HDFC life Q4 PAT up 24% at Rs 11 billion in FY18; total premiums rise 21%

HDFC life Q4 PAT up 24% at Rs 11 billion in FY18; total premiums rise 21%
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Mumbai, Apr 19: HDFC Standard Life Insurance Company Ltd (HDFC Life) has posted net profit growth of 24 per cent for FY18 to Rs 11.1 billion, compared with Rs 8.9 billion in FY 17. New Business Premium for HDFC Life rose to Rs 113.5 billion for FY18, a 32 per cent increase from Rs 86.2 billion in FY17.
For the fourth quarter ended March 31, 2018, the company’s net profit rose 40.4 per cent to Rs 3.5 billion as compared to the same quarter last fiscal.
“A balanced product mix, diversified distribution network and customer centric approach have helped deliver profitable growth,” said Amitabh Chaudhry, Managing Director and Chief Executive Offer of HDFC Life.
Since listing in November 2017, this is the first full quarter result reported by the company.
Individual annualised premium equivalent (APE) grew by 31 per cent to Rs 48.9 billion for FY18 as compared to Rs 37.4 per cent in the previous fiscal year.
Total Premium growth stands at 21 per cent for FY18, whereby the company has collected Rs 235.6 billion in premium revenue, and now commands around Rs 1,066 billion in Assets Under Management (AUM), which is 16 per cent higher than in the previous fiscal year.
Group Premium revenues have risen 22 per cent to Rs 54.9 billion in FY18 as compared to Rs 41.9 billion in FY17.
Speaking to reporters Chaudhry said, “If we break up the group business into two sub-sets, one is the funded side of the business which has actually not grown, and the protection side of the business has grown by 63 per cent. So one part continues to grow at a rapid rate and the other has not grown by much.”
“The funds business is intrinsically linked to interest rates and given the volatility around that group funds business part of it has been fairly and the protection part has grown well.
Individual business has grown well even if you take out the face that last year was relatively neutral growth, says Vibha Padalkar, Executive Director and Chief Financial Officer of HDFC Life.
Operating Expenses as a percentage of Total Premium has increased to 13.5 per cent for FY18, as compared to 12.6 per cent in FY17.
This is on account of the Indian GAAP accounting standards which do not take into acquisition costs, and since revenues are collected over time, the profit signature would only emerge over a period of time, Padalkar explained.
Product and Distribution Mix
Around 10 new bancassurance partners were added during the fourth quarter of FY18, bringing the total number of bancassurance partners for HDFC Life to 149. The company increased the number of individual agents to Rs 77,048, with the average agent productivity up by 24 per cent to Rs 81,036.
The tables above show the changes between FY17 and FY18 in terms of the share of products sold out of the total product mix, and the distribution mix (based on individual APE).
“We have been saying for some time that each of the channels has a standalone margin that we are happy with, obviously there is scope for improvement. Cost of distribution varies between channels we drive a different thought with each of the channels,” said Chaudhry.