Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — Investor Presentation (2019)
48 slides from Hdfc Life Insurance's investor presentation, 2019
Slide 1: HDFC Life Insurance Investor presentation – FY19
HDFC Life Insurance Investor presentation – FY19
Slide 2: Agenda
Agenda A Performance Snapshot Our Strategy Annexures India Life Insurance 2
Slide 3: Executive summary: FY19
Executive summary: FY19 New business NB Sum Term: Protection 27% Share1 premium: Assured: Rs 149.7 Bn Rs 6.1 Tn Annuity: Growth: 32% Growth: 28% 17% Scale AUM: Number of 13th month Efficiency Rs 1,256 Bn lives (Mn): Persistency: Growth: 18% CY: 51.4 CY: 87% PY: 33.2 PY: 87% Profitability PAT: Rs 12.
Slide 4: Consistent performance across key metrics (1/2)
Consistent performance across key metrics (1/2) Leadership in new business premium (Rs Bn) CAGR: 28% Number of lives (Mn) CAGR: 73% 15.8% 15.8% 17.2% 19.1% 20.7% 51.4 149.7 113.5 33.2 86.2 20.9 54.9 64.9 15.4 5.7 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Private Market Share Maintaining bala
Slide 5: Consistent performance across key metrics (2/2)
Consistent performance across key metrics (2/2) Strong growth in VNB, Industry leading VNB margins CAGR: 27% Healthy growth in Embedded Value CAGR: 20% Rs bn 18.5% 19.9% 22.0% 23.2% 24.6% 21.7% 20.7% 21.7% 21.5%* 20.1% 183.0 152.2 32% 124.7 32% 102.3 88.9 33% 32% 15.4 32% 12.8 68% 9.2 68% 7.4 67% 5.
Slide 6: Agenda
Agenda Performance Snapshot B Our Strategy Annexures India Life Insurance 6
Slide 7: Key elements of our strategy
Key elements of our strategy Innovation led, calibrated risk management - The first choice for all Focus on profitable growth Capturing sustainable, profitable growth with 1 effective risk management practices Balanced distribution mix Developing multiple channels of growth to drive 2 need-based dis
Slide 8: Focus on profitable growth
Focus on profitable growth FY16 FY17 FY18 FY19 Rs bn New business margins 19.9% 22.0% 23.2% 24.6% Value of new business 7.4 9.2 12.8 15.4 Profit after tax (PAT) 8.2 8.9 11.1 12.8 Underwriting profits 6.8 7.5 8.5 9.0 Shareholder’s surplus 28.0 1.4 1.4 2.6 3.8 23.0 18.0 13.0 25.5 Underwriting profits
Slide 9: Analysis of change in IEV
Analysis of change in IEV Rs bn EVOP - 30.6 EVOP1% - 20.1% 2.2 3.6 -3.4 183.0 15.4 13.0 Operating Economic Dividend 152.2 variances variances & ESOP Post over- exercises Unwind run VNB 124.3 103.6 Adjusted Net worth (ANW) Value of in-force business (VIF) 58.8 48.5 IEV at 31st IEV at 31st Mar 18 Mar
Slide 10: Balanced distribution mix
Balanced distribution mix Increasing share of proprietary channels1 Strong diversified network of 220+ partners 54 9% 11% 14% Banks 19% 11% 12% 11% 4% 5% 13% 5% 4% 141 NBFCs 75% 72% 71% 24 64% MFIs 8 FY16 FY17 FY18 FY19 SFBs Bancassurance Brokers and others Agency Direct Developing alternative chann
Slide 11: Balanced distribution mix – Agency
Balanced distribution mix – Agency 1 Agency Life Aims to improve engagement, skill and rigour in sales Profitability, Long term growth and Quality management 93% 30% 25% growth in APE Increase in Business covered qualifying FC productivity 74% growth in New Business Contribution Segmented recruitmen
Slide 12: Balanced distribution mix – E-commerce
Balanced distribution mix – E-commerce “DIY” Customers 10X growth in 5 years with an Savings & increasing contribution to the investment company’s profitable term portfolio “Innovative”Click2 Series First mover advantage; launched Click 2 APE Contribution to Term NOP @ Wealth, improved proposition
Slide 13: Focus on developing proprietary channels – Direct
Focus on developing proprietary channels – Direct Growth focus Rapidly expand and strengthen presence in Defence and Para-military segments Areas of focus for future growth Expansion 40% Targeting new CAGR between geographies and Enhance the capability to complete end to FY17-19 customer segments en
Slide 14: Expanding market through consistent product innovation
Expanding market through consistent product innovation Differentiated offerings targeting Products that created new segments specific niches Guaranteed returns, with Retirement & option for life long income pension 2014 2015 2017 2018 2019 Youngstar Prior to 2014 Joint-life single-premium Woman’s UL
Slide 15: Product mix across key channels
Product mix across key channels1 Segment FY16 FY17 FY18 FY19 Segment FY16 FY17 FY18 FY19 UL 66% 61% 64% 67% UL 25% 26% 33% 26% Par 24% 30% 26% 14% Par 56% 57% 48% 40% Banca2 Agency Non par savings 9% 8% 8% 15% Non par savings 4% 6% 5% 17% Term 2% 1% 1% 2% Term 13% 11% 11% 12% Annuity 0% 0% 1% 2% Ann
Slide 16: Reimagining Insurance
Reimagining Insurance A. Platforms & C. Journey D. Service E. Data Enrichment & Ecosystems B. Partner Integration Simplification Analytics Simplification Five building blocks of our technical capabilities Insurance beyond digital: Allow Product and services being built Customer sales journey Simplif
Slide 17: Quality of Board and Management
Quality of Board and Management Independent and illustrious Board Experienced senior management Active, well-informed and independent Board oversees Seasoned senior management team with rich experience how the management serves and protects the interests of in financial services all stakeholders Enc
Slide 18: Financial risk management framework
Financial risk management framework ▪ Protection and longevity businesses ▪ Prudent assumptions and pricing approach ▪ Unit linked and non par savings products ▪ Return of premium annuity products (>90% of annuity); Average age at entry ~59 years ▪ Quantum of retail guaranteed products <8% of AUM ▪
Slide 19: Performance of wholly-owned subsidiary companies
Performance of wholly-owned subsidiary1 companies HDFC Pension Rs bn HDFC International Life and Re 51.7 25.6 11.6 3.8 0.1 0.5 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 Fastest growing Pension Fund Manager under the NPS Registered growth of more than 100% in revenue and architecture (YoY growth
Slide 20: Agenda
Agenda Performance Snapshot Our Strategy C Annexures India Life Insurance 20
Slide 21: Individual persistency for key channels and segments
Individual persistency for key channels and segments Across key channels Across key segments 21 Note: 1. Calculated as per IRDAI circular (based on original premium) for period ended Mar 31, 2019 for individual business
Slide 22: Value of new business (VNB) and NBM walkthrough
Value of new business (VNB) and NBM walkthrough Rs bn 1.55 -0.93 15.37 1.68 0.25 Grew by 20% 12.82 vs FY18 FY18 Impact of higher Change in New Business COA impact FY19 1 APE assumptions Profile NBM 23.2% - 0.4% 2.5% -1.5% 24.6% Change in assumptions mainly due to impact of change in persistency an
Slide 23: Sensitivity analysis: FY19
Sensitivity analysis: FY19 % Change in Change in VNB % Change in Analysis based on key metrics Scenario VNB1 Margin1 EV Change in Increase by 1% -0.4% -0.1% -1.7% Reference rate Decrease by 1% 0.2% 0.1% 1.6% Equity market Decrease by 10% -1.4% -0.3% -1.7% movement Increase by 10% -2.9% -0.7% -1.4% P
Slide 24: Stable capital position
Stable capital position Rs bn Dividend paid 2.2 2.6 3.3 4.0 New business growth 100.0 18% 33% 32% 32% 230% 90.0 210% 198% 192% 192% 80.0 188% 190% 70.0 62.7 170% 60.0 52.1 12.7 150% 50.0 42.1 11.3 130% 40.0 34.3 16.7 9.1 13.6 110% 30.0 8.4 11.0 8.6 90% 20.0 33.3 27.2 10.0 22.0 70% 17.3 - 50% Mar 31,
Slide 25: Assets under management
Assets under management Assets Under Management Change in AUM1 Rs bn Debt 61% 59% 61% 62% Equity 39% 41% 39% 38% 189 24% 18% 11% 16% 14 1,550 149 30% 1,350 5 -20% 82 1,150 85 -70% 950 750 1,256 -120% 93 1,066 59 917 550 350 742 -170% 31st Mar 2018 31st Mar 2019 150 -220% Net Fund inflow Net investme
Slide 26: Delivering superior customer service
Delivering superior customer service Claim settlement ratios Customer complaints (per 10,000 policies sold) Overall1 97.4% 99.2% 99.1% 99.3% 97.6% 97.8% 99.0% 95.0% 91.9% 88.6% 79.3% Individual 107 69.4% 81 70 61 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 NOPs Benefit amount Company’s philosophy has
Slide 27: Swabhimaan- CSR Initiatives by HDFC Life
Swabhimaan- CSR Initiatives by HDFC Life CSR framework covers; Education, Health, Livelihood, Environmental Sustainability and Senior Citizens as areas of focus across India Over 2.8 lakh beneficiaries have been impacted through 22 projects till date In line with our CSR Projects are carried o
Slide 28: Awards and accolades – FY19
Awards and accolades – FY19 Named as one of the top 20 places to work for by Great Recognised as the leading private Recognised as the best 50 Place to Work life insurer by Dun & Bradstreet People Capital Index companies Excellence in Financial Reporting for Annual Report FY 2016-17 by ICAI Declared
Slide 29: Agenda
Agenda Performance Snapshot Our Strategy Annexures D India Life Insurance 29
Slide 30: Growth opportunity: Under-penetration vs global benchmarks
Growth opportunity: Under-penetration vs global benchmarks Life insurance penetration Life insurance density US$ Protection gap (2014) (2017) (2017) 17.9% 6.756 92.2% 88.3% 14.6% 78.4% 73.3% 72.5% 70.2% 4,195 56.3% 56.0% 3,835 6.6% 6.3% 2,411 3.6% 3.3% 339 2.8% 2.7% 237 16.4% 225 55 India India Mala
Slide 31: Growth opportunity: Favourable demographics
Growth opportunity: Favourable demographics Life expectancy (Years)1 Population composition (bn)1 75.0 1.3 1.6 1.7 6% 9% 15% 71.9 56% 61% 67.6 60% 38% 30% 25% 2015 2035 2055 2015 2035 2055 Less than 20 years 20-64 years 65 years and above India's insurable population is anticipated to touch 750 mi
Slide 32: Life insurance: A preferred savings instrument
Life insurance: A preferred savings instrument Household savings composition Financial savings mix 3% 23% 25% 22% 16% 11% 11% 12% 15% 9% 13% 18% 16% 15% 51% 52% 26% 67% 58% 25% 65% 67% 50% 44% 49% 48% 42% 33% FY07 FY10 FY13 FY17 FY07 FY10 FY13 FY17 Financial savings Physical savings Currency & depos
Slide 33: Industry new business trends
Industry new business1 trends Individual WRP in Rs bn Sensex Private players 35% 50% 57% 52% 46% 37% 38% 38% 49% 52% 54% 56% 58% market share Growth % Private 99% 86% 1% 7% -20% -24% 2% -3% 16% 14% 26% 24% 12% 88% 0% -22% 29% 4% 11% -4% -2% -27% 3% 15% 13% 5% LIC 92% 31% -10% 17% -9% -5% -2% -3% -11
Slide 34: Private industry: Market share trends
Private industry: Market share trends Top 7 private players vs other players Amongst private insurers, insurers with a strong bancassurance platform continue to dominate with increasing market share of the total private individual new business Notes: 1. Basis Individual Weighted Received Premium (
Slide 35: Private industry: Product and distribution mix
Private industry: Product and distribution mix Product mix1 Distribution mix2 Unit Linked Conventional Individual Agents Corporate Agents - Banks Corporate Agents - Others Brokers Direct Business 67% 63% 6% 7% 9% 10% 10% 12% 57% 14% 52% 54% 5% 5% 5% 4% 3% 3% 51% 52% 6% 4% 3% 3% 3% 3% 48% 49% 48% 3%
Slide 36: Appendix
Appendix
Slide 37: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) FY17 FY18 FY19 CAGR Key Metrics (Rs bn) New Business Premium (Indl+Group) 86.2 113.5 149.7 32% Renewal Premium (Indl+Group) 108.2 122.1 142.1 15% Total Premium 194.5 235.6 291.9 23% Individual APE 37.4 48.9 52.0 18% Overall APE 41.9 55.3 62.6 22% Group Premiu
Slide 38: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY17 FY18 FY19 Key Ratios Overall New Business Margins (post overrun) 22.0% 23.2% 24.6% (1 ) Operating Return on EV 21.7% 21.5% 20.1% Operating Expenses / Total Premium 12.6% 13.5% 13.2% Total Expenses (Opex + Commission) / Total Premium 16.7% 18.0% 17.0% (2
Slide 39: Revenue and Profit & Loss A/c
Revenue and Profit & Loss A/c Revenue A/c Profit and Loss A/c Rs bn FY19 FY18 FY19 FY18 Premium earned 291.9 235.6 Income Reinsurance ceded (2.6) (1.9) - Interest and dividend income 2.9 2.2 Income from Investments 90.3 85.9 - Net profit/(loss) on sale 1.1 0.6 Other Income 1.2 0.7 Transfer from Poli
Slide 40: Balance Sheet
Balance Sheet Rs bn Mar 31, 2019 Mar 31, 2018 Shareholders’ funds Share capital (including Sh premium) 23.8 23.3 Accumulated profits 32.7 23.9 Fair value change (0.0) 0.3 Sub total 56.6 47.5 Policyholders’ funds Fair value change 11.1 6.2 Policy Liabilities 536.3 423.2 Provision for Linked Liabiliti
Slide 41: Segment wise average term and age
Segment wise average term and age1 Average Policy Term excluding annuity (Yrs) Average Customer Age excluding annuity (Yrs) 12M FY19: 14.6 (12M FY18: 14.4) 12M FY19: 37.5 (12M FY18: 37.2) 11 UL 38 UL 39 11 15 Par 37 Par 37 15 10 Non-par Health 35 Non-par Health 34 11 Non-par Savings 35 Non-par Savin
Slide 42: Indian Embedded value: Methodology and Approach (1/2)
Indian Embedded value: Methodology and Approach (1/2) Overview Indian Embedded Value (IEV) consists of: Adjusted Net Worth (ANW), consisting of: – Free surplus (FS); – Required capital (RC); and Value of in-force covered business (VIF): Present value of the shareholders’ interest in the earnings
Slide 43: Embedded Value: Methodology and Approach (2/2)
Embedded Value: Methodology and Approach (2/2) Components of Value in-force covered business (VIF) Present value of future profits (PVFP): PVFP is the present value of projected distributable profits to shareholders arising from the in-force covered business determined by projecting the shareholde
Slide 44: Embedded Value: Economic assumptions
Embedded Value: Economic assumptions1 Forward rates % Spot rates % Years As at Mar 31, 2019 As at Mar 31, 2018 As at Mar 31, 2019 As at Mar 31, 2018 1 6.63 6.57 6.42 6.36 2 6.99 7.26 6.59 6.69 3 7.31 7.72 6.74 6.94 4 7.58 8.02 6.88 7.13 5 7.80 8.20 7.01 7.28 10 8.32 8.30 7.43 7.64 15 8.31 8.10 7.62
Slide 45: Glossary (Part 1)
Glossary (Part 1) APE (Annualized Premium Equivalent) - The sum of annualized first year regular premiums and 10% weighted single premiums and single premium top-ups Backbook surplus – Surplus accumulated from historical business written Conservation ratio - Ratio of current year renewal premi
Slide 46: Glossary (Part 2)
Glossary (Part 2) Operating expense - It includes all expenses that are incurred for the purposes of sourcing new business and expenses incurred for policy servicing (which are known as maintenance costs) including shareholders’ expenses. It does not include commission. Operating expense ratio -
Slide 47: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase any securities (“Securities”) of HDFC Life Insurance Company Limited (formerly HDFC Standard Life Insurance Company Limited)
Slide 48: Thank you
Thank you
HDFC Life Insurance Company — Investor Presentation (2019) on 6ix