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HDFC Life Q3 net flat at Rs 250 crore, new business margins rise

It saw margins on the value of new business (VNB) expand to 26.6 per cent.

ET Bureau|
Last Updated: Jan 24, 2020, 08.42 AM IST
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In the third quarter of the fiscal year to March, the insurer reported net profit of Rs 250 crore, compared with Rs 245 crore in the corresponding quarter a year ago.
Mumbai: HDFC Life Insurance, India’s most valuable pure-play listed insurer, reported flat growth in net profit in the three months to December, reflecting the bottom-line impact of surging new business.

In the third quarter of the fiscal year to March, the insurer reported net profit of Rs 250 crore, compared with Rs 245 crore in the corresponding quarter a year ago. It saw margins on the value of new business (VNB) expand to 26.6 per cent.

VNB is a key insurance industry metric that computes the present value of expected future earnings from new policies written during a specified period. In the nine months of FY20, VNB at HDFC Life surged 45 per cent to Rs 1,407 crore.

Solvency margin at the insurer was 195 per cent in the quarter under review, above the regulatory requirement of 150 per cent.

“We have recorded growth across all our product segments, while maintaining a balanced product mix,” Vibha Padalkar MD and CEO HDFC Life, said on the quarterly performance. “Our margins will grow in similar delta.”

Shares of Mumbai-based HDFC Life rose 0.49 per cent to Rs 615.75 on the BSE Thursday.

The share of Ulips fell to 28 per cent from 59 per cent in the third quarter at the insurer, indicating a strategy shift. New business premium rose 22 per cent to Rs 12,150 crore at the end of December, while total premium expanded 17 per cent to Rs 22,090 crore. Individual APE (annual premium equivalent) rose 31 per cent to Rs 4,390 crore.

APE is a metric used when an insurer sells policies tied to both single premiums and periodic annual premiums, and compares the revenue by normalising collections into the equivalent of periodic annual payments.

HDFC Life’s savings business, which includes unit linked, par and non-par segments, grew by 32 per cent. Protection APE has grown by 32 per cent in the first nine months over the corresponding period last year to Rs 886 crore.

As on December 31, assets under management (AUM) at the insurer amounted to Rs 1.4 lakh crore, with the debt-to-equity mix of such assets at 63:37.

About 96 per cent debt investments of HDFC Life are in G-Secs and AAA bonds. The operating return on embedded value was 19 per cent.

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HDFC Life Q3 profit rises 18% to Rs 246 crore

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