ICICI Prudential Life Insurance, which is the market leader in the universe of private sector life insurers continues to maintain its lead in unit-linked insurance plans (ULIPs).
In an analysis, brokerage house Nomura has, observed that while this reduces regulatory risk, the regulatory cap on charges for ULIPs implies a need for better persistency and cost control to achieve high New Business Profit (NBP) margins.
While persistency and costs are improving at the margin, value accretion will depend on further improvements on these metrics. Business margins, growth and renewals are dependent on equity markets given high ULIP dependence. With NBP margin being one of the lowest in the industry, it will need to increase share of protection business to improve margins,” the report added.
The life insurance sector has been through a phase of consolidation over the past five years and is perceived to be poised for steady growth in the next few years. Analysts estimae a compounded annual growth rate of 15-17%
in weighted premiums given improving cost and efficiency metrics.
A report by ICICI Securities points out that despite intense regulatory scrutiny and far reaching changes in the ULIPs space in 2010-11, ICICI Prudential Life insurance continues to maintain ULIP as the bulwark of its product mix (81.9% of new business premiums in FY15). “Driven by improved persistency that has created a surge in renewal premiums for both unit linked and traditional products, the company has managed to grow premiums at 8.1% CAGR over FY12-16. Its current market share stands at 21.9% amongst private players and has improved 340 bps in last 4 years,” the report notes.
The life insurer on Monday filed a draft red herring prospectus (DRHP) for its initial public offering (IPO) with Securities and Exchange Board of India (Sebi).
The report also states that, while other private players like HDFC Standard Life, SBI Life Insurance, Bajaj Allianz Life Insurance, Birla Sun Life Insurance and Max Life Insurance has share in the range of 35-45% of new business premiums in ULIPs for FY 15.
“ICICI Prudential Life has always been very strong on ULIPs and with surge in markets they can attract more investors. With ICICI bank as their Bancassurance, they can attract high net-worth individual (HNIs) of the banks which could increase the ticket-size in the ULIPs,”said a top insurance player.
ICICI Prudential Life Insurance achieved a profit after tax of `1,650 crore for FY2016 compared to `1,634 crore for FY2015. According to the data from Life Insurance Council, new business premium of ICICI Prudential Life insurance for the last financial stood at `6,765.89 crore as compared to `5,333.3 crore in FY15.
Although ICICI Prudential Life Insurance will be first insurance company to list in India, Last month HDFC Standard Life and Max Life Insurance announced their merger. With merger of HDFC Standard Life and Max Life Insurance would combined have share of 24.9% higher than ICICI Prudential Life Insurance.
