HDFC Life’s PAT rises 5.6% to Rs 326 cr in Q2

Private sector life insurer HDFC Life’s standalone profit after tax rose 5.6 per cent in the quarter ending September (Q2FY21) to Rs 326 crore, compared to Rs 308.69 crore in the same period last year.

Net premium income of the insurer in the second quarter rose 35 per cent to Rs 10,045 crore, compared to Rs 7,453.68 crore in the year-ago period. The insurer also saw a 15 per cent rise in the first-year premium in Q2FY21 at Rs 1,675.15 crore, compared to Rs 1,452.72 crore in the corresponding period last year. Renewal premium on the other hand grew by 21 per cent to Rs 4,310.37 crore. Single premiums grew more than 65 per cent in the period under review to Rs 4,197 crore.

In H1FY21, the total annualised premium equivalent (APE) of the insurer contracted 4 per cent to Rs 3,334 crore, compared to Rs 3,473 crore in the same period last year. The individual APE contracted 1 per cent to Rs 2,834 crore in the same period. While protection based on individual APE grew 38 per cent in H1FY21, protection based on APE contracted almost 30 per cent during the same period.

“Inflows into conservative long-term savings products have picked up in this quarter, with customers willing to commit to higher ticket sizes than Q1. Our product mix remains balanced with ULIPs at 23 per cent, non- par savings at 30 per cent, and par savings at 33 per cent”, said Vibha Padalkar, MD&CEO, HDFC Life.

Term products constitute 9 per cent of the product mix and annuity constitutes 5 per cent.

“It’s a bearish outlook for ULIP products, but that can change very quickly. Right now, it is more of a risk on the kind of approach wherein people don’t want volatility. They want assurance on their returns and therefore, par and non- par products are doing well”, Padalkar added.

The new business margins of the insurer in H1FY21 stood at 25.1 per cent, with the value of the new business at Rs 838 crore in the period under review, compared to Rs 957 crore in H1FY20.

The solvency ratio of the insurer stood at 203 per cent, aided by the fundraising of Rs 600 crore via non-convertible debentures. In H1FY21, the thirteenth-month persistency of the insurer stood at 88 per cent, while in Q2 it was close to 91 per cent.

The company has received 418 Covid death claims worth Rs 22 crore so far. The company has a reserve of Rs 41 crore, which it had instituted due to Covid. The management said it will suffice as far the Covid claims are concerned, but it will take a call on the reserve at the appropriate time.

The company is also looking to launch the Corona Kavach policy, the specified Covid health product of the insurer, as the regulator had allowed life insurers to sell it due to the prevailing situation.