ICICI Prudential Life Insurance posted a 34.4 percent year-on-year (YoY) drop in its December quarter (Q3) net profit at Rs 296.77 crore. The insurer saw an 84 percent YoY drop in its Q3 net income from investments to Rs 1,047.77 crore.
In a statement, the company said that the net profit decreased primarily on account of higher new business strain resulting from the new business growth of protection and annuity business.
New business strain arises when the premium paid at the commencement of a contract is not sufficient to cover the initial expenses including acquisition costs and any mathematical reserve that the company needs to set up at that point.
The insurer said that the investment income under unit-linked portfolio is directly offset by a change in valuation of policyholder liabilities and does not directly impact profits.
The total assets under management of the company was Rs 1.49 lakh crore at the end of Q3. The insurer’s Value of New Business (VNB) for the first nine months of FY19 (9MFY19) was Rs 910 crore, compared to Rs 767 crore in the year-ago period.
The Annualized Premium Equivalent (APE) was Rs 5,343 crore for the April to December period of FY19 as compared to Rs 5,579 crore for 9MFY18. During this period, the protection APE rose to Rs 461 crore, which is a 100.4 percent YoY increase.
The 13th month persistency stood at 84.1 percent for 9MFY19. The 49th month persistency improved to 63.2 percent in 9MFY19 as compared to 61.1 percent in the year-ago period.
The solvency ratio was 224.3 percent at the end of Q3 against a regulatory requirement of 150 percent.