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India's ICICI Prudential logs lower new business margin in April-Dec

Passengers wait in front of an ICICI Prudential billboard at a bus stop in Mumbai

BENGALURU (Reuters) - India's ICICI Prudential Life Insurance reported a decline in new business margins on Wednesday, as demand dipped for high-value policies following taxation changes and sales of low-margin products increased.

The value for new business (VNB) - the expected profit from new policies - fell 15% to 14.51 billion Indian rupees ($174.49 million) for the nine months ended Dec. 31, the company said, while VNB margins declined to 26.7% from 32% a year earlier.

The move to tax total returns of high-value policies at maturity, and a rise in low-margin, unit-linked plans have hurt insurers' VNB margins, analysts have said.

The ICICI Bank -backed insurer posted a largely flat net premium income growth of 4.9% to 99.29 billion rupees for the three months ended Dec. 31, following a 4.6% increase in the September quarter.

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Meanwhile, investment income more than doubled to 163.15 billion rupees, largely boosted by strong domestic markets.

The Nifty 50 Index gained nearly 11% during the three months ended Dec. 31, its best quarter since Sept. 2021, on hopes of early interest rate cuts by the U.S. Federal Reserve.

ICICI Prudential's third-quarter profit after tax rose 3% to 2.27 billion rupees from a year earlier.

Its annualized premium equivalent (APE) sales grew 1.7% for the nine-month period, while for the quarter they were up 4.7%, the company said last week.

APE is a gauge of sales that gives the annualized total value of all single premium and recurring premium policies.

Rival HDFC Life Insurance last week reported a near 16% rise in third-quarter profit, lifted by higher investment income as premium growth moderated.

Shares of ICICI Prudential closed 0.6% lower ahead of results.

($1 = 83.1548 Indian rupees)

(Reporting by Dimpal Gulwani in Bengaluru; Editing by Ravi Prakash Kumar)