TO THE MEMBERS
ICICI Prudential Life Insurance Company Limited
Your Directors have pleasure in presenting the 16th Annual Report of ICICI PrudentialLife Insurance Company Limited (the Company) with the audited statement of accounts forthe year ended March 31 2016.
Industry in FY2016
The new business premiums of life insurance industry increased by 8.1% in FY2016 interms of retail weighted received premium (RWRP). Some of the key industry trends were:Post September 2010 guidelines the market share of private players dropped from 52.3% inFY2010 to 38.0% in FY2014 on retail weighted received premium basis. Steady increase inbancassurance mix: During the past 5 years bancassurance has grown steadily from 13% inFY2011 to 25% till 9M FY2016 on the basis of retail new business premium. Contribution bybancassurance channel to the retail new business premium of the private players hasincreased to 51% for 9MFY2016 compared to 47% for FY2015.
Company in FY2016
The Company achieved a market share of 11.3% in FY2016 based on RWRP. TheCompanys RWRP grew 8.1% from Rs. 45.96 billion in FY2015 to Rs. 49.68 billion inFY2016. The Company continues to retain its market leadership among the private playersand achieved market share of 21.9% amongst private players in FY2016. The Company focussedon improving its protection business and there was a 29.4% increase in sum assured for newbusiness. Total gross premium collected by the Company grew 25.2% from Rs. 153.07 billionin FY2015 to Rs. 191.64 billion in FY2016. Our continued focus on customer retention hasresulted in increase in retail renewal premium by 25.3% from Rs. 95.71 billion in FY2015to Rs. 119.95 billion in FY2016. The 13th month persistency ratio also improved from 79.0%in FY20151 to 82.4% in FY2016. The Companys assets under management as at March 312016 was Rs. 1039.39 billion.
Total expenses increased to Rs. 25.45 billion in FY2016 as compared to Rs. 22.58billion in FY2015. However total cost to total weighted received premium (TWRP2) ratioimproved from 15.4% in FY2015 to 14.5% in FY2016. Profit after tax (PAT) for the Companystood at Rs. 16.50 billion in FY2016 compared to Rs. 16.34 billion in FY2015.
A summary of key parameters is as set out below:
| || ||(Rs. billion) |
|Particulars ||FY2015 ||FY2016 |
|RWRP ||45.96 ||49.68 |
|Retail renewal premium ||95.71 ||119.95 |
|Total premium ||153.07 ||191.64 |
|Expenses ||22.58 ||25.45 |
|Standalone profit after tax ||16.34 ||16.50 |
|Sum assured for new business ||1195.34 ||1546.25 |
|Assets held ||1001.83 ||1039.39 |
|Cost to TWRP3 ||15.4% ||14.5% |
| ||Standalone ||Consolidated |
|Particulars ||FY2015 ||FY2016 ||FY2015 ||FY2016 |
|Profit after tax (PAT) ||16.34 ||16.50 ||16.34 ||16.50 |
|Balance brought forward from previous year ||(10.33) ||0.48 ||(10.34) ||0.47 |
|Profit available for appropriations ||6.01 ||16.98 ||6.00 ||16.97 |
|Appropriations: || || || || |
|Interim Equity Dividend ||(5.36) ||(9.02) ||(5.36) ||(9.02) |
|Proposed Final Dividend ||(3.01) ||(3.01) ||(3.01) ||(3.01) |
|Tax on Equity Dividends ||(1.61) ||(2.44) ||(1.61) ||(2.44) |
|General Reserve ||4.45 ||- ||4.45 ||- |
|Surplus carried to next years account ||0.48 ||2.51 ||0.47 ||2.49 |
The solvency margin of the Company is 320.0% in FY2016 compared to regulatoryrequirement of 150.0%.
The Company reaches its customers through 521 offices in 456 locations at March 312016. On March 31 2016 the Company had 10663 employees and 121016 advisors to cater tothe needs of customers. The Company distributes its products through agents corporateagents banks brokers proprietary sales force (PSF) and online channels.
The Company offers a range of life pension and savings products across traditional andunit-linked platforms to provide a range of long term savings and protection solutions. Inorder to strengthen our Protection offerings we have launched new products on retailmortgage and group platforms.
The operations have resulted in a profit after tax of Rs. 16.50 billion as compared toa profit after tax of Rs. 16.34 billion for the previous year. The Board had approvedpayment of interim dividend of Rs. 1.10 per share and a special dividend of Rs. 1.00 pershare for each quarter at its Board meetings held on January 19 2016 October 27 2015and July 28 2015 respectively. The Board at its Meeting held on April 26 2016 hasrecommended a final dividend of Rs. 1.10 per share and a special dividend of Rs. 1.00 pershare. Total dividend for the year is Rs. 8.40 per share aggregating to Rs. 12.03 billionfor FY2016.
The Company has settled over 10600 individual mortality claims in FY2016. The claimssettlement ratio for the Company in FY2016 is 96.20%. For non-investigated claims thesettlement was completed within an average turnaround time of 3.3 days from receipt oflast requirement as compared to the regulatory norm of 30 days.
The Companys wholly owned unlisted subsidiary ICICI Prudential Pension FundsManagement Company Limited (PFM) acts as a pension fund manager under the National PensionSystem (NPS). During the year ended March 31 2016 the subscribers funds managed byPFM have increased by 90.0% from Rs. 3690.0 million at March 31 2015 to Rs. 7011.4million at March 31 2016. The inflows for the year increased by 122.3% from Rs. 1426.3million in FY2015 to Rs. 3170.1 million in FY2016. PFMs subscriber base increasedfrom 30158 at March 31 2015 to 66182 at March 31 2016. PFM registered a loss of Rs.3.1 million (previous year: profit of Rs. 1.0 million).
On the regulatory front the Finance Bill 2016 exempted from income tax 40% of thetotal amount paid to a subscriber on account of closure or his opting out of the NPSscheme.
B S R & Co. LLP and S. R. Batliboi & Co. LLP Chartered Accountants wereappointed as joint statutory auditors of the Company at the Fifteenth Annual GeneralMeeting to hold office upto the conclusion of the ensuing Annual General Meeting. TheBoard has proposed the appointment of the Auditors as mentioned in the notice enclosedwith the Annual Report based on the recommendation of the Board Audit Committee.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Dr. K. R. Chandratre Company Secretary in Practice to undertake SecretarialAudit of the Company. The Secretarial Audit Report is annexed herewith as Annexure A.
Admission of equity shares
The Companys equity shares are admitted on the records of the National SecuritiesDepository Limited ("NSDL") and Central Depository Services (India) Limited(CDSL").
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure B.
PARTICULARS OF EMPLOYEES
As required by the provisions of Section 197 of the Companies Act 2013 read with Rule5 of the Companies (Appointment & Remuneration) Rules 2014 the names and relevantparticulars of the employees are set out in the Annexure to the Directors Report.
RURAL AND SOCIAL BUSINESS
183695 policies were issued in rural areas constituting 31.6% of total policyissuances. The Company also covered more than 65000 lives falling within the norm ofsocial sector business.
INCREASE IN SHARE CAPITAL
The paid-up capital of the Company increased by Rs. 6.02 million pursuant to exerciseof stock options granted under the Employee Stock Option Scheme taking the paid-up capitalto Rs. 14.32 billion at March 31 2016.
During the year under review the Company has not accepted any deposits under Section73 of the Companies Act 2013.
Corporate Social Responsibility Initiatives
The Corporate Social Responsibility policy as approved by the Board is uploaded on theCompanys website.
The Annual Report on Corporate Social Responsibility is annexed herewith as Annexure C.
Particulars of contracts or arrangements with related parties
The particulars of contracts or arrangements entered into by the Company with relatedparties referred to in sub-section (1) of section 188 of the Companies Act 2013 includingcertain arms length transactions under third proviso thereto are disclosed in FormNo. AOC -2 appended as Annexure D.
Statement in respect of adequacy of internal financial controls with reference to theFinancial Statements
The Company has established an internal control framework comprising a robustgovernance framework and a control environment commensurate with the size scale andcomplexity of its operations. The framework comprises the following key components: