HDFC Life Q2 Results: Profit Rises, Retail Business Aids Gross Premium
Insurance regulator suggests modification in steps for speedy settlement of insurance claims in India. (Photographer: Akio Kon/Bloomberg)

HDFC Life Q2 Results: Profit Rises, Retail Business Aids Gross Premium

HDFC Life Insurance Co. Ltd.’s quarterly net profit rose, aided by cost cuts.

The insurer, which replaced Vedanta Ltd. on the Nifty 50 Index, reported a 6% year-on-year increase in net profit to Rs 326 crore in the quarter ended September, according to an exchange filing.

HDFC Life’s gross premium rose 35% over the year ago to Rs 10,183 crore in the reported quarter, aided by increased traction in retail business, backed by a marginal uplift in household income and spends.

  • Focus on the protection segment resulted in 38% growth in the individual (retail) segment.
  • Protection share based on individual annualised premium equivalent improved to 9% in the first half of FY21 from 6% a year ago.
  • Operating expense ratio stood at 11.1% for first half of FY21 compared with 14% a year ago.

“While we remain sensitive about the health impact and loss of lives due to the pandemic and continue to focus on employee, customer and partner safety norms, opening up of the economy has led to a pickup in activity levels on the ground. This has also resulted in a marginal uplift in household income and spends,” Vibha Padalkar, managing director and chief executive officer at HDFC Life, was quoted as saying in a statement. “Insurance as a category has emerged stronger as a vehicle to protect one’s family and realise their long-term financial goals. Customers are more active in decision-making, resulting in traction in individual business.”

The company’s annualised premium equivalent—a sum of first-year premium and single-premium policies—however, fell 4% year-on-year to Rs 3,334 crore during the first half of the ongoing fiscal.

Its value of new business margin, a measure of profitability, too, dropped to 25% in the first half of 2020-21 from 28% a year ago.

Also read: HDFC Life Outpaces Peers As Life Insurers Return To Growth After Six Months

HDFC Life continued to maintain a healthy persistency ratio—a measure of how long a customer continues with their policy—at 91% in the quarter ended September compared with 89% a year ago. That's the highest in at least six quarters.

Key Concall Takeaways:

  • Received approval for Corona Kavach policy along with our partner HDFC Ergo and will sell corona-specific policies going forward
  • 418 corona claims have been received to date and have Rs 22 crore worth of sum at risk
  • Continues to see traction in individual protection APE
  • Annuity product continues to trend very well. Focus will be on achieving a balanced product mix
  • Brand value, claim settlement ratios, ease of buying will be the differentiating factors that will work well, while choosing standard term plans
  • Will comfortably beat the industry performance and continue to gain market share

Shares of HDFC Life closed 2% higher before the results were announced, compared with the Nifty 50’s 0.94% gain.

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