Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — Q1 FY2019 Earnings Presentation
45 slides from Hdfc Life Insurance's earnings presentation, 2018
Slide 1: HDFC Life Insurance Investor presentation – Q1 FY19
HDFC Life Insurance Investor presentation – Q1 FY19
Slide 2: Agenda
Agenda A Performance Snapshot Additional Business Information India Life Insurance 2
Slide 3: Company overview
Company overview Financial and Actuarial snapshot VNB1 13M Persistency6 Total premium Total NB IEV2 AUM Net-worth4 NB margin (Post 61M Persistency6 Growth % Growth % EVOP3 % Growth % ROE5 overrun)1 Rs 50.6 bn Rs 26.8 bn Rs 2.5 bn Rs 156.9 bn Rs 1,096.3 bn Rs 51.1 bn 87% 37% 62% 24.2% 18.4% 16% 31.0%
Slide 4: Strong premium growth and market positioning
Strong premium growth and market positioning Consistent growth across premium categories despite volatile operating environment 235.6 Rs bn 21% 50.6 37% 194.5 19% 66.1 33% 163.1 10% 37.0 15% 49.6 56% 18.6 97% 31.9 24% 9.5 19% 122.1 13% 108.2 10% 98.3 5% 23.8 16% 20.5 10% 47.4 30% 15% 33.0 13% 36.6 1
Slide 5: Profits breakup
Profits breakup FY16 FY17 FY18 Q1 FY18 Q1 FY19 Rs bn New business margins 19.9% 22.0% 23.2% 20.5% 24.2% NBM impact of Profit after tax (PAT) 8.2 8.9 11.1 3.2 3.8 the Product Shareholder’s surplus 1.4 1.4 2.6 0.6 0.7 Committee Underwriting profits 6.8 7.5 8.5 2.5 3.1 recommendations on Surrender valu
Slide 6: Capital position
Capital position Rs bn Dividend paid 1.7 2.2 2.6 3.3 - - New business growth 80.0 36% 18% 33% 32% 18% 62% 230% 210% 70.0 196% 198% 198% 197% 192% 192% No capital 190% 60.0 55.7 infusion 52.1 required even if 170% 50.0 45.0 NB APE grows 13.4 42.1 11.3 150% at CAGR of 40.0 34.3 50% in the 10.8 9.1 14.
Slide 7: Maintained consistent balance in product and distribution
Maintained consistent balance in product and distribution Balanced product mix (based on Individual APE) Stable distribution mix (based on Financial Individual savings mixAPE) 9% 9% 9% 8% 11% 4% 5% 5% 7% 5% 5% 4% 5% 9% 11% 14% 5% 8% 15% 19% 11% 12% 11% 30% 28% 31% 10% 11% 35% 28% 75% 72% 71% 68% 65%
Slide 8: Continued focus on protection
Continued focus on protection Opportunity Focus areas Rising protection gap Easy accessibility India has the highest protection1 gap: Gap has increased Simplified products with wide options: Selling products with over 4x in last 15 years multiple riders option with limited underwriting (Credit p
Slide 9: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) FY16 FY17 FY18 CAGR Q1 FY18 Q1 FY19 Growth Key Metrics (Rs bn) New Business Premium (Indl+Group) 64.9 86.2 113.5 32% 16.5 26.8 62% Renewal Premium (Indl+Group) 98.3 108.2 122.1 11% 20.5 23.8 16% Total Premium 163.1 194.5 235.6 20% 37.0 50.6 37% Individual APE
Slide 10: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY16 FY17 FY18 Q1 FY18 Q1 FY19 Key Ratios Overall New Business Margins (post overrun) 19.9% 22.0% 23.2% 20.5% 24.2% (1 ) Operating Return on EV 20.7% 21.7% 21.5% 22.0% 18.4% Operating Expenses / Total Premium 11.6% 12.6% 13.5% 15.4% 14.4% Total Commissions /
Slide 11: Key differentiators of HDFC Life
Key differentiators of HDFC Life Balanced Market-leading Focus on business mix product innovation profitable growth Developing multiple channels of Effective risk management Leveraging emerging profit 1 growth and driving contextual, need-based product distribution 2 driving product designs that cat
Slide 12: Balanced business mix
Balanced business mix Bancassurance (65% share) Agency (11% share) HDFC group entities sourced 13% of total Launched specialised "Agency LIFE" program last group business and 29% of total new year with greater focus on recruiting quality agents, business in Q1 FY19 improving agent training and p
Slide 13: Market-leading product innovation
Market-leading product innovation Click2Protect Health: Life and indemnity-based health cover under a single plan- combination product with a stand-alone health insurer Click 2 Protect: Partnership Industry-leading with non-life Low-cost protection product insurer protection series Cardiac Care: Pro
Slide 14: Focus on profitable growth
Focus on profitable growth Differentiated products with profit leadership New partners are widening customer base potential Protection play: Retirement Composite Small Finance Banks & Rural innovators Payment apps Health, CI, ADB, Term products products NBFCs Integration with new ecosystems will dri
Slide 15: Reimagining insurance: Differentiators
Reimagining insurance Segregation of systems of records • Technology: from back office function to • Data lake Differentiators • and system of engagement arrowhead • Customer 360 • Improved CRM platform • From digitizing the data to source data • Alternative data sources • Enhanced security being di
Slide 16: Quality of Board and Management
Quality of Board and Management Seasoned and stable senior management team, with decades of experience in financial services Track record of delivering consistent results across business cycles Active well-informed and independent Board oversees how the management serves and protects the interests o
Slide 17: Performance of wholly-owned subsidiary companies
Performance of wholly-owned subsidiary companies HDFC Pension Fastest growing Pension Fund Manager under the National Pension System (NPS) architecture with AUM of Rs 30.2 bn as on 30th Jun 2018 (113% YoY growth) Consistently gaining market share HDFC Pension ranks #1 across all the categories
Slide 18: Agenda
Agenda Performance Snapshot B Additional Business Information India Life Insurance 18
Slide 19: Assets under management
Assets under management 24% 16% 22% 1,350 11% 16% 30% 1,150 -20% 950 -70% 750 1,066 1,096 -120% 550 917 948 742 -170% 350 150 -220% 31st Mar 2016 31st Mar 2017 31st Mar 2018 30th Jun 2017 30th June 2018 AUM in Rs bn Growth in AUM vs LY Continued to rank1 amongst top 3 private players, in terms of
Slide 20: Channel wise product mix
Channel wise product mix Channel summary1 Segment FY15 FY16 FY17 FY18 Q1 FY18 Q1 FY19 Banca2 Par 10% 24% 30% 26% 26% 24% Non par protection 2% 2% 1% 1% 1% 3% Non par others 12% 9% 8% 9% 7% 8% UL 75% 66% 61% 64% 66% 65% Agency Par 55% 56% 57% 48% 53% 54% Non par protection 12% 13% 11% 11% 13% 13% Non
Slide 21: Individual persistency at channel and segment level – Q1 FY19
Individual persistency at channel and segment level – Q1 FY19 Persistency across channels 88% 83% 80% 83% 78% 77% 75% 75% 75% 70% 68% 72% 63% 65% 62% 55% 56% 51% 48% 49% Agency Banca Direct and Broker Overall 13th month 25th Month 37th Month 49th Month 61st Month Persistency across segments 92% 94%
Slide 22: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) Overall Q1 FY19:14.7 (Q1 FY18: 14.1) Q1 FY19:36.9 (Q1 FY18: 37.1) UL Pension 12 UL Pension 53 12 52 UL Life 11 UL Life 39 11 40 Par Savings 15 Par Savings 37 15 37 Par Pension 13 Par Pension 50 13 49 Non-par Heal
Slide 23: Analysis of change in IEV – Q1 FY19
Analysis of change in IEV – Q1 FY19 Analysis of change in EV (Rs bn) Operating Return on 6.6 Embedded Value1: 18.4% 0.5 0.1 156.9 152.2 3.5 2.5 - -1.9 Change in Post over- Operating Dividend Expected Economic operating run VNB variances and return on variances Capital existing assum ptions and m ode
Slide 24: Indian Embedded Value (IEV) – Q1 FY19
Indian Embedded Value (IEV)1 – Q1 FY19 Rs bn Value of InForce business (VIF) 48.3 156.9 140 120 115.3 108.7 100 -0.2 -1.1 -5.4 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) (PVFP
Slide 25: Value of new business (VNB) and NBM walkthrough
Value of new business (VNB) and NBM walkthrough1 Rs bn NBM 20.5% - 1.2% 1.7% 0.7% 24.2% 0.08 2.49 0.18 0.13 0.37 1.74 - Q1 FY18 VNB Impact of higher Change in New Business Expense impact Q1 FY19 VNB 2 APE assumptions Profile Higher VNB due to growth in new business and increasing focus on protecti
Slide 26: Sensitivity analysis – FY18
Sensitivity analysis – FY18 Change in VNB Analysis based on key metrics1 Scenario % Change in VNB2 % Change in EV Margin2 Change in Increase by 1% 0.27% 0.06% -1.80% Reference rate Decrease by 1% -1.71% -0.40% 1.93% Equity market Decrease by 10% -1.24% -0.29% -1.84% movement2 Increase by 10% -5.63%
Slide 27: Operating expense trend
Operating expense trend -1.1% 0.1% 15.4% 14.4% Q1 FY18 Fixed expenses Variable expenses Q1 FY19 Notes: 1. Fixed costs include employee, infrastructure, information technology costs and any other costs which are fixed in nature 27 2. Variable costs include stamp duty, medical fees, sales incentives,
Slide 28: Bancassurance partners and cross-selling trends
Bancassurance partners and cross-selling trends Increasing customer base provides unique 25 opportunity to cross-sell1 Banks 7.7% 111 6.2% NBFCs 5.5% 3.5% 18 1.6% MFIs FY15 FY16 FY17 FY18 Q1 FY19 Wide access through our 163 bancassurance and 26 non-traditional 9 ecosystem partnerships provides us
Slide 29: Agenda
Agenda Performance Snapshot Additional Business Information C India Life Insurance
Slide 30: Growth opportunity – Under-penetration vs global benchmarks
Growth opportunity – Under-penetration vs global benchmarks Life insurance penetration Life insurance density US$ Protection gap (2014) (2017) (2017) 17.9% 6.756 92.2% 88.3% 14.6% 78.4% 73.3% 72.5% 70.2% 4,195 56.3% 56.0% 3,835 6.6% 6.3% 2,411 3.6% 3.3% 339 2.8% 2.7% 237 16.4% 225 55 India India Mal
Slide 31: Growth opportunity – Favourable demographics
Growth opportunity – Favourable demographics Life expectancy (Years)1 Population composition (bn)1 75.0 1.3 1.6 1.7 6% 9% 15% 71.9 56% 61% 67.6 60% 38% 30% 25% 2015 2035 2055 2015 2035 2055 Less than 20 years 20-64 years 65 years and above India's insurable population is anticipated to touch 750 m
Slide 32: Life insurance – A preferred savings instrument
Life insurance – A preferred savings instrument Household savings composition Financial savings mix 23% 25% 22% 16% 3% 11% 11% 12% 15% 9% 13% 18% 16% 15% 51% 52% 26% 67% 58% 25% 65% 67% 50% 44% 49% 48% 42% 33% FY07 FY10 FY13 FY17 FY07 FY10 FY13 FY17 Financial savings Physical savings Currency & depo
Slide 33: Industry new business trends
Industry new business1 trends 450 40, Sensex Private Players LIC 400 35, 357 350 30, Individual WRP in Rs bn 304 Individual WRP in Rs. Bn 288 292 285 300 287 278 260 266 261 269 273 25, 262 245 250 230 227 Sensex 208 214 20, 203 200 200 Sensex 175 178 172 143 15, 150 10, 100 61 52 50 5,0 0 - FY07 FY
Slide 34: Private industry – Market share trends
Private industry – Market share trends Top 7 private players vs other players 70% 72% 71% 72% 73% 75% 75% 76% 30% 28% 29% 28% 27% 25% 25% 24% FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1 FY19 Rest Private Top 7 Amongst private insurers, insurers with a strong bancassurance platform continue to dominate w
Slide 35: 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 67% 60% 63% 4% 6% 7% 9% 10% 10% 57% 5% 12% 5% 5% 3% 52% 51% 49% 54% 4% 5% 4% 3% 3% 48% 8% 6% 3% 3% 3% 4
Slide 36: Annexures
Annexures
Slide 37: Revenue and Profit & Loss A/c
Revenue and Profit & Loss A/c Rs bn Particulars FY17 FY18 Q1 FY18 Q1 FY19 Gross Premium Income 194.4 235.6 37.0 50.6 Reinsurance (net) (1.7) (1.9) (0.4) (0.6) Net Premium Income (A) 192.7 233.7 36.6 50.0 Income from Investments Policyholders 111.4 86.0 27.7 18.0 Shareholders 2.3 2.8 0.7 0.8 Total In
Slide 38: Balance Sheet
Balance Sheet Rs bn 31st Mar 31st Mar 30th Jun 30th Jun Particulars 2017 2018 2017 2018 SOURCES OF FUNDS Capital invested (Share capital + Premium) 21.9 23.3 22.0 23.3 Reserves and Surplus 16.2 23.9 19.3 27.7 Credit / (Debit) Fair Value Change Account 0.3 0.3 0.3 0.1 Sub-Total 38.4 47.5 41.6 51.2 Po
Slide 39: Product committee recommendation
Product committee recommendation The non-linked product regulations prescribe the minimum surrender value payable on surrender in each policy year as a certain % of the total premiums paid ranging from 30% in initial years to 90% of the premiums paid in later years. The surrender value of bonuse
Slide 40: 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 41: 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 42: Embedded Value: Economic assumptions
Embedded Value: Economic assumptions1 Forward rates % Spot rates % Years As at Jun 30, 2018 As at Jun 30, 2017 As at Jun 30, 2018 As at Jun 30, 2017 1 7.22 6.42 6.98 6.22 2 8.14 6.59 7.40 6.30 3 8.56 6.88 7.67 6.42 4 8.73 7.12 7.85 6.53 5 8.78 7.29 7.96 6.63 10 8.55 7.52 8.13 6.92 15 8.40 7.54 8.12
Slide 43: 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 44: 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 45: Thank you
Thank you Superbrand
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