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Motilal Oswal Report
HDFC Life Insurance Company Ltd. reported a 23% YoY growth in net premium, led by 27%/19% growth in new business/renewal premium. This was aided by an improving persistency ratio across key cohorts.
Value of new business growth stood at 25% YoY (~9% miss), with VNB margin expanding to 26.8% (up 60bp QoQ). Operating return on embedded value grew 210 bps to 16.5% in Q1 FY23.
Annual premium equivalent grew 22% YoY to Rs 19 billion (8% miss) in Q1 FY23. Growth was broad-based across all products. However, demand for unit linked insurance plan and retail term insurance was soft due to a volatile capital market and declining fear of the Covid-19 pandemic.
We marginally cut our estimates and expect HDFC Life to deliver ~26% VNB compound annual growth rate over FY22-24. We estimate margin to remain ~29% by FY24.
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