HDFC Life Insurance Q3 Results: Profit Rises 14%, Meets Estimates

HDFC Life Insurance Co.'s net profit rose 14% year-on-year in the October–December quarter, meeting analysts' estimates.

The insurer posted a net profit of Rs 415 crore in the quarter ended Dec. 31, 2024. That compares with a consensus estimate of Rs 417 crore by analysts polled by Bloomberg. In the year-ago period, the company posted a net profit of Rs 365 crore.

The net premium income during the quarter under review climbed 10% year-on-year to Rs 16,771 crore, compared to Rs 15,235 crore in the corresponding quarter of the previous fiscal.

HDFC Life Q3 FY25 Highlights (Standalone, YoY)

• Net profit up 14% at Rs 415 crore (Bloomberg estimate: Rs 417 crore).

• Annualised premium equivalent grew 12% to Rs 3,569 crore vs Rs 3,191 crore.

• Value of new business advanced 9% to Rs 930 crore from Rs 856 crore

• VNB margin expands to 26.1% from 24.3% (QoQ).

HDFC Life's solvency ratio gained to 188%, compared to 181% in the October quarter. The 13th month persistency ratio fell to 81.9% from 83.4%, whereas the 61st month persistency ratio improved to 57.8% from 51.1% in the year-ago period.

Earnings Call Highlights

Market share in the overall sector expanded by 70 basis points to 10.8% and market share in the private sector stands at 15.3%. Witnessed both ticket size and volume expansion during the period. No of policies grown by 15% has outperformed the private sector growth of 9%, according to Chief Executive Officer Vibha Padalkar.

"In FY25, over 70% of the customers acquired are new to HDFC Life, demonstrating progress towards our objective to expand our customer base," Padalkar said.

Product mix of individual APE at the end of nine month was composed of ULIPs 37%, non-par savings 35%, participating policies 18%, term 6% and annuities 5%. ULIPs continue to remain range bound for the insurer. So far this year, non-par savings products sustained their strong growth growing by 55% year-on-year.

On the surrender regulations, the insurer has largely closed the discussions with all the distributors and rolled out a combination of measures, including deferred commission payout, clawback of commission and reduction of commission, the CEO said.

The company expects to grow APE at 18% and VNB at 15% in FY25. The insurer will continue to gain market share and grow faster than private peers and industry, Chief Financial Officer Niraj Shah CFO told NDTV Profit.

The contribution of unit-linked insurance plans to the overall product mix has increased by 4–5%, indicating growing customer interest in market-linked products, Shah said.

The product mix between unit-linked and non-participating products has reached parity. The annuity segment continues to experience pockets of irrational and unsustainable pricing, with some players pursuing market share aggressively, he said.

There has been a margin increase across products. A 110 basis points of margin improvement contributed by repricing of products, the CEO said.

The insurer has expressed the need for a stable policy environment to policymakers.

Shares of HDFC Life Insurance closed 1.04% lower at Rs 594.20 apiece on the National Stock Exchange, compared to a 0.16% decline in the benchmark Nifty 50. The stock has fallen 2.2% in the past 12 months.

Twenty-nine out of the 35 analysts tracking the company have a 'buy' rating on the stock and six suggest 'hold', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 32.5%.

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