Private sector ICICI Prudential Life Insurance registered a 30.5 per cent drop in net profit to ₹282 crore in the first quarter of the current fiscal on account of losses from “higher new business strain” and a base year impact.
Its net profit had grown to ₹406 crore in the first quarter of 2017-18.
“There has been a huge base effect post demonetisation. Our immediate focus is on reversing the trend,” said NS Kannan, Managing Director and CEO, ICICI Prudential Life Insurance, adding that sequentially the insurer’s market share has hovered around 11.5 per cent.
Kannan, who took over at ICIC Prudential Life Insurance in June after its former chief Sandeep Bakhshi moved to ICICI Bank, said that there has been a growth of 36 per cent in the retail weighted received premium (RWRP) in June over May.
“Our focus will be on carrying forward this momentum,” he said at the first quarter earnings call.
“New business strain arises when the premium paid at the commencement of a contract is not sufficient to cover the initial expenses, including acquisition costs and any mathematical reserves that our company needs to set up at that point,” the insurer said in a release on Tuesday.
Total premium grew by 13 per cent to ₹5,518 crore in the quarter ended June 30, 2018-19, against ₹4,885 crore a year ago. The value of new business increased by 34.1 per cent to ₹244 crore in the first quarter of the fiscal from ₹182 crore in the same period last fiscal.
However, retail new business premium decreased by 18.1 per cent to ₹1,492 crore in the quarter under review, though its group premium more than doubled to ₹401 crore in the same period.
The insurer’s market share stood at 11.3 per cent among life insurance companies on a RWRP basis for the quarter under review.
Its 13th month persistency ratio remained constant at 85.8 per cent in the first quarter of the fiscal.
It further said that its claims and benefit payouts decreased by 25.9 per cent to ₹2,940 crore in the quarter ended June 30, 2018-19, due to decrease in surrender claims by ₹1,093 crore in the period.