Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — H1-FY2022 Earnings Presentation
71 slides from Icici Prudential Life Insurance's earnings presentation, Oct 19, 2021
Slide 1: Performance update: H1-FY2022
Performance update: H1-FY2022 October 19, 2021
Slide 2: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 3: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 4: Key strategic elements
Key strategic elements Protection Customer Aspiration to centricity Premium double the VNB Growth Persistency continues to be Growth FY2019 VNB in at the core 4 years Productivity 4
Slide 5: Premium growth
• Deepen penetration in under-served Premium growth customer segments Premium • Enhance current distribution growth • Create new distribution • Augment capability in Health and Protection • Increase focus on Pension and Annuity Q4- Q1- Q2- H1- ` billion FY2021 FY2021 FY2022 FY2022 FY2022 APE1 64.62
Slide 6: Premium growth: Product and Distribution
Premium growth: Product and Distribution Product mix APE Distribution mix APE H1-FY2022 H1-FY2022 Bancassurance 5% 15% 17% Agency Linked 9% 39% Non-linked 48% Direct Protection Group 13% Partnership 30% Distribution 24% Group Driven by well diversified product and distribution mix 6
Slide 7: Protection growth
Protection growth Protection Continue to grow both retail and group lines of focus business Q4- Q1- Q2- H1- Sum assured market share1 (%) ` billion FY2021 FY2021 FY2022 FY2022 FY2022 13.2% 12.5% Protection APE 10.46 3.44 2.70 2.81 5.50 YoY growth (6.3%) (2.3%) 26.2% 20.6% 23.3% FY2021 H1-FY2022 • Fo
Slide 8: Persistency improvement
Persistency improvement Persistency Improve persistency across all cohorts Persistency# 11M-FY2021* 5M-FY2022 13th month 84.8% 85.1% 30 bps 61st month 49.8% 51.6% 180 bps Continued improvement in persistency # Definition revised in accordance with IRDAI circular on ‘Public Disclosures by Insurers’ d
Slide 9: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re- engineering and to drive productivity ` billion H1-FY2021 FY2021 H1-FY2022 Cost/TWRP1 14.3% 14.8% 17.8% Cost/TWRP (savings LOB) 8.8% 9.6% 11.8% New business growth ahead of growth in expenses 1. Total cost includin
Slide 10: Resilient Balance Sheet
Resilient Balance Sheet Insurance risks Strong solvency ratio • COVID-19 claims net of reinsurance of ` 8.62 • Solvency ratio of 199.9% at September 30, billion for H1-FY2022 2021 • Provisions of ` 4.12 billion held for future COVID-19 claims including IBNR provision High quality assets Liability pr
Slide 11: Way forward
Way forward Aspire to double the FY2019 VNB by FY2023 VNB ` billion 26.50 ` billion FY2020 FY2021 H1-FY2022 Value of New 16.05 16.21 8.73 16.05 16.21 Business (VNB)1 13.28 VNB growth 20.9% 1.0% 45.0% VNB margin 21.7% 25.1% 27.3% FY2019 FY2020 FY2021 FY2022 FY2023 • Premium growth: Diversified produc
Slide 12: Key strategic elements
Key strategic elements Protection Customer Aspiration to centricity Premium double the VNB Growth Persistency continues to be Growth FY2019 VNB in at the core 4 years Productivity 12
Slide 13: 4P: Premium
4P: Premium
Slide 14: Products available across all categories
Products available across all categories Non-linked Savings Linked Savings with Guaranteed savings; ULIP: Suite of funds ULIP: with capital guarantee and equity Immediate/ Deferred for Equity and Debt guarantee participation Annuity Retail Protection Group Pure term, term with Critical illness, Pure
Slide 15: Performance across segments
Performance across segments APE (` billion) Mix Segments FY2021 H1-FY2022 Growth (%) FY2021 H1-FY2022 Savings 54.16 26.46 43.7% 83.8% 82.8% Linked 30.90 15.41 45.4% 47.8% 48.2% Non-linked 17.79 8.12 42.0% 27.5% 25.4% Annuity 2.29 1.38 97.1% 3.5% 4.3% Group 3.18 1.55 10.7% 4.9% 4.8% Protection 10.46
Slide 16: Pension and Annuity
Pension and Annuity A comprehensive pension provider Annuity Pension fund management (AUM) Annuity mix1 8.4% 17.3% 15.2% 20.1% ` billion Annuity new business received premium (` billion) 97.48 22.92 75.59 56.06 13.47 43.53 10.43 6.92 FY2020 FY2021 H1-FY2021 H1-FY2022 Mar-20 Mar-21 Sep-20 Sep-21 Annu
Slide 17: Enhancing distribution
Enhancing distribution Strategy: Create depth and add width • ~700 partnerships; 53 new partnerships Strategy: Build profitability • Protection and Annuity mix 35%, Non- • 23 bank partnerships linked savings 56% Strategy: Digital focused upsell • Protection and Annuity mix campaigns 40% • Analytics
Slide 18: Performance across distribution channels
Performance across distribution channels APE (` billion) Mix (%) Channels FY2021 H1-FY2022 Growth (%) FY2021 H1-FY2022 Bancassurance 27.34 12.60 30.3% 42.3% 39.4% Agency 15.39 7.55 41.1% 23.8% 23.6% Direct 8.10 4.15 48.7% 12.5% 13.0% Partnership distribution 5.87 2.74 39.1% 9.1% 8.6% Group 7.93 4.92
Slide 19: 4P: Protection
4P: Protection
Slide 20: Protection business
Protection business Protection APE Sum assured1 ` billion Market 12.5% 13.2% 5.50 share (%) 3,374.16 ` billion 4.46 2,503.39 H1-FY2021 H1-FY2022 H1-FY2021 H1-FY2022 Protection APE grew by 23% in H1-FY2022 Sum assured grew by 35% in H1-FY2022 1. New business 20
Slide 21: 4P: Persistency
4P: Persistency
Slide 22: Persistency (1/2)
Persistency (1/2) Regular and Limited pay Fully paid and Single premium Month 5M-FY2021 11M-FY2021 5M-FY2022 Month 5M-FY2021 11M-FY2021 5M-FY2022 13th month 82.1% 84.8% 85.1% 13th month 100.0% 100.0% 100.0% 25th month 73.0% 73.6% 74.6% 25th month 98.7% 99.3% 99.9% 37th month 65.2% 66.3% 66.3% 37th m
Slide 23: Persistency (2/2)
Persistency (2/2) Retail excluding single premium Month 5M-FY2021 11M-FY2021 5M-FY2022 13th month 82.1% 84.8% 85.1% 25th month 73.0% 73.6% 74.6% 37th month 65.2% 66.3% 66.3% 49th month 63.8% 63.0% 63.2% 61st month 57.5% 58.3% 57.1% Persistency ratios computed as per the prior definition with referen
Slide 24: 4P: Productivity
4P: Productivity
Slide 25: Productivity: Cost efficiency
Productivity: Cost efficiency H1-FY2021 FY2021 H1-FY2022 Expense ratio (excl. commission)1 9.6% 9.5% 12.3% Commission ratio2 4.6% 5.3% 5.5% Cost/TWRP3 14.3% 14.8% 17.8% Cost/Average AUM4 2.0% 2.3% 2.0% Cost/TWRP (Savings LOB) 8.8% 9.6% 11.8% ` billion 42.20 Commission 27.2 22.42 17.12 Non Commission
Slide 26: Key initiatives taken in Q2-FY2022
Key initiatives taken in Q2-FY2022 Frontline enabler Partner enabler Group digitization Form pre-fill with OCR of KYC Video verification as a service extended End-to-end digital journey for group document within sell-online journey to distribution partners partners Improves policy issuance TAT wit
Slide 27: VNB growth levers update (4P's)
VNB growth levers update (4P’s) ` billion FY2021 H1-FY2022 Growth Value of New Business (VNB)1 16.21 8.73 45.0% VNB margin 25.1% 27.3% NA ` billion FY2021 H1-FY2022 Growth Premium growth (APE) 64.62 31.96 39.7% Protection growth (APE) 10.46 5.50 23.3% Persistency (13th month)2 84.8%3 85.1% NA Persis
Slide 28: Financial update
Financial update
Slide 29: The second wave of COVID-19
The second wave of COVID-19 Trend in COVID-19 new cases and deaths 450,000 8,000 400,000 7,000 350,000 6,000 300,000 5,000 250,000 4,000 200,000 3,000 150,000 2,000 100,000 50,000 1,000 - 0 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 New cases (LHS) No of covid deaths (RHS) • 3.4 million new CO
Slide 30: Impact of COVID-19 on mortality
Impact of COVID-19 on mortality • Total claims on account of COVID-19 for H1-FY2022: ` 18.79 billion1 (FY2021: ` 3.54 billion) • Claims net of reinsurance: ` 8.62 billion (FY2021: ` 1.98 billion) • Provision of ` 4.12 billion (March 2021: ` 3.32 billion) held for future COVID-19 claims including IBN
Slide 31: Recent trend on deaths and vaccination
Recent trend on deaths and vaccination Average daily number of deaths Vaccination picking up pace 3,900 695.5 mn2 3,600 3,300 3,000 2,700 2,400 2,100 1,800 280.8 mn2 1,500 1,200 900 600 300 - Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Jan 21 Feb 21
Slide 32: Financial metrics
Financial metrics ` billion H1-FY2021 FY2021 H1-FY2022 Profit before Tax 6.41 10.81 2.59 Profit after Tax 5.91 9.60 2.59 Solvency ratio 205.0%1 216.8%2 199.9% AUM 1,814.921 2,142.182 2,370.871 • Profit after Tax of ` 4.45 billion for Q2-FY2022 • AUM grew by 31% over September 2020 1. At September 30
Slide 33: Embedded Value
Embedded Value1 ` billion 302.03 291.06 257.11 89.07 230.30 95.22 87.88 78.43 212.96 195.84 169.23 151.87 Mar-20 Mar-21 Sep-20 Sep-21 Value of Inforce (VIF) Adjusted net worth (ANW) Value of Inforce (VIF) grew by 26% over September 2020 1. As per Indian Embedded value (IEV) method 33
Slide 34: Analysis of movement in EV
Analysis of movement in EV1 ` billion FY2017 FY2018 FY2019 FY2020 FY2021 Opening EV 139.39 161.84 187.88 216.23 230.30 Unwind 12.21 13.72 15.84 17.25 16.61 Value of New Business (VNB) 6.66 12.86 13.28 16.05 16.21 Operating assumption changes + Operating variance 4.08 10.22 8.89 (0.42) 2.24 Operating
Slide 35: Sensitivity analysis
Sensitivity analysis Scenario % change in VNB % change in EV FY2020 FY2021 FY2020 FY2021 Increase in 100 bps in the reference rates (2.4) 0.7 (2.5) (2.8) Decrease in 100 bps in the reference rates 2.2 (1.7) 2.6 3.0 10% increase in the discontinuance rates (5.0) (3.1) (1.1) (0.9) 10% decrease in the
Slide 36: Environmental, Social and Governance
ENVIRONMENTAL, sé Cf SOCIAL AND WEG 4 GOVERNANCE oa COMPLIANCE, (=) a = tons < RULES eS @ICICI PRUDENTIAL? =
Slide 37: ESG: Approach and focus areas
ESG: Approach and focus areas Business itself is social in nature: Serving long term financial and protection needs 3 pillars of our sustainability framework Our focus areas Human Responsible Governance & Capital Investing Business Ethics Environmental Social Governance leaving the planet a giving b
Slide 38: Focus areas: Human capital
Focus areas: Human capital Support during Enabling Building an agile & COVID-19 Productivity engaged workforce 1. Workplace safety 1. Talent attraction & on-boarding 1. Enabling a diverse workforce • COVID-19 protocols • >50% of hiring comprise freshers • Diversity & inclusion policy 2. Learning & d
Slide 39: Focus areas: Responsible investing
Focus areas: Responsible investing Three pronged approach ESG Integration ICICI Prudential Stewardship policy and Sustainable Equity process Fund ESG integration framework made operational; subscribed to ESG ratings by an external Benchmarked against NSE 100 ESG Index Engaging with investee companie
Slide 40: Focus areas: Governance and Data privacy
Focus areas: Governance and Data privacy Governance Structure Information/Cyber security Data Privacy Policy Cyber Security Framework • Privacy policy covering • Information and Cyber Board composition Board Diversity Evaluation framework collection, usage, storage, Security Policy • >50% IDs includ
Slide 41: Focus areas: Access to finance, CSR and Environment
Focus areas: Access to finance, CSR and Environment Access to Finance CSR Environment • 46.0 mn lives covered through micro • ₹109.8 million spent for COVID-19 • ~2,700 tonnes of carbon footprint saved insurance products pandemic and CSR initiatives through: • 56.8 mn lives covered in total • ₹26.5
Slide 42: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 43: Our digital enablers
Our digital enablers Marketing Data, Analytics, RPA Pre-sales Hyper personalization – Nudge engine/ Actionable insights - Collaboration platform – Personalized messages to handhold Data analytics based system which Online meetings, joint sales calls, customers throughout journey suggests the best su
Slide 44: Our digital enablers
Our digital enablers Onboarding & issuance Customer service Partner integration Term by invite - Pre approved offers 24x7 chat/voice assistants Partner integration portal with zero documents or medical LiGo chat bot Easy UI – pre-coded premium WhatsApp bot quotation pages Voice bot on IVR D
Slide 45: Empowering stakeholders
Empowering stakeholders Contactless interactions, interfaces COVID companion app Collaboration platforms Fetches health status from Arogya setu Share Payment screen options Share Add documents experts Online meetings (upto 300 users) | Video/Audio call | Joint sales call | Share content Chat | Inv
Slide 46: Awards and accolades
Awards and accolades Only insurance Company to be ranked in the Top ICICI Pru Guaranteed Pension Plan - Product of the Innovation During COVID-19 30 of India’s ‘Most Sustainable Companies’ Year 2021 in the Retirement & Pension category Sustain Labs Paris in association with BW FICCI Insurance Indust
Slide 47: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 48: Favorable demography
Favorable demography Large and growing population base1 High share of working population1 2020 Population (mn) Population of age 25-59 years (in mn) 1,380 1,439 727 274 331 631 127 146 213 51 59 China Brazil S Africa Russia USA Japan Indonesia India S Korea 2020 2030 Driving GDP growth2 Rising afflu
Slide 49: Financialisation of savings: Opportunity for insurance
Financialisation of savings: Opportunity for insurance Household savings1 Distribution of financial savings (including currency) 2 70% 85 61% 63% 57% 60% ` tn 52% 65 17% 45% 50% 18% 40% 41% 17% 15% 45 36% 40% 23.70 19.54 30% 25 13.64 14.53 20% 14.96 20.61 22.84 5 11.91 -3.59 -3.91 -6.64 10% -7.38 -1
Slide 50: Protection opportunity: Low penetration
Protection opportunity: Low penetration Sum Assured as a % of GDP1,2 Addressable population# Protection gap(%) 4,5 332% coverage3 (%) 83 61 55 54 76 71 74 55 252% 251% 11% 16.50 153% 143% 127% USD trillion 8.40 3.90 2.80 2.00 23% 0.90 0.70 0.60 Covered by retail protection policies * Total sum assur
Slide 51: Protection opportunity: Sum assured as a % of GDP
Protection opportunity: Sum assured as a % of GDP Sum Assured (SA) as a % of GDP: A Assuming SA growth @ 20% CAGR Sum Assured as a % of GDP1,2 85% 332% India: FY2035 50% 252% 251% B 33% 23% 155% 153% A 143% 127% FY2021 FY2025 FY2030 FY2035 85% Sum Assured (SA) as a % of GDP: 23% B Assuming SA growth
Slide 52: Protection opportunity: Addressable population coverage (%)
Protection opportunity: Addressable population coverage (%) With 15% CAGR in new policy count from FY2020 to FY2035 With 20% CAGR in new policy count from FY2020 to FY2035 244.2 244.2 In million In million 42% 166.2 166.2 26% 103.2 103.2 63.3 63.3 101.9 64.3 31.5 40.8 7.4 14.8 7.4 16.1 FY2021 FY2025
Slide 53: Indicators of protection opportunity
Indicators of protection opportunity Retail Credit1 Health & Motor2 ` billion Gross direct premium 22,207 (` billion) FY2021 19,085 Health 585.72 10,619 13,922 9,339 10,097 Motor 677.90 6,454 4,711 9,746 11,589 - Motor Own Damage (OD) 260.81 7,468 5,386 - Motor Third Party (TP) 417.09 Mar-14 Mar-16
Slide 54: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 55: Evolution of life insurance industry in India
Evolution of life insurance industry in India FY2002 FY2010 FY2015 FY2021 New business premium1 (` bn) 116 21.5% 550 -5.8% 408 10.8% 757 Total premium (` bn) 501 23.2% 2,654 4.3% 3,281 11.4% 6,284 Penetration (as a % to GDP) 2.1% 4.1% 2.6% 3.2% Assets under management (` bn) 2,304 24.0% 12,899 12.6%
Slide 56: Industry overview: channel and product mix
Industry overview Industry Private Sector 26% 18% 20% Product mix1 51% 44% 39% Linked 74% 82% 80% Non-linked 49% 56% 61% FY2019 FY2020 FY2021 FY2019 FY2020 FY2021 11% 12% 13% Channel mix2 21% 22% 22% 27% 28% 29% Others Bancassurance 54% 53% 55% 62% 60% Agency 58% 25% 25% 23% FY2019 FY2020 FY2021 FY2
Slide 57: Annexures
Annexures
Slide 58: Risk management: Non-participating business
Risk management: Non-participating business Guaranteed return savings product • Expanded product tenure from a maximum Lump sum Income of 15 years to ~20 years > 15 years • Interest risk hedged through a combination Policy term of cash market instruments and derivatives • Hedge program designed for
Slide 59: Pension and Annuity
Pension and Annuity A comprehensive pension provider Annuity Pension fund management (AUM) ` billion Annuity mix1 3.4% 6.6% 8.4% 17.3% 75.59 Annuity new business received premium (` billion) 22.92 43.53 34.76 10.43 23.26 6.85 3.11 FY2018 FY2019 FY2020 FY2021 FY2018 FY2019 FY2020 FY2021 • 120% growth
Slide 60: Protection business
Protection business Retail and Group Protection APE (FY2021) Protection split based on APE* (FY2021) ` billion ` billion 3.44 1.80 (17.2%) 2.56 2.33 1.83 0.61 2.14 (5.8%) 0.95 1.22 5.72 0.75 2.34 (54.6%) (22.3%) 1.39 1.61 1.38 1.34 Q1 Q2 Q3 Q4 Retail protection Group Term Retail Group Credit life –
Slide 61: Retail persistency
Retail persistency Persistency1 across product categories Excluding single premium Including single premium 83.5% 89.5% 86.6% 84.4% 94.0% 86.6% 70.5% 74.5% 78.4% 62.0% 63.3% 63.0% Linked Non linked Protection Linked Non linked Protection Persistency1 across channel categories Excluding single premiu
Slide 62: Value of New Business (VNB)
Value of New Business (VNB) VNB contribution* VNB margin movement FY2020 FY2021 3.9% (0.7%) 0.2% 25.1% VNB 21.7% 16.05 16.21 ` billion 3.62 4.20 (22.3%) (26.2%) 2.27 9.58 8.66 (14.1%) (59.7%) 3.93 (53.4%) (24.2%) FY2020 Business Assumption Expense FY2021 mix change change Protection Savings: Non-lin
Slide 63: Average APE by product categories
Average APE by product categories Average policy term* (years) 36 34 Segment (`) FY2020 FY2021 14 15 ULIP 183,109 154,702 Savings Protection Non-linked savings 72,000 85,654 Average customer age* (years) 43 43 Protection 23,115 25,149 36 35 Total 88,648 85,701 Savings Protection FY2020 FY2021 * Prot
Slide 64: Channel wise product mix
Channel wise product mix1 Channel category Product category FY2019 FY2020 FY2021 ULIP 93.4% 86.8% 73.3% Non-linked savings 2.3% 3.3% 11.6% Bancassurance Annuity 0.5% 0.7% 4.3% Protection 3.9% 9.3% 10.9% Total 100.0% 100.0% 100.0% ULIP 75.3% 49.9% 33.3% Non-linked savings 18.4% 39.2% 57.0% Agency Ann
Slide 65: Product wise channel mix
Product wise channel mix1 Product category Channel category FY2019 FY2020 FY2021 Bancassurance 65.5% 68.2% 64.9% Agency 20.5% 16.3% 16.6% ULIP Direct 12.0% 13.0% 16.1% Partnership distribution 2.1% 2.5% 2.5% Total 100.0% 100.0% 100.0% Bancassurance 14.2% 10.8% 17.8% Agency 44.5% 53.6% 49.3% Non-link
Slide 66: Embedded value
Embedded value
Slide 67: Embedded value growth
Embedded value growth ` billion FY2019 FY2020 FY2021 Value of In force (VIF) 142.69 151.87 195.84 Adjusted Net worth 73.54 78.43 95.22 Embedded value1 216.23 230.30 291.06 Return on Embedded Value (ROEV) 20.2% 15.2% 15.2% EV growth-pre dividend 19.6% 8.4% 26.4% EV growth-post dividend 15.1% 6.5% 26.
Slide 68: Economic assumptions underlying EV
Economic assumptions underlying EV Tenor (years) References Rates Mar 31, 2021 Sept 30, 2021 1 3.91% 3.92% 5 7.38% 7.15% 10 7.93% 8.16% 15 7.48% 8.08% 20 7.02% 7.76% 25 6.72% 7.46% 30 6.55% 7.26% 68
Slide 69: Glossary
Glossary • Annualized Premium Equivalent (APE) – Annualized Premium Equivalent (APE) is the sum of the annualized first year premiums on regular premium policies, and ten percent of single premiums, from both individual and group customers • Assets under management (AUM) - AUM refers to the carrying
Slide 70: Safe harbor
Safe harbor Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forwar
Slide 71: Thank You
Thank You
ICICI Prudential Life Insurance Company — H1-FY2022 Earnings Presentation on 6ix