Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — H1 FY24 Earnings Presentation
41 slides from Hdfc Life Insurance's earnings presentation, 2023
Slide 1: Investor Presentation – H1 FY24
Investor Presentation – H1 FY24
Slide 2: Executive summary: H1 FY24
Executive summary: H1 FY24 Revenue & Scale Profitability & Cost Customer & Capital Growth 10% CY 26.2% CY 86% Individual New Business 13th month WRP Market Margin (NBM) persistency PY 26.2% PY 87% 15.7% Share Rs (Bn.) 136.4 Value of New Rs (Bn.) 14.1 Overall 99.7% Renewal Business Claim settlement p
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: 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 7: Robust delivery across key metrics (1/2)
Robust delivery across key metrics (1/2) Sustained performance Strong CP volumes on the back of higher disbursements1 Rs bn Individual NOP Individual WRP (in ‘000s) Pvt. mkt 16.1% 15.7% share 10% 55% 46% 28% Overall 10.2% 10.3% mkt share 77.4 45.1 476.2 53.0 41.1 42.0 434.7 34.2 H1 FY23 H1 FY24 H1 F
Slide 8: Robust delivery across key metrics (2/2)
Robust delivery across key metrics (2/2) Rs bn Stable Persistency Healthy VNB growth 26.2% 26.2% 87% 86% Multiple pools of Focus on quality of profitability contributing business and providing 51% 53% to VNB accretion superior customer experience_ 14.1 VNB growth of 10% over 12.9 H1 FY23 H1 FY
Slide 9: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 9
Slide 10: 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 11: Focus on profitable growth
Focus on profitable growth H1 H1 Rs bn FY21 FY22 FY23 FY23 FY24 Profitable growth 26.2% Economic New business Margin 26.1% 27.4% 27.6% 26.2% Profit Value of new business 21.9 26.8 36.7 12.9 14.1 Profit after tax (PAT) 13.6 6.9 7.9 distribution 12.1 13.6 Diversified Accounting mix Profit Underwriting
Slide 12: Existing Business surplus emergence
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 13: Analysis of change in IEV
Analysis of change in IEV Rs bn Profitable growth EVOP – 31.1 EVOP%1 - 16.4% (PY2 : 16.9%) 6.5 (3.8) 429.1 14.1 1.1 distribution 15.9 Diversified 395.3 Economic Dividend & mix Operating variances ESOPs VNB variances Unwind 294.4 Customer 267.4 first Adjusted Net worth (ANW) Value of in-force busines
Slide 14: Diversified distribution enabled by multiple levers
Diversified distribution enabled by multiple levers Second largest agency Proprietary1 Banks, NBFCs, SFBs and Other CAs Profitable Proprietary1 amongst private life growth insurers3 2L+ Agents Highest agent additions in last FY distribution Diversified 483 Branches mix 48 Digital Branches2 >1,100 ne
Slide 15: Diversified distribution mix growth strategy
Diversified distribution mix growth strategy Agency Other Key Alliances Profitable growth • Segregating Growth (tier 1) and • Gained significant experience of Focus (tier 2,3) markets working in multi-tie • Developing micro market • New tie-ups with partners like distribution Diversified strategy In
Slide 16: Focus on protection
Focus on protection Protection (Individual + Group) trends Sum Assured (Individual + Group) trends Rs Bn. Profitable growth 24% 19% 16% 25% 54% 45% 17.8 11,041 13.2 distribution Diversified 10.7 mix 8.9 7.7 7,178 6,502 5,762 4,493 Customer first FY21 FY22 FY23 H1FY23 H1FY24 FY21 FY22 FY23 H1FY23 H1F
Slide 17: Product mix across key channels
Product mix across key channels1 Segment FY21 FY23 H1 FY23 H1 FY24 Segment FY21 FY23 H1 FY23 H1 FY24 UL 27% 24% 26% 33% UL 10% 10% 11% 17% Profitable Banca 2 Agency Par 37% 27% 29% 29% Par 37% 33% 39% 34% growth Non par savings 30% 42% 37% 27% Non par savings 39% 49% 39% 36% Term 4% 3% 3% 4% Term 11
Slide 18: Governance Framework
Governance Framework 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 Committee Committee
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: Aligned to make life simpler for customers
Aligned to make life simpler for customers 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 buying / service personaliza
Slide 21: Journey Simplification
Journey Simplification Using new age technologies to ease customer onboarding and improve experience Incorporating facial recognition solutions for easier KYC verification and faster underwriting Profitable growth Digi Video Check Process Benefits distribution Diversified Automation of pre-issuance
Slide 22: Project Inspire
Project Inspire Future-ready digital transformation Reimagining our systems and processes by investing in new technologies and capabilities Profitable growth Envisioned tracks for transformation distribution Diversified mix Data Business Product CRM Process Integration configurator Platforms Managem
Slide 23: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 23
Slide 24: Persistency trends for HDFC Life
Persistency trends for HDFC Life Across key channels CY (H1 FY24) 87% 86% 86% 86% 78% 78% 78% 79% 70% 70% 70% 72% 67% 68% 65% 68% 54% 57% 53% 53% Agency Banca Direct Company 13th month 25th month 37th month 49th month 61st month Across key segments PY (H1 FY23) 92% 88% 88% 87% 81% 82% 82% 76% 77% 73
Slide 25: Improving VNB trajectory
Improving VNB trajectory Rs bn 10% 1 NBM% 26.2% - 0.1% 0.4% -0.5% 26.2% VNB Growth 1. Reflects the impact of difference in mix of segment/distribution channel/tenure/age/sum assured multiple etc 25 VNB – Value of New Business; NBM – New Business Margin 25
Slide 26: 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 27: 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 28: ESG at a glance
ESG at a glance The 5 Pillars Environment Social Governance of ESG • Launched Employee Resource Groups • ESG governed by the Board CSR & ESG • Board approved Environment and 1. Ethical Conduct & (ERGs) - Women in insurance, Life of Pride Committee and driven by the ESG Climate Change Policy Governan
Slide 29: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) Rs bn. H1 FY24 H1 FY23* Growth FY23* FY22 FY21 New Business Premium (Indl. + Group) 129.7 113.2 15% 290.9 241.5 201.1 Renewal Premium (Indl. +Group) 136.4 120.1 14% 284.5 218.1 184.8 Total Premium 266.1 233.3 14% 575.3 459.6 385.8 Individual APE 44.8 41.1 9%
Slide 30: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) H1 FY24 H1 FY23* FY23* FY22 FY21 Overall New Business Margins (post overrun) 26.2% 26.2% 27.6% 27.4% 26.1% Operating Return on EV 16.4% 16.9% 19.7% 16.6% 18.5% Total Expenses (OpEx + Commission) / Total Premium 19.7% 19.3% 19.8% 16.5% 16.4% (1) Return on Equi
Slide 31: Segment wise average term and age
Segment wise average term and age1 Average Policy Term excluding annuity (Yrs) Average Customer Age excluding annuity (Yrs) H1 FY24: 23.4 (H1 FY23: 23.1) H1 FY24: 36.1 (H1 FY23: 35.4) UL 13 UL 37 12 37 Par 36 Par 35 37 33 Non-par Health 16 Non-par Health 32 17 32 Non-par Savings 13 Non-par Savings 3
Slide 32: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 32
Slide 33: Growth opportunity: Under-penetration and favorable demographics
Growth opportunity: Under-penetration and favorable demographics Life Insurance penetration 1 Life Insurance density US$ 2 (FY 2022) (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 underse
Slide 34: 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.) 332% 83.0% 74.0% 53 71.0% 70.0% 252% 251% 61.0% 44 55.0% 34 41.0% 153% 143% 127% 24 17 85% 12 62% 23% India Malaysia Thailand China Japan Singapore Hong Singapore Japan USA
Slide 35: Macro opportunity: Retiral solutions
Macro opportunity: Retiral solutions India’s pension market is under-penetrated at Improvements in life expectancy will lead to an average post 3%* of GDP retirement period of 20 years Life expectancy at age 60 146.2 20 19 18 17 18 17 98.3 16 15 90.1 54.0 31.3 3.0 India Japan Hong Kong Canada USA Au
Slide 36: 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 H1 FY24 <=15 yrs 3,66,500 3,73,525 4,97,579 3,82,941 4,
Slide 37: Industry new business trends
Industry new business trends 1 Product mix 61% 60% 57% 51% 51% 684 49% 49% 43% 39% 40% Individual WRP in Rs bn 452 401 356 287 291 305 287 245 FY15 FY17 FY19 FY21 FY22 200 208 Unit Linked Conventional 149 2 Distribution mix 9% 10% 14% 16% 15% 5% 3% 3% 3% 5% FY15 FY17 FY19 FY21 FY23 H1 FY24 50% 57% P
Slide 38: Life Insurance: A preferred savings instrument
Life Insurance: A preferred savings instrument Household savings composition Financial savings mix 11% 11% 12% 11% 11% 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 39: Reasons for buying insurance – Tax as a reason has declined
Reasons for buying insurance – Tax as a reason has declined Top reasons to buy life insurance 1 Customer behaviour / trend 2 2019 rank 2013 rank Protect family in case of death 1 1 To secure child’s education/marriage 2 2 Macro-level • State of the economy Economy • Stock market Old age security/ret
Slide 40: 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 41: Thank You
Thank You
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