MOSL: ICICI PRUDENTIAL LIFE INSURANCE (Buy)-Strengthened distribution and product mix drives growth
ICICI PRUDENTIAL LIFE INSURANCE: Strengthened distribution and product mix drives growth; persistency trends stable
(IPRU IN, Mkt Cap USD12.6b, CMP INR660, TP INR780, 18% Upside, Buy)
VNB margin moderates due to slower Protection sales
- IPRU posted ~35% YoY growth in new business APE, led by healthy trends in the Annuity segment (~67% YoY), while ULIP growth bounced back strongly (~44% YoY). Protection growth was aided by Credit Life/Group Term, while Retail Protection growth stood weak. On the distribution side, growth was supported across all channels (barring ICICIBC). IPRU continued to improve its distribution mix by adding new partners and agents.
- VNB grew ~28% YoY to INR5.2b (~7% miss). VNB margin moderated by 130bp YoY to 26%, affected by slower growth in Protection sales.
- Shareholders’ PAT grew strongly (~47% YoY), aided by moderation in COVID-19 claims. Persistency improved in the 13th month, but was stable in the 61st month.
- We estimate IPRU to deliver ~32% CAGR in VNB over FY21-24E, led by robust premium growth, buoyed by new partnerships and product segments, enabling operating RoEV ~17%. We maintain our BUY rating.
ICICI Prudential Life Insurance Company Limited is a life insurance company, which is a joint venture between ICICI Bank Limited and Prudential Corporation Holdings Limited. The Company provides life insurance, pensions and health insurance to individuals and groups. It conducts business in participating, non-participating and unit linked lines of businesses. Its segments include Par Life, Par Pension, Non Par, Annuity Non Par, Health, Linked Life, Linked Pension, Linked Health and Linked Group. It offers term plans, such as ICICI Pru iProtect Smart; unit linked insurance plans (ULIPs), such as ICICI Pru Wealth Builder II and ICICI Pru Elite Life II; child education insurance plans, such as ICICI Prudential SmartKid with Smart Life; retirement plans, such as ICICI Pru Easy Retirement; traditional savings/money back plans, such as ICICI Pru Cash Advantage and ICICI Pru Savings Suraksha, and Health insurance. It offers products on retail, mortgage and group platforms.
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Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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