Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — Investor Presentation (2018)
44 slides from Hdfc Life Insurance's investor presentation, 2018
Slide 1: HDFC Life Insurance Investor presentation – FY18
HDFC Life Insurance Investor presentation – FY18
Slide 2: Agenda
Agenda A Performance Snapshot Additional Information CSR Activities and Awards India Life Insurance 2
Slide 3: Company overview
Company overview Financial snapshot 13M Total premium VNB1 Persistency Total NB IEV1 AUM Net-worth NB margin 61M Growth % Growth % EVOP % Growth % ROE (Post overrun)1 Persistency Rs 235.6 bn Rs 113.5 bn Rs 12.8 bn Rs 152.2 bn Rs 1,066.0 bn Rs 47.2 bn 87% 21% 32% 23.2% 21.5% 16% 26.0% 51% Operational
Slide 4: Strong premium growth and market positioning
Strong premium growth and market positioning Consistent growth across premium categories1 (Rs bn) 235.6 21% 194.5 19% 66.1 33% 163.1 10% 148.3 23% 49.6 56% 31.9 24% 25.6 52% 10% 122.1 13% 98.3 5% 108.2 93.4 16% 29.3 24% 33.0 13% 36.6 11% 47.4 30% FY15 FY16 FY17 FY18 Total APE 31.9 37.1 41.9 55.3 Tot
Slide 5: Driving balance in product and distribution
Driving balance in product and distribution Balanced product mix (based on Individual APE) Stable distribution mix (based on Individual APE) 11% 9% 9% 9% 5% 4% 5% 5% 5% 4% 5% 9% 9% 11% 14% 5% 13% 11% 12% 22% 28% 11% 30% 35% 73% 75% 72% 71% 62% 56% 57% 53% FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 ULIP
Slide 6: Diversified distribution platform driving growth across cycles
Diversified distribution platform driving growth across cycles Select bancassurance partners Bancassuarance and non 149 bancassurance partners (10 25 traditional partners added in Q4 FY18) Banks ecosystem partners Top 15 bancassurance partners have over 11,200 branches 97 22 partners across no
Slide 7: Continued innovation across products and distribution
Continued innovation across products and distribution Pension guaranteed product New Fast growing number of lives insured on group platform (In mm) Offers attractive guarantee immediately, on annuity income that starts from a chosen 32.2 retirement date in the future 19.8 Cardiac care product 14.2
Slide 8: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) FY16 FY17 FY18 CAGR Key Metrics (Rs bn) New Business Premium (Indl+Group) 64.9 86.2 113.5 32% Renewal Premium (Indl+Group) 98.3 108.2 122.1 11% Total Premium 163.1 194.5 235.6 20% Individual APE 34.3 37.4 48.9 19% Group Premium (NB) 28.3 44.2 54.1 38% (1 ) Pr
Slide 9: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY16 FY17 FY18 Key Ratios Overall New Business Margins (post overrun) 19.9% 22.0% 23.2% (1 ) Operating Return on EV 20.7% 21.7% 21.5% Operating Expenses / Total Premium 11.6% 12.6% 13.5% Total Commissions / Total Premium 4.3% 4.1% 4.6% (2 ) Return on Invested
Slide 10: Profits breakup
Profits breakup Rs bn Profit after tax (PAT) 7.9 8.2 8.9 11.1 Shareholder’s surplus 1.6 1.4 1.4 2.6 Underwriting profits 6.3 6.8 7.5 8.5 19.1 Underwriting profits 14.5 14.6 breakup1 12.7 -6.4 -7.7 -7.1 -10.6 FY15 FY16 FY17 FY18 -10.0 New Business Strain Existing Business Surplus Steady increase in
Slide 11: Analysis of change in IEV
Analysis of change in IEV Analysis of change in EV – FY18 (Rs bn) Operating Return on 26.8 Embedded Value1: 21.5% 2.6 152.2 12.8 -2.0 1.6 0.6 1.0 0.4 10.4 Economic 124.7 variances Dividend Mortality Expenses Post and Capital Change in Persistency and Other over-run injections variance operating vari
Slide 12: Indian Embedded Value (IEV)
Indian Embedded Value (IEV)1 Rs bn Value of InForce business (VIF) 48.5 152.2 140 120 110.3 103.6 100 -0.2 -1.1 -5.3 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)2 and Gua
Slide 13: Sensitivity analysis – FY18
Sensitivity analysis – FY18 % Change in Change in VNB % Change in Analysis based on key metrics1 Scenario VNB2 Margin2 EV 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 14: Capital position
Capital position Rs bn 80.0 230% 70.0 196% 198% 210% 192% 192% 190% 60.0 52.1 170% 50.0 42.1 11.3 150% 40.0 34.3 9.1 130% 28.0 13.6 30.0 8.4 11.0 110% 6.6 20.0 8.6 7.1 90% 27.2 10.0 22.0 14.3 17.3 70% - 50% Mar 31, 2015 Mar 31, 2016 Mar 31, 2017 Mar 31, 2018 RSM @100% Incremental RSM @150% Surplus C
Slide 15: Delivering superior customer service
Delivering superior customer service Enhancing customer service High claims settlement ratio Digital touch-points - “My Account” online portal, “HDFC Life” mobile app and email service; Overall2 95.3% 97.4% 99.2% 99.1% Traditional touch-points - call center support, IVRS1 95.0% 97.6% 97.8% and bra
Slide 16: Update on key focus areas (1/2)
Update on key focus areas (1/2) Employee productivity increased by 10% to Rs 2.8 mn Improving Average ticket size per policy has increased to Rs 46,796 efficiency Leveraging usage of mobility tools for productivity improvement Total number of bancassurance relationships increased to 149 (FY1
Slide 17: Update on key focus areas (2/2)
Update on key focus areas (2/2) ~99.9% policy applications submitted via digital medium ~74% of Renewal payment through online modes ~96% of front line sales force active on digital platforms Enhancing use 54% of post sales verification calls completed through InstaVerify (video based of tec
Slide 18: Key differentiators of HDFC Life
Key differentiators of HDFC Life 1 Balanced business mix with a focus on customer centricity enabling growth across business cycles 2 Reimagining Life Insurance: innovation and digital enablement in distribution, product design and customer service 3 Strong financial performance across business cycl
Slide 19: Agenda
Agenda Performance Snapshot B Additional Information CSR Activities and Awards India Life Insurance 19
Slide 20: Assets under management
Assets under management Rs bn AUM trend Change in AUM 33% 24% 16% 175 1,350 11% 30% 149 1,150 40 -20% 5 950 -70% 77 85 750 1,066 -120% 917 550 742 670 59 -170% 350 58 150 -220% 31st Mar 2015 31st Mar 2016 31st Mar 2017 31st Mar 2018 31st Mar 2017 31st Mar 2018 Net Fund inflow Net investment income A
Slide 21: Channel wise product mix
Channel wise product mix Channel summary1 Segment FY15 FY16 FY17 FY18 Banca2 Par 10% 24% 30% 26% Non par protection 2% 2% 1% 1% Non par others 12% 9% 8% 9% UL 75% 66% 61% 64% Agency Par 55% 56% 57% 48% Non par protection 12% 13% 11% 11% Non par others 9% 6% 7% 8% UL 24% 25% 26% 33% Direct and Broker
Slide 22: Persistency at channel and segment level – FY18
Persistency1 at channel and segment level – FY18 Persistency across channels 89% 84% 80% 76% 78% 75% 68% 73% 69% 62% 63% 55% 56% 50% 50% Agency Banca Direct and Broker 13th month 25th Month 37th Month 49th Month 61st Month Persistency across segments 92% 93% 85% 85% 84%82% 78% 73% 73% 76% 69% 67%65%
Slide 23: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) Overall FY18:14.4 (FY17: 14.0) FY18: 37.2 (FY17: 36.6) 11 UL Pension 53 UL Pension 51 12 11 UL Life 39 UL Life 39 11 15 Par Savings 37 Par Savings 37 15 13 Par Pension 49 Par Pension 50 13 11 Non-par Health 34 No
Slide 24: Agenda
Agenda Performance Snapshot Additional Information C CSR Activities and Awards India Life Insurance 24
Slide 25: Swabhimaan – Our CSR Initiative (1/2)
Swabhimaan – Our CSR Initiative (1/2) Focus on 4 key areas of intervention, while widening the scope of including other themes under CSR initiative. Spent Rs 96 mm in FY18 across below initiatives: Environmental Education Health Livelihood Others Sustainability Promoting Promoting health Skill train
Slide 26: Swabhimaan – Our CSR Initiative (2/2)
Swabhimaan – Our CSR Initiative (2/2) Our CSR framework covers; Education, Health, Livelihood and Environmental Sustainability as areas of focus. Over 1 Lakh beneficiaries being impacted through 15 plus projects this year. Active involvement by employees in various Swabhimaan initiatives such
Slide 27: Awards and accolades – FY18 (1/2)
Awards and accolades – FY18 (1/2) Won the Gold award at the Got award for Best ULIP policy LACP Vision Awards Indian Digital Media of the year “Click2Invest” by 2016/17 for the third Excellence in Financial Awards for Best use of Money Today consecutive year Reporting for Annual Report FY WAPP/HTML
Slide 28: Awards and accolades – FY18 (2/2)
Awards and accolades – FY18 (2/2) Quality Circle Competition - Indian Society for Quality Celent 2017 award (ISQ) Technology Initiative of the Year Digital Crest Award 2017 Data Center Summit Frost & Sullivan - Project Evaluation and Recognition Program CISO 100 awards The Economic Times' Great Info
Slide 29: Agenda
Agenda Performance Snapshot Additional Information CSR Activities and Awards D India Life Insurance 29
Slide 30: Growth opportunity – Under-penetration vs global benchmarks
Growth opportunity – Under-penetration vs global benchmarks Life insurance Life insurance density Protection gap (2014) penetration (2016) US$ (2016) 7,066 16.7% 16.2% 92.2%88.3% 78.4% 73.3% 72.5% 70.2% 3,599 2,895 56.3% 56.0% 7.2% 2,803 5.5% 3.7% 3.2% 2.7% 2.3% 298 16.4% 222 190 47 India India Hong
Slide 31: Growth opportunity – Favourable demographics
Growth opportunity – Favourable demographics Life expectancy (Years)1 Population composition (bn)2 75.9 1.2 1.5 1.7 5% 8% 14% 71.7 55% 60% 61% 65.5 40% 32% 26% 2010 2030 2050 2010 2030 2050 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% 19% 3% 11% 11% 12% 15% 9% 13% 18% 16% 15% 51% 52% 26% 67% 59% 25% 65% 67% 50% 44% 49% 48% 41% 33% FY07 FY10 FY13 FY16 FY07 FY10 FY13 FY17 Financial savings Physical savings Currency & depo
Slide 33: Industry new business trends
Industry new business1 trends 450 Sensex Private Players LIC 40 400 35 350 30 304 298 Individual WRP in Rs. Bn 292 287 300 288 273 285 266 269 262 25 260 261 Individual WRP in Rs bn 245 250 230 227 227 214 20 203 200208 200 175 178 Sensex 172 138 15 150 143 10 100 72 50 5, 0 - FY06 FY07 FY08 FY09 FY
Slide 34: Private industry – Market share trends
Private industry – Market share trends Top 7 private players vs other players 65% 66% 69% 69% 71% 75% 76% 78% 35% 34% 31% 31% 29% 25% 24% 22% FY11 FY12 FY13 FY14 FY15 FY16 FY17 11M FY18 Rest Private Top 7 Amongst private insurers, insurers with a strong bancassurance platform continue to dominate
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 68% 67% 63% 60% 6% 4% 6% 7% 9% 10% 10% 57% 5% 5% 52% 51% 5% 5% 5% 4% 3% 49% 9% 8% 6% 4% 3% 3% 3% 48% 43
Slide 36: Annexures
Annexures
Slide 37: Revenue and Profit & Loss A/c
Revenue and Profit & Loss A/c Rs bn Particulars FY17 FY18 Gross Premium Income 194.4 235.6 Reinsurance (net) (1.7) (1.9) Net Premium Income (A) 192.7 233.7 Income from Investments Policyholders 111.4 86.0 Shareholders 2.3 2.8 Total Income from Investments (B) 113.7 88.8 Other Income (C) 1.0 1.2 Tota
Slide 38: Balance Sheet
Balance Sheet Rs bn Particulars 31st Mar 2017 31st Mar 2018 SOURCES OF FUNDS Capital invested (Share capital + Premium) 21.9 23.3 Reserves and Surplus 16.2 23.9 Credit / (Debit) Fair Value Change Account 0.3 0.3 Sub-Total 38.4 47.5 Policy Liabilities 323.8 423.2 Provision for Linked Liabilities 508.
Slide 39: 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 40: 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 41: Embedded Value: Economic assumptions
Embedded Value: Economic assumptions1 Forward rates % Spot rates % Years As at Mar 31, As at Mar 31, As at Mar 31, As at Mar 31, 2018 2017 2018 2017 1 6.57 6.18 6.36 6.00 2 7.26 6.74 6.69 6.26 3 7.72 7.08 6.94 6.45 4 8.02 7.40 7.13 6.62 5 8.20 7.61 7.28 6.77 10 8.30 7.85 7.64 7.14 15 8.10 7.86 7.71
Slide 42: 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 43: 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 44: Thank you
Thank you Superbran