Growth was soft in December, but still the annualised premium equivalent (APE) growth was at 10 per cent Y-o-Y, after 3 quarters of decline. Growth could hit 25 per cent in Q4, and FY27 and FY28 may register mid-teens growth. Margin may sustain at 24.5 per cent for FY26, and improve by 50bps in FY27 if VNB grows at 16 per cent.
IPRU recorded 10 per cent growth in individual APE in Q3FY26, which is a contraction of 2 per cent for the first nine-month period of FY26 (9MFY26). Group APE grew at over 20 per cent in the first half, but contracted by 50 per cent in Q3. The VNB margin was held steady with 41 per cent growth in retail protection. Group protection growth was only 5 per cent. Annuity APE dipped by 50 per cent Y-o-Y and a Q4 rebound is likely.
This was impressive given GST 2.0 and likely ₹11 crore impact of the Wage Code.
Management believes that demand for protection policies can continue into Q4FY26. MFI disbursals are stronger and this may spark activity in credit life. Given a low base for Q4FY26, mid-twenties growth is possible. The margin outlook also looks steady, tending to positive. ULIP sales are linked to equity market performances and a better market performance could lead to sharper growth trends in the ULIP category with a beat on APE. This may be a trigger.
The reported APE of ₹2,530 crore was up 4 per cent Y-o-Y, in Q3FY26 and in 9MFY26, APE declined 1 per cent Y-o-Y to ₹6,810 crore. For 9MFY26, VNB grew 6 per cent Y-o-Y to ₹1,660 crore. PAT grew 19 per cent Y-o-Y to ₹390 crore in Q3FY26, with 23 per cent Y-o-Y growth for 9MFY26.
IPRU’s gross premium declined 3 per cent Y-o-Y to ₹12,200 crore in Q3FY26, with 8 per cent Y-o-Y growth in renewal premium, offset by single premium decline of 25 per cent Y-o-Y. APE growth of 4 per cent Y-o-Y in Q3FY26 was driven by 19 per cent Y-o-Y growth in protection, plus GST exemption, 8 per cent Y-o-Y growth in ULIP and 5 per cent Y-o-Y growth in non-par savings. Annuity declined Y-o-Y owing to a high base. Retail growth was offset by 43 per cent Y-o-Y decline in the group business. Retail contribution to APE rose to 83.8 per cent in Q3. VNB margin improvement drivers included higher sum assured, higher rider attachments and favourable yield curve moves.
Commission expenses grew 12 per cent Y-o-Y to ₹1,270 crore, while operating expenses grew 15 per cent Y-o-Y, resulting in a rise in EoM ratio from 16.4 per cent in Q3FY25 to 19.3 per cent in Q3FY26. On a 9MFY26 basis, the cost ratio has improved to 19.3 per cent (19.8 per cent in 9MFY25) despite loss of input tax credit.
Agency and direct channels contributed 29 per cent and 15 per cent respectively. The bancassurance channel saw 10 per cent growth Y-o-Y, with a contribution of 27 per cent in Q3FY26. Corporate agent channel growth was above 50 per cent Y-o-Y, with contribution of 13.5 per cent from 9.2 per cent in Q3FY25. The group channel declined 20 per cent Y-o-Y, with contribution down from 21 per cent in Q3FY25 to 16.2 per cent in Q3YF26. The AUM grew 7 per cent Y-o-Y to ₹3.3 trillion, while solvency was 214.8 per cent, up 260 bps Y-o-Y.
Management feels GST reforms are positive for all stakeholders, including distributors. Negotiations are on to aim at VNB neutrality while retaining distributor margins. APE growth in 9MFY26 was slow owing to base effects. Retail is seen as a structural opportunity, with only 13 per cent of the population protected. Group protection growth is single digits, due to slowdown in MFI-linked credit life during 9MFY26, with early signs of recovery. Management is focused on improving persistency ratios.
Given consistent VNB growth, and incremental improvement in margins, rerating is possible. IPRU is valued at some discount to HDFC Life and SBI Life and there could be an upside to PEV ratios.
 "ICICI prudential life insurance")