To focus on expansion of value of new business, improving margins: ICICI Prudential

ICICI Prudential has seen strong sequential growth in premiums... Improvement in the value of new business margins is the highlight of Q2.

Private Life Insurance Company posted a net profit of Rs 421.21 crore for the quarter ended September 30, 2017 as compared to Rs 418.78 crore a year ago. The insurer's new business premium on an annualised premium equivalent basis increased by 36.8 percent to Rs 3574 crore in H1FY18.

In an interview to CNBC-TV18, Sandeep Batra, Executive Director, ICICI Prudential spoke about the Q2 numbers and the outlook going forward.

Below is the transcript of the interview

On topline

Our topline grew by about 36.8 percent, the renewal premium during the same period has grown by about 24 percent. As we have been saying persistency has been our key focus areas, a 13-month persistency for the 6 months to debt about 87 percent which we believe is a very strong number. So, from our point of view, along with this from a profitability point of view registered a value of new business (VNB) of Rs 4.17 billion or 417 crores which represents an increase of about 71 percent over the same period, last year

On margins

There are two parts of a business and which do have different kinds of margins. There is a savings business and there is a protection business. The margins in both these segments are slightly different. As far as we are concerned, we would like to focus on capitalising the opportunities on both these segments. The margins percentage is a result of sometimes the mix. We would largely like to focus on expansion of value of new business in rupee terms rather than get fixated about percentages.

Yes, over the years we have improved our margins from about 5.7 percent two years back, we have reported a margin of an H1 of about 11.7 percent, yes there has been a steady focus.

On Profit after Tax

It's easy for us to expand Profit After Tax by reducing the growth but that is not what is going to be accretive to shareholders on a longer term basis so we do not expect the PAT to grow in a meaningful way, given the growth opportunities that we have at this point of time. Over the next few quarters and maybe a couple of years, we do expect the high growth momentum to keep on taking place which would result in VNB expansions but not necessarily corresponding to a PAT expansion. It will be only after little longer period of time that the VNB will translate into PAT