HDFC Life Insurance reported a 6% increase in standalone net profit for FY26 at ₹1,910 crore, with GST changes and surrender norms impacting profits and business margins. MD and CEO Vibha Padalkar tells Narayanan V on growth outlook for FY27, demand for ULIPs amid volatile market and views around high distribution cost of the industry. Edited Excerpts:
Profit after tax (PAT) grew only by 6% in FY26 compared to 15% growth in FY25.
Our PAT was impacted by the GST rate cut and the labour code. We reported ₹1,910 crore in PAT, and the 6% growth is what you see optically. If we exclude the GST and labour code impact, our PAT would have been ₹2,092 crore for the full year, reflecting a growth of around 16%. Similarly, our value of new business (VNB) margin was impacted by GST (input credit loss) and surrender value regulations. VNB for FY26 stood at ₹4,034 crore, with margins of 24.2%. Excluding GST and surrender regulation impact, VNB growth was broadly in line with Annualised Premium Equivalent. Margins, excluding these impacts, would have been flat at around 25.5%.
How long will the GST and surrender guideline impact last?
At the start, we had indicated a 300 bps overall impact, which we expected to neutralise over the next few quarters. I am happy to share that in Q4, this impact has already reduced to 190 bps. We now have about 110 bps of impact left, which should reduce further over the next 3–4 months. We are taking all steps to neutralise it.
Total premiums have grown by 12% to ₹79,387 crore in FY26. Which segment contributed?
All segments did fairly well. Retail protection was a clear highlight, growing 43%, supported by lower pricing post the GST rate cut and a strengthened product portfolio. In H2FY26, pure retail protection grew by 57%, and overall sum assured increased by 28%, indicating stronger traction in pure protection. Riders also rose significantly by around 200% which is again in the form of protection. Annuities were another area of meaningful progress. Also, the 13-month persistence of unit-linked products also improved significantly. We outperformed the broader industry in two key focus areas: retail protection, which grew 43%, and the agency channel, which also grew ahead of the industry. Our private sector market share stood at 15.2% for 11MFY26.
Has market volatility impacted ULIPs?
We are seeing a significant amount of money flowing into Mutual Funds, and that appetite does not seem to have reduced. Since ULIPs also have an equity component, I expect similar enthusiasm to continue there as well. I don’t think people will necessarily surrender their policies, as they understand that returns will play out over the long term in line with economic growth. Volatility may continue, but we are not seeing any materially worrying trends at the moment. Customers appear willing to stay invested.
ULIPs account for 44% of the product mix. Will it go up further?
Rather than pushing a particular product, we are responding to market demand. Customers ultimately decide what they want, and if they prefer ULIPs, we are aligned with that. At the same time, we are trying to infuse more protection into ULIPs, which customers appreciate. In FY25, ULIPs accounted for about 45% of our mix, compared to around 40% last year. This growth has come with higher sums assured, either through riders or higher base cover, often more than 10 times the first-year premium, and in some cases up to 30–40 times. Our focus is on nudging customers towards higher life cover in the format they prefer.
What’s your outlook for FY27?
Our outlook is to grow ahead of the sector, as we have done historically. This year saw some slowdown due to macro factors, but as global uncertainties ease, we expect growth to normalise. I remain optimistic about the life insurance sector. Periods of volatility often support insurance demand. Additionally, improving yield curves should benefit non-par and annuity products. We also expect asset allocation trends to support demand for insurance products.
High distribution costs are raising concerns. Do you expect regulatory action?
Insurance is a complex product that requires significant effort before a sale is made, given its long-term nature and material amount of health component, especially in term life. Life insurance cannot be directly compared with other financial products. Having said that, better alignment between customers, distributors, and manufacturers is always welcome for sustainable, long-term and orderly growth of the sector and equitable distribution between these stakeholders. We are fairly confident that the regulator will take a pragmatic approach because growth (of the sector) is equally important. We do not expect anything significantly disruptive in the medium term. We have seen multiple regulatory changes in the past including tax withdrawal, surrender norms, GST rate cuts and the sector has bounced back. As long as changes are good in the medium term, we are not excessively worried.