ICICI Life Insurance Limited reported a 25.05% year-on-year increase in standalone profit after tax to ₹374.22 crore in the second quarter of FY27, compared with ₹299.26 crore in the corresponding quarter of the previous financial year. According to reports from Business Standard and The Hindu BusinessLine, the insurer was expected to report a PAT of ₹330 crore, representing a 10% year-on-year increase, but the actual results exceeded estimates by ₹44.22 crore. The company's profit before tax also rose 25.4% to ₹435.32 crore from ₹347.01 crore in the year-ago quarter. For the first half of FY27, the company achieved a 26.5% increase in profit after tax to ₹760 crore compared with ₹601 crore in the corresponding period of the previous year. As per The Economic Times, the growth was driven by new business growth and a strategic shift towards protection and annuity products. However, shares of ICICI Prudential Life slipped close to 3% after the company announced the earnings for the second quarter, despite the jump in profit and net premium income. According to latest market data, the stock is currently trading 1.39% higher at ₹453.20 per equity share as of 12:40 PM, reflecting positive investor sentiment following the strong quarterly performance.
The company's net premium income increased 16.6% to ₹13,804 crore in Q2FY27 from ₹11,843.1 crore in the year-ago period, as reported by Business Standard and The Hindu BusinessLine. Annualised premium equivalent (APE) grew 15.1% year-on-year to ₹4,935 crore. Value of new business (VNB) demonstrated strong performance with 22.3% growth to ₹1,283 crore from ₹592 crore, with VNB margins improving to 26% compared with 24.5% in Q2FY26. The insurer's gross premium income increased 15.9% to ₹14,254.59 crore in the July-September quarter from ₹12,297.03 crore a year earlier, with the growth led by the single-premium segment recording 38.7% year-on-year increase. As of September 30, 2026, ICICI Life Insurance Ltd's assets under management (AUM) stood at ₹3.29 lakh crore. For H1FY27, total premium grew 15.3% to ₹24,505 crore while new business premium rose 25% to ₹11,821 crore. According to The Economic Times, annualised premium equivalent (APE) grew 15.1% to ₹4,935 crore in the first half, with protection APE rising 39.5% to ₹1,155 crore and annuity APE increasing 50% to ₹324 crore, while savings APE grew at a slower 6.6% to ₹3,455 crore as the business mix moved towards protection and retirement products.
The company's VNB margin expanded to 26% from 24.5% a year earlier, indicating improved profitability from new business. Embedded value rose 12.2% to ₹56,669 crore, while the claim settlement ratio remained steady at 99.3% and the 13-month persistency ratio improved to 84.5% from 84% in the previous quarter. Savings products APE grew about 12% in Q2FY27, with unit-linked insurance plans (Ulips) contributing more than half of savings APE, but Ulip premium growth was soft at 6.6% year-on-year to ₹1,266 crore. The outlook for savings products excluding Ulip is brighter for non-participating policies versus participating policies, as interest rates have been rising. Protection products APE rose 34% year-on-year in Q2FY27, but management indicated growth could moderate ahead. The improvement in margins was driven by a favourable shift in the mix of new policies sold, with the protection segment's contribution to the business mix improving to 20%.
Investors must be mindful of significant regulatory risks that could impact ICICI Life's growth trajectory. The Insurance Regulatory and Development Authority of India (Irdai) has proposed allowing loan disbursement without buying insurance, ending compulsory bundling, and lowering commissions in the credit life insurance segment. According to the Insurance Regulatory and Development Authority of India (Irdai) consultation paper, commissions on single-premium credit life averaged 22% in FY25, while effective payouts on group credit life sold through non-banking financial companies (NBFCs) had risen to around 45%. Management acknowledged that the paper "does propose a fairly significant cut" but stopped short of opposing it, saying it expects the regulator to take these points into account while drafting the final rules. Comments on the paper are due by October 25, 2026. Additionally, Irdai's consultation paper on commissions could adversely affect most insurers, with Life Insurance Corporation of India (LIC) potentially an exception. The paper proposes relatively lower commission rates for non-agents, such as banks, corporate partners and brokers, than for agents. ICICI Life derived 54% of its retail APE in Q2FY27 from non-agents, making it vulnerable to these proposed changes. If the consultation paper is finalised in its current form, ICICI Life may have to change its distribution strategy, potentially requiring recruitment of more agents to generate additional business. Currently, ICICI Bank alone contributes 17% of retail APE, highlighting concentration risk.
Despite strong Q2 performance, brokerages maintain mixed views on the stock's prospects. Goldman Sachs maintained its 'Neutral' rating but cut its price target to ₹500 from ₹525, citing margin improvement driven by favourable product mix while reiterating concerns about the durability of growth. Jefferies maintained its 'Buy' rating but lowered its target price to ₹670 from ₹685, citing lower-than-expected VNB margins and higher contribution from group business, while reducing FY27-FY29 VNB estimates by 2%. Bernstein maintained its 'Market-Perform' rating with a target of ₹680, noting that margin expansion helped offset softer growth in new business sales. HDFC Securities maintains ADD with a target of ₹585, suggesting an upside of 30.87%, while Nuvama maintains BUY but cuts its share price target to ₹600 from ₹700. The stock is down 33% so far in 2026, so the price-to-VNB ratio of 21x based on FY27 estimates appears palatable, provided the impact of Irdai's consultation paper becomes clearer. Investors must also consider the potential supply of shares in the market, as Prudential Plc. will need to reduce its holding in ICICI Prudential Life from nearly 22% to below 10% according to transaction details.
