Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — 9M FY19 Earnings Presentation
43 slides from Hdfc Life Insurance's earnings presentation, 2019
Slide 1: HDFC Life Insurance Investor presentation – 9M FY19
HDFC Life Insurance Investor presentation – 9M FY19
Slide 2: Agenda
Agenda A Performance Snapshot Key Differentiators Annexures India Life Insurance 2
Slide 3: Executive summary: 9M FY19
Executive summary: 9M FY19 29% Total premium YoY 20% IGAAP profit YoY 28.1% Protection share growth growth basis NB premium Total Prem: Rs 188.6 bn IGAAP Profit: Rs 9.1 bn YoY growth: 45% 24.0% VNB Margin 19.7% EVOP Ratio Value of new business: Rs 9.7 bn Embedded value: Rs 174.0 bn 3
Slide 4: Performance snapshot: 9M FY19 (1/2)
Performance snapshot: 9M FY19 (1/2) Rs bn Leadership in new business premium Sustained higher growth vs industry Total NB premium Individual WRP 113.5 47.5 99.4 86.2 36.4 70.7 29.8 32.5 FY17 FY18 9M FY18 9M FY19 FY17 FY18 9M FY18 9M FY19 #2 #1 #2 #1 #3 #3 #3 #3 Maintaining a balanced product mix acr
Slide 5: Performance snapshot: 9M FY19 (2/2)
Performance snapshot: 9M FY19 (2/2) Rs bn Industry leading VNB margins Healthy growth in Embedded Value1 22.0% 23.2% 22.2% 24.0% 21.7% 21.5% 20.4% 19.7% Value of New Business Embedded Value 12.8 174.0 152.2 144.7 9.2 9.7 124.7 7.8 FY17 FY18 9M FY18 9M FY19 FY17 FY18 9M FY18 9M FY19 VNB margins Opera
Slide 6: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) FY16 FY17 FY18 CAGR 9M FY18 9M FY19 Growth Key Metrics (Rs bn) New Business Premium (Indl+Group) 64.9 86.2 113.5 32% 70.7 99.4 41% Renewal Premium (Indl+Group) 98.3 108.2 122.1 11% 75.4 89.2 18% Total Premium 163.1 194.5 235.6 20% 146.1 188.6 29% Overall APE
Slide 7: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY16 FY17 FY18 9M FY18 9M FY19 Key Ratios Overall New Business Margins (post overrun) 19.9% 22.0% 23.2% 22.2% 24.0% (1 ) Operating Return on EV 20.7% 21.7% 21.5% 20.4% 19.7% Operating Expenses / Total Premium 11.6% 12.6% 13.5% 14.2% 13.8% Total Expenses (Opex
Slide 8: Agenda
Agenda Performance Snapshot B Key Differentiators Annexures India Life Insurance 8
Slide 9: Key Differentiators
Key Differentiators Balanced Market-leading Focus on distribution mix product innovation profitable growth Developing multiple channels of Effective risk management Leveraging emerging profit 1 growth to drive contextual, need-based product distribution 2 driving product designs that cater to innate
Slide 10: Constant endeavour to diversify distribution mix
Constant endeavour to diversify distribution mix Stable distribution mix (based on total NBP) Strong diversified network of 246 partners incl. new ecosystems 49 Banks 34% 34% 29% 42% 35% 129 14% 15% 22% NBFCs 17% 15% 22 20% MFIs 14% 24% 25% 26% 30% 32% 9 24% 26% 24% SFBs FY 16 FY 17 FY 18 9M FY18 9M
Slide 11: Focus on developing proprietary channels
Focus on developing proprietary channels Direct channel grew at a CAGR Growth in Front Line Sales (FLS) of 26% between FY14-18 productivity at 20% over last 3 years Leveraging technology to Direct simplify the customer on- Mining richer data on the back boarding process of analytics for effe
Slide 12: Expanding market through constant product innovation
Expanding market through constant product innovation Protection term insurance coverage Tiered-benefit product focused on Assured annuity rates from for loans cancer; cover from early stage a pre-determined date 2014 2017 2011 2015 2018 ULIP with minimal charges; only cost Online protection product
Slide 13: Product mix across key channels
Product mix across key channels Channel summary1 Segment FY16 FY17 FY18 9M FY18 9M FY19 Banca2 UL 66% 61% 64% 67% 71% Par 24% 30% 26% 24% 15% Non par protection 2% 1% 1% 1% 2% Non par others 9% 8% 9% 8% 12% Agency UL 25% 26% 33% 35% 26% Par 56% 57% 48% 47% 49% Non par protection 13% 11% 11% 11% 13%
Slide 14: Focus on profitable growth
Focus on profitable growth FY16 FY17 FY18 9M FY18 9M FY19 Rs bn New business margins 19.9% 22.0% 23.2% 22.2% 24.0% Profit after tax (PAT) 8.2 8.9 11.1 7.6 9.1 Robust YoY Shareholder’s surplus 1.4 1.4 2.6 1.6 1.9 growth of 20% Underwriting profits 6.8 7.5 8.5 6.0 7.2 19.1 18.0 Underwriting profits 14
Slide 15: Analysis of change in IEV
Analysis of change in IEV Rs bn Operating Return on EV: 19.7% 22.0 0.6 174.0 9.7 1.6 10.7 -0.8 152.2 Operating ESOP VNB variances Economic exercises variances Unwind 114.6 103.6 Adjusted Net worth (ANW) Value of in-force business (VIF) 59.4 48.5 IEV at 31st IEV at 31st Mar 18 Dec 18 Consistently d
Slide 16: Reimagining insurance
Reimagining insurance Faster processing through instant data 41% policies issued on the same day Real-time flow, e-KYC integration fulfillment 96% of documents uploaded digitally Robotics-led optimization has led to efficient processes 97% servicing requests1 fulfilled in 8 hours 63% of
Slide 17: Quality of Board and Management
Quality of Board and Management Experienced senior management Independent and illustrious Board Active, well-informed and independent Board oversees Seasoned senior management team with rich experience how the management serves and protects the interests of in financial services all stakeholders Tra
Slide 18: Performance of wholly-owned subsidiary companies
Performance of wholly-owned subsidiary1 companies Market share grew from 21.4% in Mar’18 to 25.0% in Dec’18 amongst all Pension Fund Managers (PFM) Saw a YoY growth of 93% in AUM to Rs 39.7 bn as on Dec 31, 2018 HDFC Pension Company ranks #1 in Corporate subscribers base, #2 amongst all PFMs i
Slide 19: Agenda
Agenda Performance Snapshot Key Differentiators C Annexures India Life Insurance 19
Slide 20: Individual persistency for key channels and segments
Individual persistency for key channels and segments Across key channels Across key segments 20 Note: 1. Calculated as per IRDAI circular (based on original premium) for period ended Dec 31, 2018 for individual business
Slide 21: Indian Embedded Value (IEV)
Indian Embedded Value (IEV)1 Rs bn 2 Significant proportion of VIF at 2/3rd of the total Embedded value TVFOG includes cost of guarantees for conventional participating and unit linked products Notes: 1. Based on internal analysis, detailed explanation of components provided in the Appendix to t
Slide 22: Value of new business (VNB) and NBM walkthrough
Value of new business (VNB) and NBM walkthrough1 Rs bn NBM 22.2% - 0.7% 0.6% 0.5% 24.0% Grew by 25% vs 9M FY18 2 3 Note: 1. Based on internal Company analysis 2. Impact of change in mainly persistency and mortality assumptions revised during annual review in March’18 22 3. Reflects the impact of dif
Slide 23: Sensitivity analysis: H1 FY19
Sensitivity analysis: H1 FY19 Change in VNB Analysis based on key metrics Scenario % Change in VNB1 % Change in EV Margin1 Change in Increase by 1% 0.85% 0.21% -2.00% Reference rate Decrease by 1% -2.30% -0.56% 2.10% Equity market Decrease by 10% -1.03% -0.25% -1.60% movement Increase by 10% -3.47%
Slide 24: Stable capital position
Stable capital position Rs bn Dividend paid 2.2 2.6 3.3 - New business growth 18% 33% 32% 41% 230% 90.0 210% 198% 80.0 192% 192% 191% 190% 70.0 60.5 170% 60.0 52.1 13.1 150% 50.0 42.1 11.3 130% 40.0 34.3 15.8 9.1 13.6 110% 30.0 8.4 11.0 20.0 8.6 90% 31.6 27.2 10.0 22.0 70% 17.3 - 50% Mar 31, 2016 Ma
Slide 25: Assets under management
Assets under management Assets Under Management Change in AUM1 Rs bn Debt 61% 59% 61% 57% 62% Equity 39% 41% 39% 43% 38% 24% 27% 1,550 11% 16% 13% 30% 127 111 1,350 -20% 38 1,150 62 -70% 950 64 750 1,177 -120% 1,066 56 1,044 550 917 25 742 -170% (7) 350 150 -220% 31st Dec 2017 31st Dec 2018 31st Mar
Slide 26: Operating expense trend
Operating expense trend Continue to focus our efforts in improving efficiency and rationalising costs through our various internal initiatives Notes: 1. One-off reversals comprise of reversal of previous year provisions relating to merger costs 2. Fixed costs include employee, infrastructure, info
Slide 27: Agenda
Agenda Performance Snapshot Key Differentiators Annexures D India Life Insurance 27
Slide 28: 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 Hong
Slide 29: 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 mi
Slide 30: 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 & depos
Slide 31: Industry new business trends
Industry new business1 trends 450 Sensex Private Players LIC 40 400 35 357 350 Individual WRP in Rs bn 30 304 288 292 285 287 300 273 278 260 266 261 269 25 262 257 245 250 230 227 214 20 203 200 208 189 Sensex 200 175 178 172 143 15 150 10 100 50 5,0 0 - FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Slide 32: Private industry: Market share trends
Private industry: Market share trends Top 7 private players vs other players Amongst private insurers, insurers with a strong bancassurance platform continue to dominate with increasing market share of the total private individual new business Notes: 1. Basis Individual Weighted Received Premium (
Slide 33: 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% 63% 6% 7% 9% 10% 10% 12% 57% 14% 52% 54% 5% 5% 5% 4% 3% 3% 51% 52% 6% 4% 3% 3% 3% 3% 48% 49% 48% 3%
Slide 34: Appendix
Appendix
Slide 35: Revenue and Profit & Loss A/c
Revenue and Profit & Loss A/c Particulars FY17 FY18 9M FY18 9M FY19 Rs bn Gross Premium Income 194.4 235.6 146.1 188.6 Reinsurance (net) (1.7) (1.9) (1.4) (1.8) Net Premium Income (A) 192.7 233.7 144.7 186.8 Income from Investments Policyholders 111.4 86.0 95.3 52.7 Shareholders 2.3 2.8 1.8 2.4 Tota
Slide 36: Balance Sheet
Balance Sheet Rs bn 31st Mar 31st Mar 31st Dec Particulars 2017 2018 2018 SOURCES OF FUNDS Capital invested (Share capital + Premium) 21.9 23.3 23.8 Reserves and Surplus 16.2 23.9 33.1 Credit / (Debit) Fair Value Change Account 0.3 0.3 0.0 Sub-Total 38.4 47.5 56.9 Policy Liabilities 323.8 423.2 501.
Slide 37: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) 9M FY19: 15.0 (9M FY18: 14.4) 9M FY19: 36.7 (9M FY18: 37.2) 11 UL 39 11 UL 40 15 37 Par Par 15 37 10 35 Non-par Health Non-par Health 11 34 14 33 Non-par Savings Non-par Savings 15 30 34 34 Non-par Protection Non
Slide 38: Indian Embedded value: Methodology and Approach (1/2)
Indian Embedded value: Methodology and Approach (1/2) Overview Indian Embedded Value (IEV) 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
Slide 39: 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 40: Embedded Value: Economic assumptions
Embedded Value: Economic assumptions1 Forward rates % Spot rates % Years As at Dec 31, 2018 As at Dec 31, 2017 As at Dec 31, 2018 As at Dec 31, 2017 1 7.00 6.55 6.77 6.34 2 7.39 7.12 6.95 6.61 3 7.65 7.55 7.09 6.83 4 7.82 7.85 7.20 7.01 5 7.93 8.07 7.28 7.16 10 8.02 8.42 7.50 7.59 15 7.95 8.38 7.56
Slide 41: 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 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 (formerly HDFC Standard Life Insurance Company Limited)
Slide 43: Thank you
Thank you Superbrand