HDFC Life Insurance Q1 Results: Profit Meets Estimates As Premiums Jump
HDFC Life Insurance’s profit rose 22% year-on-year to Rs 328.8 crore in the quarter ended June.
HDFC Life Insurance Co.’s quarterly profits rose over the year earlier, in line with estimates, as premiums increased.
The private insurer’s profit rose 22% year-on-year to Rs 328.8 crore in the quarter ended June, according to an exchange filing. That compares with the Rs 311.7-crore consensus estimate of analysts tracked by Bloomberg.
Sequentially, however, earnings fell 35%.
The company earned premiums of Rs 9,396 crore, a 23% increase over a year ago. Of the total, renewal premiums contributed around 49%, while the rest was new business premium.
HDFC Life Q1 FY23 Highlights (YoY)
Revenue fell by more than half to Rs 6,680 crore, against the estimated Rs 4,712.5 crore.
Value of new business—present value of the future profits associated with new business written during the period—grew 25% to Rs 510 crore.
VNB margin was at 26.8% against 26.2%.
Renewal premiums grew 19%.
Embedded value grew 9% to Rs 29,709 crore.
The 13th and 61st month persistency ratios—or customer retention—improved to 88% and 54% from 86% and 51%, respectively.
Solvency ratio—that measures the extent to which assets cover commitments for future liabilities—fell to 178% from 203%. Still, it’s above the minimum requirement of 150%.
Emkay Global in its pre-results outlook report had said growth of HDFC Life should see an improvement as the base becomes more favourable. Also, a planned merger of the parent entity is likely to increase cross-selling.
HDFC Life’s operating expenses rose 14.9% in the first quarter against an increase of 12.5% a year ago.
Its product mix contribution on the basis of individual annualised premium equivalent, from unit-linked insurance plans saw a 200-basis-points decline to 25%, while that from non-participating products increased 300 basis points to 35%.
Share of protection in the product mix fell from 8% to 5%. Annuity and participating products saw a 100-basis-points increase in their shares to 6% and 30%, respectively.
Distribution channel mix almost remained the same as the year earlier.
Exide Life Merger
Vibha Padalkar, managing director and chief executive officer at HDFC Life, said Exide Life witnessed “strong growth of 34% based on individual weighted received premium and continued to enjoy a healthy product mix and growth across channels”.
The integration of Exide Life is on track, she was quoted as saying in the filing. “We have received the initial National Company Law Tribunal approval for triggering the merger process... We expect to receive the final nod from the IRDAI and be able to merge the subsidiary in the second half of FY23.”
She also said their overseas subsidiary, HDFC International, has received an in-principle approval from International Financial Services Centres Authority-IFSCA to setup a “global in-house center” at GIFT City.
“This entity will pool and optimise all processing activities of our international business,” she said. “This is an important step for us towards eventually setting up an IFSC Insurance Office at GIFT city, which can cater to the overseas insurance needs of the Indian diaspora.”
Shares of HDFC Life were trading 1.25% down compared with a 0.35% gain in the benchmark Nifty 50 as of 2:50 p.m. on Tuesday.