ICICI Prudential Life Insurance Company Ltd. share price target

ICICI Prudential Life Insurance (IPRU) has decisively chosen pursuit of volume growth as its business strategy through better mapping of channel-specific demand with relevant product suites. This would also involve higher investments in channels.

APE down 4% YoY to Rs 14.6bn in Q1 but up 4% ex-ICICIBC despite a soft demand environment

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.

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.

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) 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.

In Q2FY23, the Gross Written Premium (GWP) grew 36.2% YoY/ 3.8% QoQ at INR 98,956 Mn driven by 26.2% YoY growth in the New Business Premium (NBP).

ICICI Prudential Life Insurance (IPRU) reported good performance in Q2FY23.

H1FY23 VNB grew 25% YoY to Rs 10.9bn with margin profile strong at 31%; on course to double VNB by end-FY23 vs. FY19

We remain enthused with IPRU Life’s product and channel diversification strides, which have made the business considerably more robust in Q1FY23 than before. This has been illustrated by the fact that VNB margin improved 302bps/162bps QoQ/YoY due to change in product mix (ULIP has declined from 48.3% in FY22 to 40.5% in Q1FY23 and Protection has increased from 17% to 21.7% in the same period).