The VNB margin of the private life insurer took a hit in Q4FY24, dropping to 21.46% from 31.97% in the previous quarter, attributable to a decrease in the sales of non-participating products following tax alterations on higher ticket size policies. Consequently, the stock traded 4% lower at Rs 569.15 at 09:29 am, while the S&P BSE Sensex witnessed a marginal rise of 0.24%.
The company's net profit also suffered a setback, showing a 26% year-on-year decline to Rs 173.76 crore in Q4FY24 from Rs 234.87 crore in Q4FY23, which was attributed to increased expenses. Sequentially, there was a 23% decrease in net profit from Rs 227.47 crore in the preceding quarter (Q3FY24). Despite this, the net premium income of the insurer rose to Rs 2,549.84 crore, marking a 9.89% year-on-year increase over Rs 2,320.35 crore in Q4FY23, with the Annualised Premium Equivalent (APE) climbing 9.54% year-on-year to Rs 3,615 crore from Rs 3,300 crore in the corresponding quarter.
The decline in VNB margins was linked to altered operating assumptions, primarily influenced by higher operating expenses. The company indicated expectations for stable commissions while planning to reinvest operating leverage back into the business. Moreover, there was a mention of a new product with a distinct commission structure not reflecting a low VNB margin, with no immediate pricing modifications for the product being considered. Looking ahead to FY25, the management anticipates business growth to surpass industry levels, and VNB growth to align with business expansion, driven predominantly by Agency and Direct proprietary channels that have showcased superior growth rates.