HDFC Life Plans To Double Its Value Of New Business In Next Four Years

HDFC Life Insurance Co. Ltd. expects to double its value of new business over the next four years.

“We have doubled our business in the last four years, and expect to continue with the growth rate at 17-18% over the next four years,” Vibha Padalkar, managing director and chief executive officer at the private sector insurer, told BloombergQuint.

HDFC Life saw its value of new business grow at 22% in fiscal 2022, while its VNB margin inched up to 27.4% for the year. “We would look to take the margin to 30% over the medium term,” she said.

HDFC Life’s latest acquisition, Exide Life Insurance Co., will be merged with itself in the ongoing fiscal. “That would mean we would be margin neutral in FY23 compared to FY22,” Padalkar said.

The insurer expects better cost and product synergies, once the merger is approved by the National Company Law Tribunal, in the first half of the fiscal. Since Jan. 1, Exide Life is a subsidiary of the company.

Solvency Margin Concerns

The insurer saw its solvency margin slip to 176% from 190% at the end of March 2022, largely on account of the acquisition of Exide Life. It will look to raise capital in the form of debt and equity to be at 180-190% solvency level.

“We would need between Rs 1,000 crore and Rs 1,500 crore of equity over the next three-four years to support growth and keep solvency above 180% level. At Rs 1,000 crore, we will have 190%, and at Rs 1,500 crore, it will be higher than that.”

HDFC-HDFC Bank Merger Benefits

As part of the HDFC Ltd.–HDFC Bank Ltd. merger, there is a proposal to allow the stake of HDFC Bank to be increased to 51% from the current 47%. The proposal is with the regulators and subject to their approval, Padalkar said.

HDFC Life expects to up-sell and cross-sell its products in a better manner, post the HDFC-HDFC Bank merger and once it becomes a subsidiary of HDFC Bank.

Currently, it allows sale of term loans attached to home loans. Once the merger process is complete, it hopes to gain better access to the bank’s customer base, which will enable it to provide better products, thereby pushing further growth through the Banca channel, Padalkar said.

The insurer saw its protection products grow at 24% during the year, which is more than double the industry growth rate. “We hope to grow in the double digits in FY23,” said Padalkar, adding that it will be one of the levers for growth.

Padalkar expects the life insurance company will be able “to achieve a fine balance” between reaching the 30% VNB margin and not losing market share.

Watch the full interview here: