HDFC Life achieves 18% VNB growth driven by 31% growth in individual APE, 22% increase in number of policies
Ambar Bhattacharya, Takmaa News, Kolkata, 15th Jul 2024: The Board of Directors of HDFC Life approved and adopted the reviewed standalone and consolidated financial results for the quarter ended June 30, 2024. The company has reported significant growth across several key metrics, setting a positive momentum for the fiscal
year.
Commenting on the results, Ms. Vibha Padalkar, MD & CEO, HDFC Life, said, “We have started the year on a strong note, achieving 31% YoY growth in individual APE, which implies a two-year CAGR of 21%. This robust growth is driven by a comprehensive performance across all
metrics.
We welcome 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”
2024: The Board of Directors of HDFC Life approved and adopted the reviewed
standalone and consolidated financial results for the quarter ended June 30, 2024. The company has
reported significant growth across several key metrics, setting a positive momentum for the fiscal
year.
Commenting on the results, Ms. Vibha Padalkar, MD & CEO, HDFC Life, said, “We have
started the year on a strong note, achieving 31% YoY growth in individual APE, which implies a
two-year CAGR of 21%. This robust growth is driven by a comprehensive performance across all
metrics.
We welcome 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”
Key Highlights:
Market Share Expansion: 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 Growth: Achieved 46% growth, 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, with a growth in backbook surplus of 18%
Assets Under Management (AUM): Surpassed Rs 3 lakh crore, with a growth of 22%
Geographic Growth: Strong topline growth recorded across Tier 1, 2, and 3 geographies
Bonus Declaration: Declared highest ever bonus of Rs 3,722 crore, to more than 22 lakh par
policyholders
HDFC Life registered a strong increase in the number of policies and witnessed expansion in ticket
size as well. The company’s growth outpaced both the private sector and overall industry, both on a
YoY and a two-year CAGR basis. 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.
Product Mix: 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 2 quarter with the launch of products across other categories. Non-par
products bounced back, clocking a 41% YoY increase. The latest Click2Achieve variant garnered
Rs 100 crore of new business in merely 16 days.
Value of New Business (VNB): Q1 VNB was Rs. 718 crore, reflecting a healthy 18% growth both
YoY and on a two-year CAGR basis. The substantial gap in financial protection across India
presents a compelling growth opportunity for the life insurance sector. HDFC Life is committed to
securing India’s future through innovative insurance solutions.
Key Financial Summary
Definitions and abbreviations
Annualized Premium Equivalent (APE) – The sum of annualized first year regular premiums and 10%
weighted single premiums and single premium top-ups
Assets under Management (AUM) – The total value of Shareholders’ & Policyholders’ investments
managed by the insurance company
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
dividend pay-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 2024, the first monthly
instalment received would be reflected as First year premiums for 2023-24 and the remaining 11
instalments due in the first policy year would be reflected as first year premiums in 2024-25, when
received
New business received premium – The sum of first year premium and single premium, reflecting the
total premiums received from the new business written
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 include commission
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 that period
Persistency – The proportion of business renewed from the business underwritten. The ratio is
measured in terms of number of policies and premiums underwritten
Premium less benefits payouts – The difference between total premium received and benefits paid
(gross of reinsurance)
Renewal premium – Regular recurring premiums received after the first policy year
Solvency ratio – Ratio of available solvency margin to required solvency margin
Total premium – Total received premiums during the year including first year, single and renewal
premiums for individual and group business
Weighted received premium (WRP) – The sum of first year premium received during the year and
10% of single premiums including top-up premiums
HDFC Life registered a strong increase in the number of policies and witnessed expansion in ticket size as well. The company’s growth outpaced both the private sector and overall industry, both on a YoY and a two-year CAGR basis. 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.
Product Mix: 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 2 quarter with the launch of products across other categories. Non-par products bounced back, clocking a 41% YoY increase. The latest Click2Achieve variant garnered Rs 100 crore of new business in merely 16 days.
Value of New Business (VNB): Q1 VNB was Rs. 718 crore, reflecting a healthy 18% growth both YoY and on a two-year CAGR basis. The substantial gap in financial protection across India presents a compelling growth opportunity for the life insurance sector. HDFC Life is committed to
securing India’s future through innovative insurance solutions.
Key Financial Summary
Definitions and abbreviations
Annualized Premium Equivalent (APE) – The sum of annualized first year regular premiums and 10% weighted single premiums and single premium top-ups
Assets under Management (AUM) – The total value of Shareholders’ & Policyholders’ investments
managed by the insurance company
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
dividend pay-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 2024, the first monthly
instalment received would be reflected as First year premiums for 2023-24 and the remaining 11
instalments due in the first policy year would be reflected as first year premiums in 2024-25, when
received
New business received premium – The sum of first year premium and single premium, reflecting the
total premiums received from the new business written
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 include commission
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 that period
Persistency – The proportion of business renewed from the business underwritten. The ratio is
measured in terms of number of policies and premiums underwritten
Premium less benefits payouts – The difference between total premium received and benefits paid
(gross of reinsurance)
Renewal premium – Regular recurring premiums received after the first policy year
Solvency ratio – Ratio of available solvency margin to required solvency margin
Total premium – Total received premiums during the year including first year, single and renewal
premiums for individual and group business
Weighted received premium (WRP) – The sum of first year premium received during the year and
10% of single premiums including top-up premiums