ICICI Prudential’s Q4 Results Show Decrease in New Business Margin for FY 2024

ICICI Prudential Life Insurance Company, one of India’s leading insurers, reported a decline in its new business margin due to a shift in customer preferences towards low-margin products. The value for new business (VNB) fell by 19.5% to ₹22.27 billion for the year ended March 31, resulting in a decrease in the VNB margin from 32% to 24.6%.

The rise in low-margin unit-linked insurance plans (ULIPs) in the market, coupled with weak demand for high-value policies post-tax implementation changes, has impacted the company’s VNB margins. The company attributed the decline in VNB margin to the shift in the product mix towards unit-linked business, with the linked segment contributing 43.2% to the overall product mix by annualised premium equivalent (APE).

Despite the challenges, ICICI Prudential Life Insurance Company saw a 4.7% growth in APE sales for the year. The company also reported a net premium income growth of 17% to ₹147.88 billion for the three months ended March 31. However, its fourth-quarter profit after tax fell by 26% to ₹1.74 billion compared to the previous year.

Rival HDFC Life Insurance also reported a decline in new business margin last week, indicating a broader trend in the industry. Despite the challenges, shares of ICICI Prudential closed 2.3% higher ahead of the results, with the stock gaining nearly 14% during the March quarter. Investors will be closely watching how the company navigates the changing landscape of the insurance market in the coming months.