ICICI Prudential Life Insurance Company Ltd. share price target

NBP and individual APE CAGR the lowest in the listed private space for FY17-FY23; underperformance continued in 2MFY24

While we are constructive on the long-term growth prospects of the LI sector, we believe major tectonic shifts will create near-term challenges, albeit preparing the industry for a cleaner insurance penetration. Contrary to expectations of relief in the Union Budget, life insurers are expected to be adversely impacted by the first-order and second-order changes proposed in the Finance Act'23. Conversation with industry experts suggest that the top four private life insurers are likely to witness 20-27% adverse impact on FY24E APE predominantly on account of the impending transition to the new tax regime. We flag high ceding charges in guaranteed NPAR savings as the next potential target as policymakers look to protect policyholder interest and improve life insurance (LI) penetration. While the demand for retail term protection remains subdued and the Apr-23 growth print was soft, we await evidence of medium-term growth momentum.

Strong Q4 growth lifts overall FY23 numbers; sustainability of growth and ability to arrest NBP market share loss key monitorables

ICICI Prudential Life Insurance (IPRU) reported Rs27.7bn VNB in FY23, achieving the target set by the company in FY19. While this has been achieved largely through improvement in margins (90% driven by change in margin and 10% on account of growth in APE), it was also post covid challenges and decrease in parent bank channel mix from 51% in FY19 to 14% in FY23.

ICICI Prudential Life Insurance (IPRU) has reported good performance in 9MFY23 in terms of both margin and volume growth (ex-parent channel).

9MFY23 VNB grew 23% YoY to Rs 17.1bn with margin profile strong at 32%

ICICI Prudential Life is consistently rated as one of the top players in India's life insurance sector on the basis of APE & NBP. It was set up in FY01 as a JV between ICICI Bank & Prudential Corp.