HDFC Life Insurance Q2 net falls 16%

By: |
October 23, 2021 4:00 AM

During the July-September period total income stood at Rs 20,478.46 crore, which was a 24.67% y-o-y jump from Rs 16,426.03 crore a year ago.

Sequentially, the net profit rose 2.36% quarter-on-quarter from Rs 269.55 crore in the first quarter of this fiscal.Sequentially, the net profit rose 2.36% quarter-on-quarter from Rs 269.55 crore in the first quarter of this fiscal.

Private sector life insurer HDFC Life Insurance on Friday reported a 15.84% year-on-year fall in its consolidated net profit to Rs 275.91 crore in the second quarter this fiscal from Rs 327.83 crore for the same period last fiscal.

Sequentially, the net profit rose 2.36% quarter-on-quarter from Rs 269.55 crore in the first quarter of this fiscal.

During the second quarter, the insurer’s net premium income increased 13.81% y-o-y to Rs 11,445.53 crore from Rs 10,056.71 crore in the corresponding period of FY21, it said in a stock exchange filing. While first year premium grew 24% y-o-y at Rs 2,077.97 crore, renewal premium rose by 16.8% y-o-y at Rs 5034.50 crore for the period under review.

During the July-September period total income stood at Rs 20,478.46 crore, which was a 24.67% y-o-y jump from Rs 16,426.03 crore a year ago.

Commenting on the performance for the first half (H1) of this fiscal, Vibha Padalkar, MD & CEO, HDFC Life Insurance, said, “Our business performance remains strong with 22% growth and private market share of 16.2% in terms of Individual WRP (weighted received premium) in H1 FY22. New business margin (NBM) expanded by 130 bps with NBM at 26.4% for H1FY22, higher than 25.1% in H1FY21. Value of New Business was Rs 1,086 crore, recording a robust growth of 30% over last year.”

Profit after tax stood at Rs 577 crore for the first half of the current financial year (26% lower than H1FY21), on the back of higher claims reserving warranted by the second wave of the pandemic, Padalkar said.

On the impact of the Covid-19 pandemic on its business, the company said it settled around 2,00,000 claims in H1. Gross and net claims amounted to Rs 3,640 crore and Rs 2,466 crore, respectively. While individual claims tapered off, group claim intimations were high in Q2FY22 — both on expected lines. The insurer said the “overall experience has been well within our projections”.

The company said its excess mortality reserve (EMR) of Rs 700 crore as on June 30, 2021, had been sufficient to cover claims received to date. It created an additional EMR of Rs 60 crore in the second quarter. And with this, it carries unutilised reserves of around Rs 204 crore into the second half (H2).

On reinsurance companies raising rates for underwriting portfolios of term plans, Padalkar said, “We have received intimations on repricing just as almost every company would have done. This is expected to kick in the fourth quarter. Because ongoing discussions are happening as we speak.”

She said the final quantum of hike in the premiums for term insurance is yet to be “pinned down” by HDFC Life. “It will be a risk-based pricing approach, meaning wherever we see higher levels of claims, we might do it in certain cohorts and certain age groups or certain variants, rather than just an Excel spreadsheet of passing on everything to the customers. Because in someways that might not be fair.”

On the proposed acquisition of Exide Life Insurance, the company said applications were filed with Irdai and CCI for approving the acquisition. HDFC Life’s shareholders approved the transactions on September 29. Notably, the transaction of acquiring 100% stake in Exide Life by the company was announced on September 3, 2021.

On Friday, HDFC Life’s scrip fell 0.61% to end the day at Rs 690.65 on the BSE.

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