HDFC Life Insurance Company conducted a conference call on 15 July 2024 to discuss the financial results for the quarter ended June 2024. Vibha Padalkar, MD & CEO of the company addressed the call:

Highlights:

The company has started the year on a strong note, achieving 31% yoy growth in individual APE, which implies a two-year CAGR of 21%, driven by a comprehensive performance across all metrics.

The company welcomes the positive impact of IRDAI''s progressive reforms that are expected to significantly strengthen the life insurance proposition in India, making it simpler, more transparent and ultimately more attractive to prospective customers.

The Private market share expanded from 16.4% in Q1FY24 to 17.1% in Q1FY25, and the overall market share in Individual WRP increased to 11.4%.

Retail sum assured increased 46%, bolstered by higher sum assured multiples for savings products and strong rider attachment and aided by 28% growth in retail protection.

Profit after Tax grew by 15% to Rs 478 crore in Q1FY2025, with a growth in backbook surplus of 18%

Assets under Management (AUM) surpassed Rs 3 lakh crore, with a growth of 22% end June 2024.

The company has recorded strong topline growth across Tier 1, 2, and 3 geographies.

The company has declared highest ever bonus of Rs 3722 crore, to more than 22 lakh par policyholders.

The company has registered a strong increase in the number of policies of 22% and witnessed expansion in ticket size of 7% as well outpacing both the private sector and overall industry.

Growth resurgence was experienced in Tier 1 markets whilst maintaining strong growth in Tier 2 and 3 geographies, which continue to account for a significant portion of the business. Lower tier cities contributed two-third of APE and three-fourth of polices.

The new to HDFC Life customers accounted for 70% of the customers.

ULIPs accounted for 38%, non-par savings for 35%, participating products for 16%, term for 6%, and annuities for 5%, based on individual APE. The ULIP mix was initially elevated, but moderated during the quarter with the launch of products across other categories.

Value of New Business (VNB) increased 18% to Rs 718 crore in Q1FY2025.

The substantial gap in financial protection across India presents a compelling growth opportunity for the life insurance sector.

The share of ULIPs is expected to continue to see moderation with the pickup in launch of new products.

The company has posted strong 28% jump in the retail protection business.

The credit protect business was impacted due to high competition and lower disbursements in some segments. The company has 200 partners in the credit protect business with products for many segments such as mortgage, personal, vehicle etc.

The share of HDFC Bank has increased to 66% in Q1FY2025 from 56% in Q1FY2024.

The company has continued to invest in agency channel and raising productivity. It has added 18500 new agents during Q1FY2025.

The company has 60 new branches raising the overall branch count to 600 branches end June 2024.

The company has witnessed moderation in the VNB margins due to product mix. The investments for growth such as branch expansion, IT, employee addition, training etc has also caused moderation in the margins.

The company expects impact from surrender value charges on VNB margins at 100 bps. The surrender value change impact has been low for the company due to low surrender profit assumption in margin calculations.

The company has received board approval to raise sub debt of Rs 2000 crore over the next 12 months, which would help to raise the solvency ratio.

The company expects to growth premium at 20% with high share of HDFC Bank, new products and growth in agency channel.

The company expects to protect margins with favourable product mix and investments in the agency channel bearing fruits in the medium term.