HDFC Life Insurance has been able to retain most of the key employees, distributors and agents after the Exide Life merger. MD & CEO Vibha Padalkar tells FE’s Mithun Dasgupta that the insurance company has already started working on rationalization of branches as the merged entity won’t probably need around 100-150 branches. Excerpts:

What were the factors that contributed to the growth in consolidated net profit?

The main reason is that our Backbook has generated almost 35% more profit at Rs 1,990 crore for H1FY23 (on a pre-merger basis). For the same period last year, the Backbook was Rs 1,480 crore. Insurance companies make money from their Backbook only when policyholders pay their premium. More premium they pay, more profits are generated. Over the years, we have been slowly increasing our 13th month and 61st month persistency ratios. So, our Backbook has typically grown about 18-20%. This 35% growth is super-normal in a way.

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The company announced completion of the Exide Life merger earlier this month after the final approval from regulator Irdai. How will this help the growth of the company?

Our market share has gone up from standalone 14.8% to 16.1%. That is the fairly significant one. Addition to our agency channel post the merger is 30% higher, and most of the metrics are on track. Solvency ratio continues to remain at 210%. Our embedded value has gone up by about 10% at around Rs 36,000 crore as on September 30, 2022. We have been able to retain most of our key employees, distributors and agents. And, the significant market share gain that you see, hopefully we can build on that collectively.

Is there any plan on rationalisation of branches?

Yes, we have already started working on that. We have about 380 branches, Exide Life has about 200 branches. So, totally we have just short of 600 branches. Now, out of that, probably 100-150 branches we don’t need. Not everything will come out of Exide Life branches, we will close HDFC Life branches or Exide Life branches depending on location and size of the branches, and lease agreements.

The company has raised around Rs 2,000 crore by allotting equity shares to HDFC on a preferential basis. Is it mainly for supporting business growth?

It is for growth capital and also partially for the Exide Life transaction, where we paid in cash. The cash (cash pay-out in the deal was Rs 726 crore) in any way has gone out of our pocket. To replenish that and as well as for some growth capital, we need the fund. Markets are facing a lot of volatility, it is good to have some capital so that we don’t have to worry about as and when we see growth opportunities.

On Irdai’s growth guidelines for insurers, you earlier said the company would continue to talk to the regulator. Any development on that?

They (Irdai) expect us to continue to focus on the regions that are allocated to us. They want us to go into the grassroots level for the growth targets that they have given us. But, right now it is not mandatory, it is more in terms of cajoling us to focus on the regions that we have been given in terms of business growth. They are also looking at how we can get into the bottom of the pyramid and get to the people who don’t have any insurance. So, it is more a dialogue rather than a diktat.

So, there is no revision of the suggested growth targets…

Nothing further as such. Yes, there are some discussions that are going on. They (Irdai) asked us to provide some data, which we keep providing.