Why ICICI Prudential Share Price is Falling

Shares of ICICI Prudential Life Insurance have fallen 4% in the last month after the company reported results for the September 2022 quarter.

Shares of insurance companies have underperformed the market in 2022 due to expensive valuations and the multiple business challenges they faced during the pandemic.

The stock of ICICI Prudential has also taken a hit.

The stock is one of the top insurance stocks in India. Yet, it was not immune to the impact of the pandemic and the volatility in the market.

So, how did the company fare during the September 2022 quarter? Let's find out...

Low investment income impacts profitability

ICICI Prudential Life Insurance reported an over 55% YoY dip in net profit at Rs 2 bn for the September 2022 quarter ended September on account of lower income.

The company's net profit stood at Rs 4.6 bn in the year ago period.

Net premium earned by the private sector insurer during the quarter came in marginally higher. However, total income decreased 2.4% YoY to Rs 2.26 bn from Rs 2.31 mainly because of a fall in investment income. Investment income was down 6.1% YoY.

The decrease in investment income is primarily on account of the decrease in market value of the securities held, the company said.

However, in the first half of the financial year 2023, the new business premium witnessed a year-on-year growth of 13.9% at Rs 7.3 bn.

The company said its value of the new business (VNB), a key measure of profitability, also grew 25% YoY with the VNB margin expanding to 31% from 27.3%.

Persistency ratios improved across all cohorts.

The 13th-month ratio, which is representative of the quality of business, stood at 85.9% for the first half an improvement of 80 basis points over the first half of the financial year 2022.

Group protection business to drive growth for life insurers

Most listed life insurers saw their retail protection business decline during the September 2022 quarter, with the exception of Max Life Insurance.

This was due to supply-side constraints due to the pandemic and the rate hikes taken by reinsurers over the past two years.

However, the group protection business saw rapid growth as disbursements from banks and non-banking finance companies (NBFCs) picked up. The segment is expected see growth ahead as the supply side constraints ease.

ICICI Prudential Life's management said the annualised premium equivalent (APE) of the company's group protection portfolio, grew 29% YoY in H1FY22, driven mainly by group life and credit life products.

It believes that the segment will see further improvement in the second half of the year.

Just like ICICI Prudential Life Insurance, HDFC Life also saw a decline in the retail protection business and increase in the group protection business.

Strong growth in group protection, especially Credit Life, more than offset the continued decline in retail protection, driving the overall protection APE growth to 24% YoY.

The management expects YoY growth to gradually pick up in the second half of the year.

Besides HDFC Life, SBI Life too saw the APE dip 4% YoY.

How ICICI Prudential Life Insurance shares have performed lately

ICICI Prudential Life Insurance shares have declined over 4% in the last month. The stock is also down 11% in 2022 and 20% over the last year.

Shares of the company of touched their 52-week high of Rs 680 on 21 November 2021 and a 52-week low quote of Rs 430 on 8 March 2022.

About ICICI Prudential Life Insurance

ICICI Prudential Life Insurance Company Limited is a life insurance company in India.

Established as a joint venture between ICICI Bank and Prudential Corporation Holdings Limited, ICICI Prudential Life is engaged in life insurance and asset management business.

In 2016, the company became the first insurance company in India to be listed in the domestic stock exchanges.

The IPO, where the parent company ICICI Bank Limited offloaded 12.65% of its shares, was termed as biggest in the Indian market since 2010 with its market capitalisation of Rs 50 bn (US$ 630 m).

Temasek Holdings, Premji Invest and Government of Singapore are other major shareholders of the company

To know more, check out ICICI Prudential company fact sheet and quarterly results.

For a sector overview, read our insurance sector report.

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