Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — Investor Presentation (September 2022)
71 slides from Icici Prudential Life Insurance's investor presentation, Sep 7, 2022
Slide 1: Cover letter to stock exchanges
September 7, 2022 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
Slide 2: Performance update
Performance update September 07, 2022
Slide 3: August 2022 update
August 2022 update
Slide 4: Premium growth
Premium growth Q4- Q1- July August 5M- ` billion FY2022 FY2022 FY2023 2022 2022 FY2023 New business sum 2,599.83 7,731.46 2,209.35 957.28 753.51 3,920.14 assured YoY growth 26.7% 25.4% 24.9% 91.3% 47.8% 41.1% New business premium 47.88 150.36 31.84 13.44 14.21 59.49 YoY growth (6.7%) 15.4% 24.4% 16.
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 Integrating centricity Premium VNB ESG with Persistency continues to Growth Growth business be at the core management Productivity Aspiration to double the FY2019 VNB in four years 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 FY2022 Q1-FY2023 Annualised premium equivalent 77.33 15.20 YoY
Slide 9: Premium growth: Product and Distribution
Premium growth: Product and Distribution Product mix Distribution mix Q1-FY2023 Q1-FY2023 28% 15% 22% 20% 11% 22% 40% 11% 21% 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 10: Protection growth
Protection growth Protection Continue to grow both retail and group lines of focus business Sum assured market share2 (%) ` billion FY2022 Q1-FY2023 Protection APE1 13.13 3.30 15.8% 13.4% YoY growth 25.5% 22.2% Protection Mix 17.0% 21.7% FY2022 Q1-FY2023 Overall market leadership based on new busine
Slide 11: Persistency improvement
Persistency improvement Persistency Improve persistency across all cohorts Persistency# FY2022 2M-FY2023 13th month 84.6% 85.5% 90 bps 49th month 63.4% 65.0% 160 bps Significant improvement in persistency # Regular and Limited pay persistency in accordance with IRDAI circular on ‘Public Disclosures
Slide 12: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re- engineering and to drive productivity ` billion Q1-FY2022 FY2022 Q1-FY2023 Growth APE 12.19 77.33 15.20 24.7% Total expenses 10.36 53.63 12.29 18.6% Cost/TWRP1 (%) 19.9% 18.6% 23.8% - Cost/TWRP (savings LOB) (%) 11
Slide 13: Resilient Balance Sheet
Resilient Balance Sheet Insurance risks Strong solvency ratio • Emerging mortality experience is within expectation • Solvency ratio of 203.6% at June 30, 2022 • ` 0.16 billion of COVID-19 claims in Q1-FY2023 against IBNR provision held of ` 0.24 billion • Closing COVID-19 IBNR provision of ` 0.24 b
Slide 14: Value of New Business (VNB)
Value of New Business (VNB) VNB ` billion ` billion FY2021 FY2022 Q1-FY2023 17.0% 21.7% 25.1% 28.0% 31.0% 26.50 Value of New 16.21 21.63 4.71 21.63 Business (VNB)1 16.05 16.21 13.28 VNB growth 1.0% 33.4% 31.6% 3.58 4.71 VNB margin 25.1% 28.0% 31.0% FY2019 FY2020 FY2021 FY2022 FY2023 On track to doub
Slide 15: Key strategic elements
Key strategic elements Protection Customer Integrating centricity Premium VNB ESG with Persistency continues to Growth Growth business be at the core management Productivity Aspiration to double the FY2019 VNB in four years 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 for ULIP: with capital guarantee and equity Immediate/ Deferred 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 FY2022 Q1-FY2023 Growth (%) FY2022 Q1-FY2023 Savings 64.20 11.90 25.3% 83.0% 78.3% Linked 37.38 6.16 15.1% 48.3% 40.5% Non-linked 21.21 4.21 40.8% 27.4% 27.7% Annuity 3.00 0.98 69.0% 3.9% 6.4% Group funds 2.61 0.56 (3.4%) 3.4% 3.7% Protect
Slide 19: Pension and Annuity
Pension and Annuity A comprehensive pension provider Annuity Pension fund management (AUM) ` billion Annuity APE (` billion) 116.14 117.49 3.00 83.69 75.59 2.29 0.98 0.58 FY2021 FY2022 Q1-FY2022 Q1-FY2023 Mar-21 Mar-22 Jun-21 Jun-22 Annuity APE grew by 69% in Q1-FY2023; Pension fund AUM grew by 40%
Slide 20: Enhancing distribution
Enhancing distribution Strategy: Create depth and add width • ~800 partnerships; 13 new partnerships • Protection and Annuity mix 26%, Non- Strategy: Build profitability linked savings 62% Strategy: Digital focused upsell • 30 bank partnerships campaigns • Analytics driven upsell channel • Protectio
Slide 21: Performance across distribution channels
Performance across distribution channels APE (` billion) Mix (%) Channels FY2022 Q1-FY2023 Growth (%) FY2022 Q1-FY2023 Bancassurance 30.12 5.28 12.1% 38.9% 34.7% ICICI Bank 19.26 3.01 (10.9%) 24.9% 19.8% Other banks 10.85 2.27 70.7% 14.0% 14.9% Agency 18.28 3.41 24.5% 23.6% 22.4% Direct 9.97 1.65 3.
Slide 22: 4P: Protection
4P: Protection
Slide 23: Protection business
Protection business Protection APE Sum assured1 ` billion 3.30 Market 14.7% 15.8% share (%) 2.70 ` billion 2,209.35 1,768.62 Q1-FY2022 Q1-FY20223 Q1-FY2022 Q1-FY2023 Protection APE grew by 22% in Q1-FY2023 Sum assured grew by 25% in Q1-FY2023 1. Overall new business 22
Slide 24: 4P: Persistency
4P: Persistency
Slide 25: Persistency
Persistency Regular and Limited pay Fully paid and Single premium Month 2M-FY2022 FY2022 2M-FY2023 Month 2M-FY2022 FY2022 2M-FY2023 13th month 85.0% 84.6% 85.5% 13th month 100.0% 100.0% 100.0% 25th month 73.7% 77.3% 77.6% 25th month 99.6% 100.0% 100.0% 37th month 66.4% 66.9% 67.8% 37th month 97.6% 9
Slide 26: 4P: Productivity
4P: Productivity
Slide 27: Productivity: Cost efficiency
Productivity: Cost efficiency Q1-FY2022 FY2022 Q1-FY2023 Expense ratio (excl. commission)1 14.7% 12.8% 17.9% Commission ratio2 5.2% 5.8% 5.9% Cost/TWRP3 19.9% 18.6% 23.8% Cost/Average AUM4 1.9% 2.4% 2.1% Cost/TWRP (Savings LOB) 11.9% 12.8% 16.9% ` billion Q1-FY2022 FY2022 Q1-FY2023 Commission 2.71 1
Slide 28: VNB growth levers update (4P's)
VNB growth levers update (4P’s) ` billion FY2022 Q1-FY2023 Growth Value of New Business (VNB)1 21.63 4.71 31.6% VNB margin 28.0% 31.0% - ` billion FY2022 Q1-FY2023 Growth Premium growth (APE) 77.33 15.20 24.7% Protection growth (APE) 13.13 3.30 22.2% Persistency (13th month)2 84.6% 85.5% - Persisten
Slide 29: Financial update
Financial update
Slide 30: Financial metrics
Financial metrics ` billion Q1-FY2022 FY2022 Q1-FY2023 Profit after Tax (1.86) 7.54 1.56 Solvency ratio 193.7%1 204.5%2 203.6%1 AUM 2,231.711 2,404.922 2,300.721 Solvency ratio continues to be strong at 203.6% 1. At June 30 of respective financial years 2. At March 31, 2022 29
Slide 31: Environmental, Social and Governance
ENVIRONMENTAL, lug | | SOCIAL AND WS 4 GOVERNANCE ox a AOS @ICICI PRUDENTIAL?
Slide 32: ESG: Approach and focus areas
ESG: Approach and focus areas Sustainability is intrinsic to life insurance as we serve long term savings 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
Slide 33: Focus area: Human capital
Focus area: Human capital Enabling employee Building an agile & engaged Enabling productivity wellbeing workforce 1. Focus on building awareness, 1. Talent attraction & onboarding 1. Enabling a diverse workforce establishing policies and • 46% fresher hiring; robust onboarding • Equal opportunity em
Slide 34: Focus area: Responsible investing
Focus area: Responsible investing Three pronged approach ICICI Prudential Stewardship policy and ESG Integration Sustainable Equity process Fund Engaging with investee companies Framework made operational; subscribed to Benchmarked against NSE 100 ESG Index ESG ratings by an external service provide
Slide 35: Focus area: Governance and Data privacy
Focus area: Governance and Data privacy Governance Structure Information/Cyber security Data Privacy Policy Cyber Security Framework Board composition Board Diversity Evaluation framework • Privacy policy covering • Information and Cyber • >50% IDs including • Policy on Board diversity & • Evaluatio
Slide 36: Focus area: Access to finance, CSR and Environment
Focus area: Access to finance, CSR and Environment Access to Finance CSR Environment • 45.6 mn lives impacted by micro • ₹ 68.2 million spent for CSR initiatives • ~1,700 tonnes of carbon footprint saved insurance products (58.1 mn lives total) • Over 155,000 children and adults through: • 84.6% - O
Slide 37: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 38: Digital@iciciprulife
Digital@iciciprulife ~3.1 million digital service Digital logins at 96% interactions every month >91.8% service interactions 1.1 million+ app downloads are via self-help / digital modes Highest rated app within life 97% of pages having a system insurance industry uptime of 99% & above Access to over
Slide 39: 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 Online meetings, joint sales calls, Easy UI – Pre-coded premium combining multiple produc
Slide 40: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ~3.1Mn. digital service interactions monthly 1.1 mn+ app downloads with best app rating >91.8% service interactions are via self-help among the peers / digital modes Renewals Flexible premium payment options inclu
Slide 41: 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 42: Data excellence @ every phase of customer journey
Data excellence @ every phase of customer journey Product recommender Cross sell engine @ Upsell engine identifies Presale high propensity customers offers best product based on partners identifies customers customer needs propensity Predict lapse Fraud detection manage persistency risk engine detec
Slide 43: Awards and Accolades – Q1-FY2023
Awards and Accolades – Q1-FY2023 Only Indian insurance Company to be featured in the list of top 100 companies in BW Businessworld – ‘India's Best Contact Centre Technology Champion of the Year – Life Insurance Most Sustainable Companies’ BW Businessworld in association with Sustain Labs Paris Quant
Slide 44: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 45: 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 S Korea India 2020 2030 Driving GDP growth2 Rising afflu
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% 70% 63% ` tn 61% 65 57% 60% 17% 52% 18% 41% 52% 50% 17% 17% 45% 45 36% 40% 20.86 23.70 40% 19.54 25 13.64 30% 14.53 31.09 20.61 22.84 20% 5 11.91 14.96 -3.59
Slide 47: 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 48: 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 49: 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 50: Indicators of protection opportunity
Indicators of protection opportunity Retail Credit1 Health & Motor2 ` billion Gross direct premium 33,749 FY2022 (` billion) Health 735.82 19,085 17,856 Motor 704.33 13,922 10,097 9,339 4,711 6,454 - Motor Own Damage (OD) 271.78 5,386 7,468 9,746 15,893 - Motor Third Party (TP) 432.55 Mar-14 Mar-16
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 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 53: Industry overview: product and channel 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 54: Annexures
Annexures
Slide 55: Risk management: Non-participating business
Risk management: Non-participating business Guaranteed return savings product (including RP deferred pension) • Interest risk hedged through a combination of cash market instruments and derivatives • Premium payment term upto 12 years only • Hedge program designed for each tranche of new business •
Slide 56: Protection business: FY2022
Protection business: FY2022 Protection split based on APE* Total new business sum assured ` billion 0.14 ` billion 0.62 (1.1%) (4.7%) 7,731.46 6,166.84 2.90 (22.1%) 5.67 (43.2%) 3.80 (28.9%) FY2021 FY2022 Group Term Retail protection Credit life - Other Credit life – ICICI Bank Retail protection ROP
Slide 57: Retail persistency: FY2022
Retail persistency: FY2022 Persistency1 across product categories Regular and Limited pay Fully paid and Single premium 100.0% 100.0% 100.0% 100.0% 100.0% 89.2% 91.7% 84.2% 84.0% 13th month 73.8% 49th month 62.4% 61.9% Linked Non linked Protection Linked Non linked Protection Persistency1 across cha
Slide 58: Value of New Business (VNB)
Value of New Business (VNB) VNB contribution* VNB margin movement FY2021 FY2022 4.3% (2.0)% 28.0% 0.6% VNB 25.1% ` billion 16.21 21.63 3.62 3.52 (22.3%) (16.3%) 9.24 (42.7%) 8.66 3.93 (53.4%) 8.87 (24.2%) (41.0%) FY2021 Business mix Operating Economic FY2022 Assumptions Assumptions change change Pro
Slide 59: Average APE by product categories
Average APE by product categories Average policy term* (years) 34 33 Segment (`) FY2021 FY2022 15 16 ULIP 154,702 163,770 Savings Protection Non-linked savings 85,654 94,925 Average customer age* (years) Protection 25,149 22,608 43 44 35 35 Total 85,701 100,407 Savings Protection FY2021 FY2022 * Pro
Slide 60: Channel wise product mix
Channel wise product mix1 Channel category Product category FY2020 FY2021 FY2022 ULIP 86.8% 73.3% 70.7% Non-linked savings 3.3% 11.6% 19.2% Bancassurance Annuity 0.7% 4.3% 4.9% Protection 9.3% 10.9% 5.2% Total 100.0% 100.0% 100.0% ULIP 49.9% 33.3% 42.6% Non-linked savings 39.2% 57.0% 48.8% Agency An
Slide 61: Product wise channel mix
Product wise channel mix1 Product category Channel category FY2020 FY2021 FY2022 Bancassurance 68.2% 64.9% 57.0% Agency 16.3% 16.6% 20.8% ULIP Direct 13.0% 16.1% 19.6% Partnership distribution 2.5% 2.5% 2.6% Total 100.0% 100.0% 100.0% Bancassurance 10.8% 17.8% 27.3% Agency 53.6% 49.3% 42.1% Non-link
Slide 62: Embedded value
Embedded value
Slide 63: Embedded Value
Embedded Value1 ` billion 316.25 291.06 83.60 95.22 232.66 195.84 Mar-21 Mar-22 Value of Inforce (VIF) Adjusted net worth (ANW) VIF grew by 18.8% to ` 232.66 billion and EV grew by 8.7% to ` 316.25 billion 1. As per Indian Embedded value (IEV) method Total may not add up due to rounding off 62
Slide 64: Analysis of movement in EV
Analysis of movement in EV ` billion 21.63 1.51 (11.87) 0.07 0.64 (4.37) 316.25 20.85 (0.91) (2.36) 291.06 EVOP1 = 31.92 ANW ROEV2 = 11.0% 83.60 ANW ROEV (ex. mortality & morbidity variance) = 15.0% 95.22 VIF 232.66 VIF 195.84 EV (Mar 31, Unwind Operating VNB Persistency Mortality and Expense Other
Slide 65: Analysis of movement in EV
Analysis of movement in EV1 ` billion FY2018 FY2019 FY2020 FY2021 FY2022 Opening EV 161.84 187.88 216.23 230.30 291.06 Unwind 13.72 15.84 17.25 16.61 20.85 Value of New Business (VNB) 12.86 13.28 16.05 16.21 21.63 Operating assumption changes + Operating variance 10.22 8.89 (0.42) 2.24 (10.56) Opera
Slide 66: Sensitivity analysis
Sensitivity analysis % change in VNB % change in EV Scenario FY2021 FY2022 FY2021 FY2022 Increase in 100 bps in the reference rates 0.7 (3.5) (2.8) (4.2) Decrease in 100 bps in the reference rates (1.7) 3.2 3.0 4.6 10% increase in the discontinuance rates (3.1) (4.9) (0.9) (1.0) 10% decrease in the
Slide 67: Embedded value growth
Embedded value growth ` billion FY2020 FY2021 FY2022 Value of In force (VIF) 151.87 195.84 232.66 Adjusted Net worth 78.43 95.22 83.60 Embedded value1 230.30 291.06 316.25 Return on Embedded Value (ROEV) 15.2% 15.2% 11.0% ROEV excluding mortality & morbidity variance 15.0% 16.3% 15.0% EV growth-pre
Slide 68: Economic assumptions underlying EV and VNB
Economic assumptions underlying EV and VNB References Rates Tenor (years) Mar 31, 2022 June 30, 2022 1 4.35% 6.01% 5 7.90% 8.05% 10 8.36% 8.07% 15 7.97% 8.11% 20 7.57% 8.15% 25 7.28% 8.17% 30 7.09% 8.18% 67
Slide 69: Glossary
Glossary • Annualized Premium Equivalent (APE): 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 value of investments managed by t
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 (September 2022) on 6ix