HDFC Life's standalone net profit up 2% to Rs 318 crore in Q4FY21

23% rise in net premium; Rs 41 cr Covid reserve last year completely used up to settle claims

Private sector life insurer HDFC Life on a standalone level reported a 2 per cent jump in net profit to Rs 317.94 crore in the March quarter of FY21, from Rs 311.71 crore in the same period last year. 

The insurer saw a 23 per cent rise in net premium in Q4FY21 to Rs 12,868.01 crore from Rs 10,464.46 crore a year ago. Its investment income of Rs 6,051.42 crore in the fourth quarter was down almost 50 per cent sequentially. 

HDFC Life has a Covid reserve of Rs 165 crore for FY22 on its balance sheet for potential adverse mortality experience. The company said it will continue to monitor the adequacy of the reserve through the course of the financial year. In the last financial year (FY21), it was carrying a reserve of Rs 41 crore, which it has fully used to pay out covid-19 death claims. The hit on its balance sheet due to such claims was Rs 145 crore in FY21.

“Over the course of the year, we have settled over 2.9 lakh death claims resulting in payouts in excess of Rs 3,000 crore”, the management said. 

The solvency ratio of the insurer has improved year-on-year (YoY) to 201 per cent, against the regulatory requirement of 150 per cent. “Further, based on the Company’s current assessment of the business operations over next one year, it expects the solvency ratio to continue to remain above the minimum limit prescribed by the Insurance regulator”, the company said in a statement. 

It has a persistency ratio of 91.4 per cent in Q4FY21 compared to 92.9 per cent in Q3FY21 and 88.4 per cent in Q4FY20. 

“Given the resurgence of Covid and the looming uncertainty around economic and market momentum, we will continue to maintain a cautiously optimistic stance for FY22 and evaluate our approach dynamically. Once the second wave subsides and significant parts of our country are vaccinated, we believe that pent-up demand would lift economic and commercial activity”, said Vibha Padalkar, MD&CEO, HDFC Life. 

In FY21, the total annualised premium equivalent (APE) of the insurer rose 13 per cent to Rs 8,372 crore and the individual APE increased 16 per cent to Rs 7,121 crore. And, the total premium collected by the insurer, which includes new business premium and renewal premium, increased 18 per cent to Rs 38,583 crore. While the value of new business (VNB) went up by 14 per cent to Rs 2,185 crore, the new business margin (NBM), a measure of profitability of life insurance companies, reported by the company stood at 26.1 per cent compared to 25.9 per cent in FY20. 

Also, assets under management (AUM) of the insurer grew 37 per cent to Rs 1.37 trillion at the end of FY21. Despite logistical challenges through the year, the company has insured close to 40 million lives in FY2, it said. 

“We witnessed an upswing in the Savings business on a sequential basis, as more and more customers continued to evaluate investing in bundled solutions to secure both their financial needs as well as protect their loved ones”, Padalkar said. 

“We will strive for consistent new business growth and an upward trajectory on NBM, whilst adhering to a conservative risk management approach”, she added. 

Shares of the insurer closed 2.52 per cent up at Rs 704.75 on the BSE. The board of the insurer has recommended a final dividend of Rs 2.02 per equity share for FY21.