HDFC Life posts 15% rise in Q4 net profit to Rs 411 crore

HDFC Life Q4: Private insurer HDFC Life Insurance on Thursday posted a net profit of Rs 411 crore for the January-March quarter of financial year (FY) 2023-24, up by 14.8 per cent from Rs 358 crore recorded in the year-ago period. The numbers beat the market expectations of a 6.1 per cent profit growth to Rs 382.1 crore.

However, the company faced headwinds in the last financial year as it reported a decline in new business margins. This decline was attributed to a shifting customer preference towards low-margin products, overshadowing high-value policies.

The value for new business (VNB), which represents the anticipated profit from new policies, witnessed a 4.7 per cent decrease to Rs 3,501 crore for the fiscal year ending March 31. Consequently, the VNB margin also contracted from 27.6 per cent to 26.3 per cent compared to the previous year.

Analysts attributed this trend to the persistent decrease in high-value policies, influenced by government tax regulations on total returns, alongside a growing inclination towards low-margin unit-linked insurance plans (ULIPs). The buoyancy in the domestic equity market further fueled investments in ULIPs, with the NSE Nifty 50 Index rising by 2.7 per cent in the March quarter, marking its fourth consecutive quarterly gain.

HDFC Life Insurance revealed that its unit-linked segment constituted 35 per cent of its overall product mix by individual annualized premium equivalent (APE) for the financial year 2024, significantly higher than the 19 per cent share observed a year earlier. APE, a crucial metric for insurers, indicates the annualized total value of all single premium and recurring premium policies. However, despite these shifts, total APE sales only experienced a marginal dip of 0.3 per cent to 132.91 billion rupees for the year.

The insurer's financials for the three months ending March 31 showed a 5.5 per cent increase in net premium income to Rs 20,488 crore, albeit at a slower pace compared to the preceding quarter's 6 per cent growth. Notably, its investment income recorded a remarkable over six-fold surge during this period.

Moreover, HDFC Life Insurance announced a change in leadership, with Keki M Mistry assuming the role of chairman as Deepak S Parekh steps down, effective from Thursday.

Following the announcement, the company's shares initially surged by as much as 3.2 per cent in early trading but later pared gains to trade 0.2 per cent higher post-results.

(With Reuters inputs.)