HDFC Life Insurance Company reported 34.8% YoY increase in gross premium to Rs10182.5 cr in Q2 FY21, driven by strong growth in new business premium as well as renewal premium. Net premium income (net of reinsurance) grew 34.9% YoY to Rs 10056.7 cr in the quarter. Consolidated profit after tax increased 6.1% YoY to Rs 327.8 cr as new business strain was offset by continued profit from back book. The company’s market share in terms of Individual Weighted received premium (WRP) grew by 235 bps to 17.5%. The company registered 2% growth in H1-FY21 compared to private industry degrowth of 11%. During H1-FY21, new business premium registered a growth of 7% y/y to Rs.84.9 bn while total annualized premium equivalent (APE) declined 4% YoY to Rs.33.3 bn, continuing with the growth momentum, protection based on individual APE jumped 38% y/y. While the growing protection business remains a key area, management remains committed to maintaining a balanced product mix.
 
Value of new business declined 12% YoY to Rs.8.4 bn in H1-FY21, resulting in reduced new business margin of 25.1%, down from 27.5% in H1-FY20. However, during Q2 FY21, new business margins witnessed improvement on sequential as well as YoY basis, led by growth, favorable product mix and cost management. Embedded value (EV) increased 16% YoY to Rs.233.3 billion during H1-FY21.
 
Management remains optimistic about growth and noted that amid the pandemic, life insurance has emerged as an important avenue for both protection as well as long term savings products. Also, management stated that the company has been experiencing growth in renewal with normalization being witnessed in premium collection rates. However, it remains cautious and would continue to monitor the same.
 
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The company remains focused on driving growth through its diverse channels of distribution – bancassurance, agency, direct, brokers and others. Notably, the company registered strong growth in the bancassurance (11%) and online channels (14%) during H1-FY21. Further, the company intends to tap new geographies and customer segments, enhance product offering and bolster technology to improve overall operational efficiency and customer service.
 
Anand Rathi has incorporated latest quarterly numbers and has revised their estimates for the company. They believe HDFC Life is well positioned for long term growth given its strong market position, solid product portfolio with lower ULIP mix and increasing protection business, diversified distribution network, healthy capital position and favorable traits in the domestic life insurance industry.