ICICI Prudential Life falls 5% after logging lower new business margin in Q3

Shares of the life insurance company are down more than 5% today.

This comes a day after it reported a decline in new business margins, as demand dipped for high-value policies following taxation changes and sales of low-margin products increased.

The value for new business (VNB) – the expected profit from new policies – fell 15% to ₹1,451 crore in 9MFY24, the company said, while VNB margins declined to 26.7% from 32% a year earlier.

The move to tax total returns of high-value policies at maturity, and a rise in low-margin, unit-linked plans have hurt insurers' VNB margins, analysts have said.

The ICICI Bank-backed insurer posted a largely flat net premium income growth of 4.9% to ₹9,929 crore for the three months ended 31 December 2023, following a 4.6% increase in the September quarter.

Meanwhile, investment income more than doubled to ₹16,315 crore, largely boosted by strong domestic markets.

The NIFTY50 Index gained nearly 11% in the December quarter, its best quarter since September 2021, on hopes of early interest rate cuts by the U.S. Federal Reserve.

ICICI Prudential's third-quarter profit after tax rose 3% to ₹227 crore from a year earlier.

Its annualised premium equivalent (APE) sales grew 1.7% for the nine-month period, while for the quarter they were up 4.7%, the company said last week.

APE is a gauge of sales that gives the annualised total value of all single premium and recurring premium policies.

Rival HDFC Life Insurance last week reported a near 16% rise in third-quarter profit, lifted by higher investment income as premium growth moderated.

(This story has been published from the Reuters news feed without major editorial change.)