ICICIPRULI Q2 FY27 Earnings Call: VNB Grows 22.3% At 26% Margin, Protection Mix Rises Sharply

Strong H1 FY 2026-2027: VNB +22.3%, Protection Mix Rises Sharply

• VNB grew 22.3% YoY to Rs.12.83 billion in H1 FY 2026-2027 with margins at 26%, despite global macroeconomic uncertainty and continued FII selling in equity markets.
• New business premium rose 25% to Rs.118.21 billion in H1 FY 2026-2027, driven by 10.6% growth in policies and a shift toward protection (protection APE up 39.5%; mix improved to 23.4% from 19.3% in H1 FY 2025-2026).
• PAT grew 26.5% YoY to Rs.7.6 billion in H1 FY 2026-2027; EV grew 12.2% YoY to Rs.566.69 billion as of Sep 30, 2026.
• Solvency ratio at 229.9% with AUM at Rs.3.29 trillion (Sep 30, 2026); ICRA reaffirmed AAA rating on the Rs.26 billion sub-debt program; track record of no NPAs since inception.
• Q2 FY 2026-2027 mix softened in savings — linked portion grew ~7% but retail savings fell ~2% in September Q2 FY 2026-2027 on market volatility; non-par/annuity grew ~50% in Q2 FY 2026-2027. Management views October Q3 FY 2026-2027 trends as too early to call.
• 25th month persistency fell to 76.2% in Q2 FY 2026-2027 from 77% in Q1 FY 2026-2027 — management views this as an expected flow-through of 13th month persistency challenges from FY 2025-2026.

CEO Handover: Bagchi Out, Mishra In — Strategy Unchanged

• Siddharth Mishra appointed MD & CEO for a 5-year tenure effective October 14, 2026, subject to requisite approvals; he assumed the COO role from October 6, 2026.
• Anup Bagchi's tenure as MD & CEO concluded October 13, 2026, ending an over three-decade association with the ICICI Group; he expressed confidence in Mishra's leadership.
• Mishra cited 28 years at the ICICI Group and commitment to customer centricity; management affirmed an unchanged strategy for FY 2026-2027 centred on sustainable VNB growth balancing growth, profitability and risk.
• Company renamed ICICI Life Insurance Limited in Q2 FY 2026-2027 to strengthen brand identity.
• Closing remarks by Mishra contained no new disclosures on FY 2026-2027 results or FY 2027-2028 outlook.

Protection Surge, Non-Par Swing and Annuity Momentum

• Protection reached 23%-24% of total AP in H1 FY 2026-2027, with retail protection, credit life and group term each contributing roughly a third; sum assured grew 30% YoY in H1 FY 2026-2027.
• Retail protection grew 40-50% over the past four quarters (since Q2 FY 2025-2026) post the government's impetus on insurance in September 2025; management expects growth to taper to moderate levels in H2 FY 2026-2027, working upwards from the elevated base.
• Non-linked mix at 60% PAR / 40% non-PAR in H1 FY 2026-2027, a swing from the PAR-heavy FY 2025-2026 mix; the non-par shift occurred across all distribution channels including partnership (Q2 FY 2026-2027, Slide 54).
• Annuity surged 50% in H1 FY 2026-2027 (APE within savings grew 9.3% to Rs.37.79 billion); Q2 FY 2026-2027 annuity and guaranteed product growth was broad-based across all channels, supported by attractive IRRs across regular pay and lump sum varieties.
• Non-par products already repriced to reflect current market yields — described as a continuous exercise; management will continue pushing non-par to younger customers seeking guaranteed returns in the rising rate environment, but has no fixed internal product mix targets.
• Credit life APE growth in Q2 FY 2026-2027 was in line with overall protection growth; management declined to disclose the ICICI Bank vs. NBFC split or group term life's contribution to protection.

Agency Turnaround, Bancassurance Moderation, Partnership Depth

• Agency gross agent additions grew 23% in H1 FY 2026-2027, outpacing the rest of the industry; the channel turned positive in Q1 and Q2 FY 2026-2027 after deep negative growth in FY 2025-2026, driven by a more accretive product mix and micro-market granularity.
• Agency APE grew 3.3% to Rs.11.02 billion in H1 FY 2026-2027 (Q2 FY 2026-2027 at +4.1%); for FY 2027-2028, management guided for sustainable agency growth but refrained from a specific double-digit target.
• Bancassurance growth moderated to ~5% in 1H FY 2026-2027 vs. a strong 1H FY 2025-2026 base; ICICI Bank maintained a steady run rate of Rs.100-120 crore per month in FY 2026-2027, with growth driven by ~50 non-ICICI Bank partners.
• Partnership distribution grew 34.1%, contributing 14.8% of APE in H1 FY 2026-2027 (~14-15% of total AP / ~17-18% of individual AP), with ~1,600 partners and none above 5% share — cited as a buffer against potential disruption from the IRDAI consultation paper.
• Agency and Direct contributed 46.1% of retail business in H1 FY 2026-2027 (Direct +10.9% to Rs.6.79 billion); management plans to broad-base proprietary channels, prioritizing quality business and top-line growth aligned to protection and annuity.
• Group business grew 39.2%, contributing 21.6% of APE in H1 FY 2026-2027.

26% Margin on Mix Shift; OpEx Discipline as the Funding Lever

• VNB margin improved from 24.7% in FY 2025-2026 to 26% in H1 FY 2026-2027, attributed primarily to favorable product mix shift toward protection; management advised focusing on full-year FY 2026-2027 margins for trajectory.
• Margin improvement partly funded by improving OpEx ratios — management does not retain all non-par yield advantages, preferring to pass them to customers to drive demand.
• OpEx (excl. GST/stamp duty) CAGR reduced by 8% over the 3 years ended FY 2025-2026, a 22% absolute OpEx reduction in FY 2025-2026 vs. FY 2022-2023; cost-to-premium ratio (excl. GST) fell 30 bps YoY to 18.3% in H1 FY 2026-2027, savings cost-to-premium fell 90 bps YoY to 11.6%.
• GST input tax credit challenge (since Sep 2025) distorts cost-to-premium — ex-GST figures are provided for comparability, though gross-of-GST metrics will be used from FY 2027-2028.
• Service metrics strong — 54% of savings policies issued same day in H1 FY 2026-2027; claim settlement ratio at 99.3% with 1.1 days average TAT for non-investigated claims; early claim ratio at 23%; 13-month persistency at 84.5%.
• H1 FY 2026-2027 variances — CFO Dhiren Salian reported the aggregate of operating and investment variances is positive, while the economic variance is very close to zero.

IRDAI Consultation Paper: Comfort, But "Too Early to Call"

• IRDAI released a consultation paper on recalibrating distribution economics (feedback due Oct 2026), proposing revised expense management limits and a phased glide path; management views the reforms as a growth catalyst and expects to emerge stronger and more efficient.
• On the proposed "fairly significant cut" in credit life commissions (potential 2% cap), management stated it is too early to call the volume impact, argued the product serves a critical societal need for low per capita income groups furthering Viksit Bharat, and expressed confidence the regulator will consider industry feedback. Management declined to quantify industry claim payouts for FY 2025-2026.
• Management declined H2 FY 2026-2027 growth guidance, citing significant month-on-month variation and differing distribution channel mixes across insurers; medium-term focus remains on protection, annuity and savings offerings.
• If the consultation paper is finalized as drafted, management's objective for FY 2027-2028 is to deploy efficiency and yield curve gains to improve customer pricing without diluting shareholder margins.
• On the FY28 regulatory triad (Consultation Paper, IFRS, RBC), management expressed comfort with IFRS and RBC impacts, cited cost-to-premium metrics as evidence of readiness for the consultation paper's cost discipline focus aligned with the "Viksit Bharat vision", and stated it is "well capitalized to take advantage of this".
• Product strategy unchanged by RBC/Ind AS implementation, citing structurally improved product profitability; management noted non-par and annuity could become a larger share of the industry's business mix if interest rates remain elevated for an extended period.
• Analyst concern on H2 FY 2026-2027 product mix risk (vs. a high protection base in H2 FY 2025-2026) — management confirmed the primary strategy remains delivering VNB growth, with margin treated as an outcome rather than a target.