Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — Q1 FY25 Earnings Presentation
46 slides from Hdfc Life Insurance's earnings presentation, 2024
Slide 1: Investor Presentation – Q1 FY25
Investor Presentation – Q1 FY25
Slide 2: Executive summary: Q1 FY25
Executive summary: Q1 FY25 Revenue & Scale Profitability & Cost Customer & Capital Rs. Bn 24.7 Value of New Rs (Bn.) 7.2 CY 88% Individual 13th month Business APE persistency Growth 31% (VNB) Growth 18% PY 87% Rs (Bn.) 64.1 CY 25.0% Overall 99.7% Renewal New Business Claim settlement premium Margin
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 Individual APE Renewal premium VNB 334 36.7 115 35.0 61 155 34 98 26.8 FY16 FY20 FY24 FY16 FY20 FY24 21.9 19.2 15.4 12.8 Protection new business1 Annuity new business 9.2 95.2 48.8 47.6
Slide 5: 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 6: Robust delivery across key metrics (1/2)
Robust delivery across key metrics (1/2) Strong individual WRP growth Focus on increasing customer base (NOPs in 000’s) Pvt. mkt 16.5% 15.4% 16.4% 17.1% share Overall mkt 10.8% 10.4% 10.6% 11.4% 11% 22% share 2-year CAGR: 20% 112.6 113.8 1,166 1,054 253 24.5 19.0 207 FY23 FY24 Q1 FY24 Q1 FY25 FY23 F
Slide 7: Robust delivery across key metrics (2/2)
Robust delivery across key metrics (2/2) Rs bn Stable Persistency Healthy VNB growth 26.2% 25.0% 87% 88% ▪ Multiple pools of ▪ Focus on quality of profitability contributing business and providing to VNB accretion 53% 56% superior customer experience_ 7.2 ▪ YoY growth of 18% (2- 6.1 year CAGR: 18%)
Slide 8: 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 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 FY22 FY23 FY24 Q1FY24 Q1FY25 Rs bn Profitable growth 25.0% Economic New business Margin 27.4% 27.6% 26.3% 26.2% Profit Value of new business 26.8 36.7 35.0 6.1 7.2 Profit after tax (PAT) 12.1 4.2 4.8 distribution 13.6 15.7 Diversified Accounting mix Profit Underwriting pro
Slide 12: Profit 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 13: Analysis of change in IEV
Analysis of change in IEV EVOP: 17.4 Rs bn EVOP%1: 15.5% Profitable growth 4.0 0.0 7.2 0.9 496.1 474.7 9.3 VNB Operating Economic Capital Unwind variances variances injection distribution Diversified mix 344.1 329.4 Customer first Adjusted Net worth (ANW) Value of in-force business (VIF) & governanc
Slide 14: Diversified distribution mix
Diversified distribution mix Agency: segmented geographical growth HDFC Bank: best in class solutions Profitable growth 2.33 lakh agents - top three agency force amongst private life insurers Widening outreach across all customer segments distribution Diversified Segregating Focus (tier 1) and Growt
Slide 15: 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% 45% 28% #2 #1 #1 growth #2 5.9 13,346 4.7 11,041 distribution Diversified mix 3,365 1.5 3,340 1.2 Customer first FY23 FY24
Slide 16: Product mix across key channels
Product mix across key channels1 Segment FY23 FY24 Q1 FY24 Q1 FY25 Segment FY23 FY24 Q1 FY24 Q1 FY25 UL 24% 40% 32% 42% UL 10% 26% 12% 28% Profitable Agency Par 27% 22% 26% 12% Par 33% 29% 32% 23% growth Banca Non par savings 42% 30% 30% 38% Non par savings 49% 33% 44% 36% Term 3% 4% 5% 4% Term 6% 7
Slide 17: Key product innovations across categories in FY24
Diversified Risk Technology, Profitable Customer distribution management digital & growth first mix & governance Analytics about HDFC Life Learn more products Key product innovations across categories in FY24 17 17
Slide 18: 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 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 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 21: Building next-gen of 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 22: Project Inspire: Benefits of Incentive & Commission Management and Virtual Office
Project Inspire: Benefits of Incentive & Commission Management and Virtual Office Overhauling our data architecture to make it more scalable and accurate in real-time Profitable growth Limited customizable, management System-driven nudges for Commission Incentive & persona-based dashboards improving
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 (Q1 FY25) 89% 87% 88% 88% 79% 77% 77% 79% 71% 73% 71% 74% 70% 69% 69% 68% 58% 59% 56% 55% Agency Banca Direct Company 13th month 25th month 37th month 49th month 61st month Across key segments PY (Q1 FY24) 89% 88% 87% 87% 83% 84% 80% 80% 79% 75
Slide 25: Steady VNB trajectory
Steady VNB trajectory Rs bn 18% 1 NBM% 26.2% 0.0% (0.2%) (1.3%) 0.3% 25.0% VNB Growth 2-year VNB CAGR: 18% 25 Note: Numbers may not add up due to rounding off 25 1. Reflects the impact of difference in mix of segment/distribution channel/tenure/age/sum assured multiple, amongst others
Slide 26: Sensitivity analysis – FY24
Sensitivity analysis – FY24 Change in VNB Analysis based on key metrics Scenario % Change in EV Margin 1 Change in Increase by 1% -1.2% -2.7% Reference rate Decrease by 1% 0.8% 2.6% Equity Market Decrease by 10% -0.2% -1.5% movement Increase by 10% -0.6% -0.1% Persistency (Lapse rates) Decrease by 1
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: Agency – Scaling up for future growth
Agency – Scaling up for future growth Driving sustainable growth through strategic investments Levers for future growth Agency APE (INR billion) Number of Agents (000’s) 214 On-boarding high performing profiles - retired govt servants & 20.7 financial distributors 115 11.8 Higher proportion of prote
Slide 29: 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: Tier 1 Tier 2/3 New branch Hyper-localization Insurer 1 77% Insurer 2 28% launch - Modular approach Insurer 2 57% Insur
Slide 30: 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 36K+ Life’s APE closer to org closer to
Slide 31: ESG at a glance
ESG at a glance The 5 Pillars of ESG Environment Social Governance • Wellness and Wellbeing Employee Resource Group • ESG governed by the Board CSR & ESG • Board approved Environment and (ERG) with 367 members and led by a senior sales 1. Ethical Conduct & Committee and driven by the ESG Management
Slide 32: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) Rs bn. Q1 FY25 Q1 FY24 Growth FY24 FY23 FY22* New Business Premium (Indl. + Group) 64.0 58.7 9% 296.3 290.9 241.5 Renewal Premium (Indl. + Group) 64.1 58.0 10% 334.5 284.5 218.1 Total Premium 128.1 116.7 10% 630.8 575.3 459.6 Individual APE 24.7 18.8 31% 115.
Slide 33: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) Q1 FY25 Q1 FY24 FY24 FY23 FY22* Overall New Business Margins (post overrun) 25.0% 26.2% 26.3% 27.6% 27.4% Operating Return on EV 15.5% 16.0% 17.5% 19.7% 16.6% Total Expenses (OpEx + Commission) / Total Premium 21.4% 19.8% 19.4% 19.8% 16.5% (1) Return on Equit
Slide 34: 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 35: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) Q1 FY25: 23.5 (Q1 FY24: 22.8) Q1 FY25: 36.4 (Q1 FY24: 36.0) UL 14 UL 37 13 37 Par 34 Par 35 35 34 Non-par Health 18 Non-par Health 34 19 32 Non-par Savings 21 Non-par Savings 37 13 38 Non-par Protection 36 Non-pa
Slide 36: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Life insurance in India Page 36
Slide 37: 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 38: 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 39: 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 40: 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 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: Indian savings in the global context
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 43: Government bond auctions
Government bond auctions Government Bonds – Tenorwise Issuance Rs cr 21% 28% 29% 34% 35% 35% 42% 79% 72% 71% 66% 65% 65% 58% FY19 FY20 FY21 FY22 FY23 FY24 2M FY25 <=15 yrs >15 yrs FY19 FY20 FY21 FY22 FY23 FY24 2M FY25 <=15 yrs 3,82,941 4,44,000 10,01,835 8,48,000 10,04,000 9,28,000 1,34,000 >15 yrs
Slide 44: Industry new business trends
Industry new business trends 1 Product mix 68% Private Players LIC 61% 57% 739 51% 49% 51% 49% 684 43% 39% Individual WRP in Rs bn 32% 452 401 356 351 287 291 305 245 FY15 FY17 FY19 FY21 FY23 Unit Linked Conventional 144 2 71 Distribution mix 9% 10% 14% 16% 15% 5% 3% 3% FY17 FY19 FY21 FY23 FY24 Q1 F
Slide 45: 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 46: Thank You
Thank You FY24 Annual FY24 ESG Q1 FY25 ESG Sustainability Report Report Deck Factsheet
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