India's ICICI Life posts key quarterly margin below estimates, shares slide

Bengaluru witnessed a slight dip in ICICI Life Insurance's shares by 3% on Tuesday, as the company's new business margins fell below market expectations. Despite a 25% year-on-year increase in its second-quarter profit, the value of new business (VNB) margin dropped from 26.7% to 25.4%. ICICI Life's VNB rose by 24.7% to 7.12 billion rupees.

The concern stems from the fact that expected pressure from the loss of tax benefits on higher-margin insurance products wasn't met as anticipated. Instead, the company's share of higher-margin protection policies declined sequentially, while the share of market-linked policies increased. Analysts had forecasted the VNB margin to be between 25.5% and 26.5%.

Prudential is planning to sell a 2% stake in ICICI Prudential AMC worth approximately $333 million. Analysts anticipate a moderation in the growth of the life insurance sector for the rest of fiscal 2027, following a surge in policy sales post the Indian government's recent reduction in consumption taxes for individual life insurance premiums.

ICICI Life, the first major Indian life insurer to release September-quarter results, has been focusing more on growth in recent quarters, shifting its attention from margin expansion. The company reported a profit of 3.74 billion rupees ($39.28 million) for the September quarter, up from 2.99 billion rupees a year ago. Its net premium income grew by 16.6% to 138.04 billion rupees, while annualised premium equivalent (APE) sales increased by 15.6% to 27.99 billion rupees.

This marks a 14.6% rise from the previous quarter but a 3% decline compared to a year earlier. ICICI Life recently announced the appointment of Sidharatha Mishra as managing director and CEO, effective Wednesday, following Anup Bagchi's resignation to become the CEO of HDFC Bank.