ECONOMY

HDFC Life Insurance Q1 Results: Profit Falls, Death Claims Rise Amid Second Covid Wave

Analysts expect HDFC Life Insurance Co. Ltd.’s non-par policies and annuity products to witness growth, while they remain cautious over its protections plans amid uncertainties caused by the newer variants of the coronavirus.

In the quarter ended June, the life insurer saw a “steep rise in death claims, with peak claims in second wave at 3-4 times of the peak claim volumes in the first wave”, according to its exchange filing. “We paid over 70,000 claims in Q1. The gross and net claims provided for amounted to Rs 1,598 crore and Rs 956 crore, respectively,” it said. “Based on our current claims experience, we have set up an additional reserve of Rs 700 crore to service the claims intimations expected to be received.”

According to Deepak Parekh, chairman at the company, HDFC Life has also provided for a Covid reserve of Rs 165 crore for FY22.

A spike in claims and a fall in premium income hurt the company’s profit during the reported quarter.

Net profit of HDFC Life stood at Rs 269.55 crore in the April-June period. That’s 16% less than the earnings in the preceding three months and 40% short over the year-ago period and Bloomberg consensus analyst estimates.

The company earned a net premium of Rs 7,540.05 crore, a 41% drop over the preceding quarter but a 32% rise year-on-year. Renewal premiums contributed more than 50% to the net premium earned.

  • Revenue fell 24% sequentially but rose 1% year-on-year to Rs 14,605.87 crore in the April-June period. Still, it beat the consensus estimate by 75%.

  • Operating income fell 12% sequentially and 39% year-on-year to Rs 274.15 crore in the three months ended June. That’s also 50% lower than the Bloomberg consensus forecast.

  • Ebidta margin was at 1.9% against the projected 6.6%. The margin was flat over the year earlier but was higher than 1.6% posted in the quarter ended March.

  • The 13th month persistency ratio—or customer retention—fell 1.6 basis points sequentially to 89.8%, while the 61st month ratio improved to 58.1% from 54.6% in the preceding three months.

  • Earnings per share for the quarter stood at Rs 1.33 apiece, lower than the estimated Rs 2.64.

  • The company maintained a 203% solvency ratio—that measures the extent to which assets cover commitments for future liabilities—at the end of the first quarter.

Other highlights (year-on-year)

  • Reported 22% growth in terms of individual weighted received premium, with a market share of 17.8% in private sector.

  • Value of new business increased 40% to Rs 408 crore.

  • New business margin was at 26.2%.

  • Saw 20% growth in renewal premium.

  • Assets under management were at Rs 1.8 lakh crore, a rise of 30%.

  • Persistency ratios for the 13th, 25th, 37th, 49th and 61st months have improved.

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