MOSL: ICICI Prudential Life Insurance (Not Rated)-Growth outlook remains strong

ICICI Prudential Life Insurance: Growth outlook remains strong

(IPRU IN, CMP INR414, Not rated)

We hosted the top management team of ICICI Prudential Life insurance (IPRU) to understand the strategy the company is following in the current phase of healthy industry growth and the opportunities and challenges that lie ahead. Our key takeaways:

•  Protection business opportunity remains huge: IPRU highlighted that the total protection premium collected annually is estimated to be in range of INR80-110b (against this, motor premium collection is >INR500b, of which ~70% is voluntary). This can rise multifold over the next few years, given huge under-penetration in this segment and lack of focus by select large players. IPRU has maintained a highly retail-focused approach, with 90% of its business coming from retail customers (as against private players’ average of 80%). However, incrementally, the company also aims to focus on group term/B2B business, which will aid overall growth in the protection business.
• Pricing fears in protection business seem exaggerated: IPRU remains focused to capitalize on strong/high margin protection business opportunity and believe that decongesting sales process is bigger challenge than actual demand from customers. The company suggested that fears of aggressive pricing in this segment are exaggerated and the current term product proposition in the country is comparable to many other emerging/developed countries. However, consistent decline in mortality charges, as longevity improves and cost of operations reduces, may bring down product pricing over the medium term.