Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — 9M FY24 Earnings Presentation
43 slides from Hdfc Life Insurance's earnings presentation, 2024
Slide 1: Investor Presentation – 9M FY24
Investor Presentation – 9M FY24
Slide 2: Executive summary: 9M FY24
Executive summary: 9M FY24 Revenue & Scale Profitability & Cost Customer & Capital Growth 6% CY 26.5% CY 86% Individual New Business 13th month WRP Market Margin (NBM) persistency PY 26.5% PY 87% 15.0% Share Rs (Bn.) 220.4 Value of New Rs (Bn.) 22.7 Overall 99.7% Renewal Business Claim settlement pr
Slide 3: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 3
Slide 4: Consistent, predictable, sustained performance
Consistent, predictable, sustained performance Rs bn Holistic growth Consistent track record over multiple periods New business premium Renewal premium VNB 291 284 150 142 55 93 36.7 26.8 FY15 FY19 FY23 FY15 FY19 FY23 21.9 15.4 12.8 9.2 Protection new business1 Annuity new business 84.4 FY17 FY18 FY
Slide 5: Consistent performance across business cycles
Consistent performance across business cycles Change in ULIP tax Change in traditional exemption limit savings tax exemption limit Open architecture Covid-19 pandemic Tax exemption removed Tax exemption removed for for policies > Rs 2.5 lakh policies > Rs 5 lakh Banks allowed to tie up Lockd
Slide 6: Robust delivery across key metrics (1/2)
Robust delivery across key metrics (1/2) Rs bn Steady performance Sustained growth in credit protect business1 Individual NOP Individual WRP (in ‘000s) Pvt. mkt 15.8% 15.0% share 9% 55% 46% 21% Overall 10.3% 10.1% mkt share 77 72.4 764.6 63 53 68.3 701.5 34 9M FY23 9M FY24 9M FY23 9M FY24 FY21 FY22
Slide 7: Robust delivery across key metrics (2/2)
Robust delivery across key metrics (2/2) Rs bn Stable Persistency Sustained VNB margins despite headwinds 26.5% 26.5% 87% 86% Multiple pools of Focus on quality of profitability contributing business and providing 52% 54% to VNB accretion superior customer experience_ VNB growth of 5% over 22.
Slide 8: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 8
Slide 9: 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 10: Focus on profitable growth
Focus on profitable growth 9M 9M Rs bn FY21 FY22 FY23 FY23 FY24 Profitable growth 26.5% Economic New business Margin 26.1% 27.4% 27.6% 26.5% Profit Value of new business 21.9 26.8 36.7 21.6 22.7 Profit after tax (PAT) 13.6 10.0 11.6 distribution 12.1 13.6 Diversified Accounting mix Profit Underwriti
Slide 11: Profit emergence of Existing Business surplus
Emergence of Existing Business (EB) Surplus Profit Emergence 80 EB Surplus emergence as a % of VIF 30% Profitable 25% 24% 24% growth 70 25% Traditional Savings Protection ULIP 20% 19% (Longer Tenure) (Ind+Grp) 60 20% 50 15% distribution Diversified 0%-1% mix 20%-25% 40 10% 30%-35% 20%-25% 55% - 60%
Slide 12: Analysis of change in IEV
Analysis of change in IEV Rs bn Profitable growth EVOP – 48.0 EVOP%1 – 16.5% 11.9 3.4 451.7 distribution Diversified 22.7 1.3 mix 24.1 395.3 Economic Dividend & variances Capital Operating VNB infusion variances Unwind 312.3 Customer first 267.4 Adjusted Net worth (ANW) Value of in-force business (V
Slide 13: Diversified distribution mix
Diversified distribution mix Agency – segmented geographical growth HDFC Bank – Expansion in SURU markets Profitable growth 2L+ agents- second largest agency force >900 HDFC bank branches added in SURU amongst private life insurers¹ (Semi-urban and Rural) locations in last 18 months Segregating Grow
Slide 14: Agency – Scaling up for future growth
Agency – Scaling up for future growth Improving scale Levers for future growth Profitable Agency APE (INR billion) Number of Agents (000’s) growth On-boarding high performing Agency 11% 13% 20% Agency 5th 4th 3rd profiles - housewives, retired Share Rank govt servants & financial distributors distri
Slide 15: Emerging tier 2/3 cities - The Bharat opportunity
Emerging tier 2/3 cities - The Bharat opportunity Our focus is to deepen our presence in tier While ensuring that quality of business is Profitable And building capacity for future growth growth 2 and 3 maintained Contribution of tier 2 and 3 to HDFC Life APE 13M persistency closer to org Tier 2,3 A
Slide 16: Our focus on core insurance proposition
Our focus on core insurance proposition Protection (Individual + Group) trends Sum Assured (Individual + Group) trends Rs Bn. Profitable growth 84.4 11,041 69.0 9,837 56.8 7,117 distribution Diversified mix 29.4 4,734 FY18 FY23 9MFY23 9MFY24 Customer FY18 FY23 9MFY23 9MFY24 first NBP Protection and
Slide 17: Product mix across key channels
Product mix across key channels1 Segment FY21 FY23 9M FY23 9M FY24 Segment FY21 FY23 9M FY23 9M FY24 UL 27% 24% 26% 36% UL 10% 10% 11% 22% Profitable Agency Par 37% 27% 28% 27% Par 37% 33% 37% 33% growth Banca Non par savings 30% 42% 38% 27% Non par savings 39% 49% 42% 33% Term 4% 3% 3% 4% Term 11%
Slide 18: Risk management & board governance
Risk management & board governance Board of Directors Profitable growth Independent and experienced Board Committees Risk Policyholder Nomination & Corporate Social Stakeholders’ Audit Investment With Profits Capital Raising Board Management Protection Remuneration Responsibility Relationship Commit
Slide 19: 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 (>95% of annuity); Average age at entr
Slide 20: Future ready organisation: Leveraging technology, digital and analytics
Future ready organisation: Leveraging technology, digital and analytics Profitable growth 1 3 5 distribution Diversified mix Give me a Accelerate SERVICE Give me PLATFORMS simple journey JOURNEY SIMPLIFICATION frictionless Nudge me in independent from purchase SIMPLIFICATION for connect and my world
Slide 21: Harnessing Gen AI Capabilities
Harnessing Gen AI Capabilities In-house Generative AI platform with capabilities that can be leveraged across business processes Profitable growth distribution Diversified mix Ability to upload Secure and authenticated A built-in library of Strict data security multiple documents and APIs, enabling
Slide 22: Platforms: Insta Insure
Platforms: Insta Insure Insurance platform to facilitate easier and faster onboarding of new-age customers Insta Insure is a streamlined and innovative solution designed to onboard eligible customers of our partners with a pre- approved sum insured with minimal underwriting Profitable growth Key fea
Slide 23: Digital, scalable, efficient architecture: Project Inspire
Digital, scalable, efficient architecture: 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 Bu
Slide 24: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 24
Slide 25: Persistency trends for HDFC Life
Persistency trends for HDFC Life Across key channels CY (9M FY24) 87% 85% 86% 86% 79% 78% 78% 79% 71% 71% 69% 73% 67% 68% 66% 68% 58% 54% 54% 54% Agency Banca Direct Company 13th month 25th month 37th month 49th month 61st month Across key segments PY (9M FY23) 87% 91% 88% 87% 81% 81% 83% 77% 78% 74
Slide 26: Improving VNB trajectory
Improving VNB trajectory Rs bn 5% 1 NBM% 26.5% 0.0% 0.1% 0.7% -0.8% 26.5% 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 etc 26 VNB – Value of New Business; NBM – New Business Mar
Slide 27: Sensitivity analysis – H1FY24
Sensitivity analysis – H1FY24 Change in VNB Analysis based on key metrics Scenario % Change in EV Margin 1 Change in Increase by 1% -1.5% -2.8% Reference rate Decrease by 1% 0.7% 2.7% Equity Market Decrease by 10% -0.2% -1.4% movement Increase by 10% -0.5% -0.1% Persistency (Lapse rates) Decrease by
Slide 28: Summary of Milliman report on our ALM approach – FY23
Summary of Milliman report on our ALM approach – FY23 Scope of review Portfolios reviewed • Assess appropriateness of ALM strategy to manage Portfolio 1: Savings and Protection – All non-single premium interest rate risk in non-par savings business non-par savings contracts and group protection pr
Slide 29: ESG at a glance
ESG at a glance The 5 Pillars of ESG Environment Social Governance • Launched Employee Resource • ESG governed by the Board CSR & ESG • Board approved Environment and 1. Ethical Conduct & Groups (ERGs) - Women in Committee and driven by the ESG Climate Change Policy Governance insurance, Life of Pri
Slide 30: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) Rs bn. 9M FY24 9M FY23 Growth FY23 FY22* FY21* New Business Premium (Indl. + Group) 201.0 187.1 7% 290.9 241.5 201.1 Renewal Premium (Indl. +Group) 220.4 191.9 15% 284.5 218.1 184.8 Total Premium 421.4 379.1 11% 575.3 459.6 385.8 Individual APE 72.7 68.7 6% 1
Slide 31: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) 9M FY24 9M FY23 FY23 FY22* FY21* Overall New Business Margins (post overrun) 26.5% 26.5% 27.6% 27.4% 26.1% Operating Return on EV 16.5% 17.5% 19.7% 16.6% 18.5% Total Expenses (OpEx + Commission) / Total Premium 19.6% 19.4% 19.8% 16.5% 16.4% (1) Return on Equi
Slide 32: Segment wise average term and age
Segment wise average term and age1 Average Policy Term excluding annuity (Yrs) Average Customer Age excluding annuity (Yrs) 9M FY24: 23.2 (9M FY23: 22.8) 9M FY24: 36.1 (9M FY23: 35.5) UL 14 UL 37 12 37 Par 36 Par 35 37 33 Non-par Health 17 Non-par Health 32 17 32 Non-par Savings 14 Non-par Savings 3
Slide 33: Consistently outpacing industry and gaining market share
Consistently outpacing industry and gaining market share1 HDFC Life market share trend HDFC Life 19% 17% 27% 27% Growth Delivered strong performance across all Pvt. mkt 5% 8% 22% 24% growth metrics while increasing market share between Overall 6% 3% 16% 19% FY19 and FY23 Industry growth Overall
Slide 34: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 34
Slide 35: 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 36: Growth opportunity: Under-penetration and favorable demographics
Growth opportunity: Under-penetration and favorable demographics Life Insurance penetration1 (FY 2022) Life Insurance density US$ 2 (FY 2022) 19.2% India remains vastly under-insured, both in 8,433 terms of penetration and density 14.0% 5,414 Huge opportunity to penetrate the 7.6% 3,772 underser
Slide 37: 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 38: 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 39: Government bond auctions
Government bond auctions Government Bonds – Tenorwise Issuance Rs cr 27% 21% 29% 35% 35% 28% 29% 34% 38% 73% 79% 72% 71% 65% 65% 71% 66% 62% FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 H1FY24 <=15 yrs >15 yrs FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 9M FY24 <=15 yrs 3,66,500 3,73,525 4,97,579 3,82,941 4,
Slide 40: Industry new business trends
Industry new business trends 1 Product mix 68% 61% 57% 684 51% 49% 51% 49% 43% 39% Individual WRP in Rs bn 32% 483 452 401 356 287 291 305 245 233 200 208 FY15 FY17 FY19 FY21 FY23 Unit Linked Conventional 2 Distribution mix 9% 10% FY15 FY17 FY19 FY21 FY23 9M FY24 5% 14% 16% 15% 3% 3% 3% 5% Private P
Slide 41: 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 42: 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 43: Thank You
Thank You FY23 Annual FY23 ESG 9MFY24 ESG Sustainability Report Report Deck Factsheet
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