Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — 9M-FY2023 Earnings Presentation
74 slides from Icici Prudential Life Insurance's earnings presentation, Jan 17, 2023
Slide 1: Performance update: 9M-FY2023
Performance update: 9M-FY2023 January 17, 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: 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 5: 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 Q3- Y-o-Y 9M- Y-o-Y Channels FY2022 FY2023 growth (%) FY2023 growth (%) Agency 18.28 5.16 3.2% 13.78 9.9% Banca (ex-ICICI Bank) 10.85 2.31
Slide 6: Premium growth: Product & distribution
Premium growth: Product & distribution Product mix Retail distribution mix 9M-FY2023 9M-FY2023 17% 29% 32% 41% 21% 20% 6% 14% 16% 4% Banca - ICICI Bank Banca - Ex ICICI Bank Linked Non-linked Protection Annuity Group Agency Direct Partnership Distribution Well diversified product & distribution mix
Slide 7: Protection growth
Protection growth Protection • Continue to leverage opportunity in group protection • Focus on retail protection growth focus • Increase risk retention for greater flexibility in a calibrated manner ` billion FY2022 9M-FY2023 Retail protection APE (in bn) 0.83 0.83 Protection APE1 13.13 10.50 0.68 0
Slide 8: Persistency improvement
Persistency improvement Persistency Continue to focus on improving persistency across all cohorts Persistency# FY2022 8M-FY2023 13th month 84.6% 86.1% 150 bps 49th month 63.4% 66.0% 260 bps Significant improvement in persistency across cohorts #Regular & limited pay persistency in accordance with IR
Slide 9: Productivity improvement
Productivity improvement Productivity Continue to leverage technology for process re-engineering & to drive productivity Y-o-Y ` billion 9M-FY2022 FY2022 9M-FY2023 Growth APE 51.25 77.33 53.41 4.2% Total expenses 34.97 53.63 41.44 18.5% Cost/TWRP1 (%) 17.7% 18.6% 20.8% - Cost/TWRP (savings LOB) (%)
Slide 10: Resilient balance sheet
Resilient balance sheet Insurance risks Strong solvency ratio • Emerging mortality experience within • Solvency ratio of 212.2% at December expectation 31, 2022 • COVID-19 claims continue to decline High quality assets1 Liability profile • 97.1% of fixed income in sovereign or • 76.4% of liabilities
Slide 11: Value of new business (VNB)
Value of new business (VNB) 9M- VNB in bn ` billion FY2021 FY2022 FY2023 17.0% 21.7% 25.1% 28.0% 32.0% VNB1 16.21 21.63 17.10 26.50 21.63 16.05 16.21 VNB growth 1.0% 33.4% 23.2% 13.28 17.10 VNB margin 25.1% 28.0% 32.0% 13.88 FY2019 FY2020 FY2021 FY2022 FY2023 Consistent growth in VNB, margin almost
Slide 12: Foundation of well diversified business mix
Foundation of well diversified business mix Product mix Distribution mix FY2019 9M-FY2023 FY2019 9M-FY2023 1% 9% 9% 1% 12% 20% 12% 22% 6% 13% 19% 6% 29% 4% 4% 5% 41% 51% 17% 80% 26% 13% Linked Non-linked Protection Banca-ICICI Bank Banca-Ex ICICI Bank Agency Direct Annuity Group Partnership Distribu
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 13
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 9M-FY2023 FY2022 9M-FY2023 (%) Savings 64.20 42.90 0.5% 83.0% 80.3% Linked 37.38 22.14 (13.7%) 48.3% 41.4% Non-linked 21.21 15.26 18.1% 27.4% 28.6% Annuity 3.00 3.37 56.0% 3.9% 6.3% Group fun
Slide 17: Pension & Annuity
Pension & Annuity Comprehensive pension provider Annuity PFM assets under management (AUM) Annuity APE 146.47 3.37 116.14 3.00 104.41 2.29 2.16 75.59 ` billion ` billion FY2021 FY2022 9M-FY2022 9M-FY2023 Mar-21 Mar-22 Dec-21 Dec-22 APE grew by 56% in 9M-FY2023; AUM grew by 40% over December 2021 ann
Slide 18: Enhancing distribution
Enhancing distribution Strategy: Create depth & add width • 861 partnerships; 66 new partnerships • Protection & annuity mix 29%, non- Strategy: Build profitability Strategy: Digital focused upsell linked savings 60% • 34 bank partnerships; 8 new campaigns banks • Analytics driven upsell channel • P
Slide 19: Performance across distribution channels
Performance across distribution channels APE (` billion) Mix (%) Y-o-Y Channels FY2022 9M-FY2023 FY2022 9M-FY2023 Growth (%) Agency 18.28 13.78 9.9% 23.6% 25.8% Banca (ex-ICICI Bank) 10.85 7.20 20.6% 14.0% 13.5% Direct 9.97 6.76 0.9% 12.9% 12.7% Partnership distribution 7.16 6.18 41.4% 9.3% 11.6% Gr
Slide 20: 4P: Protection
4P: Protection
Slide 21: Protection business
Protection business Protection APE Sum assured1 Market share (%) 14.6% 12.7% 10.50 6,921.93 8.56 5,131.63 ` billion ` billion 9M-FY2022 9M-FY2023 9M-FY2022 9M-FY2023 Increase in overall market share 1Overall new business (retail & group combined) Annualised premium equivalent (APE) 21
Slide 22: 4P: Persistency
4P: Persistency
Slide 23: Persistency
Persistency Regular & limited pay Fully paid & single premium Month 8M-FY2022 FY2022 8M-FY2023 Month 8M-FY2022 FY2022 8M-FY2023 13th month 84.8% 84.6% 86.1% 13th month 100.0% 100.0% 100.0% 25th month 75.7% 77.3% 77.1% 25th month 100.0% 100.0% 99.9% 37th month 66.6% 66.9% 70.0% 37th month 98.0% 99.0%
Slide 24: 4P: Productivity
4P: Productivity
Slide 25: Productivity: Cost efficiency
Productivity: Cost efficiency 9M-FY2022 FY2022 9M-FY2023 Expense ratio (excluding commission)1 12.0% 12.8% 15.2% Commission ratio2 5.6% 5.8% 5.6% Cost/TWRP3 17.7% 18.6% 20.8% Cost/Average AUM4 2.1% 2.4% 2.2% Cost/TWRP (savings LOB) 12.2% 12.8% 13.9% ` billion 9M-FY2022 FY2022 9M-FY2023 Commission 11
Slide 26: VNB growth levers update (4P's)
VNB growth levers update (4P’s) Y-O-Y ` billion FY2022 9M-FY2023 Growth Value of New Business (VNB)1 21.63 17.10 23.2% VNB margin 28.0% 32.0% - Y-O-Y ` billion FY2022 9M-FY2023 Growth Premium growth (APE) 77.33 53.41 4.2% Protection growth (APE) 13.13 10.50 22.7% Persistency (13th month)2 84.6% 86.1
Slide 27: Financial update
Financial update
Slide 28: Financial metrics
Financial metrics ` billion 9M-FY2022 FY2022 9M-FY2023 Profit after Tax (PAT) 5.69 7.54 5.76 Solvency ratio 202.2%1 204.5%2 212.2%1 Assets under management 2,375.601 2,404.922 2,518.841 1At December 31 of respective financial years 2At March 31, 2022 28
Slide 29: Environmental, Social & Governance (ESG)
ENVIRONMENTAL, SOCIAL “ud” | & NY GSS GOVERNANCE (ESG) ox oo ees @PICICI PRUDENTIAL? =,
Slide 30: 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 framework Our focus areas Human Responsible Governance & capital investing business ethics Environmental Social Governance leaving the
Slide 31: Focus area: Human capital
Focus area: Human capital Enabling employee Enabling Building an agile & engaged wellbeing productivity workforce 1. Focus on building awareness, 1. Talent attraction & onboarding 1. Enabling a diverse workforce establishing policies & enabling • 46% fresher hiring; robust onboarding & • Diversity &
Slide 32: 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 33: 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 34: 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 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 appli
Slide 35: Technology @ICICI Prulife
Technology @ICICI Prulife
Slide 36: Digital@iciciprulife
Digital@iciciprulife ~3.3 million digital service Digital logins at 96.8% interactions every month >92.7% service interactions are 1.4 million+ app downloads via self-help / digital modes Highest rated app within life 98% of pages having a system insurance industry uptime of 99% & above Access to ov
Slide 37: 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 38: Customer service
Customer service Empowering customers Omni channel Self service Mobile application ~3.3mn digital service interactions monthly 1.4 mn+ app downloads with best app rating >92.7% service interactions are via self- among the peers help / digital modes Renewals Flexible premium payment options inclu
Slide 39: 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 40: Key initiatives taken in 9M-FY2023
Key initiatives taken in 9M-FY2023 Account Aggregator Humanoid Empowering Partners ICICI Pru Life is now a Financial Humanoid calling for activating Micro services for powering partner Information User and Financial inactive agents. Humanoid bot calls systems for enhanced customer Information Provid
Slide 41: Data science & analytics @ IPRU
Data science & analytics @ IPRU
Slide 42: Data excellence @ every phase of customer journey
Data excellence @ 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 propensity Predict lapse manage Fraud detection engine Sale persistency risk
Slide 43: Analytics engine @ every stage and process
Analytics engine @ every stage and process 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 analytics Segmentation pr
Slide 44: Analytics engine @ every stage and process
Analytics engine @ every stage and process Servicing & ML driven Contact ML based Customer Servicing complaint customer management upsell triggers satisfaction prediction retention framework at touch points management Operations ML assisted early claims ML assisted issuance Underwriting ML assisted
Slide 45: Awards
Awards
Slide 46: Awards & Accolades: 9M-FY2023
Awards & Accolades: 9M-FY2023 Gold Award from League of Excellence Award - Innovations in Winner in the Life Insurance category American Communications Customer Propositions and Professional (LACP) Experience Outlook Money Awards – 2021 (Awarded Associated Chambers of LACP – 2022 Spotlight Awards (f
Slide 47: Agenda
Agenda • Company strategy and performance • Opportunity • Industry overview
Slide 48: 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 S Korea Brazil S Africa USA China Japan India Russia Indonesia FY2021 FY2030 Driving
Slide 49: 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 50: 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 South Korea* Japan* Thailand* India** USA* Singapore* Malaysia* Th
Slide 51: 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 52: 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 53: 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 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 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 56: 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 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 15 years only • Hedge program designed for each tranche of new business • Locked in yields for future prem
Slide 59: 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 60: 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 61: 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 62: 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 63: 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 64: 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 65: Embedded value
Embedded value
Slide 66: 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 67: 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 68: 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 69: 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 70: 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 71: Economic assumptions underlying EV and VNB
Economic assumptions underlying EV and VNB References Rates Tenor (years) March 31, 2022 December 31, 2022 1 4.3% 6.8% 5 7.9% 7.8% 10 8.4% 7.6% 15 8.0% 7.5% 20 7.6% 7.6% 25 7.3% 7.8% 30 7.1% 8.1% 71
Slide 72: 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 73: 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 74: Thank you
Thank you
ICICI Prudential Life Insurance Company — 9M-FY2023 Earnings Presentation on 6ix