q4 earnings preview: Q4 Earnings Preview: ICICI Pru Life profit may grow multifold; modest VBN growth likely

NEW DELHI: ICICI Prudential Life Insurance Company may log a multifold jump in net profit for the March quarter. Analysts said new business premiums may remain under pressure while value of new business (VNB) growth would be modest, with some expansion in margin. Expense ratio may remain stable, they said, adding that the growth in non-linked savings business would be healthy.

The life insurer will announce its quarterly earnings on Saturday.

Brokerage Motilal Oswal Securities expects the life insurance company to report a net profit of Rs 301 crore for the quarter compared with Rs 63.80 crore in the same quarter last year. This is even as the first year premium is seen falling 9.1 per cent YoY to Rs 1,845 crore from Rs 2,029.30 crore. Renewal premium is seen rising 3.3 per cent to Rs 7,141 crore from Rs 6,912.60 crore. Overall, net premium income is seen at Rs 11,6964, down 1.5 per cent YoY.

The brokerage estimated new business APE (annual premium equivalent) at Rs 2,350 crore, up 6 per cent from Rs 2,510 crore in the year-ago quarter. VBN is seen growing 8.1 per cent to Rs 640 crore from Rs 590 crore YoY. AUM is seen rising 12 per cent to Rs 2,40,000 crore from Rs 2,14,200 crore.

Sharekhan pegs the profit at Rs 300 crore, a Rs 370 per cent YoY rise, while it sees net premium income falling 1.4 per cent to Rs 11,713 crore.

“APE is expected to decrease marginally on a higher base. VNB growth is likely to remain moderate. Margin is expected to expand,” it said.

YES Securities saw new business profit at Rs 4,254.40 crore, down 17 per cent YoY.; APE at Rs 2,207 crore, down 12 per cent YoY; VBN at Rs 578.20 crore, up 35 per cent YoY.

“We pencil in APE margin deteriorating slightly on sequential basis based on business mix change wherein we see ICICI Prudential Life remaining cautious with retail protection,” YES Securities said.

For the sector as a whole, the highlight of the quarter would be the moderation of concerns around the spike in excess mortality charges seen earlier.

“The fallout of these on full-year EV/VNB accretion was anyway overstated. For most players, life insurance premium growth – led by traditional products – should register a more encouraging exit run rate than what was clocked for the full quarter. We expect persistence to move towards pre-crisis levels, mitigating the most potent threat from the crisis,” Edelweiss said.