Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — Investor Presentation (July 2021)
73 slides from Icici Prudential Life Insurance's investor presentation, Jul 8, 2021
Slide 1: Investor presentation cover letter to exchanges
July 8, 2021 General Manager Vice President Listing Department Listing Department BSE Limited, National Stock Exchange of India Limited Phiroze Jeejeebhoy Tower, ‘Exchange Plaza’, Dalal Street, Bandra-Kurla Complex, Mumbai 400 001 Bandra (East), Mumbai 400 051 Dear Sir/Madam, Subject: Investor prese
Slide 2: Performance update
Performance update July 08, 2021
Slide 3: June 2021 update
June 2021 update
Slide 4: Premium growth
Premium growth ` billion Q4-FY2021 FY2021 April 2021 May 2021 June 2021 Q1-FY2022 APE1 25.09 64.62 3.57 3.04 5.58 12.19 YoY growth 27.1% (12.5%) 87.9% 9.0% 57.6% 48.1% RWRP2 21.49 54.54 2.56 2.45 4.42 9.42 YoY growth 27.3% (17.9%) 65.0% 27.7% 42.9% 43.7% New business sum assured 2,051.84 6,166.84 70
Slide 5: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 6: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 7: Year at a glance
Year at a glance Mar 2020 May 2020 Sep 2020 Dec 2020 Mar 2021 Lockdown due to Covid-19 First phase of unlock Recovering to pre Covid levels • Economic activities • Gradual recovery in • GDP growth of 0.4% (Q3) • GDP growth expected to Environment disrupted; GDP economic activities; GDP • Stock marke
Slide 8: 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 3 - 4 years Productivity 7
Slide 9: Customer centricity
Customer centricity 94.0% 13th month persistency1 for non-linked savings 46 Number of grievances per 10,000 new business policies (retail) 97.9% Claim settlement ratio2 100% Eligible claims3 settled within the one day promise 1.4 Average claims settlement time4 Figures are for financial year ended M
Slide 10: Premium: Back to growth
• Deepen penetration in under-served Premium: Back to growth customer segments Premium • Enhance current distribution growth • Create new distribution • Augment capability in Health and Protection • Increase focus on Pension and Annuity ` billion FY2020 9M-FY2021 Q4-FY2021 FY2021 New business premiu
Slide 11: Premium diversification: Product and Distribution
Premium diversification: Product and Distribution Product mix APE Distribution mix APE FY2018 FY2021 FY2018 FY2021 5% 11% 31% 25% 31% 11% 24% 82% 47% 48% 6% 1% 14% 16% 12% 13% 3% 6% 5% 9% Banca-ICICI Bank Banca-Other Banks Linked Non-linked Protection Group Agency Direct Partnership Distribution Gro
Slide 12: Protection: Increasing mix
Protection: Increasing mix Protection Continue to grow both retail and group lines of focus business Protection APE ` billion FY2020 FY2021 ` billion 3.44 2.33 2.56 2.14 Protection APE 11.16 10.46 Q1-FY2021 Q2-FY2021 Q3-FY2021 Q4-FY2021 Protection mix 15.1% 16.2% Sum assured market share1 (%) 12.5%
Slide 13: Persistency improvement
Persistency improvement Persistency Improve persistency across all cohorts Persistency1 11M-FY2020 11M-FY2021 Y-o-Y 13th month 83.2% 84.8% 160 bps 61st month 56.0% 58.3% 230 bps 11M-FY2021 94.0% 86.6% 13th month persistency2 84.4% across product categories Linked Non- linked Protection Continued imp
Slide 14: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re- engineering and to drive productivity ` billion FY2020 FY2021 Cost/TWRP1 15.9% 14.8% Cost/TWRP (savings LOB) 10.4% 9.6% Improvement in cost ratios 1. Total cost including commission/(Total premium- 90% of single pr
Slide 15: Value of New Business (VNB)
Value of New Business (VNB) VNB contribution* FY2019 FY2021 ` billion FY2020 FY2021 3.62 4.17 (22.3%) Value of New 16.05 16.21 (31.4%) Business (VNB) 7.89 8.66 (59.4%) 3.93 (53.4%) 1.22 VNB margin 21.7% 25.1% (24.2%) (9.2%) Protection Savings: Non-linked Savings: Linked Diversification of sources of
Slide 16: Resilient Balance Sheet
Resilient Balance Sheet High quality assets Liability profile • 83% of liabilities largely pass on the market • 96.8% of fixed income in sovereign or performance to customers AAA; 0.5% of fixed income below AA • Non par guaranteed return book: 1.1% of • Zero NPA since inception liabilities Insurance
Slide 17: Way forward
Way forward Aspire to double the FY2019 VNB by FY2023 VNB ` billion 26.50 9M- Q4- ` billion FY2020 FY2021 FY2021 FY2021 16.21 Value of New 16.05 16.05 10.30 5.91 16.21 13.28 Business (VNB)1 VNB growth 20.9% (9.3%) 25.7% 1.0% FY2019 FY2020 FY2021 FY2022 FY2023 • Premium growth: Diversified product &
Slide 18: Distribution approach
Distribution approach Objective Long term sustainable growth Approach Broadening our customer reach Product proposition Position Customer for growth Distribution retention build-up 17
Slide 19: Distribution approach
Distribution approach Objective Long term sustainable growth Approach Broadening our customer reach Product proposition Position Customer for growth Distribution retention build-up 18
Slide 20: 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 with Critical illness, Pure term,
Slide 21: Performance across segments: Savings
Performance across segments: Savings Savings segment APE Linked (y-o-y growth) ` billion FY2020 Q4-FY2021 FY2021 11.0% Linked 47.72 11.85 30.90 Q1-FY2021 Q2-FY2021 Q3-FY2021 Q4-FY2021 Q4-FY2021 Non-linked 11.41 7.74 17.79 -38.8% Annuity 1.05 1.07 2.29 -45.0% -65.7% Group 2.47 1.00 3.18 Total savings
Slide 22: 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 23: 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 24: Distribution approach
Distribution approach Objective Long term sustainable growth Approach Broadening our customer reach Position Customer for growth Distribution retention build-up 23
Slide 25: Enhancing distribution
Enhancing distribution Strategy: Create depth and add width • ~600 partnerships Strategy: Build profitability Strategy: Digital focused upsell • Protection 14% and non-linked savings • 23 bank partnerships 71% in FY2021 campaigns • Protection and Annuity mix • Analytics driven upsell channel further
Slide 26: Performance across distribution channels (1/2)
Performance across distribution channels (1/2) Bancassurance-ICICI Bank (y-o-y growth) ` billion Q4-FY2021 FY2021 50.4% Bancassurance 10.68 27.34 Agency 5.86 15.39 Q1-FY2021 Q2-FY2021 Q3-FY2021 Jan-21 Feb-21 Mar-21 -33.5% -16.2% -43.0% -59.4% -45.5% Direct 3.11 8.10 Bancassurance-Other Banks APE Par
Slide 27: Performance across distribution channels (2/2)
Performance across distribution channels (2/2) Agency (y-o-y growth) Partnership distribution (y-o-y growth) 62.7% 36.9% Q1-FY2021 Q2-FY2021 Q3-FY2021 Q4-FY2021 Q4-FY2021 Direct (y-o-y growth) Q1-FY2021 Q2-FY2021 Q3-FY2021 Q4-FY2021 -6.5% -34.7% -11.7% 21.0% -9.4% -12.3% -29.0% Q1-FY2021 Q2-FY2021 Q
Slide 28: Distribution approach
Distribution approach Objective Long term sustainable growth Approach Broadening our customer reach Position Customer for growth retention 27
Slide 29: Persistency
Persistency Retail excluding single premium Retail including single premium Month 11M-FY2020 11M-FY2021 Month 11M-FY2020 11M-FY2021 13th month 83.2% 84.8% 13th month 85.3% 86.9% 25th month 75.1% 73.6% 25th month 77.4% 76.8% 37th month 66.7% 66.3% 37th month 69.0% 69.3% 49th month 64.6% 63.0% 49th mo
Slide 30: Distribution approach
Distribution approach Objective Long term sustainable growth Approach Broadening our customer reach Position for growth 29
Slide 31: Position for growth
Position for growth RWRP1 (y-o-y growth) Retail NBP3 (y-o-y growth) 121.0% 98.1% 37.0% 18.4% 6.3% Q1-FY2021 Q2-FY2021 Q3-FY2021 Jan-21 Feb-21 Mar-21 Q1-FY2021 Q2-FY2021 Q3-FY2021 Jan-21 Feb-21 Mar-21 -25.5% -7.3% -29.9% -40.5% -15.5% -10.3% -49.4% RWRP market share (%) APE2 (y-o-y growth) 108.1% 8.3
Slide 32: Financial update
Financial update
Slide 33: 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 34: Impact of COVID-19 on mortality
Impact of COVID-19 on mortality Covid-19 claims pattern Based on Date of Death Based on Date of Intimation • Total claims on account of Covid-19 for FY2021 was ` 4.59 billion1 • Claims net of reinsurance was ` 2.64 billion2 • Additional provision of ` 3.33 billion3 towards Covid-19, not utilised so
Slide 35: Embedded Value growth
Embedded Value growth1 ` billion 291.06 230.30 95.22 78.43 195.84 151.87 Mar-20 Mar-21 Value of Inforce (VIF) Adjusted net worth (ANW) VIF grew by 29% to ` 195.84 billion and EV grew by 26% to ` 291.06 billion 1. As per Indian Embedded value (IEV) method 34
Slide 36: Analysis of movement in Embedded Value (EV)
Analysis of movement in Embedded Value (EV) 25.67 291.06 ` billion 0.04 16.21 1.10 (2.37) 3 0.01 0.41 16.61 3.09 230.30 ANW EVOP1 = 35.05 95.22 ROEV2 = 15.2% ANW 78.43 VIF 195.84 VIF 151.87 EV (Mar 31, Unwind Operating VNB Persistency Mortality and Expense Other Economic Net Capital EV (Mar 31, 2020
Slide 37: 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 38: Financial metrics
Financial metrics ` billion FY2020 FY2021 Profit before Tax 10.69 10.81 Profit after Tax 10.69 9.60 Solvency ratio 194% 216.8% AUM 1,529.681 2,142.181 40% growth in AUM during FY2021 1. At March 31 of respective financial years Components may not add up to the totals due to rounding off 37
Slide 39: VNB growth levers update (4P's)
VNB growth levers update (4P’s) ` billion FY2020 FY2021 Growth Value of New Business (VNB)1 16.05 16.21 1.0% VNB margin 21.7% 25.1% ` billion FY2020 FY2021 Growth Premium growth (APE) 73.81 64.62 (12.5%) Protection growth (APE) 11.16 10.46 (6.3%) Persistency (13th month)2 83.2%3 84.8%3 Persistency (
Slide 40: Awards and accolades: FY2021
Awards and accolades: FY2021 Only insurance Company to be ranked in the Top ICICI Pru Signature - Best ULIP policy of the year Excellence in Claims and Customer Service 30 of India’s ‘Most Sustainable Companies’ Sustain Labs Paris in association with BW Business Today – Money Today Financial Awards
Slide 41: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 42: Our digital enablers
Our digital enablers Marketing Data & Analytics Pre-sales Hyper personalization – Nudge engine/ Actionable Collaboration platform – Personalized messages to handhold insights - Data analytics based Online meetings, joint sales calls, customers throughout journey system which suggests the best invite
Slide 43: Our digital enablers
Our digital enablers Onboarding & issuance Customer service Partner integration Term by invite - Pre approved 24x7 chat/voice assistants Partner integration portal offerings for partners with zero LiGo chat bot Easy UI – pre-coded premium documents or medical WhatsApp bot quotation pages Voic
Slide 44: 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 45: ESG
ESG Environmental Environmental Social Social Governance Governance
Slide 46: COVID-19 response: Employee well-being is foremost priority
COVID-19 response: Employee well-being is foremost priority Health, Safety and Well-being Enabling work from home Workplace safety Accessibility • Sanitization, UV air purifiers, HEPA filters, • Migration of applications to internet rostered attendance, masking & social distancing protocols, Plexigl
Slide 47: Environmental initiatives
Environmental initiatives Preserving ‘Mother Earth’ for future generations Replace Reduce Reuse & Recycle • End to end digital solutions for • Move towards 5 star rated ACs • Sewage treatment plant and our business activities • VRF/Inverter AC (27% of usage) wet waste conversion into • 86% sharehold
Slide 48: Social initiatives
Social initiatives Building communities and giving back to society Business itself is social in nature: Serving long term financial and protection needs of the society Customer centricity Commitment to employees Commitment to Community • Products across life stage needs; • One million digital learni
Slide 49: Governance
Governance Transparency in functioning with separation of supervision from execution Awarded for Corporate Governance; scorecard by IFC, BSE limited and IiAS 01 Supervisory structure 02 Compliance, Risk & IA 03 Ethical practices • Diverse Board composition • Compliance policy: Quarterly • Code of Co
Slide 50: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 51: 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 52: 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% 17% 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 53: Protection opportunity: Low penetration
Protection opportunity: Low penetration Sum Assured as a % of GDP1,2 Addressable population# Protection gap(%) 4,5 coverage3 (%) 273% 252% 251% 83 61 55 54 76 71 74 55 10% 16.50 142% 131% 113% USD trillion 8.40 3.90 19% 2.80 2.00 0.90 0.70 0.60 Covered by retail protection policies * Total sum assur
Slide 54: 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 75% Sum Assured as a % of GDP1,2 45% 273% 252% 251% India: FY2035 30% B 19% 145% 142% 131% A 113% FY2020 FY2025 FY2030 FY2035 75% 19% Sum Assured (SA) as a % of GDP: B Assuming SA growth
Slide 55: 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 250.8 250.8 In million In million 46% 170.7 170.7 28% 106.0 106.0 115.7 57.5 69.9 57.5 34.1 46.1 6 15.8 6 17.8 FY2020 FY2025 FY2
Slide 56: Indicators of protection opportunity
Indicators of protection opportunity Retail Credit1 Health & Motor2 ` billion Gross direct premium FY2009 FY2020 CAGR 25,537 (` billion) Health 66.23 516.38 20.5% 19,085 12,147 13,922 9,339 Motor 138.21 692.08 15.8% 10,097 6,454 4,711 9,746 13,390 - Motor Own Damage (OD) 87.56 265.52 10.6% 5,386 7,4
Slide 57: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 58: Evolution of life insurance industry in India
Evolution of life insurance industry in India FY2002 FY2010 FY2015 FY2020 New business premium1 (` bn) 116 21.5% 550 -5.8% 408 12.5% 735 Total premium (` bn) 501 23.2% 2,654 4.3% 3,281 11.6% 5,683 Penetration (as a % to GDP) 2.1% 4.1% 2.6% 2.8% Assets under management (` bn) 2,304 24.0% 12,899 12.6%
Slide 59: Industry overview: product and channel mix
Industry overview Industry Private Sector 26% 18% 18% Product mix1 44% 37% 51% Linked 74% 82% 82% Non-linked 56% 63% 49% FY2019 FY2020 9M-FY2021 FY2019 FY2020 9M-FY2021 11% 12% 12% Channel mix2 21% 22% 23% 27% 28% 27% Others Bancassurance 54% 53% 54% 62% 60% 60% Agency 25% 25% 23% FY2019 FY2020 9M-F
Slide 60: Annexures
Annexures
Slide 61: Cost efficiency
Cost efficiency FY2020 FY2021 Expense ratio (excl. commission)1 10.3% 9.5% Commission ratio2 5.7% 5.3% Cost/TWRP3 15.9% 14.8% Cost/Average AUM4 2.9% 2.3% Cost/TWRP (Savings LOB) 10.4% 9.6% ` billion 44.71 42.20 Commission 28.85 27.20 Non Commission 15.86 15.00 FY2020 FY2021 1. Expense ratio: All ins
Slide 62: 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 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: 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 67: Embedded value
Embedded value
Slide 68: 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 69: 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 70: Economic assumptions underlying VNB and EV
Economic assumptions underlying VNB and EV Tenor (years) References Rates March 31, 2020 March 31, 2021 1 4.83% 3.91% 5 7.43% 7.38% 10 7.32% 7.93% 15 7.17% 7.48% 20 7.14% 7.02% 25 7.14% 6.72% 30 7.14% 6.55% 69
Slide 71: 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 72: 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 73: Thank You
Thank You
ICICI Prudential Life Insurance Company — Investor Presentation (July 2021) on 6ix