Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — Investor Presentation (October 2023)
71 slides from Icici Prudential Life Insurance's investor presentation, Oct 9, 2023
Slide 1: Cover letter to stock exchanges
October 9, 2023 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 pr
Slide 2: Performance update
Performance update October 09, 2023
Slide 3: September 2023 update
September 2023 update
Slide 4: Premium growth
Premium growth August September ` billion FY2023 Q1-FY2024 July 2023 Q2-FY2024 2023 2023 New business sum assured 10,413.92 2,403.04 834.41 854.97 821.41 2,510.79 Y-o-Y growth 34.7% 8.8% (12.8%) 13.5% (6.6%) (3.1%) RWRP1 67.38 10.61 4.85 5.26 5.62 15.74 Y-o-Y growth 7.0% (3.6%) 7.8% 12.2% (5.2%) 4.1
Slide 5: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 6: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 7: Key strategic elements
Key strategic elements 4D framework enabling our 4P strategy Protection Data Diversified analytics propositions Customer Premium VNB Persistency centricity Growth Growth Customer continues to be at the core Depth in Digitalisation Productivity Partnerships Risk calibrated growth with focus on Integr
Slide 8: 4D drivers
4D drivers Data analytics Diversified propositions • Deeper understanding of customer • Offer suitable customer proposition lifestyle & income segments through appropriate distribution • Identify opportunities across diverse • Provide holistic solution across customer segments & geographies customer
Slide 9: Performance snapshot: Q1-FY2024
Performance snapshot: Q1-FY2024 ₹ billion Q1-FY2024 Value of New Business (VNB) 4.38 VNB margin 30.0% ₹ billion Q1-FY2024 Premium growth (APE) 14.61 Protection growth (APE) 3.44 Persistency (13th month)1 86.4% Persistency (49th month)1 64.7% Productivity (Cost/TWRP: Savings)2 18.8% 1 Regular & Limit
Slide 10: 4P: Premium
4P: Premium
Slide 11: Extensive distribution footprint
Extensive distribution footprint Strategy: Build profitability • 39 bank partnerships • Access to >19,000 bank branches Strategy: Digital focused upsell Strategy: Create depth & add • Protection & Annuity mix 25% campaigns width • Analytics driven upsell channel • 957 partnerships; 49 new partnershi
Slide 12: Premium growth (1/2)
• Build capacity & enhance efficiency in Premium growth (1/2) Premium growth • proprietary channels Focus on new partnership additions & increase share of shop in existing • Sustain growth in annuity line of business APE (` billion) Mix Channels Q1-FY2023 Q1-FY2024 Growth (%) Q1-FY2023 Q1-FY2024 Age
Slide 13: Products for every life stage
Products for every life stage Guaranteed Combination Part ROP1 Guaranteed Linked Long-term Life Pure Term savings protection need need Retirement Healthcare planning need need Deliver value proposition to serve varied customer needs 1ROP: Return of Premium 12
Slide 14: Premium growth (2/2)
• Build capacity & enhance efficiency in Premium growth (2/2) Premium growth • proprietary channels Focus on new partnership additions & increase share of shop in existing • Sustain growth in annuity line of business APE (₹ billion) Mix (%) Segments Q1-FY2023 Q1-FY2024 Growth (%) Q1-FY2023 Q1-FY2024
Slide 15: Premium growth: Product and Distribution
Premium growth: Product and Distribution Product mix Distribution mix Q1-FY2024 Q1-FY2024 28% 24% 15% 15% 39% 23% 14% 12% 20% 6% 4% Banca - ICICI Bank Banca - Other Banks Linked Non-linked Protection Annuity Group Agency Direct Partnership Distribution Group Well diversified product and distribution
Slide 16: 4P: Protection
4P: Protection
Slide 17: Protection growth
Protection growth Protection focus • Focus on retail protection growth • Increase protection with rider attachment • Focus on opportunities in group protection Sum assured (in ₹ billion) ₹ billion Q1-FY2023 Q1-FY2024 2,403.04 Protection APE1 3.30 3.44 Retail APE 0.68 1.10 2,209.35 Protection mix2 (%
Slide 18: 4P: Persistency
4P: Persistency
Slide 19: Persistency improvement
Persistency improvement Continue to focus on improving persistency across Persistency all cohorts Regular & Limited pay Fully paid & Single premium 12M- 2M- 12M- 2M- Month 2M-FY2023 2M-FY2024 Month FY2023 FY2023 FY2023 FY2024 13th month 85.5% 85.4% 86.4% 13th month 100.0% 99.9% 99.9% 25th month 77.6
Slide 20: 4P: Productivity
4P: Productivity
Slide 21: Productivity improvement
Productivity improvement Continue to leverage technology for process re- Productivity engineering & to drive productivity Q1- Q1- Y-o-Y ₹ billion FY2023 FY2023 FY2024 growth Total expenses 12.29 64.75 14.98 21.9% Cost/TWRP1 (%) 23.8% 21.5% 27.7% - Cost/TWRP1 (savings LOB) (%) 16.9% 14.2% 18.8% - Cap
Slide 22: Resilient balance sheet
Resilient balance sheet Insurance risks Strong solvency ratio • Emerging mortality experience within • Solvency ratio of 203.4% at June 30, expectation 2023 • Persistency experience monitored • Ability to raise additional sub debt regularly & witnessed improvement across all cohorts High quality ass
Slide 23: VNB growth levers update (4P)
VNB growth levers update (4P) ₹ billion Q1-FY2023 FY2023 Q1-FY2024 Value of New Business (VNB) 4.71 27.65 4.38 VNB margin 31.0% 32.0% 30.0% ₹ billion Q1-FY2023 FY2023 Q1-FY2024 Premium growth (APE) 15.20 86.40 14.61 Protection growth (APE) 3.30 15.04 3.44 Persistency (13th month)1 85.5% 85.4% 86.4%
Slide 24: Financial metrics
Financial metrics ₹ billion Q1-FY2023 FY2023 Q1-FY2024 Profit after Tax 1.56 8.11 2.07 Solvency ratio 203.6%1 208.9%2 203.4%1 AUM 2,300.721 2,511.912 2,664.201 Solvency ratio continues to be strong at 203.4% 1. At June 30 of respective financial years 2. At March 31 23
Slide 25: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG)
Slide 26: ESG: Focus areas, framework & approach
ESG: Focus areas, framework & approach Sustainability intrinsic to life insurance as we serve long term savings & protection needs 3 pillars of our sustainability framework Our focus areas Human Responsible Governance & capital investing business ethics Environmental Social Governance leaving the pl
Slide 27: Focus area: Human capital
Focus area: Human capital Strengthening Building Catalysing competitive Capacity Capability advantage through Culture 1. Multiple employee communication & engagement 1. Employee strength 1. Structured phygital learning initiatives to align employees to Vision & Values, increased by 15% to programs:
Slide 28: Focus area: Responsible investing
Focus area: Responsible investing Three pronged approach ICICI Prudential Stewardship policy & ESG integration Sustainable Equity process Fund Engaging with investee companies Responsible Investing framework incorporated Benchmarked against NSE 100 ESG Index into Corporate Investment Policy Disclosi
Slide 29: Focus area: Governance & data privacy
Focus area: Governance & data privacy Governance structure Information/cyber security Data Privacy Policy Cyber Security Framework Board composition Board Diversity Evaluation framework • Covering collection, usage, • Information & Cyber Security • >50% IDs including • Policy on Board diversity & •
Slide 30: Focus area: Access to finance, CSR and Environment
Focus area: Access to finance, CSR and Environment Access to Finance CSR Environment • 61.8 mn lives impacted by micro insurance • ₹ 39.6 mn spent for CSR initiatives • Environment policy formulated, products (77.2 mn lives total) • Over 831 underprivileged youth trained demonstrating Company’s comm
Slide 31: Innovation @ICICI Prulife
Innovation @ICICI Prulife
Slide 32: Grounds-up and an outside-in approach to innovation
Grounds-up and an outside-in approach to innovation Identifying opportunities Converting ideas to impact Employee ideas External Driving projects to scanning streamline processes, address immediate business challenges and Customer explore new growth feedback areas for business Innovation partner pro
Slide 33: Building a culture of innovation by encouraging every employee to share ideas
Building a culture of innovation by encouraging every employee to share ideas A simple & accessible digital portal is available to employees across the organisation for sharing ideas Business challenges Brainstorming & Employee recognition to solve on-ground co-creation workshops in internal and bus
Slide 34: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 35: Digital @ICICI Prulife
Digital @ICICI Prulife ~3.1 million digital service 99% digital logins and 100% e- interactions every month insurance account for eligible base 1.7 million+ app downloads 92.5% service interactions are via self-help / digital modes One of the best rated app: 4.4 and 98% of pages having a system 4.2
Slide 36: New business & growth
New business & growth Pre-sales Onboarding & issuance Partner integration InstaPlan - A pre-sales tool to create a ❖ Partner integration portal Collaboration platform customized solution for the customer by ❖ Easy UI – Pre-coded premium Online meetings, joint sales calls, combining multiple products
Slide 37: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ❖~3.1 mn digital service interactions monthly ❖1.7 mn+ app downloads with best app rating ❖92.5% service interactions are via self-help among the peers / digital modes Renewals 24x7 chat/voice assistants ❖Flexible pre
Slide 38: Digital experience
Digital experience Personalization Actionable insights Hyper personalization Nudge engine/ Actionable insights - Data Personalised messages to handhold analytics-based system which suggests the best customers throughout journey suited action to achieve the next goal Segmented targeting Smart solutio
Slide 39: Data science & analytics @ICICI Prulife
Data science & analytics @ICICI Prulife
Slide 40: Customer centric analytics powering new business
Customer centric analytics powering new business Understanding Satisfying customer Identifying right Provide STP customer need distribution Intelligent Product ML based Longevity & customer recommendation upsell/cross sell risk profiling segmentation engine propensity models models Geographical Pers
Slide 41: Analytics engine powering: Business & Product
Analytics engine powering: Business & Product Agency Banca/PD Direct Product Analytics driven Analytics driven ML based leads Geographic agent campaign assistance product activation strategy segments Incentives Pre-issuance Personalized Market efficacy journey online banner household framework integ
Slide 42: Awards
Awards
Slide 43: Awards & Accolades: Q1-FY2024
Awards & Accolades: Q1-FY2024 ASSOCHAM Award Customer FEST Awards 2023 Customer FEST Awards 2023 For Team BIU (Business Intelligence Best Use of Data & Insights in a Best Data/Analytics Team of the Year Unit) of ICICI Prudential Life Insurance Transformation Project Customer FEST Awards 2023 Custome
Slide 44: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 45: Favorable demography
Favorable demography Large & growing population base1 High share of working population1 Population in mn Population in mn (age group 25-59 years ) 1,407.6 1,425.9 736.1 273.8 337.0 124.6 145.1 214.3 645.6 51.8 59.4 India Japan Brazil Indonesia S Korea USA S Africa China Russia FY2021 FY2030 Driving
Slide 46: Financialisation of savings: Opportunity for insurance
Financialisation of savings: Opportunity for insurance Household savings1 Distribution of financial savings (including currency)2 80% 85 71% 61% 63% 65 57% 56% 60% 17% 52% 52% 18% 17% 17% 41% 17% ` tn 45% 45 40% 20.86 17% 36% 28.28 39% 40% 23.70 19.54 25 13.64 14.53 31.09 20.61 22.84 25.98 20% 5 11.
Slide 47: Protection opportunity: Low penetration
Protection opportunity: Low penetration Sum assured as % of GDP1,2 Addressable population# Protection gap(%)4,5 332% coverage3 (%) 83 61 55 54 76 71 74 55 252% 251… 16.5 153% 143% 12% 127% USD trillion 8.4 3.9 22% 2.8 2.0 0.9 0.7 0.6 South Korea* USA* Thailand* Japan* Malaysia* India** Singapore* Si
Slide 48: Protection opportunity: Sum assured as % of GDP
Protection opportunity: Sum assured (SA) as % of GDP A SA as % of GDP (SA growth @ 20% CAGR) SA as % of GDP1,2 74% 332% India: FY2035 44% 252% 251% 28% 22% B 153% 143% A 127% 125% FY2022 FY2025 FY2030 FY2035 74% 22% B SA as % of GDP (SA growth @ 25% CAGR) Singapore Thailand South Korea (25%CAGR)* (2
Slide 49: Protection opportunity: Addressable population (%)
Protection opportunity: Addressable population (%) 15% CAGR in new policy count1 20% CAGR in new policy count1 244.2 244.2 166.2 166.2 in mn in mn 103.2 103.2 21% 31% 71.5 71.5 76.9 50.7 25.2 31.3 8.4 12.6 8.4 13.3 FY2022 FY2025 FY2030 FY2035 FY2022 FY2025 FY2030 FY2035 Insured Uninsured Insured Uni
Slide 50: Indicators of protection opportunity
Indicators of protection opportunity Retail credit1 Health & motor2 40,852 ₹ billion Gross direct premium FY2023 21,488 (` billion) Health 906.68 19,085 13,922 Motor 812.92 9,339 10,097 6,454 19,364 4,711 Motor own damage (OD) 317.84 9,746 5,386 7,468 Motor third party (TP) 495.08 March 2014 March 2
Slide 51: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 52: Evolution of life insurance industry in India
Evolution of life insurance industry in India FY2002 FY2010 FY2015 FY2022 21.5% (5.8%) New business premium1 (` bn) 116 550 408 11.5% 876 11.2% Total premium (` bn) 501 23.2% 2,654 4.3% 3,281 6,917 Penetration (as % to GDP) 2.1% 4.1% 2.6% 2.9% 12.6% 12.3% Assets under management (` tn) 2.3 24.0% 12.
Slide 53: Industry overview: channel mix and product mix
Industry overview Industry Private sector 18% 20% 22% 44% 39% 40% Product mix1 Linked 82% 80% 78% Non-linked 56% 61% 60% FY2020 FY2021 FY2022 FY2020 FY2021 FY2022 12% 13% 13% 22% 22% 22% Channel mix2 28% 29% 32% Others Bancassurance 53% 55% 55% 60% 58% 55% Agency 25% 23% 23% FY2020 FY2021 FY2022 FY2
Slide 54: Annexures
Annexures
Slide 55: Retirement focus: ICICI Pru PFM opportunity
Retirement focus: ICICI Pru PFM opportunity Total subscribers Assets under management (AUM) in ‘000 ₹ billion 619.15 186.18 593.70 164.66 484.67 456.64 117.49 116.14 Mar-22 Mar-23 Jun-22 Jun-23 Mar-22 Mar-23 Jun-22 Jun-23 Subscribers grew by 28% over June 2022 AUM grew by 58% over June 2022 Signific
Slide 56: Interest rate risk management
Interest rate risk management Guaranteed return savings product • Combination of cash instruments & derivatives used to lock in yields for future premiums • Underlying bonds for derivatives selected based on tenure of liability Retail protection business • Asset liability duration matching using der
Slide 57: Retail persistency: FY2023
Retail persistency: FY2023 Persistency1 across product categories Regular & Limited pay Fully paid & Single premium 100.0% 100.0% 99.9% 99.8% 100.0% 89.1% 88.7% 91.7% 84.9% 13th month 75.8% 68.9% 49th month 62.6% Linked Non linked Protection Linked Non linked Protection Persistency1 across channel c
Slide 58: Value of New Business (VNB)
Value of New Business (VNB) VNB contribution* VNB margin movement FY2022 FY2023 1.0% (0.5)% 32.0% 3.5% 28.0% VNB ` billion 21.63 27.65 2.01 3.52 (7.3%) (16.3%) 9.24 10.87 (42.7%) (39.3%) 14.77 (53.4%) 8.87 (41.0%) FY2022 Business mix Operating Economic FY2023 Assumptions Assumptions change change Pr
Slide 59: Average APE by product categories
Average APE by product categories Average policy term* (years) 33 34 Segment (`) FY2022 FY2023 16 17 ULIP 163,770 177,057 Savings Protection Non-linked 94,925 119,748 savings Average customer age* (years) 44 43 Protection 22,608 23,086 35 35 Total 100,407 118,928 Savings Protection FY2022 FY2023 * P
Slide 60: Channel wise product mix
Channel wise product mix1 Channel category Product category FY2021 FY2022 FY2023 ULIP 73.3% 70.7% 57.0% Non-linked savings 11.6% 19.2% 31.7% Bancassurance Annuity 4.3% 4.9% 7.3% Protection 10.9% 5.2% 4.0% Total 100.0% 100.0% 100.0% ULIP 33.3% 42.6% 35.6% Non-linked savings 57.0% 48.8% 55.4% Agency A
Slide 61: Product wise channel mix
Product wise channel mix1 Product category Channel category FY2021 FY2022 FY2023 Bancassurance 64.9% 57.0% 46.6% Agency 16.6% 20.8% 26.1% ULIP Direct 16.1% 19.6% 23.7% Partnership distribution 2.5% 2.6% 3.6% Total 100.0% 100.0% 100.0% Bancassurance 17.8% 27.3% 25.0% Agency 49.3% 42.1% 39.1% Non-link
Slide 62: Embedded value
Embedded value
Slide 63: EV & ROEV composition
EV & ROEV composition EV composition ROEV composition 356.34 17.4% 316.25 0.1% 87.82 83.60 8.6% 268.52 232.66 8.7% Mar-22 Mar-23 FY2023 Adjusted net worth (ANW) Operating assumption change and variance Value of Inforce (VIF) Unwind VNB EV: Embedded value ROEV: Return on embedded value 62
Slide 64: Analysis of movement in EV
Analysis of movement in EV 27.65 1.43 0.22 0.03 0.08 (14.49) 356.34 (1.61) (0.30) 27.08 316.25 EVOP1 = 54.88 ROEV2 = 17.4% ANW ANW 87.82 83.60 ` billion VIF VIF 268.52 232.66 EV (Mar 31, Unwind Operating VNB Persistency Mortality Expense Other Economic Net Capital EV (Mar 31, 2022) Assumption varian
Slide 65: Analysis of movement in EV
Analysis of movement in EV1 ` billion FY2019 FY2020 FY2021 FY2022 FY2023 Opening EV 187.88 216.23 230.30 291.06 316.25 Unwind 15.84 17.25 16.61 20.85 27.08 Value of New Business (VNB) 13.28 16.05 16.21 21.63 27.65 Operating assumption changes + Operating variance 8.89 (0.42) 2.24 (10.56) 0.15 Operat
Slide 66: Sensitivity analysis
Sensitivity analysis % change in VNB % change in EV Scenario FY2022 FY2023 FY2022 FY2023 Increase in 100 bps in the reference rates (3.5) (4.2) (4.2) (3.5) Decrease in 100 bps in the reference rates 3.2 4.8 4.6 3.7 10% increase in the discontinuance rates (4.9) (3.4) (1.0) (0.5) 10% decrease in the
Slide 67: Economic assumptions underlying EV & VNB
Economic assumptions underlying EV & VNB Reference rates Tenor (years) March 31, 2023 June 30, 2023 1 7.2% 7.1% 5 7.5% 7.3% 10 7.6% 7.6% 15 7.7% 7.7% 20 7.7% 7.7% 25 7.7% 7.7% 30 7.7% 7.7% EV: Embedded value VNB: Value of new business 66
Slide 68: Glossary (1/2)
Glossary (1/2) • Annualized Premium Equivalent (APE): APE is the sum of the annualized first year premiums on regular premium policies, & ten percent of single premiums, from both individual & group customers • Retail Weighted Received Premium (RWRP): Premiums actually received by the insurers under
Slide 69: Glossary (2/2)
Glossary (2/2) • Value of New Business (VNB): VNB is used to measure profitability of the new business written in a period. It is present value of all future profits to shareholders measured at the time of writing of the new business contract. Future profits are computed based on long-term assumptio
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 — Investor Presentation (October 2023) on 6ix