Icici Prudential Life Insurance Co. Ltd. · NSE:ICICIPRULI
Icici Prudential Life Insurance — H1 FY2024 Earnings Presentation
74 slides from Icici Prudential Life Insurance's earnings presentation, Oct 17, 2023
Slide 1: Performance update: H1-FY2024
Performance update: H1-FY2024 October 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 4D framework enabling our 4P strategy 4P strategy Data Diversified analytics propositions Protection Customer centricity Premium VNB Customer continues Growth Growth Persistency to be at the core Depth in Digitalisation Productivity Partnerships Risk calibrated growth with foc
Slide 5: 4D framework
4D framework Data analytics Diversified propositions • Deeper understanding of customer • Offer suitable customer proposition lifestyle & income segments through appropriate distribution • Identify opportunities across diverse • Provide holistic solution across customer segments & geographies custom
Slide 6: ICICI Pru Stack: Suite of platform capabilities
ICICI Pru Stack: Suite of platform capabilities Array of platform capabilities to help us deliver superior value propositions to our customers, in collaboration with our partners 1. Data analytics 2. Diversified propositions 3. Digitalisation 4. Depth in Partnerships 6
Slide 7: Performance snapshot: H1-FY2024
Performance snapshot: H1-FY2024 VNB Premium growth Persistency 13th 86.9% (₹ billion) (₹ billion) 10.15 35.23 Month1 Total APE 49th 65.8% Protection Productivity Cost/TWRP: 28.8% 7.34 17.2% (₹ billion) Savings2 Margin APE 1 Regular & Limited pay persistency in accordance with IRDAI circular on ‘Publ
Slide 8: 4P strategic elements
4P strategic elements 4D framework enabling our 4P strategy 4P strategy Data Diversified analytics propositions Protection Customer centricity Premium VNB Customer continues Growth Growth Persistency to be at the core Depth in Digitalisation Productivity Partnerships Risk calibrated growth with focu
Slide 9: 4P: Premium growth
4P: Premium growth
Slide 10: Premium growth (1/2)
• Build capacity & enhance efficiency in Premium growth (1/2) Premium growth • proprietary channels Focus on new partnership additions & increase share of shop in existing • Focus to grow annuity line of business Q2- H1- Q2- H1- Channels Growth Growth FY2024 FY2024 FY2024 FY2024 Agency 5.42 4.2% 8.9
Slide 11: Premium growth (2/2)
• Build capacity & enhance efficiency in Premium growth (2/2) Premium growth • proprietary channels Focus on new partnership additions & increase share of shop in existing • Focus to grow annuity line of business Q2- H1- Q2- H1- Segments Growth Growth FY2024 FY2024 FY2024 FY2024 Savings 16.72 3.3% 2
Slide 12: Premium growth: Product & Distribution
Premium growth: Product & Distribution Product mix Distribution mix H1-FY2024 H1-FY2024 4% | Group funds 6% | Annuity 14% | ICICI Bank 26% | Agency 42% | Linked 21% | Protection 18% | Group 14% | Direct 13% | Partnership 15% | Banca 27% | Non-linked distribution (ex ICICI Bank) Well diversified prod
Slide 13: 4P: Protection
4P: Protection
Slide 14: Protection growth
Protection growth Protection focus • Focus on retail protection growth • Increase protection with rider attachment • Focus on opportunities in group protection (₹ billion) H1-FY2023 H1-FY2024 Sustained movement in retail protection Y-o-Y growth Protection APE1 7.10 7.34 84% Retail protection 1.27 1.
Slide 15: 4P: Persistency
4P: Persistency
Slide 16: Persistency improvement
Persistency improvement Continue to focus on improving persistency across Persistency all cohorts 5M- 5M- 5M- 5M- Month FY2023 FY2023 FY2023 FY2024 FY2023 FY2024 13th Month 85.9% 85.4% 86.9% 100.0% 99.9% 99.9% Fully paid & Single premium Regular & Limited pay 25th Month 77.2% 77.1% 78.9% 100.0% 99.7
Slide 17: 4P: Productivity
4P: Productivity
Slide 18: Productivity improvement
Productivity improvement Continue to leverage technology for process re- Productivity engineering & to drive productivity Y-o-Y (₹ billion) H1-FY2023 FY2023 H1-FY2024 Growth Total expenses 27.02 64.75 34.32 27.0% Cost/TWRP1 21.6% 21.5% 26.2% - Cost/TWRP1 (savings LOB) 14.4% 14.2% 17.2% - Cost struct
Slide 19: Resilient balance sheet
Resilient balance sheet Insurance risks Strong solvency ratio • Emerging mortality experience within • Solvency ratio of 199.4% at September 30, expectation 2023 • Persistency experience monitored regularly • Ability to raise additional sub debt & witnessed improvement across all cohorts High qualit
Slide 20: VNB growth levers update (4P)
VNB growth levers update (4P) (₹ billion) H1-FY2023 FY2023 H1-FY2024 Value of New Business (VNB) 10.92 27.65 10.15 VNB VNB margin 31.0% 32.0% 28.8% (₹ billion) H1-FY2023 FY2023 H1-FY2024 Premium growth (APE) 35.19 86.40 35.23 Protection growth (APE) 7.10 15.04 7.34 4P 13th month1 85.9% 85.4% 86.9% P
Slide 21: Financial metrics
Financial metrics (₹ billion) H1-FY2023 FY2023 H1-FY2024 Profit after Tax 3.55 8.11 4.51 Solvency ratio1 200.7% 208.9% 199.4% AUM1 2,442.79 2,511.91 2,719.03 Solvency ratio continues to be strong 1. H1: At September 30 of respective financial years; FY: At March 31 21
Slide 22: Embedded value (EV)
Embedded value (EV)1 385.29 356.34 326.48 95.66 316.25 87.82 78.51 ` billion 83.60 ` billion 289.63 268.52 247.97 232.66 Mar-22 Mar-23 Sep-22 Sep-23 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 23: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG)
Slide 24: 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 25: Focus area: Human capital
Focus area: Human capital Strengthening Building Catalysing competitive Capacity Capability advantage through Culture 1. Employee strength 1. Structured phygital learning 1. Multiple employee communication & engagement increased by 15% to programs: 1.3+ million learning initiatives to align employee
Slide 26: 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 27: 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 28: 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 29: 4D framework
4D framework 4D framework enabling our 4P strategy 4P strategy Data Diversified analytics propositions Protection Customer centricity Premium VNB Customer continues Growth Growth Persistency to be at the core Depth in Digitalisation Productivity Partnerships Risk calibrated growth with focus on Inte
Slide 30: 4D: Data analytics
4D: Data analytics
Slide 31: Customer centric analytics powering New Business
Customer centric analytics powering New Business Understanding Satisfying Identifying right Seamless process customer customer need distribution Intelligent Product ML based Longevity & risk customer recommendation upsell/cross sell profiling models segmentation engine propensity models Geographical
Slide 32: Customer centric analytics powering Operations
Customer centric analytics powering Operations Enabling Driving customer Faster settlement Managing maturity renewals satisfaction of claims & foreclosure ML based lapse Early warning Robust claims Smart MAFC propensity model model for customer investigation reinvestment dissatisfaction framework fr
Slide 33: Analytics engine powering Business & Product
Analytics engine powering Business & Product Agency Banca/PD Direct Product Analytics driven Analytics driven ML based leads Geographic agent activation campaign strategy assistance product segments Incentives efficacy Pre-issuance Personalized online Market household framework journey integration b
Slide 34: Key initiatives H1-FY2024: Persistency management
Key initiatives H1-FY2024: Persistency management Prospecting stage At renewal stage Deep lapse Actions to sellers based Prediction model to Prediction model to assist on analytical insights enhance efficiency of revival interventions renewal collection Post login stage Renewal campaigns Alerts to s
Slide 35: 4D: Diversified propositions
4D: Diversified propositions
Slide 36: Products for every life stage
Products for every life stage Linked Pure Term Part Return of Guaranteed Premium Long-term Life Guaranteed Combination savings protection Customer needs Retirement Healthcare planning Deliver value proposition to serve varied customer needs iShield: Launched in partnership with I-Lombard, offers a c
Slide 37: Key initiatives H1-FY2024: Innovation
Key initiatives H1-FY2024: Innovation Increasing income Industry’s 1st ULIP debt Choice of amount of fund with ‘constant Innovative maturity’ as theme MoneyBack products/ Constant Choice of MoneyBack Year funds Maturity Launched at time of peaked Low cover multiple for addressing Fund interest rates
Slide 38: 4D: Digitalisation
4D: Digitalisation
Slide 39: Digital @ICICI Prulife
Digital @ICICI Prulife ~3.5 million digital service 99% digital logins & 100% e- interactions every month insurance account for eligible base 1.9 million+ app downloads 92.6% service interactions are via self-help / digital modes One of the highly rated app: 98% of pages having a system 4.3 & 4.0 ra
Slide 40: Key initiatives H1-FY2024: Digital infrastructure
Key initiatives H1-FY2024: Digital infrastructure CKYC Digital GST based Digital provident Financial ecosystem Digital recurring Pre-population income estimate fund statement for bank payment solution CKYC* GST^ EPFO^ Account Digital SI@ Aggregator^ Aadhaar* Perfios^ CAS^ Vahan^ Pull OTP@ * Used for
Slide 41: New business & growth
New business & growth Pre-sales Onboarding & issuance Partner integration • Collaboration platform • InstaPlan • Retail partners: Online meetings, joint sales calls, Pre-sales tool to create customised Partner integration portal | Easy UI invite experts & share content solution for customer by combi
Slide 42: Customer service
Customer service Empowering customers Omni channel • Self service • Customer mobile application 1. ~3.5 mn digital service interactions monthly 1.9mn+ app downloads with best app rating among the 2. 92.6% service interactions are via self-help/ digital modes peers • Renewals • 24x7 chat/voice assist
Slide 43: 4D: Depth in Partnerships
4D: Depth in Partnerships
Slide 44: Distribution reach & strategy
Distribution reach & strategy 40 banks 28% | Bancassurance 1 Strategy: Build profitability 1,013 partnerships 14%1 | Direct* • 1 new bank added 13%1 | Partnership Distribution Strategy: Digital focused • Access to >19,900 bank branches Strategy: Create depth & upsell campaigns add width • Protection
Slide 45: Awards & Accolades
Awards & Accolades
Slide 46: Awards & Accolades: H1-FY2024
Awards & Accolades: H1-FY2024 Asia’s Best CSR Practices Awards by National Awards for Excellence in CSR & National Awards for Excellence in CSR & CMO Asia Sustainability Sustainability Best Sustainability Report Best Overall Sustainable Performance Best Sustainability Report ASSOCHAM Customer FEST C
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 51.8 59.4 India Japan Brazil Indonesia S Korea USA S Africa China Russia 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% 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 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% 16.5 153% 143% 15% 127% USD trillion 8.4 3.9 21% 2.8 2.0 0.9 0.7 0.6 Thailand* USA* South Korea* Japan* Malaysia* India** Singapore* Si
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 65% 332% India: FY2035 39% 252% 251% 21% 25% B 153% 143% A 127% 107% 65% FY2023 FY2025 FY2030 FY2035 21% B SA as % of GDP (SA growth @ 25% CAGR) Singapore Thailand South Korea (25%CAGR)* (2
Slide 52: Protection opportunity: Addressable population (%)
Protection opportunity: Addressable population (%) 15% CAGR in new policy count1 20% CAGR in new policy count1 143.3 143.3 102.2 102.2 72.8 72.8 63.6 63.6 29% 41% in mn in mn 59.3 40.9 24.8 20.9 9.3 11.7 9.3 11.4 FY2023 FY2025 FY2030 FY2035 FY2023 FY2025 FY2030 FY2035 Insured Uninsured Insured Unins
Slide 53: Indicators of protection opportunity
Indicators of protection opportunity Retail credit1 Health & motor2 40,852 ₹ billion 33,870 Gross direct premium (` billion) FY2023 21,488 Health 906.68 25,534 17,026 19,085 12,144 Motor 812.92 13,922 9,339 10,097 Motor own damage (OD) 317.84 6,454 19,364 4,711 16,844 13,390 5,386 7,468 9,746 Motor
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
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: Retirement focus: ICICI Pru PFM opportunity
Retirement focus: ICICI Pru PFM opportunity Total subscribers Assets under Management Net Inflows growth growth growth 30% 26% 42% 53% 40% 43% Y-o-Y Y-o-Y Y-o-Y ₹ billion ₹ billion 641.84 44.03 in ‘000 202.74 164.66 22.58 593.70 Mar-23 Sep-23 Mar-23 Sep-23 FY2023 H1-FY2024 40% of NPS retirement corp
Slide 59: 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 60: 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 61: 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 62: 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 63: 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 64: 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 65: Embedded value
Embedded value
Slide 66: 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 Unwind Value of Inforce (VIF) VNB EV: Embedded value ROEV: Return on embedded value 66
Slide 67: 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 68: 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 69: 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 70: Economic assumptions underlying EV & VNB
Economic assumptions underlying EV & VNB Reference rates Tenor (years) March 31, 2023 September 30, 2023 1 7.2% 7.2% 5 7.5% 7.4% 10 7.6% 7.5% 15 7.7% 7.7% 20 7.7% 7.8% 25 7.7% 7.8% 30 7.7% 7.9% EV: Embedded value VNB: Value of new business 70
Slide 71: 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 72: 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 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 — H1 FY2024 Earnings Presentation on 6ix