The third largest private sector life player HDFC Life Insurance on Friday reported a 16 per cent growth in net income to Rs 365 crore for the December quarter, driven by a more than doubling of investment gains that soared to Rs 11,300 crore due to the massive market rally.
Even as the net premium income inched up 6 per cent to Rs 15,273 crore in the quarter, the value of its new businesses declined by 2 per cent, as the company could not sell high-value policies much after the last Budget introduced a tax on over Rs 5 lakh policies.
However, adjusted for Exide Life, revenue rose 36 per cent to Rs 26,735 crore. Value of new business (VNB), which is the present value of the future profit associated with new business written during the period, fell 2 per cent to Rs 856 crore and the VNB margin was flat at 26.83 per cent against 26.84 per cent, the company said.
"It was business as usual but is slowly turning in now. Overall premium growth was in single-digit impacted by the poor sales of policies with above Rs 5 lakh annual premium.
"But smaller tickets policies grew 17 per cent, primarily led by better sales in small towns, where it grew 14 per cent, taking the overall revenue share from such markets to over two-thirds in value and over 70 per cent in terms of volumes," Vibha Padalkar, the chief executive of the company told PTI.
Padalkar also said that in terms of sum assured at Rs 9.8 lakh crore, which soared 54 per cent in the quarter, the company has become the market leader among its peers. The company has 5 crore active policies. Also, the company could retain its third ranking in terms of assets under management at Rs 2.8 lakh crore, which rose 30 per cent in the reporting quarter.
She said the company booked Rs 11,300 crore gains from the market rally, which was only Rs 4,900 crore in the year-ago period and Rs 8,000 crore in the previous quarter. Of the total gains in the quarter, Rs 3,000 crore are due to fair value change, which is a pass-through as it goes to policyholders.
The company's total expense ratio, which is the income after all expenses, stood at 19.6, marginally up from 19.4 a year earlier.
On the other hand, the solvency ratio, ?which measures the extent to which assets cover commitments for future liabilities,? fell to 190 from 209. It was 194 in the September quarter. But still, it is well above the minimum regulatory requirement of 150.
She said the company's overall product mix comprises 32 per cent unit-linked insurance plans, 28 per cent non-par savings, 28 per cent participating policies, 7 per cent annuities, and 6 per cent protection. The share of Ulips rose 11 per cent, annuities by 1 per cent and protection by 2 per cent, while that of par-savings fell 1 per cent and non-par savings declined 11 per cent.
Padalkar said retail protection annualised premium equivalent grew 36 per cent, while credit protection rose 21 per cent, resulting in the assets under management rising by a fifth to Rs 2.8 lakh crore. Also, as much as 18 per cent of the profit in the quarter came in from renewal policies.
When asked about the Irdai plans to massively hike the surrender value of policies mid-way, the chief executive told PTI that conceptually she agrees with the proposal, as policyholders should not be losing their money if on surrender. However, the industry wants some clarity on the circular from the regulator on the percentage of premium that has to be paid back. We are in discussion with the regulator on this and some other matters of concern.
The HDFC Life counter closed almost 1 per cent lower at Rs 637.55 on the BSE, despite a massive 1.2 per cent rally in the benchmark Sensex.