VNB growth of 33% y-o-y in FY2022 VNB margin expands to 28% for FY2022

New business sum assured grows 25% y-o-y in FY2022

Ranked #1 in private sector on new business sum assured with market share of 13.4% in 11M-FY2022

Annuity New Business Premium registers an increase of 29% FY2022 APE growth of 20% y-o-y

ICICI Prudential Life Insurance has delivered another strong financial performance leading to a 33% year-on-year growth in the Value of New Business (VNB) for FY2022. The VNB margin, a measure of profitability, expanded to 28% and absolute VNB stood at ` 21.63 billion. This was led by a robust growth of 25% in new business sum assured and 20% in Annualised Premium Equivalent for the same period.

During FY2022, Annuity and protection new business premiums grew by 29% and 35% year-on-year respectively. Given that both these segments are significantly under penetrated, they offer tremendous opportunity for growth.

New Business Sum Assured of the Company grew to ` 7,731.46 billion for FY2022 making ICICI Prudential Life Insurance the leader in the private sector. A combination of factors such as innovative products coupled with deep and wide distribution network have helped the Company to maintain its position as the market leader in New Business Sum Assured.

The Company’s 13^th month persistency ratio improved to 85.7% for FY2022, up from 84.8% for FY2021, indicative of the quality of business being underwritten. Assets under Management stood at ` 2,404.92 billion at March 31, 2022. This is an outcome of the trust reposed in the Company by customers, growth in new business, strong persistency and robust fund management. The solvency ratio for FY2022 stood at 204.5%, well above the regulatory requirement of 150%.

Despite concerns and challenges posed by the onset of the Omicron variant, the Company’s robust technology backbone has enabled continuity in operations, be it onboarding new customers or delivering superior service.

Mr. N S Kannan, MD & CEO, ICICI Prudential Life Insurance said, “Despite the disruptions caused by the third wave of COVID-19, which impacted productivity in January and February, we were able to demonstrate resilience in our operations. In March, we posted the best ever monthly sales by the Company in any year since inception. This helped grow our VNB by 33% year-on-year to ` 21.63 billion for FY2022 with a robust VNB

margin of 28.0%.

Through the pandemic-affected period, we focused on putting in place the building blocks for growth. We innovated across product categories with two new funds, Balanced Advantage Fund & Sustainable Equity Fund for our unit linked customers, two new products for customers seeking a regular income, and the return on premium variant of our retail protection product. The contribution of these innovative offerings was more than 25% of the APE in FY2022.

The strong performance was driven in equal measure by over 100 valuable partnerships forged this year. In the agency channel, we added almost 25,000 agents through the year. This enabled us to support our strategy of deepening and widening distribution.

Our revamped customer app has crossed the milestone of 1 million downloads and is one of the best rated in the industry. Today one out of every four service transactions is carried out on our mobile app. Further, I am happy to report that this year is the first year of profitability for our wholly owned subsidiary, ICICI Prudential Pension Fund Management Company Limited.

We are now poised to take advantage of all this good work that has gone into building a growing and sustainable institution with customer centricity at its core.”

Operational metrics:

` billion	FY2021	FY2022	Growth YoY
Value of New Business (VNB)1	16.21	21.63	33%
Value of New Business Margin (VNB Margin) 1	25.1%	28.0%	–
Embedded Value (EV)	291.06	316.25	9%
Return on Embedded Value (RoEV)	15.2%	11.0%	–
New Business Sum Assured	6,166.84	7,731.46	25%
Annualised Premium Equivalent (APE)	64.62	77.33	20%
Savings	54.16	64.20	19%
Protection	10.46	13.13	26%
Annuity New Business Premium	22.92	29.56	29%
New Business Received Premium	130.32	150.36	15%
13th month persistency2	84.8%	85.7%	–
Savings Cost Ratio (Cost/TWRP3)	9.6%	12.8%	–
Overall Cost Ratio (Cost/TWRP3)	14.8%	18.6%	–

` billion	At March 2021	At March 2022	Growth YoY
Assets Under Management (AUM)	2,142.18	2,404.92	12%

1. Based on management forecast of full year cost
2. Regular and Limited pay persistency in accordance with IRDAI circular on ‘Public Disclosures by Insurers’ dated September 30, 2021
3. Total Cost including commission / (Total premium – 90% of single premium)

Components may not add up to the totals due to rounding off

Company Performance:

Value of New Business (VNB) growth

The VNB for FY2022 grew by 33% year-on-year to ` 21.63 billion. The VNB margin for FY2022 stood at 28.0%, up from 25.1% for FY2021.

Progress on our 4P strategy

Premium Growth

Annualised Premium Equivalent (APE) grew by 20% year on year to ` 77.33 billion in FY2022. The Annuity business registered a strong growth of 29% year-on-year with ` 29.56 billion of New Business Received Premium in FY2022. The Company has a well-diversified product mix with linked savings at 48%, traditional savings at 31%, protection at 17% and the balance of 4% accounted for by group savings products.

Protection

Protection APE grew by 26% year-on-year to ` 13.13 billion in FY2022. The protection mix increased from 16.2% of APE in FY2021 to 17.0% of APE in FY2022. Focus on premium growth and expanding the protection business led to New Business Sum Assured growth of 25% year-on-year to ` 7.73 trillion in FY2022. With this the market share increased from 12.5% in FY2021 to 13.4% in 11M-FY2022, and the Company continued to be leader in the private sector.

Persistency

The persistency ratios have seen significant improvements. The 13^th month persistency ratio improved to 85.7% for FY2022 as compared to 84.8% for FY2021. The AUM grew by 12% year-on-year to ` 2,404.92 billion at March 31, 2022.

Productivity

The overall cost ratio i.e. Cost/Total Weighted Received Premium (TWRP) stood at 18.6% in FY2022. The cost ratio for the savings line of business stood at 12.8% in FY2022.

Net worth and capital position

Company’s net worth was ` 91.63 billion at March 31, 2022. The solvency ratio was 204.5% against regulatory requirement of 150%.

Embedded Value

The Embedded Value grew by 9% and stood at ` 316.25 billion as on March 31, 2022 and the Return on Embedded Value was 11.0% for FY2022.

Dividend

The Board has approved a final dividend of ` 0.55 per equity share for FY2022.

Definitions, abbreviations and explanatory notes

• Annual Premium Equivalent (APE): APE is a measure of new business written by a life insurance company. It is computed as the sum of annualised first year premiums on regular premium policies, and ten percent of single premiums, written by the Company during any period from new retail and group customers.
• Value  of  New  Business  (VNB)  and  VNB  margin:  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 on the basis of long term assumptions which are reviewed annually. VNB is also referred to as NBP (new business profit). VNB margin is computed as VNB for the period/APE for the period. It is similar to profit margin for any other business.

• Retail Weighted  Received  Premium  (RWRP): RWRP is a new business measure very similar to APE for the retail (also referred to as individual) business with the only difference being that the regular premiums considered here are first year premiums actually received by the life insurer and not annualised. Secondly, since it is a new business measure for retail business, it includes only Premium received from retail customers. It is the sum of all retail first year premiums and ten percent of retail single premiums received in a period.
• Persistency: It is the most common parameter for quality of business representing the percentage of retail policies (where premiums are expected) that continue paying premiums. The method of computation of Persistency has been prescribed by IRDAI vide its circular dated January 23, 2014.
• Total Weighted Received Premium (TWRP): TWRP is a measure of total premiums from new and existing retail and group customers received in a period. It is sum of first year and renewal premiums on regular premium policies and ten percent of single premiums received from both retail and group customers by Company during the period.
• Cost Ratio: Cost ratio is a measure of the cost efficiency of a Company. Expenses are incurred by the Company on new business as well as renewal premiums. Cost ratio is computed as a ratio of all expenses incurred in a period comprising commission, operating expenses, provision for doubtful debts and bad debts written off to total weighted received Premium (TWRP).