ICICI Prudential Life Insurance said it will focus on growing its absolute Value of New Business (VNB) moving forward. In the Q4FY24 results announced on April 23, the company said VNB, which is the expected profitability from new policies sold, fell 19.45 percent to Rs 2,227 crore for FY24 from Rs 2,765 crore in FY23. VNB margin also fell to 24.6 percent in FY24 from 32 percent in the previous year.
Dhiren Salian, Chief Financial Officer of the company, said in the post-earnings conference call that the decline in VNB is due to shift in “product mix, competitive pricing pressures and increases in expenses”.
An increase in stock market buoyancy has led to investors choosing unit- linked portfolios, which is a low-margin product. Salian also said the change in taxation of more than Rs 5 lakh non-linked policies impacted the insurance industries.
Costs have also increased for ICICI Prudential Life Insurance as a redesign in the commission structure has led to higher commission expenses, further weighing down on margin.
Sailan said the impact of the revised commission has been factored in the year and unit cost will not to be impacted much going forward.
The insurer’s Annual Premium Equivalent (APE), which is a measure of sales for insurance companies, increased 4.69 percent to Rs 9046 crore in FY2024.
In the Q4 results of the company that announced after market hours, the company’s net profit fell 26 percent YoY to Rs 174 crore in the quarter that ended in March 2024.
The board also declared a final dividend of Rs 0.6 per equity share of face value of Rs 10 each, to the shareholders.
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