ICICIPRULI - ICICI Prudential Life Insurance Company Limited Share Price

The management's outlook highlights sustainable growth driven by strategic product innovation, diversified distribution, and operational agility. Key points include:

1. Business Growth & Profitability:

   • Target VNB growth through balanced product mix (linked, non-linked, protection) and improved persistency.
   • Focus on retail protection (25% YoY growth in FY2025) and expansion of non-MFI credit life to offset MFI challenges.
   • Product innovation (e.g., ICICI Pru GIFT Select) to address market volatility and customer preference for guaranteed income.

2. Channel Strategy:

   • Strengthen proprietary channels (agency + direct ~50% of retail APE) with agility to shift between ULIPs and non-linked products.
   • Bancassurance (18% YoY growth) and group business (25% YoY growth) remain key drivers.
   • Revive partnership distribution (temporary decline due to ULIP-heavy market) via non-linked and protection products.

3. Margins & Cost Efficiency:

   • Improve VNB margins via rider attachments, higher sum assured, and longer policy terms.
   • Sustain cost ratios (Cost/TWRP at 15.4% for savings) through calibrated expense management and digital integration (50% same-day policy issuance).

4. ESG & Governance:

   • Maintain leadership in ESG rankings; focus on green energy, gender diversity (30% women employees), and financial inclusion (73.7 million lives covered).

5. Market Volatility & Risks:

   • Navigate equity market fluctuations with ULIPs offering goal protection and nominee benefits.
   • Monitor yield curve impact on non-par pricing; leverage steeper yield curves for margin flexibility.

6. Capital & Solvency:

   • Solvency ratio at 212.2% with sub-debt raised for flexibility amid upcoming RBI guidelines.

FY2026 Focus: Balance growth amid high base effects (especially in ULIPs/annuity), drive retail protection, and optimize mix to deliver VNB growth ahead of APE. Management remains confident in leveraging its 3C framework (Customer Centricity, Competency, Catalyst) to navigate macroeconomic shifts.

Q: What led to the negative impact of operating assumption changes on VNB margins, and how were these addressed?
A: The impact stemmed from mortality assumption updates (linked to prior-year group claim delays) and ULIP-driven expense affordability pressures. Assumption changes (Rs.2.54B) countered prior variances, while yield curve shifts contributed marginally.

Q: Why did required capital decline, and why was sub-debt raised despite comfortable solvency?
A: Sub-debt (Rs.14B) was raised to preemptively address potential regulatory changes (RBC norms) and refinance existing debt (Rs.12B callable in 2025). Solvency remains robust at 212.2%.

Q: Why did the partnership distribution channel underperform, and will growth recover?
A: The channel, focused on non-linked products, missed ULIP tailwinds in H1 and faced surrender regulation adjustments. Protection mix improved (15% to 20% of APE), with recovery expected as markets stabilize.

Q: What are FY2026 growth expectations, and can VNB outpace APE growth?
A: High FY2025 bases may pressure near-term growth, but diversified channels and product agility (e.g., ULIP riders, non-par growth) aim to sustain momentum. VNB growth targeting above APE via mix optimization.

Q: Are FY2025 group fund contributions sustainable, and what is the margin profile?
A: Group funds (6.4% of APE) are lumpy but accretive. Margins are lower than company average, yet opportunistic deals are pursued for volume.

Q: What caused the economic variance in VNB, and how steep is FY2026 growth?
A: Economic variance (-Rs.0.24B) combined equity volatility and yield curve shifts. Growth guidance avoided, but 13-15% APE CAGR is targeted medium-term via channel agility.

Q: Why were mortality assumption changes delayed to FY2025, and how are costs managed?
A: Assumptions were adjusted after monitoring FY2024 variances. Costs were contained (12.6% growth vs. 13.2% premium growth), with focus on balancing commissions and opex.

Q: How did product mix shifts yield +2% VNB despite ULIP/non-linked headwinds?
A: Improved policy terms (19 to 26 years), higher sum assured (+37% YoY), and repricing offset mix pressures. Retail protection growth (+25%) added margin resilience.

Q: Why did economic assumptions hurt margins, and how is persistency managed?
A: Steeper yield curves impacted non-par pricing, partially offset by repricing. 61st-month persistency dipped due to ULIP policy continuance options but remains value-accretive.

Q: Why did annuity APE decline YoY in Q4?
A: High FY2024 base from a 100% money-back product launch. FY2025 annuity stabilized at ~8% of APE, targeting retirement-focused customers.

Q: What is ICICI Bank's APE share, and how were VNB margins affected?
A: ICICI Bank contributed 14-15% of APE, stable YoY. ULIP mix and expense adjustments drove margin pressure, partly offset by protection and repricing.

Q: Are 4Q cost cuts sustainable, and did product launches cannibalize sales?
A: Cost control focuses on aligning with product affordability. GIFT Select (non-par) and annuity target distinct segments (younger vs. near-retirement), minimizing cannibalization.

Q: Why did agent count decline, and is retail protection repricing occurring?
A: Non-performing agents (4-5 years inactive) were pruned. Retail protection pricing adjusted segmentally, with margins steady and group term under review.

Q: How do 80C benefits impact sales, and what drove economic variance?
A: 80C has minimal impact (ticket sizes ~Rs.150-200k). Economic variance (-Rs.0.24B) combined equity/debt movements, partly mitigated by management actions.

Q: Are protection margins (~55%) sustainable, and what is the growth outlook?
A: Margins aim to rebound to 60-70% via group term repricing and retail focus. APE growth targets 13-15% medium-term, leveraging diversified channels.