HDFC Life FY19 Q2 Financial Results

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By K Ashwin Mobile: 09920183006 Email:indianshowbusiness@gmail.com

The Board of Directors of HDFC Life approved and adopted today its consolidated and standalone audited financial results for the period ended Sep 30, 2018. Below is the summary of our standalone results:

Commenting on the quarter’s solid performance, Ms. Vibha Padalkar, MD & CEO said “We continue to grow faster than the industry whilst sustaining our leadership position on profitability. We have a proven  track record of delivering consistent results across business cycles and the ability to comfortably weather changes at the macro, regulatory and market levels. We shall continue to pursue our strategy of harnessing newer pools of profitability as well as deliver the best value proposition to our partners, customers and shareholders.”

 

 

Key Financial Summary

` Bn

FY18

FY17

YoY

H1 FY19

H1 FY18

YoY

Key Financial and Actuarial Metrics

New Business Premium (Indl + Group)

113.5

86.2

32%

62.9

44.0

43%

Renewal Premium (Indl + Group)

122.1

108.2

13%

56.1

47.4

18%

Total Premium

235.6

194.5

21%

119.0

91.4

30%

Individual APE

48.9

37.4

31%

21.0

18.5

13%

Total APE

55.3

41.9

32%

25.1

21.3

18%

Group Premium (New Business)

54.1

44.2

22%

32.0

23.4

36%

Profit After Tax

11.1

8.9

24%

6.7

5.5

20%

Assets Under Management (AUM)

1,066.0

917.4

16%

1,132.3

995.3

14%

Value of new business (VNB)

12.8

9.2

39%

6.1

4.8

28%

Indian Embedded Value (IEV)

152.2

124.7

22%

163.8

140.1

17%

Net Worth

(1)

47.2

38.1

24%

54.1

44.3

22%

FY18

FY17

H1 FY19

H1 FY18

Key Financial Ratios

Overall New Business Margins (post overrun)

23.2%

22.0%

24.3%

22.4%

Operating Return on EV

21.5%

21.7%

19.6%

21.2%

Operating Expenses / Total Premium

13.5%

12.6%

14.1%

14.2%

Return on Equity (2)

26.0%

25.7%

26.4%

27.0%

Solvency Ratio

192%

192%

193%

201%

13M / 61M Persistency (3)

87%/51%

84%/59%

87%/50%

86%/55%

Conservation Ratio (4)

85%

82%

86%

85%

Business Mix (%)

Product (UL / Non par savings / Non par (5)

protection / Par)

57/9/5/28

52/9/4/35

59/11/7/23

58/8/5/29

Protection business share (basis APE) (6)

11.3%

7.8%

16.2%

11.8%

Protection business share (basis NBP) (6)

25.9%

21.8%

28.7%

26.4%

Indl Distribution (5)

(CA/Agency/Broker/Direct)

71/11/5/14

72/12/5/11

67/11/4/17

69/10/6/14

Total Distribution (7)

(CA/Agency/Broker/Direct/Group)

33/7/2/10/48

32/8/2/7/51

27/7/2/14/51

30/6/2/8/53

Notes:

1. Net worth comprises of Share capital, Share premium and Accumulated profits/(losses)

2. Calculated using net profit and average net worth for the respective period

3. Persistency ratios (based on original premium). Group business, where persistency is measurable, has been included in the calculations.

4. Conservation ratio is based on individual business

5. Based on individual APE. UL: Unit Linked, Trad: Traditional, Par: Participating & CA: Corporate Agents.

Numbers may not add up due to rounding off

6. Previous year group numbers for FY17 have not been reclassified based on current year numbers

7. On total new business premium, including business under group segment. Numbers may not add up due to rounding off

Other key highlights for the half year ending Sep 30, 2018:

• Private Market Share: Maintained our leadership position in terms of total new business received premium with a market share of 21.2% in the private sector. Consistently ranked amongst the top 3 private players in individual and group segments with market share of 13.0% based on Individual WRP and 28.0% based on Group business (on received premium) during H1 FY19.

• New Business Lives and Sum Assured: Total number of lives (new business) insured increased by

84% to 21.6 mn during H1 FY19. Overall new business sum assured increased by 33% to ` 2.6 trillion

during the same period;

• Product Portfolio: In line with stated strategy, continue to maintain a balanced product mix with focus on protection business. 28.0% of our individual policies sold during H1 FY19 were protection business policies (H1 FY18: 27.8%);

• Distribution Mix: The Company has a diversified distribution mix, backed by strong presence across the country through 413 HDFC Life offices, along with wide access to the branches of our 170 bancassurance and 31 non-traditional ecosystem partnerships as on Sep 30, 2018. Cross-selling to group customers formed 8.5% of the individual new business policies sold during H1 FY19.

• Assets Under Management:  Amongst the leading fund managers in India with an AUM of Rs. 1.1 trillion; the debt:equity mix as on September 30, 2018 is 62:38. Over 96% of debt investments are in AAA rated and Government bonds as on Sep 30, 2018.

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. AUM includes investments disclosed in the Balance sheet under Schedule 8, 8A, 8B & loans in the nature of investments included in Schedule 9

 Conservation ratio – Ratio of current year renewal premiums to previous year’s renewal premium and first year premium

 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 2018, the first monthly instalment received would be reflected as First year premiums for 2017-18 and the remaining 11 instalments due in the first policy year would be reflected as first year premiums in 2018-19, 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

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