Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — H1-FY2023 Earnings Presentation
71 slides from Icici Prudential Life Insurance's earnings presentation, Oct 15, 2022
Slide 1: Exchange filing cover letter: investor presentation
October 15, 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 p
Slide 2: Performance update: H1-FY2023
Performance update: H1-FY2023 October 15, 2022
Slide 3: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 4: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 5: Key strategic elements
Key strategic elements Protection Customer Integrating centricity Premium VNB ESG with Persistency continues to Growth Growth business be at core management Productivity Aspiration to double FY2019 VNB in four years 4
Slide 6: Premium growth
Premium growth • Focus on agency & direct to consumer channels Premium • Continue to expand bank partnerships growth • Sustain growth in annuity line of business ` billion FY2022 H1-FY2023 Annualised premium equivalent 77.33 35.19 Y-o-Y growth 19.7% 10.1% New business premium 150.36 73.59 Y-o-Y grow
Slide 7: Premium growth: Product & distribution
Premium growth: Product & distribution Product mix Retail distribution mix H1-FY2023 H1-FY2023 17% 28% 31% 23% 20% 41% 7% 14% 15% 4% Banca - ICICI Bank Banca - Other Banks Linked Non-linked Protection Annuity Group Agency Direct Partnership Distribution Well diversified product & distribution mix Ba
Slide 8: Protection growth
Protection growth Protection • Continue to leverage opportunity in group protection • Focus on revival of retail protection focus • Increase risk retention for greater flexibility in a calibrated manner Q1- Q2- H1- Sum assured market share2 (%) ` billion FY2022 FY2023 FY2023 FY2023 15.7% Protection
Slide 9: Persistency improvement
Persistency improvement Persistency Continue to focus on improving persistency across all cohorts Persistency# FY2022 5M-FY2023 13th month 84.6% 85.9% 130 bps 49th month 63.4% 65.4% 200 bps Significant improvement in persistency across cohorts #Regular & limited pay persistency in accordance with IR
Slide 10: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re-engineering & to drive productivity Y-o-Y ` billion H1-FY2022 FY2022 H1-FY2023 Growth APE 31.96 77.33 35.19 10.1% Total expenses 22.34 53.63 27.02 20.9% Cost/TWRP1 (%) 17.8% 18.6% 21.6% Cost/TWRP (savings LOB) (%) 1
Slide 11: Resilient balance sheet
Resilient balance sheet Insurance risks Strong solvency ratio • Emerging mortality experience is within • Solvency ratio of 200.7% at September 30, 2022 expectation • COVID-19 claims (net of reinsurance) of ` 271.9 mn received for H1-FY2023 • Out of above, ` 26.13 mn pertain to deaths in H1-FY2023 H
Slide 12: Value of new business (VNB)
Value of new business (VNB) VNB in bn ` billion FY2021 FY2022 H1-FY2023 17.0% 21.7% 25.1% 28.0% 31.0% VNB1 16.21 21.63 10.92 26.50 21.63 VNB growth 1.0% 33.4% 25.1% 16.05 16.21 13.28 VNB margin 25.1% 28.0% 31.0% 10.92 8.73 FY2019 FY2020 FY2021 FY2022 FY2023 On track to double FY2019 VNB by year end
Slide 13: Key strategic elements
Key strategic elements Protection Customer Integrating centricity Premium VNB ESG with Persistency continues to Growth Growth business be at core management Productivity Aspiration to double FY2019 VNB in four years 12
Slide 14: 4P: Premium
4P: Premium
Slide 15: 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 16: Performance across segments
Performance across segments Annualised Premium Equivalent (APE) in ` bn Mix (%) Y-o-Y growth Segments FY2022 H1-FY2023 FY2022 H1-FY2023 (%) Savings 64.20 28.09 6.2% 83.0% 79.8% Linked 37.38 14.36 (6.8%) 48.3% 40.8% Non-linked 21.21 9.97 22.8% 27.4% 28.3% Annuity 3.00 2.33 68.8% 3.9% 6.6% Group funds
Slide 17: Pension & Annuity
Pension & Annuity Comprehensive pension provider Annuity PFM assets under management (AUM) Annuity APE 132.44 116.14 97.48 3.00 2.29 2.33 75.59 ` billion ` billion 1.38 FY2021 FY2022 H1-FY2022 H1-FY2023 Mar-21 Mar-22 Sep-21 Sep-22 APE grew by 69% in H1-FY2023; AUM grew by 36% over September 2021 ann
Slide 18: Enhancing distribution
Enhancing distribution Strategy: Create depth & add width • >800 partnerships; 44 new partnerships • Protection & annuity mix 28%, non- Strategy: Build profitability linked savings 61% Strategy: Digital focused upsell • 30 bank partnerships; 3 new campaigns banks • Analytics driven upsell channel •
Slide 19: Performance across distribution channels
Performance across distribution channels APE (` billion) Mix (%) Channels FY2022 H1-FY2023 Growth (%) FY2022 H1-FY2023 Bancassurance 30.12 11.24 (10.8%) 38.9% 31.9% ICICI Bank 19.26 6.36 (28.5%) 24.9% 18.1% Other than ICICI Bank 10.85 4.89 31.8% 14.0% 13.9% Agency 18.28 8.61 14.0% 23.6% 24.5% Direct
Slide 20: 4P: Protection
4P: Protection
Slide 21: Protection business
Protection business Protection APE Sum assured1 Market share (%) 7.10 15.7% 4,800.05 5.50 13.2% 3,374.16 ` billion ` billion H1-FY2022 H1-FY2023 H1-FY2022 H1-FY2023 Increase in overall market share; leadership in private sector 1Overall new business (retail & group combined) Annualised premium equiv
Slide 22: 4P: Persistency
4P: Persistency
Slide 23: Persistency
Persistency Regular & limited pay Fully paid & single premium Month 5M-FY2022 FY2022 5M-FY2023 Month 5M-FY2022 FY2022 5M-FY2023 13th month 85.1% 84.6% 85.9% 13th month 100.0% 100.0% 100.0% 25th month 74.6% 77.3% 77.2% 25th month 99.9% 100.0% 100.0% 37th month 66.3% 66.9% 68.7% 37th month 97.7% 99.0%
Slide 24: 4P: Productivity
4P: Productivity
Slide 25: Productivity: Cost efficiency
Productivity: Cost efficiency H1-FY2022 FY2022 H1-FY2023 Expense ratio (excluding commission)1 12.2% 12.8% 15.8% Commission ratio2 5.5% 5.8% 5.7% Cost/TWRP3 17.8% 18.6% 21.6% Cost/Average AUM4 2.0% 2.4% 2.2% Cost/TWRP (savings LOB) 11.8% 12.8% 14.4% ` billion H1-FY2022 FY2022 H1-FY2023 Commission 6.
Slide 26: VNB growth levers update (4P's)
VNB growth levers update (4P’s) Y-O-Y ` billion FY2022 H1-FY2023 Growth Value of New Business (VNB)1 21.63 10.92 25.1% VNB margin 28.0% 31.0% 300 bps Y-O-Y ` billion FY2022 H1-FY2023 Growth Premium growth (APE) 77.33 35.19 10.1% Protection growth (APE) 13.13 7.10 29.1% Persistency (13th month)2 84.6
Slide 27: Financial update
Financial update
Slide 28: Financial metrics
Financial metrics ` billion H1-FY2022 FY2022 H1-FY2023 Profit after Tax (PAT) 2.59 7.54 3.55 Solvency ratio 199.9%1 204.5%2 200.7%1 Assets under management 2,370.871 2,404.922 2,442.791 Solvency continues to be strong at over 200% 1At September 30 of respective financial years 2At March 31, 2022 27
Slide 29: Embedded value (EV)
Embedded value (EV)1 326.48 302.03 316.25 78.51 291.06 89.07 83.60 95.22 ` billion ` billion 247.97 232.66 212.96 195.84 Mar-21 Mar-22 Sep-21 Sep-22 Value of Inforce (VIF) Adjusted net worth (ANW) Continued strong growth in VIF 1As per Indian Embedded value (IEV) method Total may not add up due to r
Slide 30: Environmental, Social & Governance (ESG)
ENVIRONMENTAL, SOCIAL “ud” | & NY GSS GOVERNANCE (ESG) ox oo ees @PICICI PRUDENTIAL? =,
Slide 31: ESG: Focus areas, framework and approach
ESG: Focus areas, framework and approach Sustainability intrinsic to life insurance as we serve long term savings & protection needs 3 pillars of our sustainability Our focus areas framework Human Responsible Governance & capital investing business ethics Environmental Social Governance leaving the
Slide 32: Focus area: Human capital
Focus area: Human capital Enabling employee Enabling Building an agile & engaged wellbeing productivity workforce • Focus on building awareness, • Talent attraction & onboarding • Enabling a diverse workforce establishing policies & enabling • 46% fresher hiring; robust onboarding • Equal opportunit
Slide 33: 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 Framework made operational; subscribed to Benchmarked against NSE 100 ESG Index ESG ratings by an external service provider
Slide 34: 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 35: Focus area: Access to finance, CSR & Environment
Focus area: Access to finance, CSR & Environment Access to Finance CSR Environment • 45.6 mn lives impacted by micro • ₹ 68.2 mn spent for CSR initiatives • ~1,700 tonnes of carbon footprint saved insurance products (58.1 mn lives total) • Over 155,000 children & adults • 96% of new business applica
Slide 36: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 37: Digital@ICICI Prulife
Digital@ICICI Prulife ~3.2 million digital service Digital logins >95% interactions every month >92.6% service interactions 1.2 million+ app downloads are via self-help/digital modes Highest rated app within life 97% of pages having system insurance industry uptime of 99% & above Access to over 45 t
Slide 38: New business & growth
New business & growth Pre-sales Onboarding & issuance Partner integration InstaPlan Pre-sales tool to create customised Partner integration portal Collaboration platform solution for customer by combining multiple Easy UI Pre-coded premium Online meetings, joint sales calls, products on the go qu
Slide 39: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ~3.1 mn digital service interactions monthly 1.2 mn+ app downloads with best app rating >92.6% service interactions are via self- among the peers help/digital modes Renewals Flexible premium payment options includ
Slide 40: 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 next goal Segmented targeting Smart solutions Pre-
Slide 41: Key initiatives taken in H1-FY2023
Key initiatives taken in H1-FY2023 Account Aggregator Empowering Partners Personalised proposal ICICI Pru Life is now a Financial Micro services for powering partner Instant customised customer Information User and Financial systems for enhanced customer proposal for empowering sales & Information P
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 detect
Slide 43: Awards
Awards
Slide 44: Awards & Accolades: H1-FY2023
Awards & Accolades: H1-FY2023 Only Indian insurance Company to be featured in The Corporate Communication Team Technology Champion of the Year – Life the list of top 100 companies in BW Businessworld featured in the ’30 Top Corporate Best Contact Centre Insurance – ‘India's Most Sustainable Companie
Slide 45: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 46: 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 52.0 59.4 Brazil S Korea S Africa USA India China Japan Russia Indonesia FY2021 FY2030 Driving
Slide 47: 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% 60% 17% 52% 18% 17% 41% 52% 17% ` tn 45% 45 40% 20.86 17% 36% 40% 23.70 19.54 25 13.64 14.53 31.09 20.61 22.84 20% 5 11.91 14.96 -3.59 -3.91 -7.
Slide 48: 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 12% 153% 143% 127% USD trillion 8.4 3.9 22% 2.8 2.0 0.9 0.7 0.6 India** Japan* USA* Thailand* Singapore* South Korea* Malaysia* So
Slide 49: 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 Thailand India* USA Singapore Malaysia
Slide 50: 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 51: 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 52: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 53: 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 54: Industry overview: channel 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 55: Annexures
Annexures
Slide 56: 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 15 years only • Hedge program designed for each tranche of new business •
Slide 57: Protection business: FY2022
Protection business: FY2022 Protection split based on APE* Total new business sum assured ` billion 0.14 ` billion 0.62 (4.7%) (1.1%) 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 58: 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 59: 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 60: 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 61: 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 62: 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 63: Embedded value
Embedded value
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 ANW ROEV2 = 11.0% 83.60 95.22 ROEV (ex. mortality & morbidity variance) = 15.0% VIF 232.66 VIF 195.84 EV (Mar 31, Unwind Operating VNB Persistency Mortality Expense Other Econ
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 15.0% 16.3% 15.0% variance EV growth-pre
Slide 68: Economic assumptions underlying EV and VNB
Economic assumptions underlying EV and VNB References Rates Tenor (years) Mar 31, 2022 September 30, 2022 1 4.35% 6.72% 5 7.90% 7.81% 10 8.36% 7.67% 15 7.97% 7.71% 20 7.57% 7.81% 25 7.28% 7.94% 30 7.09% 8.04% 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
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