Performance update: 9M-FY2021
January 27, 2021
Agenda
- Company strategy and performance
- Opportunity
- Industry overview
Risk management
High quality assets
- 96.5% of fixed income in sovereign or AAA; 0.6% of fixed income below AA
- Zero NPA since inception
Insurance risks
- Mortality experience (including Covid-19 claims) in line with provisions; additional reserve held for potential Covid-19 claims
- Other parameters in line with assumptions
Liability profile
- 83% of liabilities largely pass on the market performance to customers
- Non par guaranteed return book: 0.7% of liabilities
Strong solvency ratio
- Solvency ratio of 226% at December 31, 2020
3
Agenda
- Company strategy and performance
- Opportunity
- Industry overview
Key strategic elements
Protection
Customer
centricity | Premium | VNB Growth | Persistency |
continues to be | Growth | ||
at the core |
Productivity
Aspiration to
double the
FY2019 VNB in
3 - 4 years
5
Strategic elements (1/4) | • Deepen penetration in under-served customer | ||||||
segments | |||||||
Premium | • | Enhance current distribution | |||||
growth | • | Create new distribution | |||||
• Augment capability in Health and Protection | |||||||
• Increase focus on Pension and Annuity | |||||||
` billion | FY2020 | Q1- | Q2- | Q3- | 9M- | ||
FY2021 | FY2021 | FY2021 | FY2021 | ||||
New business premium (NBP)1 | 123.48 | 14.99 | 29.57 | 34.43 | 78.99 | ||
YoY growth | 20.4% | (32.6%) | 1.1% | 14.0% | (3.3%) | ||
APE2 | 73.81 | 8.23 | 14.65 | 16.66 | 39.54 | ||
YoY growth | (44.0%) | (22.9%) | (18.3%) | (26.9%) | |||
Linked | (62.2%) | (41.5%) | (38.8%) | (48.6%) | |||
Non-linked (savings) | 14.2% | 45.2% | 36.2% | 35.0% | |||
14% growth in NBP for Q3-FY2021;non-linked savings APE grew 36% year on year
- Received premium for retail and group
- Annualized premium equivalent
6
Strategic elements (2/4) | Protection | Continue to grow both retail and group lines of |
Focus | business |
` billion | FY2020 | 9M-FY2021 |
Protection APE | 11.16 | 7.03 |
Protection mix | 15.1% | 17.8% |
New business sum assured market share | 11.8% | 13.0% |
- Private market leader based on new business sum assured
- Market share increased from 12.5% in H1-FY2021 to 13.0% in 9M-FY2021
- New business sum assured grew by 22% in Q3-FY2021
- 2.1% year on year growth for 9M-FY2021
7
Strategic elements (3/4) | Persistency Improve persistency across all cohorts |
Persistency1 | 11M-FY2020 | 2M-FY2021 | 8M-FY2021 | vs 2M-FY2021 |
13th month | 83.2% | 81.8% | 82.7% | 90 bps |
61st month | 56.0% | 56.8% | 58.0% | 120 bps |
` billion | 9M-FY2020 | FY2020 | 9M-FY2021 | Y-o-Y |
Retail surrender | 87.30 | 121.31 | 81.27 | (6.9%) |
(linked) | ||||
Strong sequential improvement in persistency
1. Retail excluding SP computed as per IRDAI circular dated January 23, 2014
8
Strategic elements (4/4) | Productivity | Continue to leverage technology for process re- |
engineering and to drive productivity | ||
` billion | 9M-FY2020 | FY2020 | 9M-FY2021 |
Cost/TWRP1 | 16.6% | 15.9% | 14.6% |
Cost/TWRP | |||
11.1% | 10.4% | 9.3% | |
(savings LOB) | |||
Significant improvement in cost ratios
1. Total cost including commission/(Total premium- 90% of single premium)
9
Value of New Business
` billion | 9M- | FY2020 | Q1- | Q2- | Q3- | 9M- |
FY2020 | FY2021 | FY2021 | FY2021 | FY2021 | ||
APE | 54.07 | 73.81 | 8.23 | 14.65 | 16.66 | 39.54 |
Value of New | ||||||
11.35 | 16.05 | 2.01 | 4.01 | 4.28 | 10.30 | |
Business (VNB)1 | ||||||
VNB growth | 24.7% | 20.9% | (35.0%) | 0.2% | 0.5% | (9.3%) |
APE growth | 1.2% | (5.4%) | (44.0%) | (22.9%) | (18.3%) | (26.9%) |
VNB margin increased from 21.0% in 9M-FY2020 to 26.0% in 9M-FY2021
1. For full year, based on actual cost; 9M: based on management forecast of full year cost
10
Key strategic elements
Protection
Customer
centricity | Premium | VNB Growth | Persistency |
continues to be | Growth | ||
at the core |
Productivity
Aspiration to
double the
FY2019 VNB in
3 - 4 years
11
4P: Premium
Products available across all categories
Savings | Linked | ||||||||||
Non-linked | |||||||||||
Participating with | Savings with | ULIP: Suite of funds | ULIP: with capital | ||||||||
equity | guarantee; | for Equity and Debt | guarantee | ||||||||
Annuity | |||||||||||
Retail | Protection | Group | |||||
Pure term with | |||||||
Critical illness, | Pure term, Micro insurance, Credit insurance, | ||||||
accident cover | Disease specific | Critical illness | |||||
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Risk management: Non-participating savings
• Expanded product tenure from a maximum of 15 years to ~20 years
• Interest risk hedged through a
combination of cash market instruments | ||
and derivatives | years | |
• Hedge program designed for each | ||
term | > 15 | |
tranche of new business | ||
• Locked in yields for future premiums | Policy | |
• Underlying bonds for derivatives | years | |
selected keeping in mind liability | ||
15 | ||
tenure | <= |
• Regular review and repricing based on prevailing interest rates
GIFT: Guaranteed Income For Tomorrow
ASIP: Assured Savings Insurance Plan
Lump sum | Income |
GIFT
ASIP
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Product segments (1/2)
• Deepen penetration in under-served
customer segments | ||
Premium | • | Enhance current distribution |
growth | • | Create new distribution |
• Augment capability in Health and Protection
• Increase focus on Pension and Annuity
APE (` billion) | Growth (%) | ||||
Savings segment | Q1-FY2021Q2-FY2021 | Q3-FY2021 | Q-o-Q | Y-o-Y | |
Linked | 3.59 | 7.01 | 8.46 | 20.7% | (38.8%) |
Non-linked | 2.01 | 4.40 | 4.85 | 10.2% | 36.2% |
Group | 0.49 | 0.91 | 0.78 | (14.3%) | 143.8% |
Total savings APE | 6.09 | 12.32 | 14.09 | 14.4% | (20.4%) |
Sequential momentum with 14% growth, higher growth than overall market
Total may not add up due to rounding off
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Product segments (2/2)
• Deepen penetration in under-served
customer segments | ||
Premium | • | Enhance current distribution |
growth | • | Create new distribution |
• Augment capability in Health and Protection
• Increase focus on Pension and Annuity
APE (` billion) | Mix | |||||
Segments | FY2020 | 9M-FY2021 | FY2020 | 9M-FY2021 | ||
Savings | 62.65 | 32.51 | 84.9% | 82.2% | ||
Linked | 47.72 | 19.05 | 64.7% | 48.2% | ||
Non-linked | 12.46 | 11.28 | 16.9% | 28.5% | ||
Group | 2.47 | 2.18 | 3.3% | 5.5% | ||
Protection1 | 11.16 | 7.03 | 15.1% | 17.8% | ||
Total APE | 73.81 | 39.54 | 100.0% | 100.0% | ||
Diversified product mix: 48% linked, 29% non-linked savings and 18% protection
1. Protection includes retail and group protection products Total may not add up due to rounding off
16
Diversified distribution
Strategy: Build profitability
- 22 bank partnerships
- Protection and Annuity mix further increased from 10% in FY2020 to 16% in 9M-FY2021
Strategy: Invest and grow
• | 13,179 agents recruited | |
during 9M-FY2021 | ||
• | Diversified product mix: | Agency |
Savings: linked 32% | ||
savings: non-linked59% | ||
and Protection 9% |
Strategy: Create depth and add width
- >600 partnerships
- Protection and non-linked savings: ~87% in 9M-FY2021
Partnership
Distribution
Distribution
Strategy: Digital focused upsell campaigns
- Analytics driven upsell channel
- Diversified product mix with 12% protection and 32% non-linked savings
Strategy: Partner with non- traditional distributors
ecoEmerging systems | • | Tie-up with small finance |
banks, wallets, payment | ||
banks, aggregators etc. | ||
• | Product customization |
During the quarter, distribution tie-ups with RBL Bank, AU Small Finance Bank and PhonePe
Figures mentioned are for 9M-FY2021 | |
* Direct comprises sales through own website and employees on roll | 17 |
Distribution expansion
Bancassurance relationships added during the year
Branches | Customers (mn) | Quarter | |
IDFC First Bank | 523 | 10.0 | Q1 |
IndusInd Bank | 1,910 | 25.0 | Q2 |
NSDL PB1 | 1 | 0.1 | Q2 |
RBL Bank | 398 | 8.5 | Q3 |
AU SFB | 686 | 1.7 | Q3 |
Capacity creation in 9M-FY2021:
- 83 new partnerships; includes non-conventional partnerships such as PhonePe and BSE Ebix insurance broking
- 13,179 new agents
Banca customer base
162 mn
116 mn
Banca branch network
12,038
8,573
1. NSDL customer base: 20.7 mn PB: Payments Bank
SFB: Small Finance Bank | 18 |
Distribution channels (1/2) | • Deepen penetration in under-served | |||||||
customer segments | ||||||||
Premium | • | Enhance current distribution | ||||||
growth | • | Create new distribution | ||||||
• Augment capability in Health and Protection | ||||||||
• Increase focus on Pension and Annuity | ||||||||
APE (` billion) | Growth (%) | |||||||
Channels | Q1-FY2021 | Q2-FY2021 | Q3-FY2021 | Q-o-Q | ||||
Bancassurance | 3.26 | 6.42 | 6.98 | 8.7% | ||||
Agency | 2.03 | 3.32 | 4.18 | 25.9% | ||||
Direct | 1.01 | 1.78 | 2.21 | 24.2% | ||||
Partnership | 0.71 | 1.26 | 1.28 | 1.6% | ||||
distribution | ||||||||
Group | 1.23 | 1.86 | 2.01 | 8.1% | ||||
Total APE | 8.23 | 14.65 | 16.66 | 13.7% | ||||
Sequential momentum across channels
Total may not add up due to rounding off
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Distribution channels (2/2) | • Deepen penetration in under-served | |||||||
customer segments | ||||||||
Premium | • | Enhance current distribution | ||||||
growth | • | Create new distribution | ||||||
• Augment capability in Health and Protection | ||||||||
• Increase focus on Pension and Annuity | ||||||||
APE (` billion) | Mix (%) | |||||||
Channels | FY2020 | 9M-FY2021 | FY2020 | 9M-FY2021 | ||||
Bancassurance | 37.48 | 16.66 | 50.8% | 42.1% | ||||
Agency | 15.62 | 9.53 | 21.2% | 24.1% | ||||
Direct | 9.31 | 4.99 | 12.6% | 12.6% | ||||
Partnership | ||||||||
5.46 | 3.25 | 7.4% | 8.2% | |||||
distribution | ||||||||
Group | 5.94 | 5.10 | 8.1% | 12.9% | ||||
Total APE | 73.81 | 39.54 | 100.0% | 100.0% | ||||
Further diversification across distribution channels
Total may not add up due to rounding off
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4P: Protection
Protection business
Protection | Continue to grow both retail and group lines |
growth | of business |
APE (` billion)
11.16 | ||
7.03 | ||
4.46 | ||
FY2020 | H1-FY2021 | 9M-FY2021 |
Sum assured market share1
13.0% | ||
12.5% | ||
11.8% | ||
FY2020 | H1-FY2021 | 9M-FY2021 |
Strong growth in group term and credit life in Q3-FY2021; retail continues to dominate mix
1. New business
Total may not add up due to rounding off
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4P: Persistency
Persistency
Retail excluding single premium | Retail including single premium |
Month | 11M-FY2020 | 8M-FY2021 |
13th month | 83.2% | 82.7% |
25th month | 75.1% | 72.7% |
37th month | 66.7% | 65.1% |
49th month | 64.6% | 63.3% |
61st month | 56.0% | 58.0% |
Month | 11M-FY2020 | 8M-FY2021 |
13th month | 85.3% | 85.0% |
25th month | 77.4% | 75.9% |
37th month | 69.0% | 67.8% |
49th month | 66.4% | 65.9% |
61st month | 57.4% | 59.6% |
Significant recovery in 13th month persistency ratio
As per IRDAI circular dated January 23, 2014
24
4P: Productivity
Productivity: Cost efficiency
9M-FY2020 | FY2020 | 9M-FY2021 | |||||||
Expense ratio (excl. commission)1 | 10.9% | 10.3% | 9.7% | ||||||
Commission ratio2 | 5.8% | 5.7% | 4.9% | ||||||
Cost/TWRP3 | 16.6% | 15.9% | 14.6% | ||||||
Cost/Average AUM4 | 2.6% | 2.9% | 2.1% | ||||||
Cost/TWRP (Savings LOB) | 11.1% | 10.4% | 9.3% | ||||||
` billion | 44.71 | ||||||||
32.82 | 28.04 | ||||||||
28.85 | |||||||||
Commission | |||||||||
21.39 | 18.61 | ||||||||
Non Commission | |||||||||
11.43 | 15.86 | 9.43 | |||||||
9M-FY2020 | FY2020 | 9M-FY2021 |
- 96.5% of new business applications initiated via digital platform
- 90.4% of service requests through self service modules
- Expense ratio: All insurance expenses (excl. commission)/(Total premium- 90% of single premium)
- Commission ratio: Commission/(Total premium- 90% of single premium)
- Cost/(Total premium- 90% of single premium)
4. Annualized cost/Average assets under management during the period | 26 |
Total may not add up due to rounding off |
Key technology initiatives: Q3-FY2021
Personalised video product brochure
Video
verification in
vernacular
language
Rapid
application
development
- Personalised video link along with e-welcome kit
- Policy details and product features are explained through audio visual mode
- To service regional/remote customers, we have enabled 11 languages for Pre Issuance Video Verification (PIVV)
- Drag-and-dropinterface to create custom business applications in days rather than weeks
- Three web applications taken live
27
VNB growth levers update (4P's)
` billion | FY2020 | 9M-FY2021 | Growth |
Value of New Business (VNB)1 | 16.05 | 10.30 | (9.3%) |
VNB margin | 21.7% | 26.0% | |
` billion | FY2020 | 9M-FY2021 | Growth |
Premium growth (APE) | 73.81 | 39.54 | (26.9%) |
Protection growth (APE) | 11.16 | 7.03 | (8.0%) |
Persistency (13th month)2 | 83.2%3 | 82.7% | |
Persistency (61st month)2 | 56.0%3 | 58.0% | |
Productivity (Cost/TWRP: Savings)4 | 10.4% | 9.3% |
- For full year, based on actual cost; 9M: based on management forecast of full year cost
- Retail excluding SP computed as per IRDA circular dated January 23, 2014
- 11M-FY2020
4. Total Cost including commission / (Total premium - 90% of single premium) | 28 |
Financial update
Financial metrics
` billion | 9M-FY2020 | FY2020 | 9M-FY2021 |
Profit before Tax | 8.97 | 10.69 | 9.68 |
Policyholder (underwriting | 4.26 | 4.92 | 5.28 |
profits) | |||
Shareholder | 4.71 | 5.77 | 4.40 |
Profit after Tax | 8.89 | 10.69 | 8.96 |
Solvency ratio | 207% | 194% | 226% |
AUM | 1,719.531 | 1,529.682 | 2,048.721 |
• 24% year on year growth in underwriting profits
• 34% growth in AUM over March 31, 2020
1. At December 31 of respective years
2. At March 31, 2020
Components may not add up to the totals due to rounding off | 30 |
Mortality experience including Covid-19 claims
Covid-19 claims pattern
Based on Date of Death
Based on Date of Intimation
Apr-20May-20Jun-20Jul-20Aug-20Sep-20Oct-20Nov-20Dec-20
- Deaths on account of Covid-19 appear to have peaked out
- Total claims on account of Covid-19 for 9M-FY2021 was ` 3.44 billion
• Claims net of reinsurance was ` 1.54 billion - Claims during 9M-FY2021 including Covid-19 claims in line with liability provisions
- Additional provision of ~ ` 1 billion towards Covid-19, not utilised so far
31
Embedded Value (EV)1
- billion
257.11 | ||
216.23 | 226.80 | 230.30 |
87.88 | ||
73.54 | 77.31 | 78.43 |
142.69 | 149.49 | 151.87 | 169.23 |
Mar-19 | Sep-19 | Mar-20 | Sep-20 | ||
Value of Inforce (VIF) | Adjusted net worth (ANW) | ||||
EV grew by ` 26.81 billion during half year, against full year FY2020 growth of ` 14.07 billion
1. As per Indian Embedded value (IEV) method
32
Analysis of movement in EV1
` billion | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
Opening EV | 137.212 | 139.39 | 161.84 | 187.88 | 216.23 |
Unwind | 12.58 | 12.21 | 13.72 | 15.84 | 17.25 |
Value of New Business (VNB) | 4.12 | 6.66 | 12.86 | 13.28 | 16.05 |
Operating assumption changes | 1.042 | 1.00 | 7.64 | 4.20 | (2.25)3 |
Operating variance | 4.48 | 3.08 | 2.58 | 4.69 | 1.83 |
Persistency variance | 2.01 | 0.99 | 1.53 | 2.66 | 0.85 |
Mortality and morbidity variance | 0.79 | 0.98 | 0.78 | 1.97 | 0.42 |
Expense variance | 0.59 | 0.35 | 0.27 | 0.04 | 0.01 |
Other variance | 1.09 | 0.76 | 0.00 | 0.02 | 0.56 |
EVOP
Return on embedded value (ROEV)
Economic assumption change and investment variance
Net capital injection
Closing EV
22.23 | 22.95 | 36.80 | 38.01 | 32.88 |
16.2% | 16.5% | 22.7% | 20.2% | 15.2% |
(5.64) | 5.82 | 1.13 | (1.22) | (14.76) |
(14.41) | (6.32) | (11.88) | (8.43) | (4.05) |
139.39 | 161.84 | 187.88 | 216.23 | 230.30 |
- As per Indian Embedded Value (IEV) method
- Difference of FY2015 closing EV & FY2016 opening EV shown as operating assumption change
3. Negative impact of ` 5.49 billion due to change in effective tax rate | 33 |
Components may not add up to the totals due to rounding off |
Sensitivity analysis
Scenario | % change in VNB | % change in EV | ||
FY2019 | FY2020 | FY2019 | FY2020 | |
Increase in 100 bps in the reference rates | (4.3) | (2.4) | (2.0) | (2.5) |
Decrease in 100 bps in the reference rates | 4.4 | 2.2 | 2.0 | 2.6 |
10% increase in the discontinuance rates | (8.5) | (5.0) | (1.3) | (1.1) |
10% decrease in the discontinuance rates | 8.9 | 5.1 | 1.4 | 1.1 |
10% increase in mortality/morbidity rates | (9.4) | (9.5) | (1.4) | (1.6) |
10% decrease in mortality/morbidity rates | 9.4 | 9.6 | 1.4 | 1.7 |
10% increase in acquisition expenses | (13.0) | (11.6) | Nil | Nil |
10% decrease in acquisition expenses | 13.0 | 11.6 | Nil | Nil |
10% increase in maintenance expenses | (3.6) | (3.0) | (0.9) | (0.8) |
10% decrease in maintenance expenses | 3.6 | 3.0 | 0.9 | 0.9 |
Tax rates increased to 25% | (7.5) | (11.4) | (4.0) | (5.8) |
10% increase in equity values | NA | 0.7 | NA | 1.8 |
10% decrease in equity values | NA | (0.7) | NA | (1.8) |
34
Technology initiatives
Objectives
To be the most admired digitally enabled insurer
- Empower customers and distributors with simplified journeys and choice of platforms
- Decongest processes by leveraging ecosystems and emerging technologies
- Enable servicing anytime, anywhere
- Drive adoption through superior experience
- Establish industry leading benchmarks
Strengthen the | Be future ready | Support new | ||
core | growth engines | |||
36
Digital evolution path to maturity
2011-2013 | 2013-2015 |
1 | 2 |
Build digital foundation | Digitize onboarding and service |
Optimize processes | Build seamless presentation |
and systems | layer |
2015-2018
3
Leverage ecosystem
Collaborate with internal stakeholders
And partners for enhancing experience and productivity
2018-2021
4
Market leadership
IT as an enabler for Business innovation
• | Process re- | • | Process | |
automation | ||||
engineering | ||||
• | Technology | • | Build seamless | |
presentation | ||||
architecture | layer | |||
• | Service | • | Integration | |
architecture | ||||
architecture | ||||
• | Integrate internal, | • | Seamless AI, ML, | |
Partner systems | NLP interventions | |||
and external | in the journey | |||
ecosystems | • | Enhance | ||
• | Provide frictionless | experience and | ||
journey | productivity | |||
End to end digitalization of journeys | Leverage ecosystems and tech advancements |
AI : Artificial Intelligence| ML : Machine Learning
NLP : Natural Language Processing
37
Presales enablers
Knowledge repository
On-the-go
e-learning modules
via exclusive Learners'
Box app
Opportunity
Matrix
Upsell triggers to approach existing customers once again for service requirement
My
Coach
AI based platform for video based library creation for sales pitches
Lead
Management
System
Robust LMS enhanced with voice capability and geographical tagging
Collaboration
platforms
Online meetings, joint
sales calls, invite
experts, share content
Customer
profiler
Know customer better through information available on social media platforms
Suitability
analysis
Product
recommendations based on life stage, goal risk appetite
Cognitive
Bots
24x7 query resolution
using chat bots viz.
Chat Buddy, PSF Guru,
Tara
38
Onboarding & issuance enablers
Flexible
on-boarding
Platform agnostic and
paperless journey
available for all
channels
Application
tracker
A tool to track
application status, pending documents, pending medicals etc.
Integration
and data pre-filled
Pre-filled data for existing ICICI Pru customers, Bank customers, PAN verification
Smart Doc
Upload App
Upload KYC and other requisite documents conveniently
PASA
No medical or income
document
requirement for
smoother onboarding
RPA enabled
issuance
Robotic processing of applications for faster issuance
Instant Optical
Character Reader
Real time
identification,
segregation and
verification of KYC
documents
Tele/video
underwriting
Improves efficiency and reduces issuance turn around time
PASA : Pre Approved Sum Assured | KYC : Know Your Customer
RPA : Robotic processing automation
39
Service enablers
Anytime.. | Flexible |
premium | |
..Anywhere | |
payment | |
Exhaustive self-help | All popular electronic |
modes of payments | |
options for customers | |
available for | |
Omni channel | |
contactless payment | |
experience | |
fulfilment | |
Annuity | LiGo |
service | (Service Bot) |
Simplifying journey | Chatbot for all |
for Annuity customers | customers service |
with digital life | requirements with |
verification | 24x7 availability |
Intuitive and
Visual IVR
Helps customers
avoid IVR queues and
saves
50% of the navigation
time
for servicing
First life insurer to get
business verified
account for statements
and receipts
Customer
app
Exclusive customer service native app with in-app nudges/notifications
Humanoid
AI based
conversational tool for
renewal premium reminder calling
40
Marketing & lead generation
Search engine
optimization
Use of Machine
learning to rank ICICI
Pru higher on
customers search
Selfie
quotes
AI backed quotes
based on facial
recognition tools
Segmented
targeting
Reaching the
customer by mapping
their
interests/affinities
Truecaller integration
To facilitate automatic application form filling
Mobile
first
All our content and
journeys are designed
for mobile devices
Interactive
banners
Banners with built-in calculators for instant and customized quotes
Hyper
personalization
Personalized messages to handhold customers throughout journey
Co-browsing
Instant screen share facility for assisting application form filling
41
Partner integration
Process
simplification
Faster onboarding for superior experience
Easy UI
(User Interface)
AI backed quotes based on
facial recognition tools
Flexible
integration
Modular integration
approach to meet partner
requirements
Customer service on partner portal
Enabling customer service
requests closures on
partner portals
Partner
portal
For policy details, MIS,
Certificate of Insurance etc.
42
Analytics
Actionable
insights
Transform information
architecture from a
backend driven to a self-
service mode
Google Big Query,
Hadoop, Python
AI backed quotes based on
facial recognition tools
Data
modelling
Modular integration
approach to meet partner
requirements
Data lake
solution
Use of AI and ML to
analyze structured and
unstructured data
Smart
solutions
Pre-approved best offers to
customer for instant issuance and better persistency
43
Collaboration with customers for presales & onboarding
Share screen for
- Suitability analysis
- Quote generation
- Completing the onboarding journey
Customer, financial consultant and expert added on same call
UPI/BBPS, Credit card, Debit card, Netbanking, eWallet options available
Share documents and chat with customer. Customers can also upload KYC documents/photo
Online meetings (upto 250 users) | Video/Audio call | Joint sales call | Share content Chat | Invite external guests, experts | Access previous meeting notes | Record sessions
44
Collaboration with customers for servicing requirements
Pay renewal premium
Tax certificate
Set auto debit mandate
WhatsApp for requesting policy related statements
Switch funds
Policy/unit statement
Service assistant chatbot LiGo for service resolution
- An easy access to a variety of self-service options
- Service requirements met from the comfort of customers' homes
45
Addressing stakeholders' concerns
I want to have a life cover but
am wary of meeting someone face to face
Live video chat
Customers are unwilling to meet face to face, how can I still interact with them?
Collaboration platform
As a manager, how do I ensure safety of my team members in the current COVID-19 scenario?
Contactless meetings
Will my life insurance policy
cover me against
coronavirus?
Product feature
Will I be able to service my
customers during this COVID-19 scenario?
Online service options
How do I train my team members on the new products and coronavirus related advisories?
Learning videos
How do I know fund value of my ULIP plan & pay renewal premium of my policy?
Self-service options
Will my business earnings
be affected due to the prevailing lockdown conditions?
Digital selling options
Due to restricted travel, how do I communicate with my team and conduct joint field work?
Live video meets & chats
How do I file a life insurance
claim?
Online claim intimation
With the current travel
restrictions how do I keep
myself updated on the
processes?
e-Learning modules
How do I track efficiency of
my team members and service my customers in the lockdown scenario?
Real time service support
46
ESG
Environmental
Environmental
Social
Social
Governance
Governance
Environmental initiatives
Preserving 'Mother Earth' for future generations
Replace
- End to end digital solutions for our business activities
- 84% shareholders communicated digitally
- Video conferencing facility at 94 locations
- Live plants to improve air quality: ~31% office space
Reduce
- 3/5 star rated ACs in all offices
- VRF AC systems (20% of usage)
- LED technology: 54% of branch lighting, 47% of backlit signage
- Managed print services & stationery tracking
- Food wastage awareness drive
- Sensor based taps & urinals
- Periodic office equipment maintenance
Reuse & Recycle
- Sewage treatment plant and wet waste conversion into manure at head office
- No single use plastic
- E-wastedisposal through government certified vendors
- Reusable glasses & plates
VRF: Variable Refrigerant Flow
48
Social initiatives
Building communities and giving back to society
Business itself is social in nature: Serving long term financial and protection needs of the society
Customer centricity | Commitment to employees | Community service | ||
- Products across life stage needs; multi- channel reach
- Digital enablers provide 24x7 service; 87% self-help usage
- Consistent risk-adjusted returns
- Grievance redressal policy
- 13th month persistency: 85.3%
- COVID-19:Un-interrupted service including claims
- Gender neutrality, equal opportunity, POSH policy
- Supportive policies including women centric, Whistleblower
- Learning & growth programs at all levels
- 85% of SMT served >10 yrs
- Responsible behavior: Privacy, Anti-corruption
- ~100% WFH during COVID19
- 3.9 mn lives insured from rural /social sector and PMJJBY5
- ICICI Academy for Skills: Trained 25,000 youth (145,400 till date)
- Rural livelihood training:76,400 youth (275,200 till date)
- Much needed long term capital for infrastructure and housing
- COVID-19:Provision of ventilators and consumables
POSH : Prevention of sexual harassment to women at workplace; | |
SMT: Senior management team; WFH: Work from home | |
PMJJBY: Pradhan Mantri Jeevan Jyoti Beema Yojana | 49 |
Governance
Transparency in functioning with separation of supervision from execution
Awarded for Corporate Governance; scorecard by IFC, BSE limited and IiAS
01 | Supervisory structure | 02 | Compliance, Risk & IA | 03 | Ethical practices |
Diverse Board composition | • | Quarterly compliance | • | Framework for managing | |
• 50% IDs including Chairman | certificate to the Board | Conflict of Interest | |||
Risk policy: Investment, | |||||
• | Board committees comprise | • | • Guidelines for Acceptance of | ||
majority of IDs/ NEDs; and | Insurance & Operational risk | Gifts, Entertainment and | |||
chaired by IDs | • | Risk-based IA framework | Sponsored travels | ||
• | Evaluation framework for | • | WTDs' compensation aligned | • | Policies on Anti-Money |
Directors, Chairman, Board | to KPI; includes malus & | Laundering, Anti Bribery/ | |||
and its Committees | claw-back | Corruption, Privacy policy, | |||
• Policy on Board diversity & | • | ISO 22301:2012 certification | Whistleblowing | ||
• | Stewardship Code | ||||
criteria on appointment of | for the BCM | ||||
Directors; regulatory norms | • | Investment policy for | |||
on "Fit and proper" | |||||
governance & operations |
IDs: Independent Directors, NEDs: Non- executive Directors, WTD: Whole time Directors | |
IA: Internal Audit; BCM: Business continuity management | 50 |
IFC: International Finance Corporation, IiAS: Institutional Investor Advisory Services | |
Agenda
- Company strategy and performance
- Opportunity
- Industry overview
Favorable demography
Large and growing population base1
2020 Population (mn)
1380 1439
213 | 274 | 331 | ||||||||||||||||||
127 | 146 | |||||||||||||||||||
51 | 59 | |||||||||||||||||||
S Korea | S Africa | Japan | Russia | Brazil | Indonesia | USA | India | China |
High share of working population1
Population of age 25-59 years (in mn)
727
578
2015 | 2030 |
Driving GDP growth2 | Rising affluence2 | |
7.7% | 7.9% | 8.0% | 8.2% | 8.8% | ||||||||||||||||||||||||||||||
7.4% | 7.2% | |||||||||||||||||||||||||||||||||
6.4% | ||||||||||||||||||||||||||||||||||
5.5% | 6.1% | |||||||||||||||||||||||||||||||||
5.2% | ||||||||||||||||||||||||||||||||||
4.8% 4.2% | 4.2% | |||||||||||||||||||||||||||||||||
3.1% | 2.7% | 2.8% | 2.9% | 3.8% | 3.5% | |||||||||||||||||||||||||||||
1.9% | 2.5% | 2.6% | 2.8% | 5.2% | ||||||||||||||||||||||||||||||
FY02 FY08 | FY10 FY12 | FY13 | FY14 | FY15 | FY16 | FY17 FY18 | FY19 | FY20E FY21E FY22E | ||||||||||||||||||||||||||
-1.7% | ||||||||||||||||||||||||||||||||||
-4.4% | ||||||||||||||||||||||||||||||||||
-10.3% | ||||||||||||||||||||||||||||||||||
India | World |
GDP per capita CAGR
(FY2009-FY2019)
10.9% | ||||||||||||||||||||
6.0% | 7.3% | |||||||||||||||||||
2.6% | 4.4% | |||||||||||||||||||
-0.3% | 0.0% | 0.1% | ||||||||||||||||||
Russia | Japan | Brazil | U.S.A | South Korea | Indonesia | India | China |
- Source: UN population division
- Source: WEO Update, October 2020
52
Financialisation of savings: Opportunity for insurance
Household savings1 | |||||||||||
90 | 69% | 70% | |||||||||
60% | 61% | 63% | 58% 60% | ||||||||
70 | 55% | ||||||||||
tn | 54% | 52% | |||||||||
52% | |||||||||||
50% | |||||||||||
` | 48% | ||||||||||
50 | 45% | 45% | |||||||||
44% | |||||||||||
36% 40% | |||||||||||
40% | |||||||||||
30 | 36% | 37% | 19.54 | 22.17 | |||||||
31% | 15.59 | 13.64 | 16.53 | 30% | |||||||
14.23 | |||||||||||
5.38 | 8.56 | ||||||||||
10 | 2.98 | 20.61 | 19.96 | ||||||||
14.96 | 14.38 | ||||||||||
9.90 | 9.33 | 12.57 | 20% | ||||||||
7.72 | |||||||||||
2.86 | |||||||||||
-10 | -0.52 | -1.88 | -2.03 | -2.90 | -3.77 | (3.91) | -4.69 | -7.38 | -7.66 | 10% | |
FY2002 | FY2008 | FY2010 | FY2012 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
-30 | 0% |
Physical savings
Gross financial savings
Household borrowings
Gross Financial savings as a % of Household Savings
Net Financial savings as a % of Household Savings
Distribution of financial savings (excluding currency)2
23.8% | 19.0% | ||||
25.1% | 18.8% | ||||
26.7% | 20.3% | ||||
29.0% | 20.5% | ||||
16.0% | 15.1% |
21.9% |
FY2002 FY2008 FY2010 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019
Provident / Pension Fund / Claims on Govt
Shares / Debentures / MFS
Life Insurance Fund
Deposits
FY2002 | FY2008 | FY2010 | FY2012 | FY2014 | FY2018 | FY2019 | FY2020 | |
Life insurance premium3 | 2.1% | 4.0% | 4.1% | 3.3% | 2.8% | 2.7% | 2.7% | 2.8% |
as % of GDP | ||||||||
- Financialisation of savings aided by Direct Benefit Transfer, RERA and GST
1. | Source: RBI and CSO | |
2. | Source: RBI | |
3. | Total life insurance industry premium including renewal; Source: IRDAI | 53 |
Protection opportunity: Where we are… | |||||||||||
Sum Assured as a % of GDP1,2 | Addressable population# | Protection gap(%) 4,5 | |||||||||
coverage3 (%) | |||||||||||
273% | |||||||||||
252% | 251% | 83 | 61 | 55 | 54 | 76 | 71 | 74 | 55 | ||
10% | 16.50 | ||||||||||
142% | 131% | ||||||||||
113% | trillion | ||||||||||
8.40 | |||||||||||
USD | 3.90 | 2.80 | |||||||||
19% | 2.00 | 0.90 | 0.70 | 0.60 | |||||||
* For retail protection sum assured (company | # Based on Income Tax Department |
estimates) | data for individuals (annual income > |
- 250,000) and company estimates
- As of FY2020 for India (GDP Source: National Statistics Office, protection sum assured source: company estimates)
- As of FY2018 for US, Japan, South Korea. Others as of FY2017 (Source: McKinsey estimates)
- Addressable population coverage= Inforce no. of lives for retail protection/ No. of returns with income > ` 250,000
- Protection gap (%): Ratio of protection lacking/protection needed
5. | Source: Swiss Re, Closing Asia's mortality protection gap, 2020 | 54 |
Opportunity: Sum assured as a % of GDP
Sum Assured (SA) as a % of GDP:
Assuming SA growth @ 20% CAGR
75% | |||
45% | |||
30% | |||
19% | |||
FY2020 | FY2025 | FY2030 | FY2035 |
Sum Assured (SA) as a % of GDP:
Assuming SA growth @ 25% CAGR
145% | |||
70% | |||
35% | |||
19% | |||
FY2020 | FY2025 | FY2030 | FY2035 |
Sum Assured as a % of GDP1,2
273% | |||
252% | 251% | ||
India: FY2035 | |||
145% | 142% | ||
131% | |||
113% | |||
75% | |||
19% |
* For retail protection sum assured (company estimates)
1. FY2020 GDP data for India (Source: National Statistics Office, protection sum assured source: company estimates)
2. | As of FY2018 for US, Japan, South Korea. Others as of FY2017 (Source: McKinsey estimates) | 55 |
Opportunity: Addressable population coverage (%)
With 15% CAGR in new policy count from FY2020 to FY2035
In million
250.8
170.7
106.0
57.5
69.9 | |||
34.1 | |||
6 | 15.8 | ||
FY2020 | FY2025 | FY2030 | FY2035 |
With 20% CAGR in new policy count from FY2020 to FY2035
In million
250.8
170.7
106.0
57.5
115.7 | |||
46.1 | |||
6 | 17.8 | ||
FY2020 | FY2025 | FY2030 | FY2035 |
Insured Uninsured | Insured Uninsured | |
Assumed 10% lapse rate for inforce policies at each year | 56 |
Protection opportunity: Liability cover
` billion | Retail Credit |
25,537 | ||||||||||||
22,207 | ||||||||||||
19,085 | ||||||||||||
16,200 | 12,147 | |||||||||||
13,922 | 10,606 | |||||||||||
10,097 | 11,663 | 9,339 | ||||||||||
8,976 | 7,599 | |||||||||||
6,454 | ||||||||||||
5,378 | ||||||||||||
4,711 | ||||||||||||
4,409 | 11,601 | 13,390 | ||||||||||
9,746 | ||||||||||||
8,601 | ||||||||||||
6,285 | 7,468 | |||||||||||
4,567 | 5,386 | |||||||||||
Mar-13 | Mar-14 | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | |||||
Home Loans | Others | |||||||||||
- Retail credit has been growing at a healthy pace
- Credit life is voluntary
Source: RBI
Components may not add up to the totals due to rounding off
57
Protection opportunity
Gross direct premium (` billion) | FY2009 | FY2020 | CAGR |
Health | 66.23 | 516.38 | 20.5% |
Motor | 138.21 | 692.08 | 15.8% |
- Motor Own Damage (OD) | 87.56 | 265.52 | 10.6% |
- Motor Third Party (TP) | 50.65 | 426.56 | 21.4% |
- Protection premium ~ ` 200 billion for life insurance industry in FY2020
Source: General Insurance Council and company estimate
58
Agenda
- Company strategy and performance
- Opportunity
- Industry overview
Evolution of life insurance industry in India
FY2002 | FY2010 | FY2015 | ||
New business premium | 1 | (` bn) | 116 | 550 | -5.8% | ||
21.5% | 408 | ||||||
Total premium (` bn) | |||||||
501 | 3.2% | 2,654 | 4.3% | 3,281 | |||
Penetration (as a % to GDP) | |||||||
2.1% | 4.1% | 2.6% | |||||
Assets under management (` bn) | 2,304 | 24.0% | 12,899 | 12.6% | 23,361 | ||
12.5%
11.6%
10.1%
FY2020
735
5,683
2.8%
37,757
In-force sum assured | 2 | (` bn) | 11,812* | 15.5% | 37,505 | 15.8% | 78,091 | 17.3% | 173,077 |
In-force sum assured (as % to GDP) | 50.1% | 57.9% | 62.7% | ||||||
85.1% | |||||||||
1. | Retail weighted received premium (RWRP) | |
2. | Individual and Group in-force sum assured | |
Source: IRDAI, CSO, Life Insurance Council, *Company estimate | 60 |
Channel mix1
Industry | Private sector |
11% | 12% | 13% | 21% | 22% | 24% | ||||||||||
27% | 28% | 25% | |||||||||||||
54% | 53% | 52% | |||||||||||||
62% | 60% | 62% | |||||||||||||
25% | 25% | 23% | |||||||||||||
FY2019 | FY2020 | H1-FY2021 | |||||||||||||
FY2019 | FY2020 | H1-FY2021 | |||||||||||||
Agency | Bancassurance | Others | |||||||||||||
- Given a well developed banking sector, bancassurance continues to be the largest channel for private players
1. Individual new business premium basis Source: Life Insurance Council
61
Product mix1
Industry | Private sector |
26% | 18% | 16% |
35% | ||
51% | 44% |
74% | 82% | 84% |
56% | 65% | |
49% | ||
FY2019 | FY2020 | H1-FY2021 | FY2019 | FY2020 | H1-FY2021 | |||
Non-linked | Linked | |||||||
1. New business weighted premium basis; Source: IRDAI, Life Insurance Council
62
Annexures
VNB growth and contribution | |||||||||
VNB Margin(%) | 17.0% | 21.7% | VNB contribution* | ||||||
VNB growth range to achieve | 25% | FY2019 | FY2020 | ||||||
our aspiration | 19% | VNB | 16.05 | ||||||
13.28 | |||||||||
` billion | |||||||||
` billion | 16.05 | ||||||||
4.20 | |||||||||
13.28 | 4.17 | ||||||||
(26.2%) | |||||||||
(31.4%) | |||||||||
7.89 | 2.27 | 9.58 | |||||||
1.22 | (59.4%) | (14.1%) | (59.7%) | ||||||
(9.2%) | |||||||||
FY2019 | FY2020 | ||||||||
Protection | Savings: Non-linked | Savings: Linked |
VNB growth of 21%; margin 21.7% | 74% VNB from protection & non-linked savings |
*Figures in brackets represent share of VNB | |
Total may not add up due to rounding off | 64 |
Value of New Business (VNB)
` billion | FY2019 | FY2020 | ||
VNB | 13.28 | 16.05 | ||
VNB margin | 17.0% | 21.7% | ||
4.7% | (1.1%) | 0.1% | 1.0% | 21.7% |
17.0% | ||||
FY2019 | Business mix | Tax rate* | Assumption | Expense | FY2020 |
changes |
* Change in effective tax rate
65
Protection and Annuity
Protection | ||||
mix1 | 8.5% | 11.2% | 20.6% | 25.2% |
Protection new business received premium (` billion)
31.44
21.37
10.28
6.71
Annuity | ||||
mix1 | 2.6% | 3.4% | 6.6% | 8.4% |
Annuity new business received premium (` billion) 10.43
6.85
3.11
2.06
FY2017 | FY2018 | FY2019 | FY2020 | ||||
FY2017 | FY2018 | FY2019 | FY2020 | ||||
Protection and Annuity contributed over 1/3rd of new business premium
1. % of new business received premium as per financials
66
Protection: Components
APE (` billion) | 11.16 |
2.35 | |
7.22 | 1.13 |
1.57
1.28
7.68
4.36
FY2019FY2020 Retail Protection Group Term Credit Life
Retail protection is ~70% of protection APE
Protection split based on APE* | ||
` billion | (FY2020) | |
1.74 | Retail protection | |
(15.6%) | ||
0.61 | ||
(5.5%) | Group Term | |
1.13 | ||
(10.1%) | 7.68 | Credit life - ICICI |
(68.8%) | Bank |
Credit life - Other
Credit life through third party contributes
~16% of protection APE
* Figures in brackets represent mix of protection APE | |
Components may not add up to the totals due to rounding off | 67 |
Retail persistency excluding single premium1
Persistency across product categories
82.6% | 88.3% | 82.6% |
64.7% | 65.8% | |
51.7% |
Linked | Non linked | Protection | |||
13th month | 49th month | ||||
Persistency across channel categories
81.7% | 86.4% | 82.2% | 86.9% | ||
74.2% | |||||
65.5% | 66.2% | ||||
62.7% | |||||
Bancassurance | Agency | Direct | Partnership distribution | |||
13th month | 49th month | |||||
1. 11M-FY2020 persistency
As per IRDA circular dated January 23,2014; excluding group and single premium policies
68
Average APE by product categories
Average retail APE per policy (`) | FY2018 | FY2019 | FY2020 |
ULIP | 180,746 | 159,329 | 183,109 |
Par | 62,379 | 60,308 | 64,285 |
Non Par | 54,187 | 76,468 | 109,410 |
Protection | 9,123 | 12,048 | 23,115 |
Total | 90,620 | 83,309 | 88,648 |
69
Policy term and customer age*
Average policy term (years)
Average customer age (years)
43 43
12
36
30
14
36 36
SavingsProtection
FY2019 FY2020
SavingsProtection
FY2019 FY2020
* For FY2020; protection excludes credit life
70
Channel wise product mix1
Channel category | Product category | FY2018 | FY2019 | FY2020 |
ULIP | 89.8% | 93.4% | 86.8% | |
Par | 7.3% | 2.1% | 2.2% | |
Bancassurance | Non par | 0.1% | 0.6% | 1.8% |
Protection | 2.7% | 3.9% | 9.3% | |
Total | 100.0% | 100.0% | 100.0% | |
ULIP | 81.8% | 75.3% | 49.9% | |
Par | 13.5% | 18.1% | 32.5% | |
Agency | Non par | 0.4% | 0.5% | 7.3% |
Protection | 4.3% | 6.1% | 10.3% | |
Total | 100.0% | 100.0% | 100.0% | |
ULIP | 88.0% | 79.3% | 66.7% | |
Par | 4.3% | 5.3% | 10.7% | |
Direct | Non par | 2.4% | 6.4% | 11.0% |
Protection | 5.3% | 9.1% | 11.6% | |
Total | 100.0% | 100.0% | 100.0% | |
ULIP | 36.8% | 28.2% | 21.8% | |
Par | 49.9% | 49.5% | 39.9% | |
Partnership distribution | Non par | 0.5% | 0.6% | 10.4% |
Protection | 12.8% | 21.8% | 27.8% | |
Total | 100.0% | 100.0% | 100.0% | |
1. Retail Annualized Premium Equivalent (APE)
Components may not add up to the totals due to rounding off
71
Product wise channel mix1
Product category | Channel category | FY2018 | FY2019 | FY2020 |
Bancassurance | 57.4% | 65.5% | 68.2% | |
Agency | 25.4% | 20.5% | 16.3% | |
ULIP | Direct | 14.5% | 12.0% | 13.0% |
Partnership distribution | 2.7% | 2.1% | 2.5% | |
Total | 100.0% | 100.0% | 100.0% | |
Bancassurance | 35.4% | 13.8% | 9.0% | |
Agency | 31.5% | 45.4% | 56.0% | |
Par | Direct | 5.3% | 7.4% | 11.0% |
Partnership distribution | 27.7% | 33.3% | 24.0% | |
Total | 100.0% | 100.0% | 100.0% | |
Bancassurance | 15.9% | 27.4% | 19.4% | |
Agency | 24.5% | 8.0% | 33.7% | |
Non par | Direct | 52.8% | 62.0% | 30.1% |
Partnership distribution | 6.8% | 2.6% | 16.8% | |
Total | 100.0% | 100.0% | 100.0% | |
Bancassurance | 35.2% | 36.9% | 45.2% | |
Agency | 27.6% | 22.8% | 20.9% | |
Protection | Direct | 17.9% | 18.7% | 14.0% |
Partnership distribution | 19.3% | 21.7% | 19.8% | |
Total | 100.0% | 100.0% | 100.0% | |
1. Retail Annualized Premium Equivalent (APE) | |
Components may not add up to the totals due to rounding off | 72 |
Embedded value
Embedded value
` billion | FY2018 | FY2019 | FY2020 |
Value of In force (VIF) | 117.64 | 142.69 | 151.87 |
Adjusted Net worth | 70.24 | 73.54 | 78.43 |
Embedded value1 | 187.88 | 216.23 | 230.30 |
Return on Embedded Value (ROEV) | 22.7% | 20.2% | 15.2% |
EV growth-pre dividend | 23.4% | 19.6% | 8.4% |
EV growth-post dividend | 16.1% | 15.1% | 6.5% |
VNB as % of opening EV | 7.9% | 7.1% | 7.4% |
Operating assumption changes as % of | 4.7% | 2.2% | (1.0%) |
opening EV | |||
Operating variance as % of opening EV | 1.6% | 2.5% | 0.8% |
1. As per Indian Embedded Value (IEV) method Components may not add up to the totals due to rounding off
74
EV methodology
- EV results prepared based on the Indian Embedded Value (IEV) methodology and principles as set out in Actuarial Practice Standard 10 (APS10) issued by the Institute of Actuaries of India (IAI)
- EV consists of Adjusted Net Worth (ANW) and Value of in-force covered business (VIF)
- ANW is market value of assets attributable to shareholders, consisting of
- Required capital
- Free surplus
- Value of in-force covered business (VIF) is
- Present value of future profits; adjusted for
- Time value of financial options and guarantees;
- Frictional costs of required capital; and
- Cost of residual non-hedgeable risks
75
Components of ANW
- Required capital (RC)
- The level of required capital is set equal to the amount required to be held to meet supervisory requirements.
- It is net of the funds for future appropriation (FFAs)
- Free surplus (FS)
- Market value of any assets allocated to, but not required to support, the in-force covered business
76
Components of VIF (1/2)
- Present value of future profits (PVFP)
- Present value of projected distributable profits to shareholders arising from in- force covered business
- Projection carried out using 'best estimate' non-economic assumptions and market consistent economic assumptions
- Distributable profits are determined by reference to statutory liabilities
- Frictional Cost of required capital (FC)
- FCs represent investment management expenses and taxation costs associated with holding the Required capital
- Investment costs reflected as an explicit reduction to the gross investment return
77
Components of VIF (2/2)
- Time value of financial options and guarantees (TVFOG)
- Represents additional cost to shareholders that may arise from the embedded financial options and guarantees
- Stochastic approach is adopted with methods and assumptions consistent with the underlying embedded value
- Cost of residual non-hedgeable risk (CRNHR)
- An allowance for risks to shareholder value to the extent not already allowed for in the TVFOG or the PVFP
- Allowance for asymmetric risks of operational, catastrophe mortality/morbidity and mass lapsation risk
- Determined using a cost-of-capital approach
- Allowance for diversification benefits among the non-hedgeable risks, other than the operational risk
78
Components of EV movement (1/2)
- Expected return on existing business (unwind)
- Expected investment income at opening reference rate on VIF and ANW
- Expected excess 'real world' investment return over the opening reference rate on VIF and ANW
- Operating assumption changes
- Impact of the update of non-economic assumptions both on best estimate and statutory bases to those adopted in the closing EV
- Value of new business
- Additional value to shareholders created through new business during the period
79
Components of EV movement (2/2)
- Operating experience variance
- Captures impact of any deviation of actual experience from assumed in the opening EV during the inter-valuation period
- Economic assumption changes and Investment variance
- Impact of the update of the reference rate yield curve, inflation and valuation economic assumptions from opening EV to closing EV
-
Captures the difference between the actual investment return and the expected
'real world' assumed return
- Net capital injection
- Reflects any capital injected less any dividends paid out
80
Key assumptions underlying EV (1/2)
- Discount rate and Fund earning rates
- Set equal to reference rates which is proxy for risk free rates
- Reference rates derived on the basis of zero coupon yield curve published by the Clearing Corporation of India Limited
- Expenses and commission
- Based on the Company's actual expenses during FY2020 with no anticipation for productivity gains or cost efficiencies
- Commission rates are based on the actual commission payable to the distributors
81
Key assumptions underlying EV (2/2)
- Mortality and morbidity
- Based on company's experience with an allowance for future improvements in respect of annuities
- Persistency
- Based on company's experience
- Taxation
- Taxation costs reflect the reduction in costs due to dividend income being tax exempt subject to maximum of dividend declared and distributed1
1. Limit of deduction subject to dividend distribution introduced in Finance Act, 2020
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Economic assumptions underlying EV
Tenor (years) | References Rates | ||
March 31, 2019 | March 31, 2020 December 31, 2020 | ||
1 | 6.66% | 4.83% | 3.52% |
5 | 7.83% | 7.43% | 6.77% |
10 | 8.35% | 7.32% | 7.79% |
15 | 8.35% | 7.17% | 7.63% |
20 | 8.22% | 7.14% | 7.26% |
25 | 8.11% | 7.14% | 6.95% |
30 | 8.05% | 7.14% | 6.74% |
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Glossary
- Annualized Premium Equivalent (APE) - Annualized Premium Equivalent (APE) is the sum of the annualized first year premiums on regular premium policies, and ten percent of single premiums, from both individual and group customers
- Assets under management (AUM) - AUM refers to the carrying value of investments managed by the company and includes loans against policies and net current assets pertaining to investments
- Embedded Value (EV) - Embedded Value (EV) represents the present value of shareholders' interests in the earnings distributable from the assets allocated to the business after sufficient allowance for the aggregate risks in the business
- Embedded Value Operating Profit (EVOP) - Embedded Value Operating Profit (EVOP) is a measure of the increase in the EV during any given period due to matters that can be influenced by management
- Retail Weighted Received Premium (RWRP) - Premiums actually received by the insurers under individual products and weighted at the rate of ten percent for single premiums
- Total weighted received premium (TWRP) - Measure of premiums received on both retail and group products and is the sum of first year and renewal premiums on regular premium policies and ten percent of single premiums received during any given period
- Persistency Ratio - Persistency ratio is the percentage of policies that have not lapsed and is expressed as 13th month, 49th month persistency etc. depicting the persistency level at 13th month (2nd year) and 49th month (5th year) respectively, after issuance of contract
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Safe harbor
Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', 'indicating', 'expected to' etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward- looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth and expansion in business, the impact of any acquisitions, technological implementation and changes, the actual growth in demand for insurance products and services, investment income, cash flow projections, our exposure to market risks, policies and actions of regulatory authorities; impact of competition; experience with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the impact of changes in capital, solvency or accounting standards, tax and other legislations and regulations in the jurisdictions as well as other risks detailed in the reports filed by ICICI Bank Limited, our holding company, with the United States Securities and Exchange Commission. ICICI Prudential Life Insurance undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
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Thank you
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ICICI Bank Ltd. published this content on 27 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 January 2021 20:55:03 UTC.