Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — 9M FY25 Earnings Presentation
49 slides from Hdfc Life Insurance's earnings presentation, Jan 15, 2025
Slide 1: Cover letter to stock exchanges
January 15, 2025 Ref. No: HDFC Life/CA/2024-25/122 Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No C/1, Block G, Sir PJ Towers, Bandra-Kurla Complex, Dalal Street, Bandra (East), Fort, Mumbai- 400 051 Mumbai – 400 001 NSE Symbol: HDF
Slide 2: Press Release - Performance for Nine Months Ended December 31, 2024
PRESS RELEASE - PERFORMANCE FOR NINE MONTHS ENDED DECEMBER 31, 2024 BSE Code: 540777 NSE Code: HDFCLIFE HDFC Life records strong individual APE growth of 24%; New Business Margin of 25.1%, delivers value of new business growth of 14% Mumbai, 15th Jan, 2025: The Board of Directors of HDFC Life approv
Slide 3: Key Financial Summary
grown by 15%, outperforming the private sector's growth of 9%. Retail protection continues to grow well. Retail protection APE for nine months saw a growth of 28%. We are committed to adapting to the evolving market landscape with agility and resilience. This includes continued investment in distrib
Slide 4: Definitions and abbreviations
• Assets under Management (AUM) - The total value of Shareholders’ & Policyholders’ investments managed by the insurance company • Embedded Value Operating Profit (EVOP) - Embedded Value Operating Profit (“EVOP”) is a measure of the increase in the EV during any given period, excluding the impact on
Slide 5: Disclaimer
For more information, please visit www.hdfclife.com. You may also connect with us on Facebook, Twitter, YouTube and LinkedIn. Disclaimer Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected
Slide 6: Investor Presentation – 9M FY25
. Investor Presentation – 9M FY25 1
Slide 7: Executive summary: 9M FY25
Executive summary: 9M FY25 Revenue & Scale Profitability & Cost Customer & Capital Rs. Bn 89.9 Value of New Rs (Bn.) 25.9 CY 87% Individual 13th month APE Business Growth 24% Growth 14% persistency (VNB) PY 86% Rs (Bn.) 246.2 New CY 25.1% Renewal Overall 99.7% Business Claim settlement premium Margi
Slide 8: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 3
Slide 9: Consistent, predictable, sustained performance
Consistent, predictable, sustained performance Rs bn Holistic growth Consistent track record over multiple periods Individual APE Renewal Premium Value of NB 36.7 334 35.0 115 61 155 34 98 26.8 21.9 FY16 FY20 FY24 FY16 FY20 FY24 19.2 15.4 12.8 9.2 Protection new business1 Annuity New Business 95.2 F
Slide 10: Consistent performance across business cycles
Consistent performance across business cycles Change in ULIP tax Change in traditional Covid-19 pandemic exemption limit savings tax exemption ▪ Tax exemption limit Open architecture ▪ Lockdown – Face to removed for policies ▪ Tax exemption removed face communication ▪ Banks allowed to tie up with 3
Slide 11: Robust delivery across key metrics (1/2)
Robust delivery across key metrics (1/2) Strong individual WRP growth Rs bn Focus on increasing customer base (NOPs in 000’s) Pvt. mkt share 16.5% 15.4% 15.0% 15.3% Pvt. mkt rank #2 #2 #2 #2 11% 15% Overall mkt 10.8% 10.4% 10.1% 10.8% share 1,166 877 113.8 88.4 1,054 765 72.4 112.6 9M FY24 9M FY25 F
Slide 12: Robust delivery across key metrics (2/2)
Robust delivery across key metrics (2/2) Rs bn Significant improvement in 61st M Persistency VNB growth, tiding over change in surrender regulations NBM: 26.5% 25.1% 86% 87% 14% ▪ Focus on quality of ▪ Multiple pools of business and providing profitability contributing 61% superior customer to VNB a
Slide 13: Delivering customer value with a balanced approach
Delivering customer value with a balanced approach Negligible surrenders in traditional policies2 Our balanced approach to business Non-par savings Par Calibrated pricing strategy 92% 92% 91% 90% 90% 89% 6% 11% 8% 15% Conservative assumptions with zero surrenders assumed from Year 2 - in line with o
Slide 14: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 9
Slide 15: Key elements of our strategy
Key elements of our strategy 1 2 3 4 Profitable growth Diversified Customer first Risk management distribution mix & board Ensuring Creating superior governance sustainable and Developing multiple product propositions profitable growth channels of growth and customer Maintaining focus on by identify
Slide 16: Focus on profitable growth
Focus on profitable growth FY22 FY23 FY24 9MFY24 9MFY25 Rs bn Profitable growth 25.1% Economic New business Margin 27.4% 27.6% 26.3% 26.5% Profit Value of new business 26.8 36.7 35.0 22.7 25.9 Profit after tax (PAT) 12.1 11.6 13.3 distribution 13.6 15.7 Diversified Accounting mix Profit Underwriting
Slide 17: Emergence of Existing Business Surplus
Emergence of Existing Business (EB) Surplus Profit Emergence 80 EB Surplus emergence as a % of VIF 30% Profitable 24% growth 70 25% Traditional Savings Protection ULIP 20% 19% 20% (Longer Tenure) (Ind+Grp) 60 20% 50 15% distribution Diversified 0%-1% mix 20%-25% 40 10% 30%-35% 20%-25% 55% - 60% 30%-
Slide 18: Analysis of change in IEV
Analysis of change in IEV Rs bn EVOP: 55.8 EVOP%1: 16.0% Profitable growth 1.4 5.4 (3.3) 532.5 25.9 474.7 28.6 Dividend & distribution Diversified Operating Economic Unwind VNB Capital mix variances variances Injection 374.7 329.4 Adjusted Net worth (ANW) Value of in-force business (VIF) Customer fi
Slide 19: Diversified distribution mix
Diversified distribution mix Agency: segmented geographical growth HDFC Bank: best in class solutions Profitable growth ~2.4 lakh agents - top three agency force Widening outreach across all customer segments amongst private life insurers distribution Diversified Segregating Focus (tier 1) and Growt
Slide 20: Increasing contribution from mortality and longevity products
Increasing contribution from mortality and longevity products Rs Bn. Robust retail protection growth Continue to maintain leadership in overall sum assured Rs Bn. Profitable 27% 36% 28% #1 #1 #1 #1 growth 5.9 5.1 13,412 4.7 4.0 11,048 9,837 9,896 distribution Diversified mix Customer first FY23 FY24
Slide 21: Product mix across key channels
Product mix across key channels1 Segment FY23 FY24 9M FY24 9M FY25 Segment FY23 FY24 9M FY24 9M FY25 UL 24% 40% 36% 40% UL 10% 26% 22% 26% Agency Profitable Par 27% 22% 27% 17% Par 33% 29% 33% 24% Banca growth Non par savings 42% 30% 27% 37% Non par savings 49% 33% 33% 36% Term 3% 4% 4% 4% Term 6% 7
Slide 22: Key product innovations across categories
Diversified Risk Technology, Profitable Customer distribution management digital & growth first mix & governance Analytics about HDFC Life Learn more products Key product innovations across categories 17 17
Slide 23: Risk management & board governance
Risk management & board governance Board of Directors Profitable growth Independent and experienced Board Committees Policyholder Risk Protection, claims Nomination & Corporate Social Stakeholders’ Audit Investment With Profits Capital Raising Board Management monitoring and Remuneration Responsibil
Slide 24: Financial risk management framework
Financial risk management framework Natural hedges Product design & mix monitoring ▪ Profitable Prudent assumptions and pricing approach ▪ growth Protection and longevity businesses ▪ Unit linked and non par savings products ▪ Return of premium annuity products (>90% of annuity); Average age at entr
Slide 25: Future ready organization: Leveraging technology, digital and analytics
Future ready organization: Leveraging technology, digital and analytics Profitable growth 1 3 5 distribution Diversified mix Give me a Give me HYPER- OMNI-CHANNEL PLATFORMISATION simple journey PERSONALISATION frictionless SERVICE Nudge me in approach to tech from purchase for customers service to c
Slide 26: Building next-gen insurance platform: Project Inspire
Building next-gen of insurance platform: Project Inspire Future-ready digital transformation Reimagining our systems and processes by investing in new technologies and capabilities Profitable growth Envisioned tracks for transformation- moving towards execution distribution Diversified mix Data Busi
Slide 27: Project Inspire: Testing Center of Excellence
Project Inspire: Testing Center of Excellence Ensure Quality governance and enhance testing efficiencies Profitable growth distribution Diversified Standardization in Testing mix Faster product roll out Reduced defect leakage Processes & Frameworks Customer Key milestones achieved first 350+ product
Slide 28: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 23
Slide 29: Persistency trends
Persistency trends Across key channels CY (9M FY25) 88% 87% 90% 87% 78% 77% 78% 78% 72% 73% 74% 74% 67% 68% 67% 70% 63% 59% 61% 61% Agency Banca Direct Company 13th month 25th month 37th month 49th month 61st month Across key segments PY (9M FY24) 88% 88% 85% 86% 85% 84% 79% 81% 80% 75% 74% 73% 73%
Slide 30: Steady VNB trajectory
Steady VNB trajectory Rs bn 14% 1 2 NBM% 26.5% 0.0% -0.2% -1.4% -0.1% 0.3% 25.1% VNB Growth Note: Numbers may not add up due to rounding off 1. Reflects the impact of difference in mix of segment/distribution channel/tenure/age/sum assured multiple, amongst others 25 2. Effective October 1, 2024 25
Slide 31: Sensitivity analysis – H1 FY25
Sensitivity analysis – H1 FY25 Change in VNB Analysis based on key metrics Scenario % Change in EV Margin 1 Change in Increase by 1% -1.6% -2.7% Reference rate Decrease by 1% 0.8% 2.6% Equity Market Decrease by 10% -0.1% -1.5% movement Increase by 10% -0.9% -0.1% Persistency (Lapse rates) Decrease b
Slide 32: Focus on increasing awareness across tier 2/3 markets
Focus on increasing awareness across tier 2/3 markets Spontaneous awareness (Private insurers) Focus on category creation and deeper regional connect, supported by large campaigns: Evident that insurance awareness is far lower in tier 2/3 markets Tier 1 Tier 2/3 New branch Hyper-localization Insurer
Slide 33: The tier 2/3 growth opportunity
The tier 2/3 growth opportunity Our focus is to deepen our presence While ensuring that quality of And building capacity for future in tier 2/3 markets business is maintained growth Contribution of tier 2/3 markets in HDFC 13M persistency Tier 2/3 markets’ ATS 40K+ Life’s APE closer to org closer to
Slide 34: ESG at a glance
76 percentile in 2024 ESG at a glance S&P Global Corporate Sustainability Assessment Ethical Conduct & Responsible Diversity, Equity Sustainable Holistic Living Governance Investment and Inclusion Operations ENVIRONMENT SOCIAL • Board approved Environment and Climate Change Policy • Insurance awaren
Slide 35: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) Rs bn. 9M FY25 9M FY24 Growth FY24 FY23 FY22* New Business Premium (Indl. + Group) 223.9 201.0 11% 296.3 290.9 241.5 Renewal Premium (Indl. + Group) 246.2 220.4 12% 334.5 284.5 218.1 Total Premium 470.1 421.4 12% 630.8 575.3 459.6 Individual APE 89.9 72.7 24%
Slide 36: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) 9M FY25 9M FY24 FY24 FY23 FY22* Overall New Business Margins (post overrun) 25.1% 26.5% 26.3% 27.6% 27.4% Operating Return on EV 16.0% 16.5% 17.5% 19.7% 16.6% Total Expenses (OpEx + Commission) / Total Premium 20.8% 19.6% 19.4% 19.8% 16.5% (1) Return on Equit
Slide 37: Consistent track record of maximising shareholder value
Consistent track record of maximising shareholder value Rs bn FY 20-24 FY 16-24 FY24 FY23 FY22 FY21 FY20 FY19 FY18 FY17 FY16 CAGR CAGR Value of new business (VNB) 35.0 36.7 26.8 21.9 19.2 15.4 12.8 9.2 7.4 16% 21% Operating variances 1.5 1.6 -4.91 0.8 1.5 1.4 2.0 2.1 3.1 Embedded Value2 474.7 395.3
Slide 38: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) 9M FY25: 24.3 (9M FY24: 23.4) 9M FY25: 36.5 (9M FY24: 36.0) 16 38 UL UL 14 37 34 35 Par Par 36 35 22 37 Non-par Savings Non-par Savings 13 38 36 34 Non-par Protection Non-par Protection 36 34 13 50 Non-par Pensio
Slide 39: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 34
Slide 40: India – poised for sustainable growth
India – poised for sustainable growth The burgeoning Fifth middle largest and class fastest and growing Investment in physical and digital Rising affluence emergenceeconomy of Bharat building blocks to further drive growth India’s GDP (in USD)1 India’s middle income segment as % of all households3 T
Slide 41: Growth opportunity: Under-penetration and favorable demographics
Growth opportunity: Under-penetration and favorable demographics Life Insurance penetration1 (CY 2023) Life Insurance density US$ 2 (CY 2023) 6,264 7.4% 7.1% 6.8% ▪ India remains vastly under-insured, both in terms of penetration and density 3.7% 3.4% 2,285 2,245 ▪ Huge opportunity to penetrate the
Slide 42: Low levels of penetration: Life protection
Low levels of penetration: Life protection 1 3 Protection gap (2019) Sum Assured as a % of GDP 2 Trend of retail loans (Rs Tn.) 91.0% 332% 64 74.0% 71.0% 70.0% 252% 251% 53 61.0% 55.0% 44 153% 34 41.0% 143% 127% 24 85% 17 62% 23% India Malaysia Thailand China Japan Singapore Hong Singapore Japan USA
Slide 43: Macro opportunity: Retiral solutions
Macro opportunity: Retiral solutions 2 India’s pension market is under-penetrated at India’s retirement savings gap to grow annually by 10% to reach 1 3% of GDP ~$96Tn in 2050 146.2 2050 retirement savings gap ($ Tn.) 128.2 98.3 95.7 90.1 54.0 31.3 32.4 24.3 3.0 16.4 9.6 India Japan Hong Kong Canada
Slide 44: Life Insurance: A preferred savings instrument
Life Insurance: A preferred savings instrument Household savings composition Financial savings mix 26% 21% 24% 23% 24% 2% 5% 9% 9% 7% 2% 15% 9% 7% 19% 8% 17% 18% 22% 22% 48% 18% 59% 51% 52% 54% 17% 18% 18% 67% 56% 52% 48% 42% 45% 41% 49% 48% 46% FY13 FY16 FY19 FY22 FY23 FY13 FY16 FY19 FY22 FY23 Gros
Slide 45: Insurance density
Indian savings in the global context 1 2 India’s gross savings is higher than global average Insurance density is likely to rise with income levels 4 44.9 Taiwan 42.7 38.0 3 Italy 32.1 Insurance density 31.1 28.7 South Korea Japan 2 21.9 18.6 1 South Africa Indonesia 14.6 Malaysia Spain India Brazil
Slide 46: Government bond auctions
Government bond auctions Government Bonds – Tenorwise Issuance Rs cr 21% 28% 29% 34% 35% 35% 38% 79% 72% 71% 66% 65% 65% 62% FY19 FY20 FY21 FY22 FY23 FY24 9M FY25 <=15 yrs >15 yrs FY19 FY20 FY21 FY22 FY23 FY24 9M FY25 <=15 yrs 3,82,941 4,44,000 10,01,835 8,48,000 10,04,000 9,28,000 7,07,000 >15 yrs
Slide 47: Industry new business trends
Industry new business trends 1 Product mix Private Players LIC 739 49% 49% 57% 61% 60% 684 68% Individual WRP in Rs bn 576 43% 51% 51% 39% 32% 40% 452 401 356 351 FY15 FY17 FY19 FY21 FY23 FY24 287 291 305 245 243 Unit Linked Conventional 2 Distribution mix 9% 10% 14% 16% 15% 17% 5% 3% 3% 3% 5% 5% FY
Slide 48: 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 (“HDFC Life” or the “Company”) in India, the United Stat
Slide 49: Thank You
Thank You FY24 Annual Report FY24 ESG Report 9M FY25 ESG Deck Sustainability Factsheet 44
HDFC Life Insurance Company — 9M FY25 Earnings Presentation on 6ix