ICICI Pru Life Q4 net profit slips 31% to Rs 179.5 crore

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ICICI Prudential Life said a staggering loss on its investments and a robust growth in protection policy sales have led to an over 31% dip in net income.
ICICI Prudential Life

Mumbai, Apr 25 (PTI) Private sector ICICI Prudential Life on Saturday said a staggering Rs 18,898 crore loss on its investments and a robust growth in the cash-burning protection policy sales have led to an over 31 per cent dip in net income for the March quarter at Rs 179.5 crore.

The city-based insurer, which recorded an over 12.5 per cent growth in the high margin new businesses (VNB) at Rs 470 crore, said its losses from market investments stood at Rs 18,898 crore against a profit of Rs 5,839 crore a year ago as the key market indices plunged more than 35 per cent in March alone.

Even otherwise, its net premium income rose a tepid 4.17 per cent to Rs 10,475 crore from 10,056 crore a year ago.

Protection premium jumped 55 per cent in the year taking the overall share of this to 15 per cent of total business up from 5 per cent a year ago. The rise in protection policy sale has also led to a the fall in net income as regulation demands upfront full cover for each policy sold.

However, for the full fiscal, the company reported a net profit of Rs 1,069 crore, still down 6.31 per cent from a year ago as the total value of new business income, which is the high margin business for an insurer, rose over 21.7 per cent to Rs 1,605 crore and the VNB margin increased from 17 in FY19 to 21.7 per cent in FY20.

With an average premium equivalent of Rs 7,381 crore the margin of value of new business was 21.7 per cent compared to 17 per cent for FY2019, primarily on account of increase in protection business, which grew in high double digits, chief executive and managing director N S Kannan told PTI in a post-earnings concall.

Its average premium equivalent came in at Rs 7,381 crore for FY20, a drop of 5.36 percent from Rs 7,799 crore for FY19.

The solvency ratio declined to 194.1 from 214.9 for the quarter and to 194.1 from 214.9 for the full year which Kannan described as of higher maturities and also due to a marginal increase in claim settlements including two COVID-19 death claims.

On the impact of the pandemic, Kannan said the company has seen a massive spike in protection covers since the March and April and also use of the digital platforms for claims and servicing.

Whether they will retrench people given the gloomy market and economic condition at least in the first and second quarters due to the pandemic Kannan answered in the negative.

No, we have no plans to retrench anyone, nor we are planning salary cuts for anyone. While the management and senior staff will not seek an increment, we will be offering a marginal hike to junior employees, especially the sales force, Kannan said.

He said digital sales are in double-digits since the lockdown and they have seen 40-50 per cent jump in digital transactions in terms of queries etc. While our chatbot usage is up 42 per cent Whatsapp usage is up 65 per cent and mobile app login has gone up by 94 per cent, he said.

On the outlook for the full fiscal, he said demand will come back, as there is huge demand for protection policy.

Kannan also said the share of their Ulips came down to 65 percent in March 2020 from 80 per cent earlier.

New business received premium grew at a healthy rate of 20 per cent from Rs 10,252 crore in FY19 to Rs 12,348 crore in FY20. Annuity new business premium registered grew 52 per cent from Rs 685 crore in FY19 to Rs 1,043 crore in FY20.

Protection policies registered a healthy growth of 55 per cent from Rs 722 crore in FY19 to Rs 1116 crore in FY20. The protection mix improved from 9.3 per cent of APE in FY19 to 15.1 per cent of APE for FY20.

Kannan also said ICICI Prudential is the first private life insurer to cross the Rs 1 lakh crore mark in AUM at Rs 1,52,968 crore and a total sum assured of around Rs 14.80 lakh crore.

Source: PTI

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