ICICI Pru Life delivers margin surprise, shares surge by 7% on FY18 results

Change in product mix and cost control boosts profit margin by 640 bps in FY18; embedded value also surges

Shares of ICICI Prudential Life Insurance (ICICI Pru Life) surged by 7.1 per cent on Tuesday after the company posted strong results for FY18. What cheered the Street was the 640-basis point (bp) expansion in value of new business (VNB) margin to 16.5 per cent for the recently concluded fiscal year. VNB is a key profitability indicator of an insurer, and is the present value of profit from new business over a given period of time, divided by the annualised premium.

According to the management, product mix changes mainly led to this sturdy improvement in margin during the year. First,