Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — 9M-FY2022 Earnings Presentation
70 slides from Icici Prudential Life Insurance's earnings presentation, Jan 18, 2022
Slide 1: Performance update: 9M-FY2022
Performance update: 9M-FY2022 January 18, 2022
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 ` billion FY2021 Q3-FY2022 9M-FY2022 APE1 64.62 19.29 51.25 YoY growth (
Slide 6: Premium growth: Product and Distribution
Premium growth: Product and Distribution Product mix APE Distribution mix APE 9M-FY2022 9M-FY2022 Annuity Group 4% 4% Group Partnership 15% Distribution Protection 9% 17% Bancassurance Linked 39% Direct 50% 13% Non-linked 25% Agency 24% 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 Sum assured market share2 (%) ` billion FY2021 Q3-FY2022 9M-FY2022 12.5% 12.7% Protection APE1 10.46 3.06 8.56 YoY growth (6.3%) 19.5% 21.8% FY2021 9M-FY2022 • Focused efforts on protection business despite s
Slide 8: Persistency improvement
Persistency improvement Persistency Improve persistency across all cohorts Persistency# 11M-FY2021* 8M-FY2022 13th month 84.8% 84.8% - 61st month 49.8% 52.7% 290 bps Significant improvement in persistency across most cohorts # Definition revised in accordance with IRDAI circular on ‘Public Disclosur
Slide 9: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re- engineering and to drive productivity ` billion FY2021 9M-FY2021 9M-FY2022 Growth APE 64.62 39.54 51.25 29.6% Total expenses 42.20 28.04 35.05 25.0% Cost/TWRP1 (%) 14.8% 14.6% 17.7% - Cost/TWRP (savings LOB) (%) 9.
Slide 10: Resilient Balance Sheet
Resilient Balance Sheet Insurance risks Strong solvency ratio • COVID-19 claims net of reinsurance of ` 9.82 • Solvency ratio of 202.2% at December 31, billion for 9M-FY2022 2021 • Provisions of ` 2.03 billion held for future COVID-19 claims including IBNR provision High quality assets Liability pro
Slide 11: Way forward
Way forward Aspire to double the FY2019 VNB by FY2023 VNB ` billion 26.50 ` billion FY2020 FY2021 9M-FY2022 Value of New 16.05 16.21 13.88 16.05 16.21 Business (VNB)1 13.28 VNB growth 20.9% 1.0% 34.8% VNB margin 21.7% 25.1% 27.1% FY2019 FY2020 FY2021 FY2022 FY2023 • Premium growth: Diversified produ
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 9M-FY2022 Growth (%) FY2021 9M-FY2022 Savings 54.16 42.68 31.3% 83.8% 83.3% Linked 30.90 25.64 34.6% 47.8% 50.0% Non-linked 17.79 12.92 28.6% 27.5% 25.2% Annuity 2.29 2.16 77.0% 3.5% 4.2% Group funds 3.18 1.96 (10.1%) 4.9% 3.8% Protecti
Slide 16: Pension and Annuity
Pension and Annuity A comprehensive pension provider Annuity Pension fund management (AUM) Annuity mix1 8.4% 17.3% 15.1% 20.0% ` billion Annuity new business received premium (` billion) 104.41 22.92 21.21 75.59 66.20 10.43 12.10 43.53 FY2020 FY2021 9M-FY2021 9M-FY2022 Mar-20 Mar-21 Dec-20 Dec-21 An
Slide 17: Enhancing distribution
Enhancing distribution Strategy: Create depth and add width • ~700 partnerships; 72 new partnerships Strategy: Build profitability • Protection and Annuity mix 32%, 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 9M-FY2022 Growth (%) FY2021 9M-FY2022 Bancassurance 27.34 20.22 21.4% 42.3% 39.5% Agency 15.39 12.53 31.5% 23.8% 24.4% Direct 8.10 6.70 34.3% 12.5% 13.1% Partnership distribution 5.87 4.38 34.8% 9.1% 8.5% Group 7.93 7.4
Slide 19: 4P: Protection
4P: Protection
Slide 20: Protection business
Protection business Protection APE New business sum assured ` billion ` billion 5,131.63 8.56 7.03 4,115.00 9M-FY2021 9M-FY2022 9M-FY2021 9M-FY2022 Protection APE grew by 22% in 9M-FY2022 Sum assured grew by 25% in 9M-FY2022 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 8M-FY2021 11M-FY2021 8M-FY2022 Month 8M-FY2021 11M-FY2021 8M-FY2022 13th month 82.7% 84.8% 84.8% 13th month 100.0% 100.0% 100.0% 25th month 72.7% 73.6% 75.7% 25th month 98.8% 99.3% 100.0% 37th month 65.1% 66.3% 66.6% 37th
Slide 23: Persistency (2/2)
Persistency (2/2) Retail excluding single premium Month 8M-FY2021 11M-FY2021 8M-FY2022 13th month 82.7% 84.8% 84.8% 25th month 72.7% 73.6% 75.7% 37th month 65.1% 66.3% 66.6% 49th month 63.3% 63.0% 63.1% 61st month 58.0% 58.3% 56.1% Persistency disclosures were revised in line with IRDAI circular on
Slide 24: 4P: Productivity
4P: Productivity
Slide 25: Productivity: Cost efficiency
Productivity: Cost efficiency ` billion FY2021 9M-FY2021 9M-FY2022 Growth APE 64.62 39.54 51.25 29.6% Total expenses 42.20 28.04 35.05 25.0% Cost/TWRP1 (%) 14.8% 14.6% 17.7% - Cost/TWRP (Savings LOB) (%) 9.6% 9.3% 12.2% - Cost/Average AUM2 (%) 2.3% 2.1% 2.1% - New business growth ahead of expense gr
Slide 26: Key initiatives taken in Q3-FY2022
Key initiatives taken in Q3-FY2022 Customer service on Leveraging ecosystem Mobility partners platform Income documents ICICI Pru Fit Life - Health tracker Empowering partners to accept Option for customer to upload to record steps count, calories customer request on their burned. Key features –
Slide 27: VNB growth levers update (4P's)
VNB growth levers update (4P’s) ` billion FY2021 9M-FY2022 Growth Value of New Business (VNB)1 16.21 13.88 34.8% VNB margin 25.1% 27.1% NA ` billion FY2021 9M-FY2022 Growth Premium growth (APE) 64.62 51.25 29.6% Protection growth (APE) 10.46 8.56 21.8% Persistency (13th month)2 84.8%3 84.8% NA Persi
Slide 28: Financial update
Financial update
Slide 29: COVID-19: Emerging trends
COVID-19: Emerging trends • ~47% of population fully vaccinated Emerging third wave with lower expected fatality1 • ~65% of population received at least one dose 450,000 12,000 914.7 mn2 400,000 10,000 350,000 656.0 mn2 300,000 8,000 250,000 6,000 200,000 150,000 4,000 100,000 2,000 50,000 - 0 New c
Slide 30: Impact of COVID-19 on mortality
Impact of COVID-19 on mortality • Total claims on account of COVID-19 for 9M-FY2022: ` 20.45 billion1 (FY2021: ` 3.54 billion) • Claims net of reinsurance: ` 9.82 billion (FY2021: ` 1.98 billion) • Provision of ` 2.03 billion (March 2021: ` 3.32 billion) held for future COVID-19 claims including IBN
Slide 31: Financial metrics
Financial metrics ` billion 9M-FY2021 FY2021 9M-FY2022 Profit after Tax 8.96 9.60 5.69 Solvency ratio 226.1%1 216.8%2 202.2%1 AUM 2,048.721 2,142.182 2,375.601 • Profit after Tax of ` 3.11 billion for Q3-FY2022 • AUM grew by 16% over December 2020 1. At December 31 of respective years 2. At March 31
Slide 32: 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 32
Slide 33: 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 34: 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 35: Environmental, Social and Governance
ENVIRONMENTAL, sé Cf SOCIAL AND WEG 4 GOVERNANCE oa COMPLIANCE, (=) a = tons < RULES eS @ICICI PRUDENTIAL? =
Slide 36: 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 37: 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 • App based hea
Slide 38: Focus areas: Responsible investing
Focus areas: Responsible investing Three pronged approach ESG Integration ICICI Prudential Stewardship policy and Sustainable Equity process Fund Framework made operational; subscribed to ESG ratings by an external service provider; Engaging with investee companies Benchmarked against NSE 100 ESG In
Slide 39: 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 40: 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 41: Awards and accolades
Awards and accolades Only insurance Company to be ranked in the Top Innovation During COVID 19 Gold Award for FY2021 Annual Report 30 of India’s ‘Most Sustainable Companies’ Sustain Labs Paris in association with BW FICCI Insurance Industry Awards 2021 LACP* 2021 Spotlight Awards Businessworld Excel
Slide 42: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 43: Digital@iciciprulife
Digital@iciciprulife Most visited website among private life insurance players Digital logins at 96% ~3 million digital service 80%+ issuances through interactions every month smart OCR / ML >90% service interactions are Over 800,000 app downloads via self-help / digital modes Highest rated app with
Slide 44: New business & growth
New business & growth Pre-sales Onboarding & issuance Partner integration Collaboration platform – Term by invite - Pre approved offers Partner integration portal Online meetings, joint sales calls, with zero documents or medical Easy UI – Pre-coded premium invite experts, share content quotatio
Slide 45: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ~3 Mn. digital service interactions monthly Awarded ‘Best Mobile App of the Year’ for the >90% service interactions are via self-help / ‘Customer Mobile App’ in the Velocity Awards 2021 digital modes 8 lakh+ app d
Slide 46: 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 sol
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% 12% 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 mix 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 • Interest risk hedged through a combination of cash market instruments and derivatives • Premium payment term upto 10 years only • Hedge program designed for each tranche of new business • Locked in yields for future prem
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: 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 62: 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 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) Protection 23,115 25,149 43 43 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 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 67: Economic assumptions underlying EV
Economic assumptions underlying EV Tenor (years) References Rates Mar 31, 2021 Dec 31, 2021 1 3.91% 4.05% 5 7.38% 7.42% 10 7.93% 8.27% 15 7.48% 8.04% 20 7.02% 7.63% 25 6.72% 7.29% 30 6.55% 7.06% 67
Slide 68: 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 69: 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 70: Thank You
Thank You
ICICI Prudential Life Insurance Company — 9M-FY2022 Earnings Presentation on 6ix