BENGALURU (Reuters) – India’s ICICI Prudential Life Insurance Company posted a nearly 9% rise in its first-quarter profit on Tuesday, aided by strong demand for market-linked products.
The ICICI Bank-backed insurer said its profit after tax for the quarter ended June 30 rose to 2.25 billion rupees ($26.9 million) from 2.07 billion rupees a year earlier.
Its annualised premium equivalent (APE) sales grew 34.4% from a year earlier. APE, a key metric for insurers, is a gauge of sales that gives the annualised total value of all single premium and recurring premium policies.
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KEY CONTEXT
A shift to low-margin market-linked insurance plans amid strong equity market performance and rising payouts have exerted pressure on life insurers’ margins, analysts have said.
Indian equity benchmarks scaled record highs during the June quarter, supported by policy continuity following the results of the general election and on hopes for strong economic growth.
The value for new business (VNB), the expected profit from new policies, for ICICI Prudential Life rose 7.8% to 4.72 billion rupees for the June quarter while the VNB margin shrunk to 24% from 30% a year earlier.
The insurer’s market-linked savings segment made up just over half its overall product mix, higher from a 38.8% share a year earlier.
PEER COMPARISON
Valuation Estimates (next 12 Analysts’ sentiment
(next 12 months)
months)
RIC PE EV/EBI Revenue Profit Mean # of Stock to Div
TDA growth (%) growth rating* analyst price yield
(%) s target** (%)
ICICI Prudential 81.66 NULL 13.24 26.94 Buy 21 0.99 0.09
Life Insurance
Company Ltd
HDFC Life Insurance 70.54 NULL -7.31 18.70 Buy 14 0.86 0.31
Company Ltd
SBI Life Insurance 71.55 NULL 16.83 17.11 Strong 26 0.91 0.16
Company Ltd Buy
Life Insurance 17.41 21.90 6.68 4.17 Buy 13 0.99 0.89
Corporation Of
India
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 83.6570 Indian rupees
(Reporting by Dimpal Gulwani and Ashish Chandra; Editing by Mrigank Dhaniwala)
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