Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — 9M FY18 Earnings Presentation
33 slides from Hdfc Life Insurance's earnings presentation, Jan 19, 2018
Slide 1: HDFC Life Insurance Investor presentation – 9M FY18
HDFC Life Insurance Investor presentation – 9M FY18 This is the sole and exclusive property of HDFC Life. January 19, 2018
Slide 2: Agenda
Agenda A Performance Snapshot Additional Business Information Annexure 2
Slide 3: Company overview
Company overview Overview as on Dec 31, 2017 Operations Snapshot (9M FY18) One of the most profitable life insurers in India based on new Total premium: Rs 146.1 bn business margins1 Premium Premium less benefit payouts2: Rs 59.1 bn Individual APE: Rs 30.8 bn Consistently ranked amongst top 3 pr
Slide 4: Reimagining insurance: Leading the way as a digital insurance company
Reimagining insurance: Leading the way as a digital insurance company Branding and marketing Product innovation Significant investments to Online product range: Click2Series maintain strong position in digital ‐ Click 2 Protect 3D Plus marketing ‐ Click 2 Invest ‐ Click 2 Retire Promotion of U
Slide 5: Diversified distribution platform driving growth across cycles
Diversified distribution platform driving growth across cycles Select bancassurance partners Bancassuarance 23 and non Banks traditional ecosystem 139 bancassurance partners (14 partners partners added in Q3 FY18) 90 Top 15 bancassurance partners NBFCs have over 11,200 branches 17 MFIs 21 part
Slide 6: Continued innovation across products and distribution
Continued innovation across products and distribution Fast growing bancassurance partnerships Cardiac care product New Launched unique health product in Q3 FY18, Non-traditional 9 21 partners providing for Cardiac treatment covering multiple incidences of same illness. It also offers the option of
Slide 7: Strong premium growth and market positioning
Strong premium growth and market positioning Consistent growth across premium categories despite volatile operating environment (Rs bn) 194.5 19% 163.1 10% 148.3 23% 51.2 61% 146.1 20% 120.6 31.9 24% 122.2 25.6 52% 40.6 24% 16.8 32.8 98.3 5% 107.5 9% 93.4 16% 75.4 80.2 9% 68.9 23.6 29.3 24% 33.0 13%
Slide 8: Robust profitability and asset size
Robust profitability and asset size FY15 FY16 FY17 9M FY17 9M FY18 VNB (Rs bn) 5.9 7.4 9.2 5.3 7.8 VNB margin 18.5% 19.9% 22.0% 22.0% 22.2% Operating return on embedded 22.9% 20.7% 21.7% 18.4% 20.4% value1 Return on Equity1 35.1% 28.7% 25.7% 25.7% 24.9% Dividends (Rs bn)2 1.7 2.2 2.6 2.6 3.3 EV (Rs
Slide 9: Underwriting profits breakup
Underwriting profits breakup1 Rs bn Profit after tax (PAT) 7.9 8.2 8.9 6.5 7.6 6.2 6.8 7.5 15.0 15.0 0.4 6.0 6.2 5.5 3.9 5.6 10.0 10.0 2.2 0.3 14.5 14.6 15.5 12.7 13.6 5.0 5.0 9.5 9.7 9.1 0.0 0.0 -4.1 -6.4 -5.9 -5.8 -7.7 -7.1 -7.6 -5.0 -5.0 -9.6 -10.0 -10.0 FY15 FY16 FY13 FY17 FY14 9M FY17 9M FY18 F
Slide 10: Market Consistent Embedded Value (MCEV)
Market Consistent Embedded Value (MCEV)1 Rs bn Value of InForce business (VIF) 46.1 144.7 120 104.7 98.6 100 -0.2 -0.9 -4.9 80 60 40 20 - Present Value of Time Value of Frictional Cost Cost of Non VIF Adjusted Networth Embedded value Future Profits Financial Options (FC) Hedgeable Risk (EV) 2 (PVFP)
Slide 11: Analysis of change in EV
Analysis of change in EV Analysis of change in EV – FY17 (Rs bn) Operating Return on Annualised operating Return 22.2 Embedded Value1: 21.7% on Embedded Value1: 20.4% 144.7 9.2 2.5 -2.4 124.7 1.2 0.6 1.1 0.5 9.6 102.3 Economic Dividend and Change in Expenses Post over- variances Capital Persistency
Slide 12: Capital position
Capital position 80.0 230% Rs bn 70.0 196% 198% 210% 192% 191% 190% 60.0 48.3 170% 50.0 42.1 150% 10.3 40.0 34.3 9.1 130% 28.0 30.0 8.4 12.7 11.0 110% 6.6 20.0 8.6 7.1 90% 25.3 10.0 22.0 14.3 17.3 70% - 50% Mar 31, 2015 Mar 31, 2016 Mar 31, 2017 Dec 31, 2017 RSM @100% Incremental RSM @150% Surplus C
Slide 13: Update on key focus areas
Update on key focus areas Employee productivity2 increased by 28% to Rs 1.8 mn Improving Average ticket size2 per policy has increased by 10% to Rs 43,554 efficiency Leveraging usage of mobility tools for productivity improvement Total number of bancassurance relationships increased to 139 L
Slide 14: Key differentiators of HDFC Life
Key differentiators of HDFC Life 1 High GDP growth, favourable demographics and underpenetrated life insurance sector: significant opportunity for growth 2 Balanced business mix with a focus on customer centricity enabling growth across business cycles 3 Reimagining Life Insurance: innovation and di
Slide 15: Agenda
Agenda Performance Snapshot B Additional Business Information Annexure 15
Slide 16: Assets under management
Assets under management Rs bn Debt: Equity mix Linked - Non linked mix 670.5 742.5 917.4 1,044.3 670.5 742.5 917.4 1,044.3 33% 39% 41% 38% 41% 44% 48% 43% 67% 61% 59% 62% 59% 56% 52% 57% Mar 31, 2015 Mar 31, 2016 Mar 31, 2017 Dec 31, 2017 Mar 31, 2015 Mar 31, 2016 Mar 31, 2017 Dec 31, 2017 Debt Equi
Slide 17: Channel wise product mix
Channel wise product mix Channel summary1 Segment FY15 FY16 FY17 9M FY18 Banca2 Par 10% 24% 30% 24% Non par protection 2% 2% 1% 1% Non par others 12% 9% 8% 8% UL 75% 66% 61% 67% Agency Par 55% 56% 57% 47% Non par protection 12% 13% 11% 11% Non par others 9% 6% 7% 7% UL 24% 25% 26% 35% Direct and Bro
Slide 18: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) Overall 9M FY18:14.4 (9M FY17: 14.0) 9M FY18: 37.2 (9M FY17: 36.2) 11 UL Pension 53 UL Pension 50 12 11 UL Life 39 UL Life 39 12 15 Par Savings 37 Par Savings 37 15 13 Par Pension 49 Par Pension 51 13 11 Non-par
Slide 19: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) FY15 FY16 FY17 CAGR 9M FY17 9M FY18 Growth Key Metrics (Rs bn) New Business Premium (Indl+Grp) 54.9 64.9 87.0 26% 53.3 70.7 33% Renewal Premium 93.4 98.3 107.5 7% 68.9 75.4 9% Total Premium 148.3 163.1 194.5 15% 122.2 146.1 20% Individual WRP 29.7 33.3 36.4 1
Slide 20: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY15 FY16 FY17 9M FY17 9M FY18 Key Ratios Overall New Business Margins (post overrun) 18.5% 19.9% 22.0% 22.0% 22.2% (6 ) Operating Return on EV 22.9% 20.7% 21.7% 18.4% 20.4% Operating Expenses / Total Premium 10.2% 11.6% 12.6% 13.3% 14.2% Total Commissions /
Slide 21: Awards and accolades – 9M FY18 (1/2)
Awards and accolades – 9M FY18 (1/2) IndIAA Awards 2017 for best campaign in the Insurance category DMAsia ECHO Awards Asia - Pacific Customer Engagement award Mega Corporate Film Festival and Awards 2017 BFSI IT Leadership Awards 2017 Working Mother & AVTAR 100 Best Company for Women in India Data
Slide 22: Awards and accolades – 9M FY18 (2/2)
Awards and accolades – 9M FY18 (2/2) Quality Circle Competition - Indian Society for Quality (ISQ) Technology Initiative of Celent 2017 award the Year Digital Crest Award 2017 CISO 100 awards IDC Insights Award Infosec Maestros award for Excellence in Cyber Security Frost & Sullivan - Project Evalua
Slide 23: Agenda
Agenda Performance Snapshot Additional Business Information C Annexure 23
Slide 24: Revenue and Profit & Loss A/c
Revenue and Profit & Loss A/c Rs bn Particulars FY15 FY16 FY17 9M FY17 9M FY18 Gross Premium Income 148.3 163.1 194.4 122.2 146.1 Reinsurance (net) (0.7) (1.3) (1.7) (1.2) (1.4) Net Premium Income (A) 147.6 161.8 192.7 121.0 144.7 Income from Investments Policyholders 122.5 17.9 111.4 62.8 95.3 Shar
Slide 25: Balance Sheet
Balance Sheet Rs bn 31st Mar 31st Mar 31st Mar 31st Dec 31st Dec Particulars 2015 2016 2017 2016 2017 SOURCES OF FUNDS Capital invested (Share capital + Premium) 21.6 21.6 21.9 21.8 23.1 Reserves and Surplus 4.3 10.4 16.2 13.7 20.5 Credit / (Debit) Fair Value Change Account (0.0) (0.4) 0.3 (0.0) 1.1
Slide 26: Sensitivity analysis – FY17
Sensitivity analysis1 – FY17 Change in VNB Scenario % Change in VNB % Change in EV Margin Change in Increase by 1% 0.4% 3 0.1% -1.9% Decrease by 1% -1.4% 3 -0.3% 1.9% Reference rate Increase by 2% 0.0% 3 0.0% -3.8% Decrease by 2% -4.1% 3 -0.9% 3.7% Equity market Decrease by 10% -1.4% -0.3% -2.0% mov
Slide 27: Persistency at channel and segment level – FY17
Persistency1 at channel and segment level – FY17 Persistency across channels 86% 81% 80% 79% 72% 74% 65% 66% 59% 58% 61% 58% 55% 56% 52% Agency Banca Direct and Broker 13th month 25th Month 37th Month 49th Month 61st Month Persistency across segments 95%93% 89% 86% 82% 81% 75% 75% 73% 75% 74% 70% 72
Slide 28: Embedded Value: Methodology and Approach (1/2)
Embedded Value: Methodology and Approach (1/2) Overview Embedded Value (EV) 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 distributable
Slide 29: 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 30: Embedded Value: Economic assumptions
Embedded Value: Economic assumptions1 Forward rates % Spot rates % Years As at Dec 31, As at Dec 31, As at Dec 31, As at Dec 31, 2016 2017 2016 2017 1 6.36 6.55 6.16 6.34 2 6.60 7.12 6.28 6.61 3 6.91 7.55 6.41 6.83 4 7.16 7.85 6.54 7.01 5 7.32 8.07 6.64 7.16 10 7.52 8.42 6.93 7.59 15 7.53 8.38 7.04
Slide 31: Glossary
Glossary APE (Annualized Premium Equivalent) - The sum of annualized first year regular premiums and 10% weighted single premiums and single premium top-ups Conservation ratio - Ratio of current year renewal premiums to previous year's renewal premium and first year premium First year premiums
Slide 32: 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 Standard Life Insurance Company Limited (“HDFC Life” or the “Company”) in India, the Un
Slide 33: Thank you
Thank you This is the sole and exclusive property of HDFC Life