Leading private sector life insurer HDFC Life expects its margins to improve further in the fourth quarter, having pared the blow it took from the Exide Life merger three quarters earlier than expected.
The company closed the December quarter with a new business premium margin of 26.8 percent. Its FY22 VNB (Value of New Business) margin stood at 27.4% and management is confident of getting there or making further improvement by the end of the current fiscal year.
Over the weekend, HDFC Life reported a 15.2% growth in net income to Rs 315.22 crore on net premium income of Rs 14,379.38 crore, which increased by 18.6% annualized from Rs 12,124.36 crore.
Its first-year premium stood at Rs 2,724.87 crore, up from Rs 2,115.97 crore, and the renewal premium shot up to Rs 7,187 crore from Rs 5,543.03 crore.
At 26.8 percent, VNB’s margin is already at pre-merger level, neutralizing the impact of the Exide Life merger (in the second quarter of FY23) nearly three-quarters before ahead of schedule, said Vibha Padalkar, the insurer’s managing director and chief executive officer.
Although it’s holding steady from a year earlier, and down from the 27.4 percent it was in FY22 since it neutralized it so early, the company hopes to improve it further to bring it to FY22-of-27 level. .4 percent or even better than March quarter, Padalkar PTI over the weekend, unquantified number.
She said VNB rose 20 per cent to Rs 877 crore in the December quarter, buoyed by healthy 52 per cent growth in the credit life portfolio (loan protection policies) to Rs 5,200 crore. . Given the demand for such products from individual customers and NBFCs, she expects this segment to exceed Rs 6000 crore by March.
The other revenue driver, he said, was protective products which were down 13 percent and grabbed a 14 percent revenue share. Non-participating products continue to hold the largest share of revenue at 42%, followed by participating products and ULIPs at 22% each. Annuity products got 6 percent of the top line.
Padalkar said that with a combination of data analysis, insights into customer profiles and calibrated risk retention, the overall protection premium grew by more than 20 per cent.
On the retirement front, HDFC Life has consistently gained market share in the annuity business, which grew 22 percent on a premium received basis compared to 1 percent growth for the industry.
The company also recorded healthy growth in both new business premium and renewal premium of Rs 18,713 crore and Rs 19,194 crore so far this fiscal year, compared to Rs 17,075 crore and 14 467 crore respectively in the same period of the previous fiscal year.
His total premium stood at Rs 37,907 crore as of December 2022, up from Rs 31,542 crore in December 2021.
Its built-in value increased enormously to Rs 37,702 crore from Rs 29,543 crore and the value of new business increased to Rs 2,163 crore from Rs 1,780 crore.
She said that if the proposed amendments to the Insurance Act, which seek to allow for compounding leave and a host of other business-friendly changes, such as allowing banks to sell products from multiple insurers as opposed to the current limit of three, and also to allow insurers to sell all financial products, is approved in Parliament’s Budget session, HDFC Life will soon resume health insurance services.