ICICI Prudential Life Insurance posted a 27.8% rise in first-quarter profit on Wednesday, helped by strong growth in new business premiums and retail term insurance sales, sending its shares up as much as 5.5%.
The value of new business, or VNB, seen as a key measure of profitability from new policies, rose 24.9% from a year earlier, easing concerns over margin pressure from goods and services tax-related input tax credit issues.
Analysts had been watching whether ICICI Prudential Life’s shift towards higher-margin non-participating and retail term insurance products would offset those headwinds.
Annualised premium equivalent sales, a key measure of new business, rose 14.6% to 21.36 billion rupees ($221.9 million), while the VNB margin improved to 26.7% from 24.5% a year earlier.
Investors and analysts closely watch these operational metrics to gauge the health of new business for insurers.
Prudential has said it must cut its stake in the Indian insurer to below 10%, from about 22%, to secure regulatory approval for its planned 75% acquisition of Bharti Axa Life Insurance, which was announced in May.
Bernstein analysts have warned that the resulting sale of nearly a 12% stake could create a supply overhang and weigh on ICICI Prudential Life’s shares.
On Wednesday, its board approved a proposal to rename the company to ICICI Life Insurance Limited. Its shares closed up 3.78% at 523 rupees.
Peers HDFC Life Insurance and SBI Life Insurance have yet to report their quarterly results.
($1 = 96.2475 Indian rupees)
