HDFC Life Insurance Q2 Results: Profit Up But Misses Estimates On Higher-Than-Expected Covid-19 Claims

HDFC Life Insurance Co.'s second-quarter profit missed estimates as the company received higher-than-expected Covid-19 claims.

The company incurred net Covid claims worth Rs 2,466 crore in the first half of the fiscal against an anticipated Rs 1,690 crore, the management said in a post-earnings call. The excess Rs 776 crore was paid out of reserves, which stood at Rs 204 crore as on Sept. 30.

Net Covid-19 claims in the first quarter stood at Rs 956 crore. Meaning, the company incurred Rs 1,510 crore on net claims in the second quarter.

This reserve should be sufficient to meet any future claims barring the impact of a third wave which has not been considered, Vibha Padalkar, managing director and chief executive officer at HDFC Life, said.

• After-tax profit fell 26%. According to Padalkar, that was because of "higher claims reserving warranted by the second wave of the pandemic".

• The product mix comprised non-participating savings at 32%, participating products at 30% and unit-liked plans at 26% on annualised premium equivalent basis.

• Value of new business rose 30% to Rs 1,086 crore.

• New business margin was at 26.4% versus 25.1%.

• Solvency ratio fell to 190% from 203%; it's well above the minimum solvency requirement of 150%.

• Renewal premiums rose 18% while new business premium on individual and group basis grew 22%.

• Assets under management were at Rs 1.91 lakh crore, a rise of 27%.

• Persistency ratios for the 13^th, 25^th, 37^th, 49^th and 61^st months improved.

Padalkar is optimistic about the second half of FY22 citing new bancassurance partnerships and agency channels.

On the acquisition of Exide Life Insurance Co., Padalkar expects HDFC Life to receive the approval from the regulator by late third quarter or early fourth quarter.