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.