Banking/Finance

ICICI Prudential hopes to outperform life insurance industry in terms of APE growth for medium term

Anup Bagchi, MD & CEO, ICICI Prudential Life Insurance
| Photo Credit:
PAUL NORONHA

ICICI Prudential Life Insurance aims to register more than 13-15 per cent growth in its annualised premium equivalent (APE) for the medium term, as it hopes to outperform the life insurance industry.

The private sector life insurer feels it would be difficult to provide APE growth guidance for the current financial year at this point in time due to current market volatility.

“It is very difficult to call into next year (FY26), given the current volatility and the environment conditions. However, if you were to look at a medium term perspective, I think we should be able to build a range of 13 per cent to 15 per cent APE growth, definitely as an industry. And, we would like to outperform on that perspective. But over the shorter term, quite difficult to call,” Anup Bagchi, MD & CEO, ICICI Prudential Life Insurance, said during the company’s Q4FY25 earnings conference call.

The company’s APE for the fourth quarter last fiscal fell around 3 per cent year-on-year to ₹3,502 crore. For FY25, APE grew 15 per cent y-o-y to ₹10,407 crore.

ICICI Prudential Life Insurance on Tuesday declared a 39.6 per cent y-o-y growth in its net profit at ₹1,189 crore for the last financial year. It reported a two-fold y-o-y jump in its net profit to ₹386.29 crore in Q4FY25, backed by a strong growth in its net premium income during the period.

On Wednesday, the insurer’s shares were trading at ₹585 a piece on BSE at 13:18 p.m., up 3.07 per cent from the previous day’s close.

Sequentially, APE growth was healthy in Q4FY25 for ICICI Prudential, driven by Non-Par among other segments, YES Securities said in a report.

“Overall APE in Q4 de-grew by 3.2 per cent y-o-y, but was up 43.6 per cent q-o-q to ₹35.02 billion. Non-linked business has grown 153 per cent q-o-q. Within this, the Non-Par business has seen resurgence on the back of the GIFT Select product, which will do well in current market conditions. Proprietary channel (Agency + Direct) contributed more than 50 per cent of total retail APE mix in FY25. The decline in proprietary channel in Q4 was due to high base of annuity in Q4FY24 and customer preference shifting away from ULIPs,” YES Securities said in the report.

“The bancassurance APE has grown 18.2 per cent y-o-y in FY25 and contributed 29.4 per cent to APE. The partnership distribution channel de-grew 3.2 per cent y-o-y in FY25 and contributed 10.9 per cent to APE. The growth of the Partnership channel has been muted since it focuses on non-linked business and was unable to capitalise on the earlier ULIP boom. Secondly, the channel was also impacted due to the adjustments being made due to the surrender value guidelines,” it added.

During the earnings conference call, the insurer said its endeavour is to build VNB (Value of New Business) ahead of APE. “Of course, the endeavour is to be able to go VNB ahead of the APE, and that is what we will continue to work towards,” Bagchi said, while replying to a set of questions.

The life insurer’s VNB for the last fiscal stood at ₹2,370 crore, up by 6.4 per cent y-o-y. VNB margin stood at 22.8 per cent against 24.6 per cent in FY24. The company attributed the fall in VNB margin primarily to a shift in new business profile and assumption changes.

“The VNB margin for 4QFY25 was 22.7 per cent, up 150 basis points q-o-q and 124 bps y-o-y. The share of low-margin linked business declined 582 bps q-o-q, whereas the share of low-margin group funds business also declined 387 bps q-o-q. The share of non-linked business rose 1234 bps q-o-q. The share of Par vs Non-Par has been 55:45 for the year and this has improved in favour of Non-Par in Q4 to 50:50,” according to YES Securities.