HDFC Life Insurance Company conducted a conference call
on 18 April 2024 to discuss the financial results for the quarter ended March
2024. Vibha Padalkar, MD & CEO of the company addressed the call:
Highlights:
The company has delivered a healthy
growth of 20% for Q4FY24 after adjusting for the one-off business of Rs 1000
crore in March 2023, despite the budget changes impacting high ticket sized
business in FY24.
The aspiration of a double-digit
growth for the full year was achieved with a 11% growth for FY24, on a
normalized basis.
An individual APE grew 1% on an
unadjusted basis in FY24. Renewal collections surged 18%. Persistency for the
13th month and 61st month was 87% and 53% respectively.
FY24 has been another landmark year
for product launches, fuelled by relentless innovation and a desire to help
meet customers evolving requirements.
New business margins were 26.3% in
FY24.
Value of new business was Rs 3501
crore, implying a 2 year CAGR of 14%.
Embedded value stands at Rs 47468
crore end March 2024, with an operating return on embedded value of 17.5%.
The net profit of the company has
increased 15% to Rs 1569 crore, fuelled by 18% increase in profit emergence
from back book.
Solvency continues to be healthy at
187%.
During the first 11
months, the company has grown faster than the overall industry growth of 9%.
The private market shares stood 15.4% and the company maintained position
amongst the top three life insurers across individual and group businesses.
The company has
established a sustainable foundation for FY25 through targeted initiatives
aimed at key growth metrics.
Growth momentum
continued across ticket sizes up to Rs 5 lakh with robust growth of over 22% in
Q4 and 19% for full FY2024.
Tier 2 and 3 markets
recorded a growth of 13% against overall company growth of 1%.
In line with intent to
broaden the customer base, the number of policies increased by 11% which is
almost 3X overall industry growth. The company insured 6.6 crore lives during
FY24.
More than 70% of the
retail customers on boarded are new to the company and almost half of these are
below the age of 35 years.
Sum assured witnessed
robust growth of 47% aided by growth in pure term, return of premium, high protection
cover embedded in savings products and riders.
With product innovation
across product segments, average sum assured per policy has increased by 33% on
overall basis and 39% for savings business.
Annuity and protection
put together contributed nearly half of overall new business premium in FY24.
Retail protection grew
by 27% based on individual APE and the company believes that the momentum will
sustain into FY2025.
The credit protect
recorded 13% growth in spite of a cautious lending environment in H2 and
increased competitive intensity in certain segments. The company continues to
be a market leader in this segment.
The company remains
optimistic about the growth potential of the annuity segment in India,
considering its nascent stage and believes that the long-term opportunity
remains promising.
The company will
continue to pursue a balanced approach to growth by enhancing product offerings
and maintaining pricing discipline.
The company maintained a
healthy balance in terms of product mix with unit linked policies at 35%, non-par
savings at 30%, participating products at 23%, retail term at 5% and annuity at
6%.
Unit link products
continue to see a strong traction driven by buoyant equity markets.
New business margins declined
to 26.3% in FY24 from 27 .6% in FY23. Of this drop of 130 basis points, about 70
basis points was on account of the operating leverage gap caused by the Rs 1000
crore additional APE received in FY23 due to the budget changes and 40 basis
points was due to higher unit link proportion in FY2024.
The current business mix
sets a strong platform for the company to continue delivering strong top Line
and VNB growth in FY25 and beyond. The company expects VNB growth similar to APE
growth.
The focus is on further
enhancing presence across geographies and customer segments and maximizing the
potential of distribution channels.
The company added 80,000
agents, while opened 75 new branches in FY24 and anticipate presence to exceed
600 touch points in FY25.
If the company sees
significant incremental growth opportunities, the company will be flexible to
trade-off margins while maximizing VNB growth.
The company anticipates
a shift in 13- month persistency going forward influenced by product mix. The company
is committed to maintaining persistency levels across all relevant cohorts.
The bancassurance
channel has grown 17% in FY2024. HDFC Bank counter share continues to trend
well to 63% as against 56% in last year. The company will continue to make
further inroads in HDFC Bank share and that should grow faster than company
level growth.
The company would be prioritizing
VNB growth to build profitable business in the long run.
Historically the private
sector has grown in the range of 12 to 15%, so the company should grow at least
by that if not a shade higher than that.
The company aims to
maintained return on embedded value in the range of 17-18%.
The subsidiary- HDFC Pension
Management Company has achieved a milestone by crossing the AUM of Rs 75000 crore,
showcasing a remarkable growth of 70%. The company has maintained market
leadership in the pension category commanding a market share of 43%.
The company is actively advancing
expansion plan for the GIFT City business with the introduction of innovative
US dollar denominated life and health insurance products. It is already making
strides in penetrating the NRI segment.
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