HDFC Life Q2FY25 results: Net profit rises nearly 15% to Rs 433 crore

Its value of new business (VNB) increased 17.1 per cent Y-o-Y to Rs 938 crore in Q2, compared to Rs 801 crore in the year-ago period

Private sector life insurer HDFC Life on Tuesday reported a 14.85 per cent year-on-year (YoY) jump in its net profit at Rs 433 crore in the second quarter of financial year 2024-25 (Q2FY25), driven mainly by the growth in its back book i.e policies which have already been sold.

Its value of new business (VNB) increased 17.1 per cent Y-o-Y to Rs 938 crore in Q2 against Rs 801 crore in the year-ago period. VNB is the present value of all future profits to shareholders measured at the time of writing the new business contract.

The insurer’s VNB margin, a measure of profitability, contracted to 24.3 per cent as compared to 26.3 per cent in last year, as low margin unit-linked policies dominated the product sales.

The company’s new business premiums grew by 14.03 per cent Y-o-Y to Rs 8,097 crore in Q2 against Rs 7101 crore in the year-ago period. 

Its annualised premium equivalent (APE) was up 26.7 per cent Y-o-Y to Rs 3858 crore. APE is the sum of annualised first year regular premiums and 10 per cent weighted single premiums and single premium top-ups.

“On the regulatory front, we have successfully relaunched more than 40 top products contributing to about 95 per cent of the business, in alignment with revised regulations as on October 1, 2024 and we plan to relaunch other products during the course of the quarter,” said Vibha Padalkar, managing director and chief executive officer of HDFC Life.

In Q2FY25, the solvency ratio of HDFC Life stood at 181 per cent as compared to 194 per cent in the year ago period, as it wrote more new business, which is capital consuming. Having said that, it has raised Rs 1,000 crore through non-convertible debentures (NCDs), which has pushed up its solvency over 190 per cent.

The persistency ratio of the insurer in H1 FY25 for 13th month persistency ratio stood at 88 per cent compared to 86 per cent in H1 FY25. Meanwhile, the 61st month persistency ratio was at 60 per cent in the quarter under review as compared to 53 per cent in the year ago period.