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ICICI Prudential Life Insurance Co. Ltd showed the flipside of the pandemic through a jump in mortality claims and a sharp sequential drop in new business premium. Investors, though, can take comfort from the healthy profitability metrics that the insurer maintained despite the challenges.

ICICI Prulife reported a 51% drop in business on an annualized premium equivalent basis for Q1FY22. Year-on-year growth looked strong at 48% simply because of a low base. Even as the overall business recovery suffered due to the second covid wave, ICICI Prulife saw mortality claims shoot up. On a gross basis, the company settled 1,120 crore worth of claims specific to the pandemic during Q1FY22, which was three times that of the entire FY21. Net of reinsurance, claims settled were 500 crore. The life insurer is not an outlier in this. Peer HDFC Life Insurance Co. Ltd, too, witnessed a spike in claims.

ICICI Prulife beefed up its provisions towards this to 498 crore. A spike in claims weighed on portfolio growth.

The silver lining for ICICI Prulife is that its protection business has held up. Margin-friendly protection plans shrank by a smaller 21%, mostly due to pandemic-related claims. The share of protection plans for ICICI is among the highest in the industry. This augurs well for the insurer’s future profitability. For the June quarter, ICICI Prulife did not disappoint on margins. Value of new business (VNB) margin improved from 23.6% in the last quarter to 29.4%. Analysts said the life insurer’s strategy to re-orient its product mix is paying off.

Satish Kumar/Mint
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Satish Kumar/Mint


ICICI Prulife sharpened its focus on protection plans and traditional savings products, which led to a reduction in the share of volatile market-linked products. “With a higher share of protection and annuity in the mix, we raise our VNB margins by 160 basis points (bps) for FY22 and FY23 to 26.3% and 26.5%, respectively," wrote analysts at HDFC Securities Ltd in a note.

The management has indicated that growth in protection products will continue to be strong. New partners and an increase in agents will strengthen its distribution channels further, which in turn will drive growth, the management said in a call with analysts on Tuesday. The second wave has hit insurers through claims, but ICICI Prulife’s improving growth metrics has lent support to its valuations.

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