Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE

Hdfc Life Insurance — 9M FY2018 Earnings Presentation

40 slides from Hdfc Life Insurance's earnings presentation, Feb 1, 2018

  1. 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. February 1, 2018

  2. Slide 2: Agenda

    Agenda A Performance Snapshot Additional Business Information India Life Insurance 2

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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%

  8. 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

  9. 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

  10. 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)

  11. 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

  12. 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

  13. 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

  14. 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

  15. Slide 15: Agenda

    Agenda Performance Snapshot B Additional Business Information India Life Insurance 15

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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 /

  21. 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

  22. 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

  23. Slide 23: Agenda

    Agenda Performance Snapshot Additional Business Information C India Life Insurance 23

  24. Slide 24: Growth opportunity – Under-penetration vs global benchmarks

    Growth opportunity – Under-penetration vs global benchmarks Life insurance Life insurance density Protection gap (2014) penetration (2016) US$ (2016) 7,066 16.7% 16.2% 92.2%88.3% 78.4% 73.3% 72.5% 70.2% 3,599 2,895 56.3% 56.0% 7.2% 2,803 5.5% 3.7% 3.2% 2.7% 2.3% 298 16.4% 222 190 47 India India Hong

  25. Slide 25: Growth opportunity – Favourable demographics

    Growth opportunity – Favourable demographics Life expectancy (Years)1 Population composition (bn)2 75.9 1.2 1.5 1.7 5% 8% 14% 71.7 55% 60% 61% 65.5 40% 32% 26% 2010 2030 2050 2010 2030 2050 Less than 20 years 20-64 years 65 years and above  India's insurable population is anticipated to touch 750 m

  26. Slide 26: Life insurance – A preferred savings instrument

    Life insurance – A preferred savings instrument Household savings composition Financial savings mix 23% 25% 22% 19% 3% 11% 11% 12% 15% 9% 13% 18% 16% 15% 51% 52% 26% 67% 59% 25% 65% 67% 50% 44% 49% 48% 41% 33% FY07 FY10 FY13 FY16 FY07 FY10 FY13 FY17 Financial savings Physical savings Currency & depo

  27. Slide 27: Industry new business trends

    Industry new business1 trends 450 Sensex Private Players LIC 400 350 304 Individual WRP in Rs. Bn 292 287 300 288 273 285 266 269 Individual WRP in Rs bn 261 262 260 245 250 230 227 232 214 203 200208 Sensex 200 175 178 180 172 138 143 150 100 72 50 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY1

  28. Slide 28: Private industry – Market share trends

    Private industry – Market share trends Top 7 private players vs other players 65% 66% 69% 69% 71% 75% 76% 78% 35% 34% 31% 31% 29% 25% 24% 22% FY11 FY12 FY13 FY14 FY15 FY16 FY17 9M FY18 Rest Private Top 7  Amongst private insurers, insurers with a strong bancassurance platform continue to dominate w

  29. Slide 29: 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 68% 67% 63% 60% 6% 4% 6% 7% 9% 10% 10% 57% 5% 5% 52% 51% 5% 5% 5% 4% 3% 49% 9% 8% 6% 4% 3% 3% 3% 48% 43

  30. Slide 30: Annexures

    Annexures This is the sole and exclusive property of HDFC Life. February 1, 2018

  31. Slide 31: 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

  32. Slide 32: 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

  33. Slide 33: 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

  34. Slide 34: 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

  35. Slide 35: 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

  36. Slide 36: 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

  37. Slide 37: 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

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: Thank you

    Thank you This is the sole and exclusive property of HDFC Life

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