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Investors cheered ICICI Prudential Life Insurance Co.’s March quarter (Q4FY26) results, sending the stock up around 3% to ₹560. Its annualized premium equivalent (APE) stood at ₹3,830 crore, up 9.3% year-on-year — a sharp improvement from 3.6% growth in Q3. Notably, APE had declined in the first two quarters of FY26.
The growth was driven largely by protection APE (term-insurance APE), which rose 30% year-on-year to ₹613 crore. In life insurance, protection products carry higher profitability than savings products.
Within protection, retail and group (usually corporate employees or micro-finance institutions) are the two sub-segments, with retail being more profitable. Retail protection grew a striking 60%, compared with 12% growth in group protection.
However, protection still accounts for just about 16% of total APE. ULIPs remain dominant, contributing 46%.
The higher-margin protection mix helped lift Q4FY26 value of new business (VNB), also known as economic profit, by 21.4% year-on-year to ₹965 crore.
While Q4 signals that ICICI Pru Life is moving in the right direction, the bigger question is whether it justifies the optimism embedded in valuations.
For FY26, APE grew only 2% year-on-year to ₹10,641 crore, while VNB increased 10.9% to ₹2,629 crore. VNB margin expanded 193 basis points to 24.7%.
However, this margin expansion was largely driven by changes in economic assumptions such as interest rates and inflation. The margin gain from new business profile was 3.4%, but this was fully overshadowed by a 3.9% margin loss due to changes in operating assumptions.
Thus, a 2.5% margin gain from economic assumption changes — which are volatile and beyond the company’s control — boosted the overall margin.
New business profile changes include product mix, repricing and sourcing channel shifts (direct, agency, bancassurance). Greater protection sales aided margins here.
Operating assumption changes included GST exemption of individual life insurance products leading to loss of input tax credit, as well as changes in persistency (lapses or policy surrenders).
Management refrained from giving FY27 guidance.
JM Financial and Nomura Research estimate VNB growth of 12% and 7%, respectively, in FY27.
These growth rates appear moderate relative to the stock’s valuation. The stock trades at a price-to-VNB multiple of 28x and 29x based on FY27 estimates of JM Financial and Nomura, respectively.
The Q4 performance shows improving product mix and earnings quality. But whether that momentum can sustain at a pace strong enough to justify current valuations remains the key question.