Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — Kotak Conference May 2019
26 slides from Hdfc Life Insurance's conference presentation, May 20, 2019
Slide 1: Protecting our golden years...
Protecting our golden years... Opportunity in the retirement space in India Vibha Padalkar MD & CEO, HDFC Life Insurance Company Ltd. This is the sole and exclusive property of HDFC Life. May 20, 2019
Slide 2: Most people bank on a default retirement plan - serendipity
Most people bank on a default retirement plan - serendipity 2
Slide 3: India, perceived as a young country, now has a rapidly increasing ageing population
India, perceived as a “young country”, now has a rapidly increasing ageing population Proportion of the elderly is By 2050, 1 in 6 people over the age of 41.5% of elderly male (65+) expected to double to ~17% 60 will live in India, bringing the future are working to meet their as of 2050 market to 2
Slide 4: Changes in societal structures and lack of mindfulness about retirement savings
Changes in our societal structures and lack of mindfulness about retirement savings have led to a ticking time bomb-ish situation Financial literacy as % of population Unorganized workforce not under any 52% of elderly population in both is 18% as compared to global urban and rural formal pension sc
Slide 5: India's pension market is woefully under-penetrated at 4.8% of GDP
Compared to global benchmarks, India's pension market is woefully under-penetrated at 4.8% of the GDP Pension Assets/GDP Ratio 166.7 130.7 126.0 120.5 101.7 94.0 84.2 65.4 60.8 56.4 43.2 44.3 45.4 13.8 9.0 1.5 4.8 India has a long way to go! Source: “Global Pension Assets Study 2019”; Thinking Ahead
Slide 6: So, what is the opportunity size?
So, what is the opportunity size ? Estimated market opportunity (organized sector)* Total Pension AUM (₹ trillion) 70,00,000 60,00,000 36% 54% 50,00,000 47 tn 47 tn 40,00,000 34% 11% 30,00,000 3% 7% 20,00,000 21 tn 27% 17% 10,00,000 2018 2025 SAF/Gratuity Annuity NPS NPS Govt. EPF PPF MF Pension - 2
Slide 7: But there are challenges...
But there are challenges...
Slide 8: But there are challenges…
But there are challenges… Inability to anticipate future Deposits are popular choice financial needs with retirees
Slide 9: Significant lack of awareness among Indians regarding systematic retirement planning
There is a significant lack of awareness among Indians regarding systematic retirement planning With a culture of saving in physical assets… ..there a low mindshare to invest in pension savings for retirement Household savings composition Financial savings mix 3% 11% 11% 12% 15% 9% 13% 51% 52% 18% 1
Slide 10: But there are challenges…
But there are challenges… Mandatory pension schemes do Social security is low in India not cover the large population
Slide 11: Indians covered under formal social security is lower than regional average
Indians covered under formal social security is lower than the average of the region Significant scope for improvement within Asia Pacific and India in particular EU and Central Asia Americas Asia Pacific Africa 84% 68% 39% 18% % of population receiving at least one social security benefit In India,
Slide 12: India's coverage of mandatory pension schemes is lowest amongst Asian counterparts
India’s coverage of mandatory pension schemes is lowest amongst Asian counterparts Coverage of mandatory pension schemes (%) 93 95 90 91 92 87 87 87 80 75 71 70 70 71 72 66 61 61 57 52 54 51 50 46 40 36 33 30 29 27 22 18 19 19 19 13 9 10 5.5 6.3 By population (age 15-64) Active labour force • Percen
Slide 13: But there are challenges…
But there are challenges… Low mindshare to invest in Low financial literacy Pension
Slide 14: Significant % of India's population is unaware of financial investment opportunities
Significant % of India’s population is unaware of financial investment opportunities leading to low pension contribution Awareness of financial investment opportunities Low pension contribution amounts, owing to low is least in India as compared to global disposable income & awareness across India,
Slide 15: But there are challenges…
But there are challenges… Fragmented and disjointed Varied products with different pension system leaving tax treatment customers confused
Slide 16: We also have a fragmented and disjointed pension system
We also have a fragmented and disjointed pension system 4 Regulators EPFO PFRDA IRDAI SEBI 7 Different LI Pension/ EPF PPF NPS SAF Gratuity MF Pension Products Annuity Differences in Lump sum + Lump sum + Lump sum + Lump sum Lump sum Lump sum Lump sum Payout at Exit Pension Pension Pension Differing
Slide 17: Can we make India a Pensioned Society?
Can we make India a Pensioned Society? 17
Slide 18: Addressing specific areas to boost pension coverage in India
By addressing specific areas we do see an opportunity to boost pension coverage in India 1 2 Awareness about 3 4 Products & Policy reforms & Distribution Pension Implementation regulations investment ● Increase adoption of ● Increase financial ● Allow flexible payment ● Regulatory & tax NPS (tap inc
Slide 19: We are putting our money where our mouth is…
We are putting our money where our mouth is… (HDFC Life’s ecosystem) 19
Slide 20: HDFC Life identified the retirement opportunity early
HDFC Life identified the retirement opportunity early and has been a key contributor to uplift this category Retirement was a focus even in the initial years – Pension contributed to average ~30% share in the portfolio HDFC Life portfolio break-up (APE) – FY06 to FY10 22% 28% 31% 30% 34% 77% 71% 65%
Slide 21: HDFC Life is working to build a pension distribution ecosystem
HDFC Life is working to build a pension distribution ecosystem that will help deepen coverage Large distribution network that enables HDFC Life – Pension distribution ecosystem wider reach 2600+ crs annuity business in FY19– still 412 Life offices (plus bank branches) ASP potential for growth 91
Slide 22: Creating adjacencies like Life99 platform for all retiral needs
Creating adjacencies like Life99 platform, a one stop solution for all retiral needs across employee demographics, will enhance customer experience Retirement Platform I One-view I Buying Journeys Get one-view of retirement corpus and plan for Retirement Save 1 score Tax retirement NPS subscription
Slide 23: We have also been innovating in the annuity space...
We have also been innovating in the annuity space... Breakthrough with innovative “HDFC Immense scope for product innovation Life Pension Guaranteed Plan” ● Gap in the Indian market ● Deferred annuity product – max 10 years ● Provides for long term care ● Attractive rates Health (income) on CI, disa
Slide 24: Driven by risk calibrated investment opportunities
…..driven by risk calibrated investment opportunities 1 2 Product design & mix Natural hedges monitoring ● 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
Slide 25: Life insurers can play a pivotal role in increasing pension coverage
Life insurers, with their vast reach and expertise can play a pivotal role in increasing pension coverage across the country 5 pillar Pension coverage in India Caters to low income groups with low Nearly non-existent Vanishing support pension amounts Pillar 0 Pillar I Pillar II Pillar III Pillar IV
Slide 26: Thank You
Thank You
HDFC Life Insurance Company — Kotak Conference May 2019 on 6ix