A Quarter of Steady Execution

Volume recovery that began in the second half of FY26 carried into the September quarter. Total annualised premium equivalent (APE), the industry's yardstick for new business, rose 15.6% to about Rs 2,800 crore, against 2.2% growth for all of FY26. Retail APE grew 10.7%.

Value of new business (VNB), the profit embedded in policies sold, rose about 20% to roughly Rs 710 crore. The VNB margin widened 100 basis points to 25.4%. First-half VNB grew 22.3% at a 26% margin. Shareholder profit after tax climbed 26.5% to about Rs 374 crore, and the solvency ratio stood at a comfortable 229.9%.

Management repeated that absolute VNB growth is the goal and margin "an outcome rather than a target."

Five Channels, One Premium Pool

No channel supplies more than about 28% of APE, a diversity the brokerage says sharply reduces regulatory risk. In the quarter, growth came from the newer channels: partnership distribution rose 37.7% and group business 39.6%, while bancassurance grew only 3.9%.

Management wants agency to outpace overall growth in the medium term but gave no channel targets.

Protection and Annuity Lead the Mix Shift

Retail protection grew 36.5% and annuity 64.7%, both higher-margin lines. Total protection now makes up about 20% of APE. Savings APE rose 11.8%, though late-quarter equity volatility held unit-linked growth to 6.7%.

Management expects retail protection growth to moderate in the second half as the boost from the September 2025 GST changes fades. Elevated interest rates could lift annuities' share further.

The Margin Pulse and the Cost Engine

The margin dipped 129 basis points from the June quarter's high but remained 100 basis points above last year's level, despite the loss of input tax credits after GST was removed from premiums.

Costs are the quieter story. Excluding GST and stamp duty, operating expenses fell 22% between FY23 and FY26, and the first-half cost-to-premium ratio eased 30 basis points to 18.3%. Automation now issues 54% of savings policies the same day. Reported operating expenses, which include those taxes, still rose 45.4% in the quarter.

Persistency: The One Soft Reading

Persistency, the share of policyholders still paying premiums, slipped at the 25th, 37th and 49th months but improved at the 13th and 61st. The weakest point was the 25th month, down to 74.5% from 79.3%. Management blamed weaker earlier cohorts rolling forward.

Why the Target Came Down

The cut owes nothing to the quarter. India's insurance regulator has floated draft distribution rules that would change expense limits, cap commissions differently and raise renewal commissions. Management says its cost discipline leaves it well placed but cannot yet quantify the impact. ICICI Securities lowered its multiple to 1.3x from 1.5x to allow for slower growth once the rules take effect.

The house models VNB margins of about 26% and 26.5% for FY27 and FY28, with APE growth of about 13% and 15%. That lifts embedded value to about Rs 68,560 crore by FY28. Applying 1.3 times to the per-share figure gives about Rs 615; the report does not explain why it settles at Rs 600. At roughly 0.9 times FY28 EV, the brokerage sees "deep value."

Levels at a glance: ICICI Prudential Life Insurance · BUY (ICICI Securities) · CMP Rs 447 · Target Rs 600 (earlier Rs 705) · Upside 34% · 12 months · 52-week range Rs 442–707 · Basis 1.3x FY28E embedded value.