Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — FY2023 Earnings Presentation
79 slides from Icici Prudential Life Insurance's earnings presentation, Apr 20, 2023
Slide 1: Performance update: FY2023
Performance update: FY2023 April 20, 2023
Slide 2: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 3: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 4: Value of new business (VNB) journey
Value of new business (VNB) journey
Slide 5: Key strategic elements
Key strategic elements Protection Customer Integrating ESG centricity Premium VNB Persistency with business continues to be Growth Growth management at the core Productivity Aspiration to double the FY2019 VNB in four years 5
Slide 6: FY2023: 2x FY2019 VNB
FY2023: 2xFY2019 VNB VNB (in ` bn) ` billion FY2019 FY2023 VNB 28.0% 32.0% 17.0% 21.7% 25.1% margin VNB 13.28 27.65 27.65 21.63 16.05 16.21 VNB Y-o-Y growth 3.3% 27.8% 13.28 VNB margin 17.0% 32.0% FY2019 FY2020 FY2021 FY2022 FY2023 Doubled the FY2019 VNB at a CAGR of 20.1% in four years VNB: Value o
Slide 7: Customer centricity continues to be at the core: organisational capabilities
Customer centricity continues to be at the core Organisational capabilities Protection People Process Premium VNB VNB Growth Persistency Growth Growth Technology & Distribution & Productivity Analytics Product Integrating ESG with business management 7
Slide 8: Organisational capabilities: People
Organisational capabilities: People Capacity Capability Culture Strengthened capacity for risk- Developed capability to address Built competitive advantage calibrated business growth & skill gaps, and built future-ready through a culture of profitability talent empowerment & inclusion • Employee str
Slide 9: Organisational capabilities: Process
Organisational capabilities: Process Onboarding Touchpoint Renewal Payout Claims Payments through External ecosystems Digital first, anytime Digital payout Claimant centric new-age digital integrated anywhere experience approach channels enabled Non investigated Steady increase in digital adoption %
Slide 10: Organisational capabilities: Technology & analytics
Organisational capabilities: Technology & analytics Scalability Resilience Security Implemented seamless Ensured high system Enforced multi factor onboarding & servicing availability & authentication & zero Technology journey with scalable performance through trust security across architecture failo
Slide 11: Organisational capabilities: Distribution & Product
Organisational capabilities: Distribution & Product Extensive distribution footprint Comprehensive product suite Figures mentioned are for FY2023 * Direct comprises sales through own website & employees on roll 11
Slide 12: Accelerated growth across channels
• Focus on agency & direct to consumer Accelerated growth across channels channels Premium • Continue to expand bank partnerships growth • Sustain growth in annuity line of business Company Company (ex-ICICI Bank) 26.5% 42.9% 14.9% 4.2% 19.9% -0.3% 3 year CAGR 9M-FY2023 Q4-FY2023 3 year CAGR 9M-FY20
Slide 13: Strong growth across products
• Focus on agency & direct to consumer Strong growth across products channels Premium • Continue to expand bank partnerships growth • Sustain growth in annuity line of business Non-linked savings Annuity 104.6% 102.4% 63.2% 56.0% 44.7% 18.1% 3 year CAGR 9M-FY2023 Q4-FY2023 Group funds 3 year CAGR 9M
Slide 14: Robust protection growth
• Continue to leverage opportunity in Robust protection growth group protection Protection focus • Focus on retail protection growth • Increase risk retention for greater flexibility in a calibrated manner New business sum assured Retail protection 10,413.92 27.7% ` billion -3.3% 4,428.12 3 year CAG
Slide 15: Resulting in diversified business mix
Resulting in diversified business mix Distribution mix Product mix FY2019 FY2023 FY2019 FY2023 5% 6% 15% 17% 37% 12% 9% 12% 51% 14% 80% 36% 9% 22% 26% 1% 16% 17% 1% 4% 4% 6% Banca-ICICI Bank Banca-Ex ICICI Bank Agency Direct Linked Non-linked Protection Partnership Distribution Group Annuity Group W
Slide 16: Resilience across risks, capital & profitability
Resilience across risks, capital & profitability Insurance & Strong solvency ratio investment risks • Insurance risk • Solvency ratio of 208.9% at March 31, • Emerging mortality experience is 2023 consistent with expectation • Ability to raise additional sub debt • High asset quality • Economic solv
Slide 17: FY2023 performance
FY2023 performance
Slide 18: Key strategic elements
Key strategic elements Protection Customer Integrating ESG centricity Premium VNB Persistency with business continues to be Growth Growth management at the core Productivity Aspiration to double the FY2019 VNB in four years 18
Slide 19: Extensive distribution footprint
Extensive distribution footprint Strategy: Create depth & add width • 908 partnerships; 113 new partnerships • Non-linked savings 70%, protection & Strategy: Build profitability Strategy: Digital focused upsell annuity mix 22% • 39 bank partnerships; 13 new campaigns banks • Analytics driven upsell
Slide 20: Premium growth (1/2)
Focus on agency & direct to consumer channels Premium growth (1/2) • Premium • Continue to expand bank partnerships growth • Sustain growth in annuity line of business Y-o-Y Channels FY2022 FY2023 growth (%) Agency 18.28 22.81 24.8% Banca (ex-ICICI Bank) 10.85 13.41 23.6% Direct 9.97 10.64 6.7% Part
Slide 21: Comprehensive product suite
Comprehensive product suite Protection Savings Annuity Pure term Linked Par Non-Par Immediate Term Deferred Equity Lump sum Lump sum Single Premium Return of premium Group term & credit Income Income Deferred life Debt Short Term Regular Premium Short Term Income Income Critical illness cover Balanc
Slide 22: Products across all categories
Products 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 term, Mic
Slide 23: Premium growth (2/2)
Focus on agency & direct to consumer channels Premium growth (2/2) • Premium • Continue to expand bank partnerships growth • Sustain growth in annuity line of business Y-o-Y Product segments FY2022 FY2023 growth (%) Savings 64.20 71.36 11.2% Linked 37.38 31.02 (17.0%) Non-linked 21.21 32.21 51.9% An
Slide 24: Retail protection APE
• Continue to leverage opportunity in group Protection growth Protection focus protection • Focus on retail protection growth • Increase risk retention for greater flexibility in a calibrated manner ` billion FY2022 FY2023 Retail protection APE (in `bn) 1.06 0.83 0.83 Protection APE1 13.13 15.04 0.6
Slide 25: Persistency improvement
Persistency improvement Continue to focus on improving persistency Persistency across all cohorts Persistency1 11M-FY2022 11M-FY2023 Y-o-Y 13th month 85.7% 86.6% 90 bps 25th month 77.2% 77.8% 60 bps 37th month 67.1% 71.3% 420 bps 49th month 63.7% 64.2% 50 bps 61st month 54.4% 65.7% 1130 bps 11M-FY20
Slide 26: Productivity improvement
Productivity improvement Continue to leverage technology for process re- Productivity engineering & to drive productivity Y-o-Y ` billion FY2022 FY2023 growth APE 77.33 86.40 11.7% Total expenses 53.63 64.75 20.7% Cost/TWRP1 (%) 18.6% 21.5% - Cost/TWRP1 (savings LOB) (%) 12.8% 14.2% - Building for s
Slide 27: VNB growth levers update (4P)
VNB growth levers update (4P) Y-o-Y ` billion FY2022 FY2023 growth Value of New Business (VNB) 21.63 27.65 27.8% VNB margin 28.0% 32.0% - Y-o-Y ` billion FY2022 FY2023 growth Premium growth (APE) 77.33 86.40 11.7% Protection growth (APE) 13.13 15.04 14.5% Persistency (13th month)1 85.7% 86.6% - Pers
Slide 28: Financial update
Financial update
Slide 29: 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 30: 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 31: 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 31
Slide 32: 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 33: Financial metrics
Financial metrics ` billion FY2022 FY2023 Profit after Tax 7.54 8.11 Solvency ratio 204.5% 208.9% AUM 2,404.92 2,511.91 AUM: Assets under management 33
Slide 34: Environmental, Social & Governance (ESG)
ENVIRONMENTAL, SOCIAL “uu | & WIA 4 GOVERNANCE (ESG) ox rae oe} @ICICI PRUDENTIAL?
Slide 35: 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 36: 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 37: 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 38: 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 39: 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 40: Innovation @ICICI Prulife
Innovation @ICICI Prulife
Slide 41: Grounds-up & an outside-in approach to innovation
Grounds-up & 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 progr
Slide 42: 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 43: Recognised in various external forums
Recognised in various external forums ICICI Prudential Life Insurance wins Jury Award for ICICI Prudential Life wins ICICI Prudential Life wins ‘Best Innovation and Excellence Award for ‘Most Innovative Insurer – Diversification introduced by a ‘Innovation in Customer Life Category’ at the FICCI Com
Slide 44: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 45: Digital @ICICI Prulife
Digital @ICICI Prulife ~3.4 million digital service 99% digital logins and 100% e- interactions every month insurance account for eligible base 1.5 million+ app downloads >92.5% service interactions are via self-help / digital modes Best rated app: 4.4 and 4.5 rating 98% of pages having a system on
Slide 46: 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 47: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ❖~3.4 mn digital service interactions monthly ❖1.5 mn+ app downloads with best app rating ❖>92.5% service interactions are via self- among the peers help / digital modes Renewals 24x7 chat/voice assistants ❖Flexible p
Slide 48: 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 49: Key initiatives taken in FY2023
Key initiatives taken in FY2023 Humanoid Empowering Partners Seamless journey Humanoid calling for activating Micro services for powering partner Prefilling application and instant inactive agents. Humanoid bot calls systems for enhanced customer closure of KYC document the advisor for experience re
Slide 50: Data science & analytics @ICICI Prulife
Data science & analytics @ICICI Prulife
Slide 51: Data excellence at every phase of customer journey
Data excellence at every phase of customer journey Product recommender Cross sell engine @ Presale Upsell engine identifies high propensity customers offers best product based on partners identifies customer needs customers by propensity Predict lapse & manage Fraud detection engine Sale persistency
Slide 52: Analytics engine at every stage of process & distribution
Analytics engine at every stage of process & distribution Intelligent Analytics driven Pre underwritten Personalised Upsell & offer for existing offers in website PASA* Assisted upsell lead generation customer & mobile App Premium Customer Customer Smart customer Personalised & Product NPS* analytic
Slide 53: Analytics engine at every stage of process & distribution
Analytics engine at every stage of process & distribution Servicing & ML* driven Contact ML* based Customer Servicing complaint customer management upsell triggers satisfaction prediction retention framework at touch points management Operations ML* assisted A/E* ML* assisted longevity & ML* assiste
Slide 54: Awards
Awards
Slide 55: Awards & Accolades: FY2023
Awards & Accolades: FY2023 Excellence Award - Award for Excellence in Innovations in Customer Gold Award from League of Awards for Most ‘Sales Champion’ in Life Driving Distribution in Propositions and American Communications Innovative Insurer Insurance - Large category Digital Experience Professio
Slide 56: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 57: 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 S Korea Brazil S Africa USA China Japan India Russia Indonesia FY2021 FY2030 Driving
Slide 58: 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 59: 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* Japan* Thailand* India** USA* Singapore* Malaysia* Th
Slide 60: 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% 125% A 127% FY2022 FY2025 FY2030 FY2035 74% 22% B SA as % of GDP (SA growth @ 25% CAGR) Japan India* USA Thailand Singapore South Ko
Slide 61: 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 62: Indicators of protection opportunity
Indicators of protection opportunity Retail credit1 Health & motor2 ` billion 33,749 Gross direct premium FY2022 (` billion) 17,856 Health 735.82 19,085 13,922 Motor 704.33 9,339 10,097 6,454 4,711 15,893 Motor own damage (OD) 271.78 7,468 9,746 5,386 Motor third party (TP) 432.55 March 2014 March 2
Slide 63: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 64: 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 65: 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 66: Annexures
Annexures
Slide 67: 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 68: 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 69: 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 70: 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 71: 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 72: Embedded value
Embedded value
Slide 73: 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 74: Economic assumptions underlying EV & VNB
Economic assumptions underlying EV & VNB Reference rates Tenor (years) March 31, 2022 March 31, 2023 1 4.3% 7.2% 5 7.9% 7.5% 10 8.4% 7.6% 15 8.0% 7.7% 20 7.6% 7.7% 25 7.3% 7.7% 30 7.1% 7.7% EV: Embedded value VNB: Value of new business 74
Slide 75: Reference rates (one year forward rates)
Reference rates (one year forward rates) 9.00% 8.00% 31-Mar-22 7.00% 31-Mar-23 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Tenor (years) 75
Slide 76: 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 77: 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 78: 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 79: Thank you
Thank you
ICICI Prudential Life Insurance Company — FY2023 Earnings Presentation on 6ix