ICICI Prudential Life profit rises marginally to Rs 288 crore in June quarter

The increase in VNB margin is primarily on account of increase in protection mix.

ICICI Prudential Life Insurance posted a 1.05% year-on-year increase in its net profit to Rs 288 crore in the June quarter. The challenges brought about by the ongoing pandemic had an impact on the new business premium during the quarter, which decreased from Rs 2,226 crore in Q1 of FY20 to Rs 1,499 crore during Q1 of FY21.

The value of new business (VNB) for Q1 was Rs 201 crore as compared to Rs 309 crore in the corresponding period last financial year, which is a fall of 35%. With an annual premium equivalent (APE) of Rs 823 crore for the Q1 of FY21, VNB margin was 24.4% for Q1, compared to 21.7% last year. The increase in VNB margin is primarily on account of increase in protection mix.

VNB is used to measure profitability of the new business written in a period. It is present value of all future profits to shareholders measured at the time of writing of the new business contract. While VNB margin is computed as VNB for the period divided by APE for the period. On the other hand the APE is computed as the sum of annualised first year premiums on regular premium policies, and 10% of single premiums, written by the insurance company during any period from new retail and group customers.

The protection APE maintained in Q1 was at Rs 214 crore. The protection mix improved from 14.6% of APE in Q1 of FY20 to 26.0% of APE for Q1 of FY21. N S Kannan, MD & CEO, ICICI Prudential Life Insurance said, “For the first quarter of the current fiscal, APE stood at Rs 823 crore while NBP was around Rs 1,500 crore. The start of the quarter was difficult period given the lockdown situation in the country. But we were able to deliver healthy sequential growth in the May and June.” He also added the company had received 69 death claims for novel coronavirus.

Income from investments also improved for ICICI Prudential Life Insurance in the first quarter and the company said rise in investment income was due to the favourable market conditions. According to the company, it saw income from investments at Rs 13,150 crore in the first quarter of this financial year compared to Rs 2,100 crore in previous year.

The 13th and 49th month persistency ratios have been range-bound and stood at 84.1% and 66.2%, respectively, at June 30, 2020. Assets under Management stood at Rs 1.7 lakh crore as of June 30, 2020. The company’s solvency ratio for the quarter stood at 205%, well above the regulatory requirement of 150%.