HDFC Life Insurance Company
conducted conference call on 26 April 2023 to discuss its financial results for
the quarter ended March 2023. Vibha Padalkar, MD&CEO of the company
addressed the call:
Highlights:
The company continued to
grow faster than the private industry and be ranked amongst the top 3 life
insurers across individual and group businesses.
In terms of Individual WRP, the
company outpaced the private industry over multiple timeframes including, in
the past 3, 5 and 7 years, thereby consistently demonstrating growth leadership.
The company has closed the
year with a strong growth of 27% in individual WRP with a market share of 16.5%
and 10.8% in the private and overall sector respectively, clocking expansion of
40 and 70 basis points respectively.
There has been an increase
in protection share in total NBP from 24% in FY22 to 29% in FY23. The overall protection
APE grew by about 20% in FY23. Retail protection trends remain encouraging with
sequential growth being over 50% and yoy growth being over 40% in Q4FY23.
Annuity business in FY23
grew by 18% on received premium basis compared to a 2% growth for the industry.
APE growth is much higher at
59% due to a pickup in regular premium annuity product - Systematic Retirement
Plan during the year.
New business margin for the
year was 27.6% thereby delivering value of new business of Rs 3674 crore, which
is a growth of 37%. Margin neutrality, after considering the acquired business,
was achieved well ahead of target.
The embedded value stood at
Rs 39527 crore end March 2023, with an operating return on embedded value of
19.7% for FY23.
The company is optimistic
about the growth prospects of the industry and is committed to driving a
significant increase in insurance penetration in line with the regulator’s
vision.
The RBI has permitted HDFC
Bank or HDFC to increase their shareholding in HDFC Life to more than 50% prior
to the effective date, thus clearing any uncertainty around HDFC Bank’s
eventual shareholding in the company and it look forward to collaborating with parent
to be, towards creating value for all stakeholders.
The company expects VNB
growth to be in line with APE growth leading to stable VNB margin for FY2024. The
company expects to continue to improve margin in the long term driven by
efficiencies gains from technology and investment made earlier.
The strong growth in the
back book surplus at 27% boosted the growth in the EV for FY2023. The company
expects better unwind rate supporting EV in FY2024 on account of high interest
rate curve.
The company expects protection
and annuity to be key drivers going ahead.
The non-HDFC banca partners are
showing strong, while the company expects pick up in HDFC Bank leading to a overall
strong growth. HDFC Bank has well as other banca partners are strongly
expanding distribution network.
The pension subsidiary of
the company has doubled AUM in 1 and half years to Rs 34000 crore. Another
subsidiary, HDFC International has received approval to set up a branch in Gift
City and it will commence operations from Q1FY24.
On new expenses of
management regulation, the company expects higher allowances in renewal to help
improve persistency.
The share of high ticket policies
above Rs 5 lakh was 12-14% for FY23 and 35% for Q4FY2023. The company has
posted the strong growth of 27%, while the normalized growth was at 16%.
There is no concrete
discussions n fresh issue or secondary transaction for stake raise from HDFC,
while the company sees high probability of secondary transaction.
The company will continue
investment in technology and expects to spend Rs 100 crore each in FY24 and
FY25 for project Inspire.
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