HDFC Life Sees Better Margins In Q4

Leading private sector life insurer HDFC Life expects its margins to improve further in the fourth quarter, having already neutralised the hit it had taken from the merger of Exide Life three quarters earlier than expected.

The company closed the December quarter with a new business premium margin of 26.8%. Its FY22 value of new business margin stood at 27.4% and the management is confident of reaching there or making a further improvement as it closes the current fiscal.

Over the weekend, HDFC Life reported a 15.2% growth in net income at Rs 315.22 crore on a net premium income of Rs 14,379.38 crore, which rose 18.6% annualised from Rs 12,124.36 crore.

Its first-year premium stood at Rs 2,724.87 crore, up from Rs 2,115.97 crore, and the renewal premium soared to Rs 7,187 crore from Rs 5,543.03 crore.

At 26.8%, the VNB margin is already at the pre-merger level, neutralising the impact of the merger of Exide Life (in Q2 FY23) almost three quarters earlier than planned, said Vibha Padalkar, the managing director and chief executive of the insurer.

Though it is flat year-on-year, and down from the 27.4% it had in FY22, having already neutralised it so early, the company hopes to improve it further to take it to the FY22 level of 27.4% or even better it in the March quarter, Padalkar told PTI over the weekend, without quantifying a number.

The VNB climbed 20% to Rs 877 crore in the December quarter, boosted by a healthy 52% growth in the credit life (loan protection policies) portfolio to Rs 5,200 crore, she said. Given the demand for such products from individual customers and NBFCs, she expects this segment to top Rs 6,000 crore by March.

The other revenue booster, she said, was protection products which clipped at 13% and cornered a 14% income share. Non-participating products still continue to hold the major revenue share at 42%, followed by participating products and ULIPs at 22% each. Annuity products got 6% of the top-line.

Padalkar said with a combination of data analytics, insights into customer profiles and calibrated risk retention, overall protection premium grew by over 20%.

On the retirement front, HDFC Life has steadily gained market share in the annuity business which grew 22% on a received premium basis compared to a 1% growth for the industry.

The company also recorded healthy growth in both new business premium as well as renewal premium at Rs 18,713 crore and Rs 19,194 crore so far this financial year, compared to Rs 17,075 crore and Rs 14,467 crore respectively in the same period last fiscal.

Its total premium stood at Rs 37,907 crore as of December 2022 up, from Rs 31,542 crore in December 2021.

Its embedded value scaled up massively to Rs 37,702 crore from Rs 29,543 crore and the value of new business rose to Rs 2,163 crore from Rs 1,780 crore.

She said if the proposed amendments to the Insurance Act, which seek to allow composite licence and a host of other pro-business changes like allowing banks to sell products of multiple insurers unlike the present cap of three, and also permitting insurers to sell all financial products, is cleared in the Budget session of Parliament, HDFC Life will shortly resume health insurance services.