Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — Investor Presentation (August 2021)
73 slides from Icici Prudential Life Insurance's investor presentation, Aug 9, 2021
Slide 1: Cover letter to stock exchanges
August 9, 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 pre
Slide 2: Performance update
Performance update August 09, 2021
Slide 3: July 2021 update
July 2021 update
Slide 4: Premium growth
Premium growth ` billion Q4-FY2021 FY2021 Q1-FY2022 July 2021 4M-FY2022 APE1 25.09 64.62 12.19 5.69 17.88 YoY growth 27.1% (12.5%) 48.1% 29.0% 41.5% RWRP2 21.49 54.54 9.42 4.77 14.19 YoY growth 27.3% (17.9%) 43.7% 25.3% 36.9% New business sum assured 2,051.84 6,166.84 1,768.62 500.33 2,268.94 YoY gr
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 Protection Customer Aspiration to centricity Premium double the VNB Growth Persistency continues to be Growth FY2019 VNB in at the core 4 years Productivity 6
Slide 8: 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 Q4-FY2021 Q1-FY2022 APE1 64.62 25.09 12.19 YoY growth (
Slide 9: Premium growth: Product and Distribution
Premium growth: Product and Distribution Product mix APE Distribution mix APE Q1-FY2022 Q1-FY2022 Bancassurance 5% 17% 22% Agency Linked 39% 44% Non-linked 8% Direct Protection Group 13% Partnership Distribution 29% 23% Group Well diversified product and distribution mix 8
Slide 10: Protection growth
Protection growth Protection Continue to grow both retail and group lines of focus business Q4- Q1- Sum assured market share1 (%) ` billion FY2021 FY2021 FY2022 14.7% Protection APE 10.46 3.44 2.70 YoY growth (6.3%) (2.3%) 26.2% 12.5% Sum assured market share1 12.5% 11.6% 14.7% FY2021 Q1-FY2022 • De
Slide 11: Persistency improvement
Persistency improvement Persistency Improve persistency across all cohorts Persistency1 11M-FY2021 2M-FY2022 13th month 84.8% 85.4% 60 bps 49th month 63.0% 63.1% 10 bps Continued improvement in persistency Computed as per IRDAI circular dated January 23, 2014 1. Retail excluding SP 10
Slide 12: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re- engineering and to drive productivity ` billion Q1-FY2021 FY2021 Q1-FY2022 Cost/TWRP1 14.8% 14.8% 20.1% Cost/TWRP (savings LOB) 8.8% 9.6% 11.9% Expense growth in line with new business growth 1. Total cost includin
Slide 13: Resilient Balance Sheet
Resilient Balance Sheet Insurance risks Strong solvency ratio • COVID-19 claims net of reinsurance of ` 5.00 • Solvency ratio of 194% at June 30, 2021 billion for Q1-FY2022 • Provisions of ` 4.98 billion held for future COVID-19 claims including IBNR provision • Net of COVID-19 mortality experience
Slide 14: Way forward
Way forward Aspire to double the FY2019 VNB by FY2023 VNB ` billion 26.50 ` billion FY2020 FY2021 Q1-FY2022 Value of New 16.05 16.21 3.58 16.05 16.21 Business (VNB)1 13.28 VNB growth 20.9% 1.0% 78.1% VNB margin 21.7% 25.1% 29.4% FY2019 FY2020 FY2021 FY2022 FY2023 • Premium growth: Diversified produc
Slide 15: 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 14
Slide 16: 4P: Premium
4P: Premium
Slide 17: 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 18: Performance across segments
Performance across segments APE (` billion) Mix Segments FY2021 Q1-FY2022 Growth (%) FY2021 Q1-FY2022 Savings 54.16 9.50 56.0% 83.8% 77.9% Linked 30.90 5.35 49.0% 47.8% 43.9% Non-linked 17.79 2.99 66.1% 27.5% 24.5% Annuity 2.29 0.58 163.6% 3.5% 4.8% Group 3.18 0.58 18.4% 4.9% 4.8% Protection 10.46 2
Slide 19: Pension and Annuity
Pension and Annuity A comprehensive pension provider Annuity Pension fund management (AUM) Annuity mix1 8.4% 17.3% 13.4% 20.5% ` billion Annuity new business received premium (` billion) 83.69 75.59 22.92 50.71 43.53 10.43 5.59 2.16 FY2020 FY2021 Q1-FY2021 Q1-FY2022 Mar-20 Mar-21 Jun-20 Jun-21 Annui
Slide 20: Enhancing distribution
Enhancing distribution Strategy: Create depth and add width • ~700 partnerships; 24 new partnerships Strategy: Build profitability • Protection and Annuity mix 23%, Non- • 23 bank partnerships linked savings 68% Strategy: Digital focused upsell • Protection and Annuity mix campaigns further increase
Slide 21: Performance across distribution channels
Performance across distribution channels APE (` billion) Mix (%) Channels FY2021 Q1-FY2022 Growth (%) FY2021 Q1-FY2022 Bancassurance 27.34 4.71 44.5% 42.3% 38.6% Agency 15.39 2.74 35.0% 23.8% 22.5% Direct 8.10 1.60 58.4% 12.5% 13.1% Partnership distribution 5.87 1.02 43.7% 9.1% 8.4% Group 7.93 2.12
Slide 22: 4P: Protection
4P: Protection
Slide 23: Protection business
Protection business Protection APE Sum assured1 ` billion Market 10.7% 14.7% 2.70 share (%) 2.14 ` billion 1,768.62 937.57 Q1-FY2021 Q1-FY2022 Q1-FY2021 Q1-FY2022 Protection APE grew by 26% in Q1-FY2022 Sum assured grew by 89% in Q1-FY2022 1. New business 22
Slide 24: 4P: Persistency
4P: Persistency
Slide 25: Persistency
Persistency Retail excluding single premium Retail including single premium Month 2M-FY2021 11M-FY2021 2M-FY2022 Month 2M-FY2021 11M-FY2021 2M-FY2022 13th month 81.8% 84.8% 85.4% 13th month 84.1% 86.9% 87.6% 25th month 73.4% 73.6% 73.7% 25th month 76.3% 76.8% 76.9% 37th month 65.4% 66.3% 65.8% 37th
Slide 26: 4P: Productivity
4P: Productivity
Slide 27: Productivity: Cost efficiency
Productivity: Cost efficiency Q1-FY2021 FY2021 Q1-FY2022 Expense ratio (excl. commission)1 10.5% 9.5% 14.9% Commission ratio2 4.2% 5.3% 5.2% Cost/TWRP3 14.8% 14.8% 20.1% Cost/Average AUM4 1.8% 2.3% 1.9% Cost/TWRP (Savings LOB) 8.8% 9.6% 11.9% ` billion 42.20 Commission 27.2 Non Commission 10.44 7.19
Slide 28: Key initiatives taken in Q1-FY2022
Key initiatives taken in Q1-FY2022 First in the industry Cognitive automation Demand generation UPI Auto pay End-to-end process automation using Digital platform for generating interest Allows customers to enable recurring intelligent and cognitive tools for insurance products, qualifying leads e-ma
Slide 29: VNB growth levers update (4P's)
VNB growth levers update (4P’s) ` billion FY2021 Q1-FY2022 Growth Value of New Business (VNB)1 16.21 3.58 78.1% VNB margin 25.1% 29.4% NA ` billion FY2021 Q1-FY2022 Growth Premium growth (APE) 64.62 12.19 48.1% Protection growth (APE) 10.46 2.70 26.2% Persistency (13th month)2 84.8%3 85.4% NA Persis
Slide 30: Financial update
Financial update
Slide 31: 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 0 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-2
Slide 32: Impact of COVID-19 on mortality
Impact of COVID-19 on mortality • Total claims on account of COVID-19 for Q1-FY2022: ` 11.19 billion1 (FY2021: ` 3.54 billion) • Claims net of reinsurance: ` 5.00 billion (FY2021: ` 1.98 billion) • Provision of ` 4.98 billion (March 2021: ` 3.32 billion) held for future COVID-19 claims including IBN
Slide 33: Recent trend on deaths and vaccination
Recent trend on deaths and vaccination Average daily number of deaths Vaccination picking up pace 5,000 321.9 mn2 4,000 3,000 2,000 83.0 mn2 1,000 - Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Jan 2021 Feb 2021 Mar 2021 Apr 2021 May
Slide 34: Financial metrics
Financial metrics ` billion Q1-FY2021 FY2021 Q1-FY2022 Profit before Tax 3.11 10.81 (2.16) Profit after Tax 2.88 9.60 (1.86) Solvency ratio 205.1%1 216.8%2 193.7% AUM 1,700.061 2,142.182 2,231.711 • Profit for the quarter impacted due to COVID-19 related claims and provisions • AUM grew by 31% over
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 2. Learning & d
Slide 38: Focus areas: Responsible investing
Focus areas: Responsible investing Three pronged approach ESG Integration Stewardship policy and Exclusion: Restricted process exposure to ESG integration framework made operational; subscribed to ESG ratings by an external Engaging with investee companies service provider Disclosing voting actions
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: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 42: 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 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 offers with zero documents or LiGo chat bot Easy UI – pre-coded premium medical WhatsApp bot quotation pages Voice bot on IVR D
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: Awards and accolades
Awards and accolades Only insurance Company to be ranked in the Top ICICI Pru Guaranteed Pension Plan - Product of the ICICI Pru Signature - Best ULIP policy of the year 30 of India’s ‘Most Sustainable Companies’ Year 2021 in the Retirement & Pension category Sustain Labs Paris in association with B
Slide 46: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 47: 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 48: 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 49: 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% 10% 16.50 153% 143% 127% USD trillion 8.40 3.90 2.80 2.00 19% 0.90 0.70 0.60 Covered by retail protection policies * Total sum assur
Slide 50: 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 51: 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 52: 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 53: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 54: 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 3.2% 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 55: Industry overview: channel and product 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 56: Annexures
Annexures
Slide 57: 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 58: 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 59: 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 60: 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 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: 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 63: 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 64: 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 65: Embedded value
Embedded value
Slide 66: 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 65
Slide 67: 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 68: 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 69: 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 70: Economic assumptions underlying EV
Economic assumptions underlying EV Tenor (years) References Rates Mar 31, 2021 Jun 30, 2021 1 3.91% 3.94% 5 7.38% 7.50% 10 7.93% 8.05% 15 7.48% 7.78% 20 7.02% 7.50% 25 6.72% 7.32% 30 6.55% 7.22% 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 (August 2021) on 6ix