HDFC Life’s Value of New Business doubles to Rs. 509 crs in Q1 FY20

Mumbai / Chennai, July 23, 2019: The Board of Directors of HDFC Life approved and adopted today the consolidated and standalone audited financial results for the quarter ended June 30, 2019. Below is the summary of our standaloneresults:

Commenting on the quarter’s solid performance, Ms. Vibha Padalkar, MD & CEO said “In line with our stated strategy, we continue to focus on providing the best value proposition to our customers, partners and shareholders and generating profitable growth. We have recorded stellar topline growth, with strong traction witnessed across savings, protection and retirement solutions whilst maintaining our focus on profitability. Our diversified distribution mix coupled with product innovation has helped us address niche customer segments and emerging profit pools. We have witnessed strong growth in key indicators of economic value generated by our business viz. New Business Margins at 29.8% and Operating Return on Embedded Value at 19.9%. We have stepped up our efforts within the protection and retirement space, which we expect would fuel our growth across market cycles. Our digital capabilities put us in a good position to maximize the tremendous potential of the life insurance industry.”

Key Financial Summary

 

Rs Cr Q1 FY20 Q1 FY19 YoY FY19 FY18
Key Financial and Actuarial Metrics
Individual APE 1,378 840 64% 5,204 4,887
Total APE 1,710 1,027 67% 6,260 5,532
New Business Premium (Indl + Group) 3,926 2,678 47% 14,971 11,350
Renewal Premium (Indl + Group) 2,610 2,380 10% 14,215 12,215
Total Premium 6,536 5,058 29% 29,186 23,564
Assets Under Management (AUM) 1,29,581 1,09,634 18% 1,25,552 1,06,603
Indian Embedded Value (IEV) 19,230 15,693 23% 18,301 15,216
Networth (1) 6,084 5,106 19% 5,659 4,719
Value of new business (VNB) 509 249 104% 1,537 1,282
Profit After Tax (PAT) 425 380 12% 1,277 1,109

 

 

 

Rs Cr Q1 FY20 Q1 FY19 YoY FY19 FY18
Protection based on APE 304 187 63% 1,045 624
Protection based on NBP 1,014 847 20% 4,042 2,942
Annuity based on Ind APE 70 42 69% 261 107
Annuity based on NBP 695 409 70% 2,592 1,066
 
  Q1 FY20 Q1 FY19 FY19 FY18
Key Financial Ratios
New Business Margins 29.8% 24.2% 24.6% 23.2%
Operating Return on EV (2) 19.9% 18.4% 20.1% 21.5%
Operating Expenses / Total Premium 13.5% 14.4% 13.2% 13.5%
Solvency Ratio 193% 197% 188% 192%
13M / 61M Persistency (3) 88%/54% 87%/50% 87%/52% 87%/51%
Product mix by Ind APE (UL / Non par savings / Non par protection / Par) 26/63/5/6 54/11/8/28 55/20/7/18 57/9/5/28
Distribution mix by Ind APE (Corp Agents/ Agency/ Broker/ Direct) 56/15/9/20 65/11/5/19 64/13/4/19 71/11/5/14

 

Notes:

  1. Networth comprises Share capital, Share premium and Accumulatedprofits
  2. During FY18, there was a one-time operating assumption change of positive Rs 1.4 bn based on review by an external actuary as part of the IPO process. Excluding this one-time adjustment, Operating return on EV would have been 20.4% forFY18
  3. Persistency ratios (based on original premium) as per methodology specified in IRDA circular no. IRDA/ACT/CIR/MISC/035/01/2014 dated January 23, 2014. Group business, where persistency is measurable, has been included in thecalculations

 

Other key highlights for the quarter ending June 30, 2019:

 

  • Private Market Share: We expanded our market share in the private sector to 25.1% as compared to 22.3% in Q1 FY19, based on total new business received premium. Consistently ranked amongst the top 3 private players in individual and group segments with market share of 17.5% based on Individual WRP (YoY increase of 420 bps) and remained steady at 30.0% based on Group business (on received premium) during Q1FY20.

 

  • New Business Lives and Sum Assured: Total number of lives insured grew by 26% to 1.3 Cr during Q1 FY20. Overall new business sum assured also saw an increase of 46% to Rs 1.8 lakh Cr during the same period.

 

  • Product Portfolio: Maintaining a profitable product suite has always been at the forefront of our thinking, with an emphasis on the protection and retirement space. Term protection APEhas

 

 

increased to Rs 304 Cr during Q1 FY20, from Rs 187 Cr in the corresponding period last year, representing a strong growth of 63%. Annuity APE was at Rs 70 Crs in Q1 FY20, growing by 69% over Q1 FY19. Protection and annuity businesses comprise a substantial 26% and 18% of total new business premiumrespectively.

 

  • Distribution Mix: Our diversified distribution mix is demonstrated by the wide access to the customers of our 270 plus partners, including more than 40 new-ecosystem partners as on June 30, 2019. This is further supplemented by our 421 branches spread across thecountry.

 

  • Assets Under Management: We are one of the leading fund managers in India with an AUM of around Rs. 1.3 lakh Cr; the debt:equity mix as on June 30, 2019 is 62:38. Almost 96% of debt investments are in GSecs and AAA bonds as on June 30, 2019.

 

Definitions and abbreviations

 

  • Annualized Premium Equivalent (APE) – The sum of annualized first year regular premiums and 10% weighted single premiums and single premiumtop-ups
  • Assets under Management (AUM) – The total value of Shareholders’ & Policyholders’ investments managed by the insurance company. AUM includes investments disclosed in the Balance sheet under Schedule 8, 8A, 8B & loans in the nature of investments included in Schedule9
  • Embedded Value Operating Profit (EVOP) – Embedded Value Operating Profit (“EVOP”) is a measure of the increase in the EV during any given period, excluding the impact on EV due to external factors like changes in economic variables and shareholder-related actions like capital injection or dividendpay-outs
  • First year premium – Premiums due in the first policy year of regular premiums received during the financial year. For example, for a monthly mode policy sold in March 2019, the first monthly instalment received would be reflected as First year premiums for 2018-19 and the remaining 11 instalments due in the first policy year would be reflected as first year premiums in 2019-20, when received
  • New business received premium – The sum of first year premium and single premium, reflecting the total premiums received from the new businesswritten
  • Operating expense – It includes all expenses that are incurred for the purposes of sourcing new business and expenses incurred for policy servicing (which are known as maintenance costs) including shareholders’ expenses. It does not includecommission.
  • Operating expense ratio – Ratio of operating expense (including shareholders’ expenses) to total premium
  • Operating return on EV – Operating Return on EV is the ratio of EVOP (Embedded Value Operating Profit) for any given period to the EV at the beginning of thatperiod

 

 

  • Persistency – The proportion of business renewed from the business underwritten. The ratio is measured in terms of number of policies and premiumsunderwritten
  • <

Leave a Reply

Your email address will not be published. Required fields are marked *