ICICI Life Q3 Results Review - Robust Margin Drives VNB Growth: Motilal Oswal

Motilal Oswal Report

ICICI Prudential Life Insurance Company Ltd. reported a decline in new business annual premium equivalent (down 6% YoY; inline) in Q3 FY23 hit by weak unit linked insurance plan growth even as nonlinked savings and protection businesses grew strongly. However, APE rose 4% YoY to Rs 53.4 billion in nine months-FY23.

VNB grew 20% YoY to Rs 6.2 billion (10% beat), driven by a 720 bps YoY VNB margin expansion to 33.9% in Q3 FY23. For nine months-FY23, VNB rose 23% YoY to Rs 17.1 billion fueled by VNB margin expansion of 490 bps to 32.0%.

We estimate ICICI Life to deliver an 18% compound annual growth rate in VNB over FY22-25. This will be driven by a combination of premium growth and slight improvement in margins, thereby enabling an operating return on return on enterprise of ~16% over FY23-25E.

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