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Published 19:05 IST, April 23rd 2024

ICICI Prudential reports decline in new business margin for FY24

The value for new business (VNB), representing the anticipated profit from new policies, declined by 19.5% to Rs 2,227 crore for fiscal year ending March 31.

Reported by: Business Desk
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The insurer, backed by ICICI Bank, achieved a 17 per cent growth in net premium income | Image: Freepik
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ICICI Prudential Life Insurance Company reported a narrowed new business margin on Tuesday, citing a sustained decline in demand for high-value policies and a shift in customer preferences towards lower-margin products.

The value for new business (VNB), representing the anticipated profit from new policies, declined by 19.5 per cent to Rs 2,227 crore for fiscal year ending March 31. Consequently, the VNB margin dropped to 24.6 per cent from 32 per cent in the preceding year.

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Life insurers have witnessed an increase in the proportion of low-margin unit-linked insurance plans (ULIPs) amid a robust domestic equity market. The NSE Nifty 50 Index recorded a 2.7 per cent rise in the January-March period, marking its fourth consecutive quarterly gain and reaching record highs.

Analysts attribute the persistent weakness in demand for high-value policies, following changes in tax implementation, as a major factor impacting VNB margins.

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ICICI Prudential noted that the decline in VNB margin primarily stems from the shift in the product mix towards unit-linked business. The linked segment contributed 43.2 per cent to the overall product mix by annualised premium equivalent (APE) for the year.

APE, a critical metric for insurers, reflects the annualised total value of all single premium and recurring premium policies. ICICI Prudential recorded a 4.7 per cent growth in APE sales for the year.

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The insurer, backed by ICICI Bank, achieved a 17 per cent growth in net premium income, amounting to Rs 14,788 crore for the three months ending March 31. However, the company's fourth-quarter profit after tax declined by 26 per cent to Rs 174 crore compared to the previous year.

Last week, rival HDFC Life Insurance also reported a decrease in new business margin.

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ICICI Prudential's shares closed 2.3 per cent higher prior to the release of results, following a nearly 14 per cent gain during the March quarter.

(With Reuters inputs)
 

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19:05 IST, April 23rd 2024