ICICIPRULI - ICICI Prudential Life Insurance Company Limited Share Price

The management outlook for ICICI Prudential Life Insurance Company Limited for H1-FY2026 indicates a positive trajectory despite facing regulatory changes and market challenges. Key highlights from the earnings call include the anticipation of increased insurance penetration due to GST reforms making life insurance more accessible. The company aims to leverage its robust brand and diversified distribution channels to drive sustainable growth and enhance the Value of New Business (VNB).

Major forward-looking points from management include:

1. Total Premium Growth: A total premium increase by 9.2% year-on-year to Rs.212.51 billion.
2. VNB Performance: The VNB was reported at Rs.10.49 billion with a margin of 24.5%, showcasing a focus on high-margin protection products despite an overall decline in APE of 4.1%.
3. Cost Efficiency: A reduction in cost-to-premium ratio by 280 basis points to 19.2%, indicating strong operational optimization efforts.
4. Regulatory Changes: The impact of GST reforms is expected to be a major catalyst for growth, improving product affordability and accessibility, particularly in the retail protection segment where APE rose by 10.8%.
5. Customer Persistence: The 13-month persistency ratio improved to 85.3%, reflecting customer satisfaction levels.
6. Future expectations: The management expects that the conducive environment created by government reforms and improvements in operational efficiency will allow the company to capitalize on growing market opportunities effectively.

The company remains focused on navigating challenges while emphasizing growth in both VNB and overall premium revenues, positioning itself to take advantage of potential market shifts.

1. Question: "How did the GST announcement impact your business for the second quarter, and how much volume got impacted?" Answer: The GST announcement did lead to some slowdown in retail protection before its implementation. However, the exact quantification is challenging. Post-announcement, we witnessed a pickup in business, indicating that while there was some impact, it wasn't as severe as suggested, and sequential growth from July to September remained reasonable.

2. Question: "What is the status of your persistency, and are there sustained challenges affecting it?" Answer: Persistency levels appear lower on a year-on-year basis, primarily due to a high base last year. This year's numbers reflect normal levels, and despite some challenges, I believe we can regain momentum. Continuous efforts are underway to improve it across various product and channel combinations.

3. Question: "Regarding renegotiating commission structures, should we expect disturbances in channels like agency and hence impact performance?" Answer: Disturbances in commissions are more about discussions than turbulence. We're actively negotiating commissions with all distributors, aiming to strike a balance that promotes growth while addressing new cost structures due to GST. We believe the ecosystem can adapt, similar to past changes.

4. Question: "What are the key policies you foresee driving growth in the insurance sector over the next five years, considering regulatory tightening?" Answer: The regulatory landscape has indeed shifted towards support for ease of business, particularly with the recent GST reforms, which are expected to enhance accessibility and affordability in insurance. I anticipate continued government support for insurance penetration across India, crucial as we aim for broader coverage and growth.

5. Question: "Given the impact of input tax credit changes, have you incorporated this into your VNB margin figures?" Answer: Yes, we've taken the GST input tax impact into account for our VNB margins. The 24.5% margin we reported reflects this adjustment, ensuring that our figures provide a realistic outlook amid the changing regulatory environment.

6. Question: "What can you share about the growth of your non-par business over the recent quarters?" Answer: We've observed strong growth in our non-par business, aligning well with market demands. For the first half, the non-par product mix has become more balanced, around 50:50 with traditional savings, reflecting an effective shift toward products that provide better value to our customers.

7. Question: "How do you expect the margin to stabilize amidst the GST changes, and what growth do you anticipate?" Answer: While we foresee some short-term impacts from the GST changes, our focus remains on enhancing absolute VNB. We believe the favorable conditions created by the reforms will drive demand, allowing us to offset any adverse impacts as we look towards growth in the latter half of the year.

8. Question: "Can you elaborate on the distribution and growth within the bancassurance channel?" Answer: Bancassurance has seen flat growth recently, partly due to market dynamics across various partnerships. As we focus on enhancing our collaboration with existing banks and onboarding new ones, we expect improvements in throughput, leveraging our competitive edge for future growth.

9. Question: "How are you managing costs associated with the impact of GST on your operations?" Answer: We are employing several strategies to manage costs post-GST reform, including negotiating better commission structures and optimizing operational expenses. Our cost to premium ratio has improved, and we are continuing to focus on making our operational structure more efficient.

10. Question: "What levels of persistency do you expect moving forward, and how will you address declines?" Answer: We're actively working to address persistency levels that are slightly below our assumptions. The goal is to return to stable levels through targeted improvements and continued engagement with our product offerings and channels to increase retention going forward.