CRISIL Ratings has reaffirmed its 'CRISIL AAA/Stable' rating on the Rs 1200 crore subordinated debt of ICICI Prudential Life Insurance Company Limited (ICICI Pru Life).
The rating continues to factor in the strategic importance to, and expectation of support, if required, from its parent, ICICI Bank Limited (ICICI Bank; rated 'CRISIL AAA/CRISIL AA+/Stable') both on an ongoing basis and in the event of distress; the established market position of ICICI Pru Life within life insurance industry, well diversified distribution channels, healthy persistency metrics with stable profitability, and adequate capital position. These rating strengths are partially offset by an ability to sustain a growth in non-linked segment, and challenges that ICICI Pru Life is expected to face in sustaining its profitability due to rising competition.
ICICI Pru Life is managed independently and is a self-sustaining entity; strong linkage with ICICI Bank driven by majority ownership (currently holds 51.3%) and a shared brand name adds to its strength. ICICI Bank's presence in the life insurance sector is through ICICI Pru Life, which is, therefore, one of the critical entities for the bank. The strong linkage implies a moral obligation on ICICI Bank's part to support ICICI Pru Life in the event of exigency. ICICI Bank has provided ICICI Pru Life access to its network of branches and for selling insurance products to their customers on an exclusive basis. The ICICI brand and the bank's wide distribution network, particularly among salaried and affluent individuals, gives ICICI Pru Life competitive advantage in terms of acquiring new business. The foreign promoter Prudential Corporation Holdings Limited held stake of 22.1% as on September 30, 2021.
In the light of second wave of pandemic, ICICI Pru Life had witnessed elevated claims as compared to first wave. During Q1 fiscal 2022, the company honored claims of Rs 500 crore (as against Rs 198 crore fiscal 2021). As on June 30, 2021, the company held reserves of Rs 498 crore towards COVID claims (Rs 332 crore till fiscal 2021 and Rs 166 crore during Q1 fiscal 2022). However, in Q2 fiscal 2022, the company witnessed steady reduction in claims due to Covid. During second quarter, the company honored claims of Rs 362 crore (net of reinsurance). This took total Covid-19 claims (net of insurance) to Rs 862 crore during first half of fiscal 2022. In terms of provisions, the company held reserves of Rs 412 crore for the potential Covid-19 claims including IBNR (incurred but not reported) as of September 2021. CRISIL Ratings notes the surge in claims has largely been due to second wave of Covid-19. With the situation still evolving, CRISIL Ratings will continue to monitor level of claims that company may receive in coming 2-3 quarters and its resultant impact on overall credit profile of the company.
Shares of ICICI Prudential Life Insurance Company Limited was last trading in BSE at Rs. 619.30 as compared to the previous close of Rs. 620.25. The total number of shares traded during the day was 52905 in over 2407 trades.
The stock hit an intraday high of Rs. 623.75 and intraday low of 609.80. The net turnover during the day was Rs. 32635091.00.