ICICI Prudential Life Insurance Co. Ltd. (IPLICL) is the largest private sector life insurer in India by total premium in fiscal 2016 and assets under management at March 31, 2016. It is a joint venture between ICICI Bank Limited, India’s largest private sector bank in terms of total assets with an asset base of 7.2 trillion at March 31, 2016, and Prudential Corporation Holdings Limited, a part of the Prudential Group, an international financial services group with GBP 509 billion of assets under management at December 31, 2015. ICICI Prudential Life Insurance Co. Ltd. Is one of the first private sector life insurance companies in India and commenced operations in fiscal 2001. It offers a range of life insurance, health insurance and pension products and services. Every fiscal year since fiscal 2002,It has consistently generated the most new business premiums on a retail weighted received premium basis among all private sector life insurers in India.
The Indian life insurance sector was the 10th largest life insurance market in the world and the 5th largest in Asia in terms of total premiums in 2016, according to Swiss Re, sigma No 3/2016. The Indian economy is one of the fastest growing large economies in the world, with a GDP growth rate of 7.3% (in real terms) in fiscal 2016 and a household savings rate of 19.1% of GDP in fiscal 2015, according to CRISIL Research, Life insurance industry report, July 2016 . ICICI Prudential Life Insurance Co. Ltd. expect these macroeconomic factors, coupled with India’s large and young population, rapid urbanisation and rising affluence to propel the growth of the Indian life insurance sector.
Comparison of Life Insurance penetration
In fiscal 2016, its market share, on a retail weighted received premium basis, among all insurance companies in India (public and private sector) was 11.3%, as compared with a market share of 9.7% for our nearest private sector competitor. Among the 23 private sector life insurance companies in India, IPLICL had a market share, on a retail weighted received premium basis, of 21.9% in fiscal 2016
Issue opens on 19 Sept 2016
Issue closes on 21 Sept.2016
Issue Size: 181,341,058 Equity Shares of Rs 10 aggregating up to Rs 6,056.79 Cr
Offer for Sale of 181,341,058 Equity Shares of Rs 10 aggregating up to Rs [.] Cr
Face Value: Rs 10 Per Equity Share
Issue size : Rs. 6000/- Cr.
Price Band Rs. 300-334
Market Lot : 44 shares
Proposed listing on : BSE,NSE
Lead Managers : BoA Merrill Lynch,Deutsche Equities India Private Limited,Edelweiss Capital Limited,HSBC Securities & Capital Markets Pvt Ltd,ICICI Securities Limited,IIFL Holdings Limited,JM Financial Consultants Private Limited,SBI Capital Markets Limited,UBS Securities India Private Limited.
Market premium Updates ( Grey Market )
On 20th Sept 2016, at 03.00 pm, MP is Rs. 14-15 sellers, kostak Rs. 600/650.
On 19th Sept 2016, at 12.00 noon MP is Rs. 23-24, kostak Rs. 1100.
On 16th Sept at 02.00 pm : MP is Rs. 21-22 .Kostak is of Rs.900/950.
On 15.09.2016 at 02.00 pm : MP is Rs. 21-22 .Kostak is of Rs. 900
On 14.09.2016 at 11.00 am : MP is Rs. 17-18 .Kostak is of Rs. 850.
On 13.09.2016 at 11.00 am : MP is Rs. 21.50-23 .Kostak is of Rs. 950.
On 12-09-2016 at 05.00 pm MP Rs. 18-19 ,Kostak rates Rs.600-650
On 12-09-2016 at 12.00 noon MP Rs. 17-18 ,Kostak rates Rs.750
On 10-09-2016 at 08.00 pm MP Rs. 15 ,Kostak rates Rs. 900
On 10-09-2016 at 03.00 pm MP Rs. 18 ,Kostak rates Rs. 925
On 09-09-2016 at 05.00 pm MP Rs. 22-23 ,Kostak rates Rs. 950
On 09-09-2016 at 11.00 am MP Rs. 21-22 ,Kostak rates Rs. 900
On 08-09-2016 at 11.00 am MP Rs. 27-28 ,Kostak rates Rs. 1200
On 07-09-2016 at 11.00 am MP Rs. 36-37 ,Kostak rates Rs. 1350 ( Strong buying seen), & at some centres, trades were at Rs. 28-29 and kostak Rs. 1200-1300
On 06-09-2016 at 11.00 am MP Rs. 35 and Kostak rates Rs. 1350-1400 ( Strong buying seen)
ICICI Pru life Comparison with others
In the 2015-16 fiscal, ICICI Pru Life total premium stood at Rs 19,164 crore. Its persistency ratio was 82.4 percent, the highest in the sector, while AUM was at Rs 1.09 trillion (Rs 1.09 lakh crore). The total expenses of the entity are one of the lowest at 14.6 percent.
L&T Technology Services IPO Review
ICICI Bank has diluted around 6 per cent before IPO and through IPO now it is diluting another 12.63 per cent stake. Post IPO ICICI Bank will hold around 55 per cent, Prudential group 26 per cent and the rest will be public holding. As it needs to dilute another 6 per cent in next three years, the existing stakeholders have planned to have ICICI Bank holding around 54 per cent and Prudential group at 20%, thus the next dilution will be by way of offerings from Prudential group.
Claim settlement ratio
A.Consistent leadership across cycles;
B. Ability to deliver superior customer value;
C. Diversified multi-channel distribution network for our products and services;
D. Leveraging technology;
E. Robust and sustainable business model.
F. Strong and established brand of our shareholders, “ICICI Bank” and “Prudential”; and
G. Experienced senior management team.
Its Company and its Directors and its Subsidiary, one of its Promoter and certain Group Companies are involved in certain legal and other proceedings.
Changes in market interest rates could have a material adverse effect on its business and profitability.
Higher expenses than expected could have a material adverse effect on its business, financial condition and results of operations.
It could be subject to claims by the customers and/or regulators for alleged mis -selling.
There are operational risks associated with the insurance industry which, when realised, may have a material adverse effect on its business, financial condition, results of operations and prospects.
Any termination of, or any adverse change to, its ability to attract or retain distributors, both institutional and retail,and key sales employees, could have a material adverse effect on its business, financial condition, results of operations and prospects.
Regulatory and statutory actions against IPLICL or its distributors could cause us reputational harm and have a material adverse effect on its business, financial condition, results of operations and prospects.
Shifts in demographic trends and consumer attitudes towards life insurance could have a material and adverse effect on its business, financial condition, results of operations and prospects.
Catastrophic events, including natural disasters, could materially increase its liabilities for claims by policyholders and have a material adverse effect on its business, financial condition and results of operations.
A WAY OF SUCCESS FULL FINANCIAL PLANNING
Differences between its actual benefits and claim payments and those assumptions and estimates used in the pricing of, and setting reserves for, our products could have a material adverse effect on its business, financial condition, results of operations and prospects.
The actuarial valuations of liabilities for our policies with outstanding liabilities are not required to be audited and if such valuation is incorrect, it could have an adverse effect on its financial condition.
Its rely on third -party contractors and service providers for a number of services, but ICICI PRU cannot guarantee that such contractors and service providers will comply with relevant regulatory requirements or their contractual obligations.
Insurance business is vulnerable to misconduct and fraudulent activities and such activities could have a material adverse effect on its business, financial condition, results of operations and reputation.
Any increase in or realisation of its contingent liabilities could have a material adverse effect on its business, financial condition, results of operations and prospects
The majority of our corporate bonds portfolio has a domestic credit rating of not lower than “AA”.
Investment portfolio is subject to liquidity risk,market risk,interest rate which could decrease its value.
Some of Group Companies have incurred losses in the past, based on their audited financial statements available. One of its Promoters may also have unsecured loans.
The insurance sector is subject to seasonal fluctuations in operating results and cash flows.
Adverse changes in the reinsurance markets could have a material adverse effect on its business, financial condition, results of operations and prospects, and ICICI PRU are exposed to the risk that our reinsurers may not perform their obligations.
Foreign investors are subject to foreign investment restrictions under Indian laws that may limit our ability to attract foreign investors, which may have a material adverse impact on the market price of the Equity Shares.
Market risk arises from unanticipated financial loss due to adverse fluctuations in key variables, including interest rates, foreign exchange rates and equity market prices
At March 31, 2016, we had 10,673 employees. Agents are not an employees.
On performance front, for last three fiscals it has posted an average EPS of Rs. 11.40 (on consolidated basis). First quarter of current fiscal is showing dismal performance, but insurance industry normally generates maximum business in the second half of the year. Hence the attribution on the basis of first quarter will be misguiding.
Valuation: The IPO values the company at Rs 47,880 crore, at the upper end of the price band. This implies a price to embedded value (EV) -an industry term which represents the present value of future profits from assets after adjusting for risks -multiple of 3.4 times the FY16 EV of Rs 13,939 crore. The valuation is 47% higher than the last stake sale of 6% to Premji Invest and Temasek in November 2015. However, compared to the multiple commanded by the share swap agreement between HDFC Life and Max life (4.2 times FY16 EV), the pricing appears attractive.
Current market premium is Rs. 22/- ( From Rs. 35/- )
No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here