HDFC Life Insurance, the third-largest private sector life insurance company, reported a 16 per cent growth in net income to Rs 365 crore for the December quarter. The increase was driven by a significant rise in investment gains, which surged to Rs 11,300 crore due to a massive market rally.
Net premium income inched up by 6 per cent to Rs 15,273 crore in the quarter, while the value of new businesses declined by 2 per cent as the company faced challenges in selling high-value policies after the last Budget introduced a tax on policies with premiums over Rs 5 lakh.
Despite this, adjusted for Exide Life, revenue rose by 36 per cent to Rs 26,735 crore. The value of new business (VNB) fell by 2 per cent to Rs 856 crore, and the VNB margin remained flat at 26.83 per cent. The company mentioned that overall premium growth was in the single digits, impacted by poor sales of policies with premiums above Rs 5 lakh. Smaller ticket policies, however, grew by 17 per cent, led by better sales in small towns.
"It was business as usual but is slowly turning in now. Overall premium growth was in the single-digits, impacted by the poor sales of policies with an above-Rs 5 lakh annual premium. But smaller ticket policies grew 17 per cent, primarily led by better sales in small towns, where they grew 14 per cent, taking the overall revenue share from such markets to over two-thirds in value and over 70 per cent in terms of volumes," Vibha Padalkar, the chief executive of the company, told PTI.
HDFC Life booked gains of Rs 11,300 crore from the market rally, up from Rs 4,900 crore in the year-ago period and Rs 8,000 crore in the previous quarter. The company's total expense ratio stood at 19.6 per cent, marginally up from 19.4 per cent a year earlier. The solvency ratio fell to 190 from 209 but is still well above the minimum regulatory requirement of 150.
Padalkar mentioned that the company's overall product mix comprises 32 per cent unit-linked insurance plans, 28 per cent non-par savings, 28 per cent participating policies, 7 per cent annuities, and 6 per cent protection. The share of Ulips rose 11 per cent, annuities by 1 per cent, and protection by 2 per cent, while that of par-savings fell 1 per cent and non-par savings declined 11 per cent.
Retail protection annualised premium equivalent grew 36 per cent, and credit protection rose 21 per cent, contributing to assets under management rising by a fifth to Rs 2.8 lakh crore. Additionally, 18 per cent of the profit in the quarter came from renewal policies.
Regarding the IRDAI plans to hike the surrender value of policies midway, Padalkar agreed with the proposal conceptually, but the industry is seeking clarity on the percentage of the premium that has to be paid back. The HDFC Life stock closed almost 1 per cent lower at Rs 637.55 on the BSE, despite a 1.2 per cent rally in the benchmark Sensex.
(With PTI inputs)
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