ICICI Prudential Q3 profit falls 34% despite a rise in premium earnings

ICICI Prudential Life insurance has reported a 34.29 per cent decline in its profit after tax (PAT) in the third quarter of FY 19 after the company changed its product mix to focus more on protection and annuity business.

In absolute numbers, PAT of the life insurer stood at Rs 297 crore in Q3 FY19 against Rs 301 crore in the third quarter of FY 18.

In the first nine months of FY 19, the PAT of the insurer stood at Rs 879 crore as opposed to Rs 1279 crore in the same period of FY18, thereby witnessing a decline of 31.27 per cent.

Net premium earned by the company, however, increased by 10 per cent in the third quarter of FY 19 from Rs 6,795 crore in Q3 of FY18 to Rs 7483 crore in Q3 of FY19. On the other hand, net premium earned by the company in the first nine months of FY19 saw a 13.2 per cent rise from Rs 18, 340 crore in FY 18 to Rs 20, 766 crore.

The value of new business of the insurer grew 18.6 per cent from Rs 767 crore in the first nine months of FY 18 to Rs 910 crore in the same period in FY 19.

The net investment income of the insurer also reported a huge decline of 83.99 per cent from Rs 6544.77 crore in the Q3 of FY 18 to Rs 1047.77 crore in Q3 of FY 19.

The 13-month persistency ratio, which is a measure of the total business that the insurance company is able to retain without policies getting lapsed in a year, has also reported a decline from 81.8 per cent in Q3 of FY 18 to 79.8 per cent in Q3 of FY 19.

The solvency ratio, which is a measure of a company’s cash flow that is sufficient to meet its short-term and long-term liabilities, has also taken a hit. It declined from 2.51 in Q3 of FY18 to 2.24 in Q3 of FY19. The mandated ratio is fixed at 1.5 by the insurance regulator.

Asset under management of the life insurer saw an increase of 8.44 per cent from Rs 1.38 trillion in the first nine months of FY18 to 1.49 trillion in the first nine months of FY19.