What TV doesn't, print can't; we deliver.
What TV doesn't, print can't; we deliver.
By Prithvish Uppal
ICICI Prudential Life Insurance (IPRU) has demonstrated a solid performance in recent quarters, positioning itself as a standout player in India’s insurance sector.
With robust growth in Annualized Premium Equivalent (APE) and Retail Weighted Received Premium (RWRP), IPRU has outpaced both industry and private players, underscoring its ability to adapt and thrive in a competitive landscape.
The company’s continued focus on diversification, technology integration, and product innovation signals a promising future, with key developments and strategic moves positioning it well for sustained growth.
In Q2FY25, IPRU’s APE growth of 21% YoY was driven by strong performances across multiple product lines. Unit Linked Insurance Products (ULIPs) saw impressive growth of 40% YoY, while annuity products surged 74% YoY, and retail protection grew by 31% YoY.
These figures reflect a well-balanced product portfolio, capable of offsetting challenges in specific segments, such as the 10% drop in non-linked savings and group protection.
Given ongoing negotiations with distributors over commissions, which may take some time to resolve, growth is expected to moderate in the second half of the fiscal year to around 16% YoY.
Despite this, the overall business mix remains healthy, and full-year Value of New Business (VNB) growth is expected to reach approximately 12% YoY, with a margin of 23%.
While IPRU’s VNB margin was slightly lower sequentially, down 60 basis points (bps) in Q2 due to a shift in business mix and a delay in repricing non-par products, the outlook remains positive.
The margin is expected to improve by FY26E as the non-participating (non-par) product segment gains momentum. With competitive intensity likely to ease following the impact of surrender values, IPRU is well-positioned to capitalize on this shift and enhance margins.
One of IPRU’s key strengths lies in its ability to move beyond past challenges, particularly those related to its reliance on ICICI Bank for APE contributions. The bank’s contribution has now been built into the base, and the company has diversified both its distribution channels and partners.
This diversification has made the company’s distribution network more resilient, reducing the risks associated with over-reliance on any single partner.
Furthermore, IPRU’s product offerings have expanded, and its investments in non-par products provide a buffer against any potential slowdown in ULIP sales.
This adaptability ensures that the company is not overly dependent on one segment for growth, giving it the flexibility to respond to market changes.
IPRU’s strong technology integration with its distribution partners has been a key differentiator in the highly competitive insurance sector.
By leveraging technology, the company has streamlined processes, enhanced customer experiences, and improved operational efficiency.
This tech-driven approach has allowed IPRU to maintain a balanced distribution mix and strengthen its bancassurance partnerships, positioning it well for future growth.
With a favourable risk-reward profile and a clear strategy for growth, IPRU is well-positioned for long-term success.
The company’s investments in retail protection, agency channels, and non-par products, combined with its diversified distribution network, make it a compelling investment opportunity. Based on a 2.2x P/EV multiple on September 2026E embedded value per share of INR 408, we recommend a Buy with a target price of INR 900.
Despite the positive outlook, several risks remain. These include potential adverse regulatory changes, delays in distributor commission negotiations, and a slowdown in ULIP growth that may not be fully offset by non-par growth.
However, given IPRU’s strategic initiatives and strong fundamentals, the company is well-equipped to navigate these challenges.
ICICI Prudential Life Insurance is clearly on the right path. With its diversified product mix, focus on technology and strong growth in key segments, the company is poised to deliver strong returns for investors.
While some near-term challenges exist, the long-term outlook remains promising, making IPRU a solid investment choice in the Indian insurance sector.
