Hdfc Life Insurance Co. Ltd. · NSE:HDFCLIFE
Hdfc Life Insurance — FY2024 Earnings Presentation
58 slides from Hdfc Life Insurance's earnings presentation, Apr 18, 2024
Slide 1: Exchange cover letter: Press Release and Investor Presentation FY24
April 18, 2024 Ref. No: HDFC Life/CA/2024‐25/8 Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No C/1, Block G, Sir PJ Towers, Bandra‐Kurla Complex, Dalal Street, Bandra (East), Fort, Mumbai‐ 400 051 Mumbai – 400 001 NSE Symbol: HDFCLIF
Slide 2: Press Release: Performance for Full Year Ended March 31, 2024
PRESS RELEASE - PERFORMANCE FOR FULL YEAR ENDED MARCH 31, 2024 BSE Code: 540777 NSE Code: HDFCLIFE Navigating well through sectoral changes with focus on increasing volumes, retail protection and making meaningful in roads into Bharat Double-digit APE growth1 of 11% for full year and 20% growth fo
Slide 3: Key Financial Summary
In addition to business developments, we would like to inform that Mr Deepak Parekh has decided to step down as the Chairman and Non-Executive Director of the Company with effect from close of business hours on April 18, 2024. Being the founder Chairman of our Company, Mr Parekh has been instrumenta
Slide 4: Definitions and abbreviations
Market share Individual WRP (Overall industry) (2) 10.4% 10.8% Overall new business premium (Overall (2) 8.0% 7.9% industry) Product mix by Indl APE (UL / Non par 35/30/6/5/23 19/45/5/4/27 savings /Annuity/ Protection / Par) Distribution mix by Indl APE (Corp Agents/ 65/18/6/11 56/20/11/13 Agency/ B
Slide 5: Definitions and About HDFC Life
Premium less benefits payouts - The difference between total premium received and benefits paid (gross of reinsurance) Renewal premium - Regular recurring premiums received after the first policy year Solvency ratio - Ratio of available solvency margin to required solvency margin Total premi
Slide 6: Disclaimer
Disclaimer Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward
Slide 7: Investor Presentation – FY24
Investor Presentation – FY24
Slide 8: Executive summary: FY24
Executive summary: FY24 Revenue & Scale Profitability & Cost Customer & Capital Rs. Bn 115.1 Rs (Bn.) 35.0 Value of New CY 87% Individual Growth1 1% Growth -5% 13th month Business APE persistency (VNB) PY 87% 2-year 2-year 14% 14% CAGR CAGR Rs (Bn.) 334.5 CY 26.3% Overall 99.7% Renewal New Business
Slide 9: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Our approach to ESG 5 Life insurance in India Page 3
Slide 10: Consistent, predictable, sustained performance
Consistent, predictable, sustained performance Rs bn Holistic growth Consistent track record over multiple periods Individual APE Renewal premium VNB 334 36.7 115 35.0 61 155 34 98 26.8 FY16 FY20 FY24 FY16 FY20 FY24 21.9 19.2 15.4 12.8 Protection new business1 Annuity new business 9.2 95.2 48.8 47.6
Slide 11: Consistent performance across business cycles
Consistent performance across business cycles Change in ULIP tax Change in traditional Covid-19 pandemic exemption limit savings tax exemption ▪ Tax exemption limit Open architecture ▪ Lockdown – Face to removed for policies ▪ Tax exemption removed face communication ▪ Banks allowed to tie up with 3
Slide 12: Robust delivery across key metrics (1/2)
Robust delivery across key metrics (1/2) Steady individual WRP growth despite headwinds1 Focus on increasing customer base (NOPs)1 Pvt. mkt share3 16.1% 16.5% 15.4% Overall mkt 1% 11% share 3 10.1% 10.8% 10.4% 2-year CAGR: 13% 1,166 112.6 113.8 1,043 1,054 88.7 FY22 FY23 FY24 FY22 FY23 FY24 YoY Grow
Slide 13: Robust delivery across key metrics (2/2)
Robust delivery across key metrics (2/2) Rs bn Stable Persistency Sustained VNB growth (2-year VNB CAGR) despite headwinds 27.4% 27.6% 26.3% 87% 87% 87% ▪ Focus on quality of ▪ Multiple pools of business and providing 54% 52% 53% profitability contributing superior customer 36.7 to VNB accretion exp
Slide 14: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Our approach to ESG 5 Life insurance in India Page 8
Slide 15: Key elements of our strategy
Key elements of our strategy 1 2 3 4 Profitable growth Diversified Customer first Risk management distribution mix & board Ensuring Creating superior governance sustainable and Developing multiple product propositions profitable growth channels of growth and customer Maintaining focus on by identify
Slide 16: Focus on profitable growth
Focus on profitable growth FY20 FY21 FY22 FY23 FY24 Rs bn Profitable growth 26.3% Economic New business Margin 25.9% 26.1% 27.4% 27.6% Profit Value of new business 19.2 21.9 26.8 36.7 35.0 Profit after tax (PAT) 13.0 13.6 15.7 distribution 13.6 12.1 Diversified Accounting mix Profit Underwriting pro
Slide 17: Emergence of Existing Business (EB) Surplus
Emergence of Existing Business (EB) Surplus Profit Emergence 80 EB Surplus emergence as a % of VIF 30% Profitable 24% growth 70 25% Traditional Savings Protection ULIP 20% 19% 20% (Longer Tenure) (Ind+Grp) 60 20% 50 15% distribution Diversified 0%-1% mix 20%-25% 40 10% 30%-35% 20%-25% 55% - 60% 30%-
Slide 18: Analysis of change in IEV
Analysis of change in IEV Rs bn EVOP – 69.2 EVOP%1 - 17.5% Profitable growth 13.5 (3.3) 474.7 1.5 0.3 35.0 Dividend & Operating Economic 395.3 Capital distribution variances 2 Diversified 32.4 Change in variances VNB infusion mix assumptions Unwind 329.4 267.4 Customer first Adjusted Net worth (ANW)
Slide 19: Diversified distribution mix
Diversified distribution mix Agency – segmented geographical growth HDFC Bank – best in class solutions Profitable growth 2.14 lakh agents - top three agency force amongst private life insurers Widening outreach across all customer segments distribution Diversified Segregating Focus (tier 1) and Gro
Slide 20: Agency – Scaling up for future growth
Agency – Scaling up for future growth Driving sustainable growth through strategic investments Levers for future growth Profitable Agency APE (INR billion) Number of Agents (000’s) growth On-boarding high performing Distribution 13% 14% 18% profiles - retired govt servants & Mix 214 financial distri
Slide 21: Focus on increasing awareness across tier 2/3 markets
Focus on increasing awareness across tier 2/3 markets Spontaneous awareness (Private insurers) Focus on category creation and deeper regional Profitable growth connect, supported by large campaigns: Tier 1 Tier 2/3 distribution Diversified New branch Hyper-localization Insurer 2 28% mix Insurer 1 77
Slide 22: The tier 2/3 growth opportunity
The tier 2/3 growth opportunity Our focus is to deepen our presence While ensuring that quality of And building capacity for future Profitable in tier 2/3 markets business is maintained growth growth Contribution of tier 2/3 markets in HDFC 13M persistency Tier 2/3 markets’ ATS 36,000+ Life’s APE cl
Slide 23: Key product innovations across categories in FY24
Diversified Risk Technology, Profitable Customer distribution management digital & growth first mix & governance Analytics about HDFC Life Learn more products Key product innovations across categories in FY24 17 17
Slide 24: Increasing contribution from mortality and longevity products
Increasing contribution from mortality and longevity products Rs Bn. Robust protection growth Continue to maintain leadership in overall sum assured Rs Bn. Individual APE Overall NBP Individual Overall Profitable growth 27% 13% 47% 21% 95.2 5.9 3,700 13,346 distribution 84.4 Diversified mix 4.7 11,0
Slide 25: Product mix across key channels
Product mix across key channels1 Segment FY21 FY22 FY23 FY24 Segment FY21 FY22 FY23 FY24 UL 27% 29% 24% 40% UL 10% 16% 10% 26% Profitable Agency Par 37% 33% 27% 22% Par 37% 33% 33% 29% growth Banca Non par savings 30% 33% 42% 30% Non par savings 39% 39% 49% 33% Term 4% 4% 3% 4% Term 11% 10% 6% 7% An
Slide 26: Risk management & board governance
Risk management & board governance Board of Directors Profitable growth Independent and experienced Board Committees Risk Policyholder Nomination & Corporate Social Stakeholders’ Audit Investment With Profits Capital Raising Board Management Protection Remuneration Responsibility Relationship Commit
Slide 27: Financial risk management framework
Financial risk management framework Natural hedges Product design & mix monitoring ▪ Profitable Prudent assumptions and pricing approach ▪ growth Protection and longevity businesses ▪ Unit linked and non par savings products ▪ Return of premium annuity products (>95% of annuity); Average age at entr
Slide 28: Future ready organization: Leveraging technology, digital and analytics
Future ready organization: Leveraging technology, digital and analytics Profitable growth 1 3 5 distribution Diversified mix Give me a Give me HYPER- OMNI-CHANNEL PLATFORMISATION simple journey PERSONALISATION frictionless SERVICE Nudge me in approach to tech from purchase for customers service to c
Slide 29: Building next-gen insurance platform: Project Inspire
Building next-gen of insurance platform: Project Inspire Future-ready digital transformation Reimagining our systems and processes by investing in new technologies and capabilities Profitable growth Envisioned tracks for transformation- moving towards execution distribution Diversified mix Data Busi
Slide 30: Project Inspire: Product Configurator & CRM
Project Inspire: Benefits of Product Configurator & CRM Industry-first innovation to significantly reduce time & effort to bring new products to the market Product Configurator Profitable growth High cost of product Improved resource development optimization & cost reduction Pre-INSPIRE Post INSPIRE
Slide 31: Project Inspire: Unified Data Platform & Business Process Management
Project Inspire: Benefits of Unified Data Platform & Business Process Management Overhauling our data architecture to make it more scalable and accurate in real-time Unified Data Platform Profitable growth Multiple data sources- Information accuracy and real- limited data analytics time status updat
Slide 32: HDFC Pension Management Company
HDFC Pension Management Company HPMC AUM (in Rs. bn) Market share FY22-24 2.7x 43% 769.6 41% FY21-23 2.8x 454.0 FY20-22 37% 3.4x 284.1 34% 163.8 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 ▪ HDFC Pension continues to be the largest Pension Fund Manager growing faster than industry in Retail and Corporat
Slide 33: HDFC International Life and Re Company Limited
HDFC International Life and Re Company Limited Revenue ($ MM) 24.4 Positive operating performance ▪ Reinsurance business’ GWP grew by 38% YoY in FY24; Growing at a 5 year CAGR of 42% ▪ Favourable mortality and morbidity experience 17.2 ▪ Array of US dollar denominated innovative life and 15.6 health
Slide 34: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Our approach to ESG 5 Life insurance in India Page 28
Slide 35: Persistency trends for HDFC Life
Persistency trends for HDFC Life Across key channels CY (FY24) 88% 87% 87% 87% 79% 78% 78% 79% 71% 72% 73% 70% 68% 69% 69% 67% 55% 59% 53% 53% Agency Banca Direct Company 13th month 25th month 37th month 49th month 61st month Across key segments PY (FY23) 88% 89% 89% 87% 81% 83% 83% 78% 79% 75% 72%
Slide 36: Steady VNB trajectory
Steady VNB trajectory Rs bn -5% 1 NBM% 27.6% 0.0% (0.2%) (0.4%) (0.7%) 26.3% VNB Growth 2-year VNB CAGR: 14% 30 Note: Numbers may not add up due to rounding off 30 1. Reflects the impact of difference in mix of segment/distribution channel/tenure/age/sum assured multiple, amongst others
Slide 37: Sensitivity analysis – FY24
Sensitivity analysis – FY24 Change in VNB Analysis based on key metrics Scenario % Change in EV Margin 1 Change in Increase by 1% -1.2% -2.7% Reference rate Decrease by 1% 0.8% 2.6% Equity Market Decrease by 10% -0.2% -1.5% movement Increase by 10% -0.6% -0.1% Persistency (Lapse rates) Decrease by 1
Slide 38: Summary of Milliman report on our ALM approach – FY23
Summary of Milliman report on our ALM approach – FY23 Scope of review Portfolios reviewed • Assess appropriateness of ALM strategy to manage ▪ Portfolio 1: Savings and Protection – All non-single premium interest rate risk in non-par savings business non-par savings contracts and group protection pr
Slide 39: Financial and operational snapshot (1/2)
Financial and operational snapshot (1/2) Rs bn. FY24 FY23 FY22* FY21* New Business Premium (Indl. + Group) 296.3 290.9 241.5 201.1 Renewal Premium (Indl. + Group) 334.5 284.5 218.1 184.8 Total Premium 630.8 575.3 459.6 385.8 Individual APE 115.1 114.0 81.7 71.2 Overall APE 132.9 133.4 97.6 83.7 Prof
Slide 40: Financial and operational snapshot (2/2)
Financial and operational snapshot (2/2) FY24 FY23 FY22* FY21* Overall New Business Margins (post overrun) 26.3% 27.6% 27.4% 26.1% Operating Return on EV 17.5% 19.7% 16.6% 18.5% Total Expenses (OpEx + Commission) / Total Premium 19.4% 19.8% 16.5% 16.4% (1) Return on Equity 11.5% 11.9% 10.1% 17.6% So
Slide 41: Segment wise average term and age
Segment wise average term and age1 Average Policy Term (Yrs) Average Customer Age (Yrs) FY24: 22.9 (FY23: 22.7) FY24: 36.2 (FY23: 35.6) UL 14 UL 37 12 37 Par 35 Par 35 36 33 Non-par Health 16 Non-par Health 32 16 32 Non-par Savings 16 Non-par Savings 38 13 38 Non-par Protection 36 Non-par Protection
Slide 42: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Our approach to ESG 5 Life insurance in India Page 36
Slide 43: ESG at a Glance
ESG at a Glance 5 Pillars of ESG 37 37
Slide 44: Ethical Conduct & Governance
Ethical Conduct & Governance Leadership Oversight on ESG Policies & Frameworks ▪ ESG governed by the Board CSR & ESG Committee and driven by the ESG Management Committee and cross functional teams • Anti-bribery & Anti-corruption Policy ▪ Performance Management based on the principles of Balanced Sc
Slide 45: Responsible Investment
Responsible Investment RI – Policy, Framework & Governance structure Responsible Investing Products Policy objective Sustainable Equity Fund To generate optimal risk adjusted returns over the long term through consideration of The fund seeks to generate returns from investing in companies with high
Slide 46: Diversity, Equity & Inclusion and Employee Engagement
Diversity, Equity & Inclusion and Employee Engagement DEI – Policies & Programs Employee Engagement Talent Management / Retention Awards & Recognition • ‘Celebrate You’ programme ingrains DEI • Emotional and well being assistance • Launched Leadership Edge for mid-management • Great Place to Work re
Slide 47: Holistic Living: Delivering superior customer experience
Holistic Living: Delivering superior customer experience Customer Centricity Enhancing Customer Experience through our CX Program, based on 5 focus areas: Journey Simplifying buying journeys through platforms Online claim processing for eligible simplification – like LifeEasy (online term purchase)
Slide 48: Sustainable Operations & Climate Strategy
Sustainable Operations & Climate Strategy Policies & Frameworks • Boar approved Environment & Climate Change Policy, serving as a guideline for understanding and managing our environmental and climate risks, impacts and opportunities • Climate-related performance disclosed in accordance with the TCF
Slide 49: Agenda
Agenda 1 Performance Snapshot 2 Business Overview 3 Other Business Highlights 4 Our approach to ESG 5 Life insurance in India Page 43
Slide 50: India – poised for sustainable growth
India – poised for sustainable growth The burgeoning Fifth middle largest and class fastest and growing Investment in physical and digital Rising affluence emergenceeconomy of Bharat building blocks to further drive growth India’s GDP (in USD)1 India’s middle income segment as % of all households3 T
Slide 51: Growth opportunity: Under-penetration and favorable demographics
Growth opportunity: Under-penetration and favorable demographics Life Insurance penetration1 (FY 2022) Life Insurance density US$ 2 (FY 2022) 19.2% ▪ India remains vastly under-insured, both in 8,433 terms of penetration and density 14.0% 5,414 ▪ Huge opportunity to penetrate the 7.6% 3,772 underser
Slide 52: Low levels of penetration: Life protection
Low levels of penetration: Life protection 1 3 Protection gap (2019) Sum Assured as a % of GDP 2 Trend of retail loans (Rs Tn.) 91.0% 332% 64 74.0% 71.0% 70.0% 252% 251% 53 61.0% 55.0% 44 153% 34 41.0% 143% 127% 24 85% 17 62% 23% India Malaysia Thailand China Japan Singapore Hong Singapore Japan USA
Slide 53: Macro opportunity: Retiral solutions
Macro opportunity: Retiral solutions 2 India’s pension market is under-penetrated at India’s retirement savings gap to grow annually by 10% to reach 1 3% of GDP ~$96Tn in 2050 146.2 2050 retirement savings gap ($ Tn.) 128.2 98.3 95.7 90.1 54.0 31.3 32.4 24.3 3.0 16.4 9.6 India Japan Hong Kong Canada
Slide 54: Government bond auctions
Government bond auctions Government Bonds – Tenorwise Issuance Rs cr 27% 21% 29% 35% 35% 28% 29% 34% 38% 73% 79% 71% 65% 65% 72% 71% 66% 62% FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 <=15 yrs >15 yrs FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 <=15 yrs 3,66,500 3,73,525 4,97,579 3,82,941 4,44,00
Slide 55: Industry new business trends
Industry new business trends 1 Product mix 68% 61% 684 57% 51% 51% 617 43% 49% 49% 39% Individual WRP in Rs bn 32% 452 401 356 287 291 305 296 245 200208 FY15 FY17 FY19 FY21 FY23 Unit Linked Conventional 2 Distribution mix 9% 10% 14% 16% 15% 5% 3% 3% FY15 FY17 FY19 FY21 FY23 11MFY24 3% 5% 50% 57% Pr
Slide 56: Life Insurance: A preferred savings instrument
Life Insurance: A preferred savings instrument Household savings composition Financial savings mix 26% 21% 24% 23% 24% 2% 5% 9% 9% 7% 2% 15% 9% 7% 19% 8% 17% 18% 22% 22% 48% 18% 59% 51% 52% 54% 17% 18% 18% 67% 56% 52% 48% 42% 45% 41% 49% 48% 46% FY13 FY16 FY19 FY22 FY23 FY13 FY16 FY19 FY22 FY23 Gros
Slide 57: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase any securities (“Securities”) of HDFC Life Insurance Company Limited (“HDFC Life” or the “Company”) in India, the United Stat
Slide 58: Thank You
Thank You FY23 Annual FY23 ESG FY24 ESG Sustainability Report Report Deck Factsheet