HDFC Life Q2 profit rises 3.3% to ₹4470 cr, net premium income up 13%

The insurer's net profit rose 3.3% year-on-year to 4.47 billion rupees for the quarter ended September 30

India's HDFC Life Insurance reported a higher second-quarter profit on Wednesday, driven by strong demand for retail insurance products and a pickup in market-linked plans.

Net premium income for the quarter rose 13 per cent to 187.77 billion rupees ($2.13 billion), supported by an 11 per cent increase in one-time premiums, and a 17 per cent growth in premiums from older policies which were renewed.

However, commission paid for sales jumped 25 per cent, hitting the bottom line.

The insurer's net profit rose 3.3 per cent year-on-year to 4.47 billion rupees for the quarter ended September 30.

Analysts said that robust retail demand for life insurance helped HDFC Life in July-September while demand for market-linked products also recovered.

 

Market-linked policies, which generate lower margins, made up 42 per cent of HDFC Life's product mix at September-end, up from 36 per cent a year earlier, and 38 per cent at the end of June.

The value of new business rose nearly 8 per cent to 10.09 billion rupees, according to a Reuters' calculation. The margin on the new business value stood at 24.5 per cent, down from 25 per cent at June-end.

Annual premium equivalent sales - a key metric of new policy growth - rose 10 per cent to 74.13 billion rupees for the half year.

Analysts have warned that the government's move to cut goods and services tax on life insurance products to 0 per cent from 18 per cent could weigh on insurers' profitability in the coming quarters.

While the tax cut improves affordability for customers and may aid volume growth, it eliminates insurers' ability to claim input tax credit on services used to deliver these products.

Shares of HDFC Life ended 2.4 per cent higher ahead of the results.