Mumbai: Falling Covid claims, improving persistency ratio and a strong increase in premiums are signs that ICICI Prudential Life Insurance Company can achieve a 20% growth in the value for new business (VNB) in the medium term, CEO NS Kannan said.
The company’s Covid-linked claims halved to ₹16 crore in the quarter ended June from ₹35 crore in March and were down from ₹70 crore in December 2021 indicating that the worst of the pandemic impact is over. Falling claims, strong growth in premiums and VNB growth helped the insurer swing to a net profit of ₹156 crore during the quarter from a loss of ₹186 crore in the year-ago period.
VNB, which is a measure of the profitability of the new business written during the quarter, increased 32% to ₹471 crore from ₹358 crore in the year-ago period.
Kannan said the company is set to achieve its VNB target of ₹2,650 crore this fiscal, double of FY19, helped by a 25% annualised premium equivalent (APE) growth which is the sum of annualised first-year premiums on regular premium policies, and ten per cent of single premium policies.
“Going forward, APE growth will track the nominal GDP, then there is a huge gap in protection (retail term plans) which is an opportunity for us and hopefully IRDAI will also give us the ability to operate in the health insurance space. Given all this, I think the VNB levers are quite intact. We can safely say we will grow at 15% to 20% per annum for VNB beyond this fiscal,” Kannan said.
The company used the pandemic period to reinforce its distribution network and now has 200,000 agents, adding 25,000 a year.
It has also added 29 bancassurance partners in the last 18 months shrugging its dependence on parent in favour of growing large and mid-sized lenders.
“One-and-a-half years ago we only had ICICI and Standard Chartered. ICICI used to contribute 60% of our business at its peak. Now it is down to 20%. Other banks contribute 15% now versus 4% earlier. We expect our agency channel to contribute 50% of our business up from 22% now,” Kannan said.
The company saw a 40% fall year-on-year in retail term plans as rising costs and tighter underwriting impacted demand. Kannan said he is confident of sustaining margins because they expect the retail business to stabilise in the second half of the fiscal and contribute to growth. “Retail protection has faced issues like tighter underwriting, increase in prices of reinsurers and medical examination linked issues. But now the process and pricing have stabilised. We expect growth from Q3. Under-penetration, regulatory focus in growth and ease of doing business will be the tailwinds for growth,” he said.
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