ICICI Pru soars 9%, hits new high on strong performance in June quarter

VNB growth was driven by a resilient business model, innovative product offerings and diversified distribution and product mix

Shares of ICICI Prudential Life Insurance (ICICI Pru) hit a new high of Rs 660.95 as they rallied 9 per cent on the BSE in intra-day trade on Thursday after reporting strong earnings for the quarter ended June 2021 (Q1FY22). The APE (annualised premium equivalent) grew ahead of estimates at 7 per cent and the company delivered a significant beat on VNB (value of the new business) margins (+637 bps), driven by a higher share of protection and annuity.

The stock of the life insurance company surpassed its previous high of Rs 635.40 touched on July 7, 2021. In the past three months, it beat the market by surging 31 per cent, as compared to a 10 per cent rise in the S&P BSE Sensex.

The VNB, which is a measure of the profitability of the company, grew by 78 per cent year-on-year (YoY) to Rs 358 crore for Q1FY22. The VNB margin expanded from 24.4 per cent in Q1FY21 to 29.4 per cent in Q1FY22. The growth in VNB has been driven by a resilient business model, innovative product offerings and diversified distribution and product mix, ICICI Pru said.

The company’s new business premium grew by 71 per cent to Rs 2,559 crore for Q1FY22 over the same period last year, reflecting strong growth momentum in the business. Significantly, the company gained an overall market leadership position in terms of new business sum assured, with a market share of 14.7 per cent in Q1FY22, up from 12.5 per cent for FY2021, it said.

With this strong growth momentum along with the company’s well-diversified product and distribution mix, the management believes the company is well-positioned to achieve its stated objective of doubling its FY2019 VNB by FY2023.

“In recent quarters, Banca partners other than ICICI Bank have delivered strong growth momentum. VNBM for Q1FY22 was significantly higher than our estimates at 29.4 per cent (+580 bps sequentially), largely on account of shifting business mix towards protection (+850bps) and improving share of annuity,” analysts at HDFC Securities said in a results update.

“We like IPRU’s re-engineered business model, which is focused on a more diversified product and channel mix, industry-leading share of protection (Q1FY22: 15 per cent), and rising share of traditional products. With a higher share of protection and annuity in the mix, we raise our VNB margins by 160 bps for FY22E/23E to 26.3/26.5 per cent,” the brokerage firm said.