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Private sector ICICI Prudential Life Insurance reported a 16.42 per cent drop in net profit for the quarter ended March 31 at ₹341 crore. Its profit after tax amounted to ₹408 crore in the fourth quarter of 2016-17.
Similarly, its net profit for the fiscal 2017-18 fell by 3.68 per cent to ₹1,620 crore from ₹1,682 crore in 2016-17.
“Profit after tax decreased to ₹1,720 crore in 2017-18 primarily on account of higher new business strain resulting from the new business growth,” ICICI Prudential Life Insurance said in a statement on Tuesday, adding that new business strain arises when the premium paid at the start of a contract is not sufficient to cover the initial expenses, including acquisition costs and any mathematical reserve that the company needs to set up at that point.
Fall in total income
Total income fell by 49 per cent to ₹7,314 crore in the fourth quarter of 2017-18, compared to ₹13,573 crore in the same period a year ago.
The company also posted a loss of ₹ 1,613.38 crore in its income from investments (net of amortisation, and provision for diminution in value of investments) in the fourth quarter, compared to a gain of ₹6,576.34 crore a year ago.
However, for the whole of 2017-18, the total income of the life insurer saw a marginal rise of 2.65 per cent to ₹ 38,882 crore, compared to ₹37,878 crore in 2016-17.
“In view of the seasonality of the industry, the financial results of the quarter are not indicative of the full year’s expected performance,” the company said in a regulatory filing.
According to data released by the Insurance Regulatory and Development Authority of India, the first-year life insurance premium of ICICI Prudential had increased by 15.95 per cent last fiscal.
Among other key metrics, the company said the profitability of new business written, as measured in the value of new business (VNB), increased 93.1 per cent to ₹1,286 crore in 2017-18, from ₹666 crore in 2016-17.
“We are excited about the opportunities coming from formalisation of the economy and consequently financialisation of savings,” said Sandeep Batra, Executive Director, ICICI Prudential Life.
Dividend declared
Additionally, the board has recommended a final dividend of ₹3.30 per equity share (including special dividend of ₹1.10 per equity share).
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