Track record of delivering healthy returns for shareholders:
I-Pru Life’s RoE has exceeded 30% for each year since FY12. Company has a strong capital position with a solvency ratio of 320.5% at June 30, 2016 compared to regulatory requirement of 150.0%. Company’s persistency ratios have been increasing in recent years and its expense ratio is one of the lowest among the private sector life insurers.
Key Risks: Capital Levered:
ICICI Prudential Life is more levered to capital market movements as compared to most other large life insurance companies. Policyholders typically like the investment appeal of a ULIP (84% of FY2016 APE) and often consider ULIP as a play on capital markets; ICICI Prudential Life’s average policy size in ULIP is `150,000 in FY2016 as compared to `10,000-45,000 for other policies.
Change in regulatory policy:
Change in regulatory environment remains a key risk for the life insurance industry. Several regulations over the last few years (2010 ULIP regulations being the most impactful), directions on expense caps, banking partnerships and draft on commissions payouts, have driven business strategies of life insurance players.
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