ICICI Prudential’s profit, market share down in April, May
ICICI Prudential Life’s (ICICI Pru’s) revenue from premiums declined for two straight months in the current financial year¸ from ~13.05 billion in the first two months of FY17 to ~10.12 billion at the end of May FY18. For its new business, premium revenue also went down 22.4 per cent year-on-year for the month of April and May, compared to the same period in the previous year.
Even market share fell from 6.9 per cent at the end of May 2017 to five per cent in May 2018, according to data from the Insurance Regulatory and Developmental Authority of India (IRDAI).
The total market share of private life insurers rose from 31.7 per cent in May 2017 to 32.6 per cent at the end of May 2018.
“There has been overgrowth in the last few years but that is because of the higher base that ICICI Prudential has had. You’ll see growth picking up in the second half as we expect some recovery in June.
But it will definitely be a humble month compared to previous records, and that of its peers,” an analyst tracking the firm told Business Standardon the condition of anonymity.
Business Standard sent a questionnaire to ICICI but the company refused to comment. For the financial year ending March 31, 2018, ICICI Pru saw a dip in net profit by around 16 per cent to ~3.41 billion, but at during the same period its annualised premium equivalent (APE) grew 15.4 per cent and protection business by 71.5 per cent.
By May 2017, ICICI Pru had sold around 115,341 policies — covering both individual and group customers — which declined 10.59 per cent to 62,035 policies in April and May 2018. This is a significant fall in sales for the listed life insurer, but a part of it could be due to base effect as sale of policies grew 38.5 per cent between May 2016 and May 2017.
However, between May 2015 and 2017, policy sales growth stood at 48.7 per cent.
However, experts said that in any life insurance business, operating expenses are frontloaded — which is why one could see a decline in net profit. A better benchmark is the ‘value of new business measure’, which increased 93.1 per cent to ~12.86 billion at the end of FY2018, compared to ~6.66 billion in the previous fiscal.
A report by stock broking firm Prabhudas Lilladher said, “Margins expanded mainly on the recently launched highmargin savings product¸ and increase in protection mix.”
ICICI Pru’s embedded value rose to ~187.88 billion at the end of FY18, which is a growth of 16.1 per cent from the previous fiscal, while assets under management grew from ~1.22 trillion at the end of FY17 to Rs 1.39 trillion.
“One possible reason for the fall may be problems with the bank that could have affected the bancassurance business. But we can’t be sure unless we have the full year’s numbers.