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HDFC Life Insurance Company Ltd.

BSE: 540777 Sector: Financials
BSE 09:23 | 18 Jan 677.55 3.45






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OPEN 677.70
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P/E 123.42
Mkt Cap.(Rs cr) 143,086
Buy Price 677.30
Buy Qty 108.00
Sell Price 677.80
Sell Qty 59.00
OPEN 677.70
CLOSE 674.10
52-Week high 775.65
52-Week low 627.00
P/E 123.42
Mkt Cap.(Rs cr) 143,086
Buy Price 677.30
Buy Qty 108.00
Sell Price 677.80
Sell Qty 59.00

HDFC Life Insurance Company Ltd. (HDFCLIFE) - Director Report

Company director report




Your Directors are pleased to present the 21st Annual Reportof HDFC Life Insurance Company Limited ("the Company"/ "HDFC Life")together with the audited financial statements for the year ended March 31 2021.

1. Standalone Financial Performance Business Review and OutlookFinancial Performance:

( crore)

Standalone (Audited)

FY 2020-21 FY 2019-20
a. New business premium 20107 17238
(i) Regular premium 6858 6044
(ii) Single Premium 13248 11194
b. Renewal premium 18477 15469
Total Premium 38583 32707
Profit After Tax 1360 1295

Other Key Parameters:

( crore)
Particulars FY 2020-21 FY 2019-20
Individual APE 7121 6145
Group new business premium 10031 8775
Assets under Management 173839 127226
Embedded Value 26617 20650
Overall new business margins (post overrun) 26.1% 25.9%

Note: Embedded Value and Overall new business margins for FY 2020-21and FY2019-20 are based on external review; Numbers may not add up due to rounding offeffect.

2. Business Review and Outlook

Macro Economic Scenario

FY 2020-21 started with a stringent lockdown aimed at controlling thespread of the COVID-19 pandemic. Post the initial 2-3 months restrictions wereprogressively eased during the rest of the year. However towards the end of the year thenumber of infections started rising again giving indications of a possible second wave.Globally too most countries went through a similar trajectory of initial lockdownssubsequent easing followed by a second wave of infections. Monetary and fiscalauthorities around the world unveiled various stimulus measures to cushion the economicblow from the pandemic and help their respective economies recover.

In India most economic parameters bore signs of the effect of thepandemic. Fiscal deficit for the year was revised to 9.5% from the budgeted level of 3.5%of GDP. Government revenues were severely dented with no relief on expenditure as theGovernment needed to take measures to support the affected sections of the economy. TheReserve Bank of India (RBI) also took multiple measures including cutting interest ratesto increase liquidity allowing banks to provide moratoriums and restructure loans toaffected borrowers amongst others.

The Government's fiscal policy supported the economy through variousmeasures - from providing food and income support to the most vulnerable sections toproviding investment incentives to industries to push up capital expenditure andconsequently improve employment. The Government also increased infrastructure spending toattract private investment and trigger second order effects that would sustain growth. TheGovernment committed to gradually ease fiscal deficit to 4.5% over the next 5 years.

The medium term outlook for the economy is more sanguine as theGovernment is expected to respond with less stringent and more localised responses to thesecond wave while the increase in vaccinations is expected to help reduce further spreadin infections.

Industry Update

The pandemic has impacted lives across the world. For organisations ithas been a test of resilience and agility to adapt to the situation. The year began withcompanies prioritising safety of employees enabling digital servicing of customers andcontinued engagement with distributors. Continued investments in technology along withincreased adoption and streamlining of digital assets for customer servicing andgenerating new business helped the life insurance industry showcase strong growthrecovery.

During FY 2020-21 the life insurance industry grew by 7% and garneredRs. 2783 billion of new business premium against Rs. 2589 billion in the previousfinancial year. The private players grew by 8% and overall industry (including LIC) grewby 3% in terms of Individual weighted received premium (WRP). Development of alternatechannels of distribution and product innovation were the key drivers resulting in furtherconsolidation of private player's market share to 60% of the individual WRP business.Within the private sector the top 10 insurers accounted for 88% of the market (in termsof individual WRP) in FY 2020-21 compared to 85% in FY 2016-17. Bancassurance sourcedbusiness continues to dominate the channel mix on the back of increasing reach of banks.The share of direct channels including the online channel has also increased while shareof agency has been constant in the last few years.

Product mix continued to shift towards traditional products with higherfocus on non-par savings. The share of ULIPs continued to decline in current financialyear. While demand for individual protection saw an initial surge growth normalised asthe year progressed due to difficulty in completing medical underwriting requirements inpandemic conditions. Group protection business linked to loan products (credit life)reflected lower disbursements by lenders especially in the initial part of the year.

COVID-19 Update

India witnessed a second wave of COVID-19 by the end of FY 2020-21 andthe second wave appeared to be far steeper than the first wave. There is a downside riskto GDP growth in the wake of rising number of COVID-19 cases and localised lockdowns inmajor cities throughout the country. However on a positive note the expectation is thatonce the second wave subsides and a larger proportion of the population is vaccinatedpent-up services demand could push GDP growth during the later part of the year.

In this environment of the 'new normal' we maintained businesscontinuity by executing our core strategy of maintaining a balanced product mix adiversified distribution continuous product innovation and reimagining the insurancelandscape through effective use of technology.

Our past investments in technology helped us navigate through theperiod of uncertainty and we have seen sustained utilisation of our digital assets by ourcustomers distributors and partners.

3. Company Performance Sustained growth across segments

HDFC Life continued on its trajectory of delivering consistent andpredictable performance in FY 2020-21 while outpacing industry growth. Our full yearmarket share amongst private insurers based on individual WRP increased by 130 bps to15.5% (PY: 14.2%) on the back of 17% growth. Our total new business premium increased by17% to Rs. 20107 crore. We maintained our leadership position within the group segmentrecording growth of 14% to end at Rs. 10031 crore. Total premium grew by 18% to Rs.38583 crore in FY 2020-21 compared to Rs. 32707 crore in FY 2019-20 on account of newbusiness growth of 17% and 19% growth in renewal premium.

Despite a difficult operating environment in FY 2020-21 we coveredaround 4 crore lives and paid over 2.9 lakh death claims with a payout value of over Rs.3000 crore.

Diversification and innovation being the key themes across our business

We have a diversified distribution mix and we offer multipletouch-points for the convenience of our customers. We have pan India presence with 390branches partnerships with 300+ banks NBFCs MFIs SFBs brokers new-ecosystempartners over 100000 individual agents and online access to our customers. We continueto expand our distribution by adding marquee names such as YES Bank and SBICAP SecuritiesLtd in retail business ONGC GSK in group annuity business and Indian Oil Siemens infund business.

We have grown well across all our key distribution channels withbancassurance channel registering growth of 29% in FY 2020-21 and accounting for 61% ofindividual annualised premium equivalent (APE) for FY 2020-21. Agency direct and brokerchannels contributed 13% 19% and 7% respectively. Protection remains a key focus areawithin the group segment contributing 34% of our group business. All the channelscontinue to be profitable and generate healthy new business margins.

We believe in maintaining a balanced product mix with a focus onincreasing the share of protection and retirement products. This is in line with theevolving customer demand for long-term savings products flexible protection products toprovide financial security to their dependants and long-term income products includingannuities to get post retirement income. Continuous product innovation across all productcategories has been key in this journey. We focus on ensuring that we have a relevantproduct suite that is able to address customer needs and gaps in current market offerings.Participating savings non-participating savings ULIPs protection and annuity accountedfor 34% 31% 24% 7% and 5% of Individual APE respectively. Protection and annuitysegments contributed to around 13% and 5% of total APE.

The current pandemic led to higher awareness about the need forprotection and the inadequacy of the current insurance coverage. We remain confident aboutthe medium to long term prospects of protection in India on the back of theunder-penetration higher awareness rising affluence and increasing levels of consumercredit. We aim to address the opportunity in a calibrated manner as we penetrate deeperand wider into the Indian market through appropriate pricing and underwriting.

Another area of opportunity is the retirement segment. We areoptimistic on the growth potential of the retiral business opportunity given the changingdemographics increase in life expectancy and no social security. In addition to annuitybeing an important focus area we are also focused on addressing the long-term incomeneeds through our product offerings like HDFC Life Sanchay Plus and HDFC Life Sanchay ParAdvantage. Our constant endeavour is to identify sources or means to grow our annuitybusiness including empanelling corporate clients and introducing new product variantswhile ensuring appropriate pricing and risk management.

Maintaining Profitable Growth

Our embedded value was Rs. 26617 crore as on March 31 2021 with ahealthy operating return on embedded value (EVOP/ Opening Embedded Value) of 18.5% versus18.1% last year. While we have had an overall positive operating variance during the yearwe experienced a negative mortality variance. This was largely absorbed by the COVIDreserve of Rs. 41 crore created by us at the start of FY 2020-21. Based on our actualexperience in FY 2020-21 and after factoring in aspects such as latest mortality trendsacross business and customer segments and geographic spread of COVID 2.0 we have providedfor a COVID reserve of Rs. 165 crore for FY 2021-22. We will continue to review theadequacy of this reserve through the course of FY 2021-22. With this approach we remainconfident of our ability to absorb the impact of shocks from one-off events and deliversteady returns with minimal variances through a realistic and disciplined assumptionsetting approach.

We continue to sustain healthy new business margin of 26.1% versus25.9% for last year as a result of profitable product mix and control on costs. Ourprofit after tax (PAT) grew by 5% over last year to Rs. 1360 crore in FY 2020-21.

Operating expenses (Opex) to total premium ratio reduced to 12.0%during FY 2020-21 from 13.1% for the previous year largely on account of healthy growthin revenue and cost control measures taken during the year. We shall continue to invest instrengthening our distribution and enhancing our technological capabilities whilecalibrating our costs at an overall level.

Our assets under management (AUM) stood at Rs. 173839 crore with adebt-equity proportion of 64:36 as on March 31 2021 thereby clocking a 37% growth overthe previous year.

Business Outlook

We remain sensitive about the health impact and loss of lives due tothe current pandemic and continue to prioritise employee customer and partner safety. Wehave been able to demonstrate resilient performance in FY 2020-21

inspite of the challenging environment. However given the resurgenceof COVID we continue to maintain a cautiously optimistic stance for FY 2021-22 and willevaluate our approach on a dynamic basis. We will strive to achieve sustainable newbusiness growth and maintain an upward trajectory on new business margins whilst adheringto a robust risk management approach.

The current pandemic has led to higher awareness around the need forprotection and the inadequacy of current insurance coverage at a household level. Lifeinsurance has emerged as a prominent theme to protect one's family whilst securinglong-term financial goals.

We believe that life insurance in India is a structural longterm growthopportunity given the under-penetration. In addition pandemic-induced awareness shift inconsumer behaviour and robust demographic trends indicate that we are well placed tocapture these multi decade opportunities. We have built a track record of resilientperformance across business cycles and are confident of delivering value to customersprofitable growth to our shareholders consistently. Our agility and timely identificationof emerging opportunities across products services distribution and technology whileadapting to changing consumer preferences has enabled us to create value for all ourstakeholders.

4. Products

The prevailing uncertainty has made it necessary for one to secure thefuture for themselves and their families. Our product offerings span across retirementsavings and investments child term health plans and provide options to our customers toprovide financial protection for their families. The Company has 36 individual and 12group products in its portfolio along with 7 rider benefits.

Economic slowdown and financial distress can easily createuncertainties derailing short-term and long-term plans of the household. To protectagainst the burden of loans it is imperative to have to ensure the right provisions aremade which can secure one's lifestyle.

In September 2020 we introduced HDFC Life Group Poorna Suraksha agroup term product which has a suite of benefits such as easier on-boarding long-termcoverage portability and customised underwriting and pricing. This product is availableto employees customers members of financial institutions retail chains educationalinstitutions government agencies amongst others. The product also enables members tocontinue with the insurance coverage after their exit from their current organisation. Theproduct offers the benefits and features of a retail term product on a group platform.

As the world adjusts to a new normal we introduced Click 2 ProtectCorona Kavach that offers the dual protection of life cover as well as medical expensesincurred on COVID-19 treatment. This plan provides comprehensive coverage with 9 planoptions for whole life accidental disabilities critical illnesses and COVID-19 relatedco-morbidities while also covering expenses for hospital home care and Ayurveda Yoga andNaturopathy Unani Siddha and Homoeopathy (AYUSH) treatment.

In January 2021 we introduced HDFC Life Click 2 Protect Life aninnovative term plan that ensures financial protection as per one's changing lifestyle andlife stage. The plan offers benefits such as income payouts whole life cover premiumwaiver and rebalancing of death and critical illness benefits with age. Additionally thisplan also provides special premium rates for female lives and non-tobacco users.

Customer needs remain central to our product strategy and we willcontinue to develop innovative product propositions that addresses their needs at everystage of life.

Human Resource and People Development

At HDFC Life we believe people are the driving force behind oursuccess. We have institutionalised robust frameworks to attract train develop and engageour talent for higher productivity. Digitisation continues to remain at the heart of allour people processes.

It is also our constant endeavor to have a workforce which isrepresentative of our social and customer demographics. Principles of diversity andinclusion are deeply rooted in our way of doing business. As an equal opportunityemployer our culture is one of meritocracy and performance based recognition for ouremployees who hail from diverse backgrounds education and experience. In addition tothese we have certain initiatives meant exclusively for our women employees such as the'Women's mentoring circle' where women employees are mentored and coached by senior womenleaders in the organisation. We have also been sensitising our workforce on the LGBTQ+cohort representation and inclusion.

Our practices processes and policies have been designed keeping inmind challenges employees face whilst managing their responsibilities at work and at home.Some of these include flexible shift timings availability of creche facilities hiring ofsecond career women a special maternity transition program to assist expectant mothersalong with flexible work arrangements post maternity and paternity leave sabbaticalscoverage of legally wedded 'partner' or cohabiting partner of any gender under the

Group Health Benefits program as well as coverage of gender transitionsurgery availability of an exclusive helpline for the LGBTQ+ community and their alliesetc.

To meet our ever-evolving business needs we have been focusing oncreating a robust talent pipeline in-house. For career opportunities that arise in theorganisation our internal talent is given the first priority. Through career progressionand Internal Job Postings (IJPs) we encourage our employees to opt for cross-functionalmovements thereby broadening their professional exposure. Over the years we havedeveloped alliances with universities and academia for a 'train and hire' model for ourfrontline sales roles. For managerial levels our campus hiring programme 'Jigyasa'continues to induct fresh minds from coveted business schools across the country. Withdigitisation being at the core of our business our 'Graduate Trainee Programme' has beendeveloped to build a strong new-age technology skill set in the organisation.

We believe that values are the most critical elements that reflect theconduct of an organisation. Our organisation values in conjunction with clearlyidentified leadership traits enable employees to deliver on their responsibilitiestowards customers both internal and external in an effective way. Various scientificallydesigned assessment tools in external hiring as well as internal career advancementprocesses ensure that employees are aligned to these values.

At our middle and senior management levels we have designed andimplemented various talent review and succession planning processes. These have enabled usin developing people for higher productivity in their current roles and in building astrong pipeline of future-ready talent.

We are committed to creating and sustaining a high performance cultureacross the organisation. Our performance management system is deeply entrenched in theprinciples of balanced scorecard. At the same time our compensation philosophy ensuresthat we benchmark ourselves with the external market in order to stay attractive as apotential employer. We ensure that we differentiate and reward high performance.

On the learning and development front our mission is to meet theorganisation's strategic needs by facilitating enterprise-wide capability development foremployees and distributors. We have been enabling this through adoption of a contemporaryand progressive learning ecosystem.

Particulars of Employees

The statement showing particulars of employees pursuant to Section 197of the Companies Act 2013 ("the Act") read with Rule 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 forms partof this report. However the above mentioned statement is not being sent to the membersalong with this Annual Report in accordance with the provisions of Section 136 of the Act.

The aforesaid information is available for inspection by the membersupto the date of this Annual General Meeting (AGM) on all working days during businesshours at the registered office of the Company subject to restrictions if any that maybe imposed by the local authorities on account of the pandemic. Members who are interestedin obtaining the said particulars may please write to the Company Secretary.

The details of remuneration of Directors and Employees as requiredunder Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 including amendments thereof are givenas an 'Annexure 4' and forms part of this report.


Asset markets across the world had a tumultuous journey over the courseof the year. The initial period saw sharp sell-offs across equity and commodity markets.Equity markets in most jurisdictions tumbled into bear territory i.e. corrected more than20% from their recent tops. Commodity prices also saw sharp corrections.

Huge amounts of liquidity poured in from multiple governments andcentral banks' stimulus measures helped the asset markets recover from their lows.Liquidity flow into equity markets and development of vaccines against COVID-19 led tosharp recovery in the markets which more than offset losses triggered by the advent of thepandemic.

In India large-cap equity indices had seen correction of about 25%during the previous year. Equity indices bottomed out in the early part of the year andsubsequently rallied through the year with intermittent bouts of correction. The initialperiod of recovery was triggered by liquidity flows. Subsequently as the lockdownrestrictions were progressively relaxed industrial/ manufacturing activities picked upand businesses recovered. The trying period of COVID-19 related restrictions inducedcompanies to improve efficiency and reduce debt which helped them post higher profitmargins as economic activity recovered. These margin improvements were seen to besustainable. Moreover certain sectors benefited from the changes in business andlife-styles due to the pandemic. A brighter outlook led to multiple upgrades on earningsgrowth estimates for companies which propelled equity indices

higher and set new all-time highs. The capital inflows due to the hugeliquidity surplus globally added to the positive momentum in the markets. Over thecourse of the year the large cap equity indices gained about 70% while the mid-cap indicesgained 90-100%. This was the best annual gain in more than a decade for the equitymarkets. Foreign investor inflows topped Rs. 2.76 trillion over the course of the year.

The fixed income markets however had a mixed year. The large easingmeasures taken by RBI in the initial part of the year led to lower bond yields. Inaddition to the policy measures RBI supported the bond markets through activeintervention by purchasing bonds which reduced bond yields further. The COVID-19 pandemicseverely affected the government's revenues and a large increase in market borrowing wasrequired to keep up its spending to support the economy. This additional borrowing wasabsorbed by the market with minimal impact on yields due to RBI's support. However asthe economy recovered from the slowdown the bond market outlook started factoring inhigher future interest rates. Bond yields hardened across the yield curve though the10-year benchmark saw limited movement as RBI focused on this segment to temper the risein bond yields. The 10-year benchmark GSec yield ended the year at 6.18% up from the lowlevel of 5.76% set during the year though only slightly higher than 6.12% at the end ofthe previous year.

Investment funds of the Company were managed as per the statedobjectives laid down in the Investment Policy Asset-Liability Management Policy ('ALMPolicy') and respective fund's objectives. These policies lay down the asset allocationand risk appetite guidelines for different funds some of which have in-built guarantees.Fund allocation is tracked on a regular basis and is backed with suitable assets. Duringthe year the asset allocation in the Company's conventional and shareholder funds was inline with the ALM policy.

The Company's total AUM as on March 31 2021 was Rs. 173839 crore.This comprised assets of Rs. 74759 crore held under the unit-linked funds and Rs. 99080crore held under the conventional and shareholders' funds. The corresponding numbers forthe previous year were Rs. 54182 crore and Rs. 73044 crore respectively.

Information Technology

HDFC Life continues on the journey of leveraging technology totransform its business. The Company has invested in technological platforms and systemsfor better customer lifecycle management and to improve user experience for its customersand distributors. HDFC Life's operating model has evolved from a traditional distributionand product play model to a customer centric matrix of platforms digital channelsecosystems and traditional avenues led by technology and analytics.

Our digital ecosystem is supported by tie-ups with multiple partnersproprietary platforms and growth engines. These engines translate into five buildingblocks viz. journey simplification partner integration data led ecosystems servicesimplification and platforms. These blocks are powered by four engines - Futurance (ourstructured program to work with start ups in identified areas) architecture resilienceworkforce resilience and cyber resilience that enable operating in a volatileenvironment.

The Company continues to develop applications for a simplified andfrictionless customer on-boarding experience like Mobile Sales Diary (MSD) InstaGOInstaMix LifeEasy InstaSIP PoSP InstaVerify Chat PCVC Electronic ConsentVideo/Voice Integrated Sales Enabler - WISE Video and Tele Underwriting.

For our partners distributors and online aggregators we offerapplication programming interface (API's) and journey design that embed seamlessly intotheir insurance selling process giving straight-through experience for their customers. Wehave digital enablers like InstaInsure HelloSelfie InstaPlan InstaPRL Partner Portaland Corporate Portal to enhance partner engagement. LifeNext is integrated with theleading telecom fintech insuretech etc. issuing real-time policy issuance.

In addition to the on-boarding process the Company constantly strivesto enable real-time and convenient ways to serve the customer through multipleapplications like InstaServ VServ Click2Upload TrackNow InstaReceipt InstaRevivalLife Certificate Quick Register apart from enhancing Customer MyAccount Portal and App.We have leveraged artificial intelligence robotics and NLP in areas of customer servicingthrough Etty (WhatsApp service bot) Elle (chat bot) SPOK (email bot) Elsa (Alexa bot)Zoey (digital Avatar) and Twitter bot.

While in person interaction is important technology has been anenabler in all aspects of our business. Being cognizant of the current environment and theincreasing comfort of our customers to connect with us virtually we had launched 'WISE'-our video based sales enablement tool in June 2020. This tool enables our sales teams toconnect with customers via video and complete the entire sales process thereby providinga near face-to-face experience. We have seen good adoption of this tool in tier 2 and 3towns as well.

We have now extended the hybrid model of digital + human interaction toservicing via our tool 'VServ'. Vserv is an industry's first video based 'Phy-gital' modeof servicing. It allows our branch staff to service customers remotely and solve theirqueries and requests via virtual interactions.

Our chat based customer verification process has seen increasingadoption with over 50% of verifications being carried out through this mode therebyreducing dependency on sales persons or our call centre. We have seen increasing trends inonline payments by customers whereby about 95% of the policies are being reneweddigitally accounting for 87% of renewal premium being done via digital modes.

In order to identify new opportunities of additional revenue riskreduction and process optimisation the Company has taken initiatives to leverage dataalong with technology and specialised manpower. These have led to capabilities such aroundvision AI (FaceSense) speech AI (TrueCue) machine learning and predictive models forearly claims persistency customer propensity financial consultant engagement cognitivebots AI based virtual assistant (Insta).

Through our Futurance program the Company continues to engage withstart-ups and experiment with emerging technologies.

HDFC Life has taken up initiatives to achieve architectural resiliencethrough use of cloud services middle-ware services data lake API platform low codeplatforms and workforce resilience through hybrid work model using collaborationplatforms digital re-skilling for employees improving employee morale and productivityinitiatives and launch of Click2Wellness digital platform.

Cyber resilience continues to be the focus area of the Company withappropriate controls and tools implemented for risk mitigation especially while putting inplace a new operating model due to the pandemic. As part of the ISO 27001:2013 and ISMSassessment program independent auditors audit and verify the implementation.

We at HDFC Life continue in our pursuit for excellence in technologyand have been recognised with multiple awards in the space of technology innovation andcyber security initiatives throughout the year.


Our persistency ratios continue to be steady across various cohorts.The 13th month persistency for individual business has improved from 88% in FY2019-20 to 90% in FY 2020-21. The 61st month persistency remained stable at53%.

Awards & Accolades

The Company received various awards and accolades during the year underreview in areas of financial disclosures customer service technology digital solutionsproducts human resources marketing etc.

Some of the key ones are:

• Great Place to Work certification for the 11th time;India's Top 30 Best Workplaces in BFSI 2021 by Great Place to Work

• Awarded the 'Most Innovative Insurer' in the Life category atthe FICCI Insurance Industry Awards 2020

• Ranked as the 27th most valuable brand amongst theTop 75 Most Valuable Indian Brands 2020 in the BrandZ report published by WPP and Kantar

• Recognised as Superbrand for the 8th time

• Won the Best Innovation Award in the insurance segment at theETBFSI Excellence Awards 2020

• Won Best Security Practices in the Insurance Sector at the DSCIExcellence Awards 2020

• IMC RBNQA Trust - MQH Best Practices award for 'Creatingdifferentiated engagement & improving performance using SEO (Search EngineOptimisation)'

• Frost & Sullivan Project Evaluation and Recognition ProgramAward 2020 in the Customer Value Leadership Category Service Sector for the BranchDigitisation project

The complete list of all the awards is mentioned in the Awards &Accolades section of this report.

Regulatory Landscape

During the year under review the IRDAI issued various regulations andguidelines to facilitate the insurance industry to tide over uncertain times due to theCOVID-19 pandemic and to further aid the growth of industry. Some of the key regulations/guidelines etc. have been provided hereunder:

Products covering COVID-19

Insurers were allowed to offer COVID-19 related shortterm healthinsurance policies until March 2021. Later in July 2020 General and Health insurers weredirected to mandatorily offer standardised individual health insurance products coveringCOVID-19 namely "Corona Rakshak" and "Corona Kavach". The IRDAI alsoissued various norms on portability of group health insurance policies issued to accountholders of various banks and specific norms for such products.

Group Credit Life policies

Insurers were allowed to suitably modify the term and sum assured undergroup credit life insurance schemes. The modification was to be done with the objective ofaligning the cover available under such schemes with the revised

loan repayment schedule for members who had availed the facility ofmoratorium announced by the RBI (in the wake of the COVID-19 pandemic).

Relaxation in timelines

Following IRDAI's instructions on relaxation of timelines forapplicable grace period collection of premium filing of quarterly half-yearly andannual returns by insurers and insurance intermediaries the IRDAI further relaxed varioustimelines including for submission of hard copies of regulatory returns publicdisclosures on websites and compliance with revised standards and benchmarks forhospitals.

Higher FDI limits

The Insurance (Amendment) Act 2021 has been notified with effect fromMarch 25 2021 allowing the foreign investment limit in Indian Insurance companies up to74% from the earlier 49% omission of restrictions pertaining to Indian owned andcontrolled and revision in conditions and manner of foreign investments.

Rural and Social Sector obligations

HDFC Life maintains dedicated focus on undertaking rural business andendeavors to tailor its products and processes to support customer needs in this segment.

As part of its overall business the Company has achieved prescribedregulatory targets of social and rural business as follows:

• Rural Business - Achieved 21.70% versus prescribed requirementof 20% of overall business

• Social Business - Insured 9400794 social lives versusprescribed 3062325 social lives


The IRDAI requires life insurers to maintain a minimum Solvency Ratioof 150%. The Solvency Ratio is calculated as specified in the IRDA (Assets Liabilitiesand Solvency Margin of Insurers) Regulations 2016. As compared to the minimum requirementof 150% the Company's Solvency Ratio as at March 31 2021 was 201%.

Dividend & Reserves

In cognizance of the IRDAI Circular No. IRDA/F&A/CIR/MISC/099/04/2020 dated April 24 2020 the Company did not declare dividend for FY2020-21. Subsequently IRDAI had issued Circular Ref. No. IRDA/F&A/CIR/MISC/032/02/2021 dated February 25 2021 withdrawing applicability of its earlier Circulardated April 24 2020. However IRDAI had advised Insurers to take a view on dividenddeclaration for FY 2020-21 considering their capital solvency and liquidity positions.

The Board of Directors of the Company recommended a final dividend ofRs. 2.02 per equity share of face value of Rs. 10/- each subject to approval of themembers of the Company. This translates into a dividend pay-out ratio of 30%.

The Company has formulated a 'Dividend Distribution Policy' which hasbeen approved by the Board of Directors. In terms of Regulation 43A of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 ('SEBI Listing Regulations')the 'Dividend Distribution Policy' is hosted on the website of the Company at about-us/Investor-Relations.

The Company has carried forward profit amounting to Rs. 1360.10 croreearned during the year to the reserves. The Company had accumulated profits of Rs.5929.40 crore as at March 31 2021.

Capital Shares and Debentures

The issued subscribed and paid-up share capital of the Company as atMarch 31 2021 is Rs. 20209439660 comprising 2020943966 equity shares of facevalue of Rs. 10/- each.

During the year under review the Company has allotted 2145567 equityshares pursuant to exercise of options by option holders under its various Employee StockOption Schemes ('ESOS').The equity shares allotted under ESOS rank pari-passu withexisting equity shares issued and allotted by the Company.

Issue of Non-Convertible Debentures (NCDs)

During the year under review the Company has issued and allotted 6000unsecured redeemable nonconvertible debentures ("NCDs") each having a facevalue of Rs. 1000000/- for an aggregate nominal value of Rs. 6000000000/- (Rupees sixhundred crore only) in the nature 'subordinated debt' in accordance with InsuranceRegulatory and Development Authority of India (Other Forms of Capital) Regulations 2015and other applicable laws/ rules and regulations. NCDs are listed on the wholesale debtmarket segment of the National Stock Exchange of India Limited.

Credit Rating

During the year under review the rating agencies viz. ICRA Ltd. andCRISIL Ltd. had allotted below given ratings in favor of NCDs issued by the Company:

"[ICRA] AAA" with "stable" outlook by ICRA Ltd.and "CRISIL AAA/ Stable" by CRISIL Ltd.

Policy on remuneration to Non-Executive Directors

The Remuneration Policy ("the Policy") including thecriteria for remuneration to Non-Executive Directors is recommended by the Nomination& Remuneration

Committee ("NRC") and duly approved by the Board. The keyobjective of the Policy is to ensure that it is aligned with the overall performance ofthe Company. The Policy ensures that it is fair and reasonable to attract and retainnecessary talent. The Policy is placed on the website of the Company at Relations. The remuneration paid to theDirectors is in line with the Policy of the Company and in compliance with guidelinesissued by IRDAI. No Stock Options were granted to Non-Executive Directors.

Further details about remuneration to Directors including Whole-timeDirectors are provided under report on Corporate Governance which is enclosed as'Annexure 1' and forms part of this report.

Directors and Key Managerial Personnel

As on date of this report the Company's Board comprises of eleven (11)Directors viz. three (3) Non-Executive Directors six (6) Independent Directors two (2)Executive Directors including Managing Director & CEO.

(a) Changes in Board Composition

Changes in the Board Composition during FY 2020-21 along with theproposed changes are furnished below:

• Appointment/ Re-appointment of Director(s)

The Board of Directors based on the recommendations of the Nominationand Remuneration Committee of the Board ("NRC") has in its meeting held onMarch 17 2021 considered and approved re-appointment of Ms. Vibha Padalkar (DIN:01682810) as Managing Director & CEO of the Company and Mr. Suresh Badami (DIN:08224871) as Executive Director of the Company for a period of five (5) years with effectfrom September 12 2021 and September 18 2021 respectively subject to the approval ofIRDAI and the members at the 21st AGM of the Company.

The Board of Directors based on the recommendations of NRC has in itsmeeting held on April 26 2021 considered and approved reappointment of Mr. Sumit Bose(DIN: 03340616) as Independent Director of the Company for a second term of five (5)consecutive years with effect from July 19 2021 subject to the approval of the membersat the 21st AGM of the Company by way of a special resolution. Further thefirst term of Mr. Ranjan Mathai Independent Director of the Company expires on July 212021.

The necessary resolutions for re-appointment of the Directors alongwith their brief profile have been included in the Notice of the 21st AGM ofthe Company for approval of the members.

• Cessation of Director(s)

Ms. Stephanie Bruce (DIN: 08594969) ceased to hold office asNon-Executive Nominee Director of the Company with effect from the close of businesshours on January 13 2021 pursuant to withdrawal of her nomination by Standard Life(Mauritius Holdings) 2006 Limited. Accordingly Mr. Rushad Abadan (DIN: 08035538) who wasappointed as Alternate Director to Ms. Stephanie Bruce also ceased to hold office asAlternate Director with effect from January 13 2021.

• Retirement by Rotation

Section 152(6) of the Act provides that not less than two-thirds of thetotal number of directors of a public company shall be liable to retire by rotation andthat one-third of such directors as are liable to retire by rotation shall retire fromoffice at every AGM of the Company.

In accordance with the provisions of the Act Mr. Deepak S. Parekh(DIN: 00009078) NonExecutive Chairman being longest in office since his lastappointment retires by rotation and being eligible offers himself for re-appointment atthe 21st AGM of the Company.

As required under Regulation 36(3) of the SEBI Listing Regulationsparticulars of Directors seeking appointment/ re-appointment/ liable to retire by rotationat this AGM are given in the Annexure to the Explanatory Statement enclosed to the AGMNotice.

None of the Directors are disqualified from being appointed as'Director' pursuant to Section 164 of the Act or under any other applicable law.

The Company has obtained a Certificate from M/s. N. L. Bhatia &Associates practising Company Secretaries (Firm's Registration No. P1996MH055800)confirming that none of the Directors on the Board of the Company are debarred ordisqualified from being appointed or continuing as Director on the Board by the Securitiesand Exchange Board of India Ministry of Corporate Affairs or any other RegulatoryAuthority.

• Independent Directors

The Company has received declarations from all the IndependentDirectors confirming that they meet the 'Criteria of Independence' as laid down underSection 149(6) of the Act and the Rules made thereunder.

The Board is of the opinion that all the Independent Directors fulfillthe conditions relating to their status as Independent Director as specified under Section149 of the Act and the Rules made thereunder and applicable provisions of the SEBI ListingRegulations and are independent of the management.

The Company has undertaken the requisite steps for inclusion of thenames of all Independent Directors in the databank maintained with the Indian Institute ofCorporate Affairs Manesar ('IICA'). Accordingly all the Independent Directors of theCompany have registered themselves with IICA for the said purpose. In terms of Section 150of the Act read with Rule 6(4) of the Companies (Appointment & Qualification ofDirectors) Rules 2014 (including any amendments thereunder) Independent Directors arerequired to undertake online proficiency self-assessment test to be conducted by IICAwithin a period of two years from the date of inclusion of their names in the Databank.The online proficiency self-assessment test was completed by all the Independent Directorswho were required to undergo the same.

(b) Key Managerial Personnel (KMP's) and changes if any

In terms of the provisions of Sections 2(51) and 203 of the Act readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thefollowing employees were holding the position of Key Managerial Personnel (KMP) of theCompany as on March 31 2021:

Sr No Name of the KMP Designation
1 Ms. Vibha Padalkar Managing Director & CEO
2 Mr. Niraj Shah Chief Financial Officer
3 Mr. Narendra Gangan General Counsel Chief Compliance Officer & Company Secretary

In terms of the guidelines on Corporate Governance issued by IRDAI thefollowing senior management employees of the Company were holding positions of KMPs as onMarch 31 2021:

Sr. No. Name of the KMP Designation
1 Ms. Vibha Padalkar Managing Director & CEO
2 Mr. Suresh Badami Executive Director
3 Mr. Niraj Shah Chief Financial Officer
4 Mr. Parvez Mulla Chief Operating Officer
5 Mr. Prasun Gajri Chief Investment Officer
6 Mr. Srinivasan Parthasarathy Chief Actuary
7 Mr. Pankaj Gupta Group Head - Distribution Strategy and Alliances
8 Mr. Sanjay Vij Group Head - Bancassurance
9 Mr. Vibhash Naik Chief Human Resource Officer
10 Mr. Narendra Gangan General Counsel Chief Compliance Officer & Company Secretary
11 Mr. Khushru Sidhwa Head - Audit and Risk Management

There were no changes in the KMPs during the year.

Performance Evaluation of the Board and its Committees

Pursuant to the provisions of the Act and the SEBI ListingRegulations the Board has carried out the annual evaluation of its own performance andthat of its Committees and individual Directors. Further the Independent Directors metseparately without the attendance of non-Independent Directors and members of theManagement and inter alia reviewed the performance of non-independent directors andBoard as a whole; and performance of the Chairman. They further assessed the qualityquantity and timeliness of the flow of information between the Company Management and theBoard.

Overall the independent directors expressed their satisfaction on theperformance and effectiveness of the Board all the committees non-independent boardmembers and the Chairman and on the quality quantity and timeliness of flow ofinformation between the Company management and the Board. The NRC also undertook aperformance evaluation of individual directors and expressed its satisfaction onperformance of each director.

There have been no material observations or suggestions consequent tosuch evaluation and review.

'Fit and Proper' criteria

In accordance with the guidelines for Corporate Governance issued byIRDAI directors of insurers have to meet 'fit and proper' criteria prescribed by IRDAI.Accordingly all Directors of the Company have confirmed compliance with 'fit and proper'criteria/ norms prescribed under the guidelines on Corporate Governance issued by IRDAI.

The Company had received declarations from all the Directors in termsof Section 164 of the Act confirming that they are not disqualified being appointed asdirector of the other companies.

Directors & Officers (D&O) Liability Insurance

The Company has in place Directors and Officers Liability Insurance(D&O) for all its Directors (including Independent Directors) and Members of theSenior Management Team for such quantum and risks as determined by the Board in line withRegulation 25(10) of the SEBI Listing Regulations.

Succession Planning

The Nomination & Remuneration Committee of the Board overseesmatters related to succession planning of Directors Senior Management and other keyexecutives of the Company.

Meetings of the Board and its Committees attendance and constitutionof various Committees

The details of meetings of the Board and Committees of the Board heldduring the year attendance of Directors thereat and constitution of various Committees ofthe Board forms part of the Corporate Governance Report which is enclosed as 'Annexure1' to this report.

Management Discussion and Analysis Report Report on the CorporateGovernance and Business Responsibility Report

Pursuant to Regulation 34 of the SEBI Listing Regulations ManagementDiscussion and Analysis (MD&A) Report and Business Responsibility Report (BRR) ispresented in separate sections and forms part of this report.

In compliance with SEBI Listing Regulations a Report on the CorporateGovernance framework of the Company with certifications as required under applicableRegulations (including guidelines on Corporate Governance issued by IRDAI) in annexedhereto as 'Annexure 1' and forms part of this report.

Risk Management Framework

The Company has a defined risk management strategy and a framework thatis designed to identify measure monitor and mitigate various risks. With the outbreak ofCOVID-19 pandemic the Company was able to manage risks arising out of the pandemicthrough timely execution of the Business Continuity Management (BCM) framework as well assafeguards for the IT infrastructure and systems as part of the work from homeenvironment.

The Company has received the coveted RIMS 2020 Global ERM Award ofDistinction Honorable Mention for Innovation during the year. The award recognisesoutstanding integration of ERM with governance and strategy to achieve sustainablelong-term value across organisation.

A Board approved Risk Management Policy has been put in place which isreviewed periodically to establish appropriate systems or procedures to mitigate allmaterial risks faced by the Company. The risk management architecture of the Company hasbeen detailed under the Enterprise Risk Management section of the Annual Report.

Internal Audit Framework

The Company has institutionalised a robust and comprehensive internalaudit framework/mechanism across all the processes to ensure reliability of financialreporting timely feedback on achievement of operational and strategic goals andcompliance with applicable policies procedures laws and regulations.

The Internal Audit function at HDFC Life works closely with otherverticals in the ARM (Audit and Risk Management) Group and other assurance functionsconsidering relevant material inputs from risk registers compliance reports and externalauditor reports etc. The function also tests and reports compliance to Internal FinancialControls over Financial Reporting.

Internal audits are conducted by in-house Internal Audit team andco-sourced auditors. The function also undertakes follow-up on engagement findings andrecommendations in line with the approved framework.

The Internal Audit function reports its findings and follows up statuson these findings to the Audit Committee on quarterly basis.

Internal Financial Controls

The Company has institutionalised a robust and comprehensive internalcontrol mechanism across all the major processes. The Company has put in place adequatepolicies and procedures to ensure that the system of internal financial control iscommensurate with the size scale and complexity of its operations. These systems providea reasonable assurance in respect of providing financial and operational informationcomplying with applicable statutes safeguarding of assets of the Company prevention anddetection of frauds accuracy and completeness of accounting records and ensuringcompliance with corporate policies.

The internal audit in addition to ensuring compliance to policiesregulations processes etc. also test and report adequacy of internal financial controlswith reference to financial reporting/ statements.

Vigil Mechanism/ Whistle Blower Policy

The Company encourages an open and transparent system of working anddealing amongst its stakeholders. In accordance with Section 177(9) of the Act andRegulation 22 of SEBI Listing Regulations the Company is required to establish a VigilMechanism for Directors and employees to report genuine concerns. The Company has a Policyfor Prevention Detection and Investigation of Frauds and Protection of Whistle Blowers("the Whistleblower Policy") which also encourages its employees and variousstakeholders to bring to its notice any issue involving compromise/ violation of ethicalnorms legal or regulatory provisions actual or suspected fraud etc. without any fear ofreprisal discrimination harassment or victimisation of any kind. The details of WhistleBlower complaints/ concerns received if any and subsequent actions taken and thefunctioning of the Whistle Blower Mechanism is reviewed periodically by the AuditCommittee and Risk Management Committee of the Board.

Further details of the Vigil Mechanism and Whistle Blower Policy of theCompany are provided in the Report on Corporate Governance which forms part of thisreport. The Whistle Blower Policy is also available on the Company's website athttps://www.hdfclife. com/aboutus/Investor-Relations

Particulars regarding Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo

A. Conservation of Energy

In view of the nature of business activity of the Company theinformation relating to the conservation of energy as required under Section 134(3) andRule 8(3) of Companies (Accounts) Rules 2014 is not applicable to the Company.

B. Technology Absorption

Sr. No. Particulars Remarks
Research and Development (R&D)
1. Specific areas in which R&D is carried out by the Company NA
2. Benefits derived as a result of the above R&D NA
3. Future plan of action Improved automation using Robotic Process Automation/ Artificial Intelligence including Cognitive Face Recognition Voice Analytics/ Cloud Computing/ Cyber Security/ Machine Learning Enhanced/ simplified digital journeys.
4. Expenditure on R&D
a) Capital
b) Recurring NA
c) Total
d) Total R&D expenditure as a percentage of total turnover
Technology absorption adoption and innovation
1. Efforts made towards technology absorption Major initiatives undertaken/ completed are:
• Upgrade and add capabilities to InstaSuite of applications to reduce the friction in the customer journey.
• Seamless API-based partner integration. Suite of tech offerings which enable frictionless customer journeys such as Hello Selfie Credit Mart & other widgets
• Cloud migration to ensure high availability and scalable architecture
• Big Data and analytics models across several business areas and built a range of AI based capabilities
• Robotic Process Automation
• Customer Service further augmented on Mobile Apps
• Quick Claim process - Life Easy an analytics-driven investigation process
2. Benefits derived as a result of the above efforts (eg product improvement cost reduction product development import substitution and soon) • Cloud migration helped increase application availability by reducing downtimes ability to scale on demand with optimal performance
• InstA has 1400+ queries for partners customers and employees and is responding with 99% accuracy over 24 lakh queries/month
• By the use of RPA the organisation has achieved reduction in TAT's upto 90% improvement in accuracy upto 25% with reduced risk
Sr. No. Particulars Remarks
• Customer servicing touch-points enabled seamless experience during pandemic times
• Microsoft Teams collaboration platform configured for employees and third party to collaborate and work effectively as part of WFH
• ML and predictive analytics initiatives like early claims/ risk models help align new business with our risk appetite persistency models on probability of customers paying next premium financial consultant (FC) engagement model to predict FC activity levels
• Easy claims enabled 3-click journey for 99% of noninvestigative claims settled within 24 hours
3. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -
i. The details of technology imported;
ii. The year of import; NA
iii. Whether the technology been fully absorbed;
iv. If not fully absorbed areas where absorption has not taken place and the reasons thereof
4. Expenditure incurred on Research and Development NA

C. Foreign Exchange Earnings and Outgo

Details of foreign exchange earnings and outgo during FY 2020-21 are asfollows:

(' in crore)
Foreign Exchange Earnings 252.1
Foreign Exchange Outgo 242.5

5. Subsidiary Companies

(i) HDFC Pension Management Company Limited ("HDFC Pension")

HDFC Pension closed FY 2020-21 with assets under management of Rs.16384 crore. HDFC Pension is now the largest pension fund manager in India in the retailand corporate NPS category. It continues to be the fastest growing Pension Fund Manager(PFM) registering a Y-o-Y growth of 98%. Market share of the company grew from 31% to 34%over the year.

HDFC Pension was formed with a strategic rationale of being asignificant source of annuity business of HDFC Life and we remain enthused about thestrong potential of this business. HDFC Pension has 7.61 lakh customers as on March 312021 out of which 5.09 lakh are in the retail segment and 2.52 lakh are in the corporatesegment. HDFC Pension ranks #1 in the corporate segment and #2 in the retail segmentamongst all PFMs.

Effective April 1 2019 central government employees were allowed tochoose amongst private owned PFMs and hence this has opened up a big opportunity for HDFCPension. As on March 31 2021 HDFC PFM market share is 42% in this category.

Additionally HDFC Pension started operations as a point of presence(POP) in both retail and corporate NPS segments and has positioned itself strongly in thissegment as well. HDFC Pension is ranked #1 POP in terms of new corporate registrations andnew corporate subscriber registrations in FY 2020-21 and #8 in new retail subscriberregistrations amongst 90 plus POPs.

Financials and Business Outlook

A synopsis of financial performance is shown below:

(Rs. in lakh)
Particulars FY 2020-21 FY 2019-20
Gross Income 550.0 349.9
Total Expenses 539.8 430.7
Profit/ (Loss) before Tax 10.2 (80.8)
Provision for Tax 1.6 -
Profit/ (Loss) after Tax 8.6 (80.8)

(ii) HDFC International Life and Re Company Limited ("HDFCInternational")

HDFC International is as a wholly-owned subsidiary of HDFC Life havingits office in the Dubai International Financial Centre (DIFC).

Financials and Business Outlook

HDFC International has successfully completed five years of operationsand is steadily building experience in the GCC Life reinsurance market. It continues tofocus on the need for creation of stable and diversified revenue lines while acceleratingrevenue and profit growth. HDFC International has been working with ceding insurers toprovide reinsurance support for long-term individual life policies and also collaborate onfacultative arrangement on group programmes.

During FY 2020-21 HDFC International earned a Gross Income of US$ 13.3million while its expenses stood at US$ 1 million. The period under review ended with theCompany declaring its third successive annual profit with the figure standing at US$ 0.04million.

HDFC International's aim is to partner with insurers and help themrealise their potential through reinsurance solutions which enable them to innovate andoptimise as per the needs of their market segments.

6. Consolidated Financial Statements

In accordance with Section 129(3) of the Act and SEBI ListingRegulations Consolidated Financial Statements of the Company along with its wholly- ownedSubsidiaries viz. HDFC Pension and HDFC International have been prepared in accordancewith the applicable Accounting Standards issued by Institute of Chartered Accountant ofIndia ("the ICAI") and forms part of this report.

7. Statement containing salient features of the financial statements ofSubsidiaries

Pursuant to Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the subsidiaries in the prescribed Form AOC-1forms part of the financial statements.

8. Swabhimaan - Corporate Social Responsibility

As part of its initiatives under Corporate Social Responsibility("CSR") the Company has undertaken projects in various areas includingeducation livelihood health environmental sustainability

COVID-19 response sanitation etc. The CSR Policy is framed based onthe activities permitted under Schedule VII of the Act.

Consistent with the requirements of Section 135 of the Act andapplicable CSR Rules the Company has setup a Board-level CSR Committee to look after theCSR initiatives. The Committee is headed by Mr. Deepak S. Parekh as the Chairman and Mr.Ranjan Mathai and Ms. Vibha Padalkar as Members. The composition of the CSR Committee isin accordance with Section 135 of the Act.

The Ministry of Corporate Affairs ("MCA") has notified theCompanies (Corporate Social Responsibility Policy) Amendment Rules 2021 on January 222021. The said rules strive to increase the transparency and accountability towards CSRactivities by the Companies. In accordance with the requirements of the said Rules theCompany has suitably amended the existing Corporate Social Responsibility Policy("CSR Policy") and put in place the annual action plan for FY 2021-22. The CSRInitiatives/ Projects undertaken by the Company are in accordance with Schedule VII of theAct.

The annual report on CSR activities is enclosed as 'Annexure 2' andforms part of this report. The updated CSR Policy of the Company as approved by the Boardhad been hosted on the Company's website at https://

As prescribed under Section 135 of the Act certain Companies arerequired to spend at least 2% of their average net profits made during the threeimmediately preceding financial years in pursuance of their CSR Policy. Accordingly theCompany had spent Rs. 20 crore towards various CSR activities specified in Schedule VII ofthe Act during FY 2020-21.

9. Annual Return

Pursuant to the amendments to Section 134(3)(a) and Section 92(3) ofthe Act read with Rule 12 of the Companies (Management and Administration) Rules 2014the Annual Return (Form MGT-7) for the financial year ended March 31 2021 is hosted onthe website of the Company at aboutus/Investor-Relations

10. Related Party Transactions

Pursuant to Section 177 read with Section 188 of the Act the AuditCommittee approves the related party transactions of the Company on a quarterly basis. All

the related party transactions entered during the year under reviewwere in the ordinary course of business and on an arm's length basis thereby notrequiring a separate Board/ Shareholders' approval.

The Related Party Transactions Policy of the Company ensures timelyapprovals and reporting of the concerned transactions between the Company and its relatedparties to the concerned authorities. The Policy on Related Party Transactions is placedon the Company's website at the under mentioned link:

During the year there were no material transactions with relatedparties which were not in the ordinary course of business and not on an arm's lengthbasis.

M/s. B.K. Khare & Co. Chartered Accountants have reviewed therelated party transactions for FY 2020-21 and their reports were placed before the AuditCommittee for review along with details of such transactions.

As per the requirements of the Accounting Standards (AS) - 18 issued bythe ICAI on 'Related Party Disclosures' the details of related party transactions enteredinto by the Company are covered under Notes forming part of the financial statements.

11. Ind AS Roadmap

IRDAI had issued a circular dated June 28 2017 deferring theimplementation date for Ind AS 117 Insurance Contracts for insurance sector in India fora period of two years to be effective from FY 2020-21. This circular was withdrawn laterthrough IRDAI circular dated January 21 2020 notifying that effective date ofimplementation shall be decided after finalisation of IFRS 17 by the InternationalAccounting Standard Board (IASB).

The IASB had issued the new standard IFRS 17 Insurance Contractsinitially with effective date on or after January 1 2021 which was further deferred fromMarch 2020 to period beginning on or after January 1 2023. Further in June 2020 theIASB amended IFRS 17 to address concerns and implementation challenges that wereidentified after publication of IFRS 17.

In order to remain converged with IFRS amended standards in December2020 the ICAI issued an exposure draft of Amendments to Ind AS 117 for comments frompublic including in the exposure draft an effective date of implementation to be annualreporting periods beginning on or after April 1 2023.

The final date of Ind AS implementation is yet to be announced byIRDAI.

12. Statutory Auditors

M/s. G.M. Kapadia & Co. Chartered Accountants (Firm RegistrationNo. 104767W) and M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No.012754N/N500016) are the Joint Statutory Auditors of the Company.

The Joint Statutory Auditors have not made any qualification/reservation/ adverse remarks or disclaimer in their report for FY 2020-21.

As per the IRDAI Regulations a Statutory Auditor can conduct audit ofinsurance company for a maximum period of 5 years at a time. Further as per the Act anaudit firm can be appointed as Statutory Auditor for not more than two terms of five (5)consecutive years.

Members may note that appointment of M/s. G.M. Kapadia & Co.Chartered Accountants was approved by the members in the 16th AGM of theCompany held on July 14 2016 for a period of five (5) consecutive years i.e. until theconclusion of the 21st AGM. Appointment of M/s. Price Waterhouse CharteredAccountants LLP Chartered Accountants was approved by the members in the 19thAGM held on July 23 2019 for a second term of five (5) consecutive years i.e. up to theconclusion of the 24th AGM.

As per the provisions of the Act read with rules made thereunder thecurrent term of M/s. G.M. Kapadia & Co. Chartered Accountants ends at the conclusionof the 21st AGM of the Company. The Board of Directors based on therecommendation of the Audit Committee has recommended re-appointment of M/s. G.M. Kapadia& Co. Chartered Accountants for second term of five (5) consecutive years from theconclusion of 21st AGM until the conclusion of the 26th AGM of theCompany.

The resolution seeking revision in remuneration payable to JointStatutory Auditors in connection with the audit of the accounts of the Company for the FY2021-22 and the re-appointment of M/s. G.M. Kapadia & Co. Chartered Accountants forthe second term of five (5) consecutive years has been included in the Notice of the 21stAGM for approval of members.

13. Independent Auditors' Report

M/s. Price Waterhouse Chartered Accountants LLP and M/s. G.M. Kapadia& Co. Chartered Accountants Joint Statutory Auditors of the Company have auditedthe financial statements of the Company for FY 2020-21 and their Report is enclosed andforms part of this Report.

Audit observations if any and corrective actions taken by theManagement are presented to the Audit Committee of the Board from time to time.

There are no qualifications reservations or adverse remarks made inthe Auditors' Report.

14. Reporting of frauds by Auditors

During the year under review there have been no instances of fraudreported by the Auditors to the Audit Committee of the Board pursuant to Section 143(12)of the Act and the Rules made thereunder.

15. Legal Update

There are no significant and material orders were passed by theregulators courts or tribunals that impacted the going concern status of the Company orwhich can potentially impact the Company's future operations.

16. Material changes and commitments affecting the financial position

There have been no material changes and commitments affecting thefinancial position of the Company which have occurred between the end of the financialyear of the Company to which the Balance Sheet relates and the date of this report.

17. Secretarial Audit Report

Pursuant to the requirements of Section 204 of the Act and Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. N. L. Bhatia & Associates Practising Company Secretaries (FirmRegistration No. P1996MH055800) for conducting the Secretarial Audit for the financialyear ended March 31 2021. The Secretarial Audit Report for FY 2020-21 issued by M/s. N.L. Bhatia & Associates Practising Company Secretaries is enclosed as 'Annexure 3' andforms part of this report.

18. Secretarial Standards

The Company has complied with Secretarial Standards on Meetings of theBoard of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of CompanySecretaries of India (ICSI).

19. Maintenance of Cost Records

Being insurance company the Company is not required to maintain costrecords.

20. Change in the nature of business

During the year under review there has been no change in the nature ofbusiness of the Company.

21. Deposits

The Company has not accepted any deposits during the year under reviewand hence provisions of the Act relating to acceptance of Public Deposits are notapplicable to the Company.

22. Loans Guarantees or Investments

In line with the clarification given by the Ministry of CorporateAffairs under the Removal of Difficulty Order dated February 13 2015 the provisions ofSection 186 of the Act relating to loans guarantees and investments not applicable to theCompany.

23. Employee Stock Option Schemes

The Company has formulated various Employee Stock Option Scheme(s)("ESOP schemes") which helps it to retain and attract right talent and inadministering the issue of Stock Options to its eligible Employees including that of itssubsidiary companies. The NRC administers the Company's ESOP schemes. There has been nomaterial variation in the terms of the options granted under any of the ESOP schemes andall the ESOP schemes are in compliance with the SEBI (Share Based Employee Benefits)Regulations 2014 ("SBEB Regulations").

The Annual Certificate on compliance with SBEB Regulations issued byStatutory Auditors of the Company is being made available for inspection at theforthcoming AGM of the Company.

During the year under review there were no instances of loan grantedby the Company to its employees for purchasing/ subscribing its shares.

The statutory disclosures as mandated under the SBEB Regulations havebeen hosted on the website of the Company at

24. Sale of shares by Promoters

During the year Housing Development Finance Corporation Limited("HDFC Limited") and Standard Life (Mauritius Holdings) 2006 Limited("Standard Life") Promoters of the Company sold certain equity shares of theCompany. The details of which are furnished below:

HDFC Limited

Date of transaction Number of shares sold % to total paid- up capital*
June 3 2020 26000000 1.29
November 13 2020# 2548750 0.13
Total 28548750

* % to total paid capital refers to paid up capital as on date oftransaction mentioned above.

#Pursuant to the directions of the Reserve Bank of India and NationalHousing Bank's Circular No. NHB (ND)/DRS/Policy Circular No. 71/2014-15 dated April 222015 HDFC Limited had reduced its stake to 50% on November132020. Hence as per Section19 of the Act the Company has ceased to be a subsidiary of HDFC Limited with effect fromNovember 132020.

The sale of shares by HDFC Ltd had resulted in dilution of theirshareholding from 51.44% as on March 31 2020 to 49.97% as on March 31 2021.

Standard Life

Date of transaction Number of shares sold % to total paid- up capital*
June 4 2020 40000000 1.98
December 3 2020 27772684 1.38
Total 67772684

* % to total paid capital refers to paid up capital as on date oftransaction mentioned above.

Further the sale of shares by Standard Life resulted in dilution inits shareholding in the Company from 12.25% as on March 31 2020 to 8.88% as on March 312021.

25. Appointed Actuary's Certificate

The Appointed Actuary has provided certificate on valuation andactuarial assumptions.

26. Prevention and Redressal of Sexual Harassment Policy anddisclosure under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013

Internal Complaints Committee (ICC):

The Company has instituted an Apex Committee and four zonal InternalComplaints Committees (ICCs) for redressal and timely management of sexual harassmentcomplaints. The central Apex Committee is chaired by a senior woman leader of the Company.The Committee also has an external senior representative member who is a subject matterexpert. All zonal ICCs have minimum of 50% women representatives and their functioning isoverseen by the central Apex Committee. The Risk Management Committee of the Board isperiodically updated on matters arising out of the Policy/Framework as well as on certainincidents if any.

Prevention and Redressal of Sexual Harassment (PRSH) Policy andAwareness:

The Company has zero tolerance towards sexual harassment and iscommitted to provide a safe environment for all. Organisation's PRSH policy is inclusiveirrespective of gender or sexual orientation of an individual. It also includes situationsaround work from home scenarios.

To create awareness on this sensitive and important topic aninformative campaign was driven for all the employees. Also the Prevention and Redressalof Sexual Harassment (PRSH) module on the Company's self learning application (MLearn) hasbeen revised and made mandatory for all the employees.

Pursuant to the said Act the details regarding number of complaintsreceived disposed and pending during FY 2020-21 pertaining to incidents under the aboveframework/ law are as follows:

Particulars Numbers
Number of complaints filed during the financial year 35
Number of complaints closed during the financial year 27
Number of complaints pending as on March 31 2021 8

27. Directors' Responsibility Statement

In accordance with the requirements of Section 134 of the Act theBoard of Directors state that:

i. In the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures (if any);

ii. Such accounting policies have been selected and appliedconsistently and judgments and estimates made that are reasonable and prudent so as togive a true and fair view of the Company's state of affairs as on March 31 2021 and ofthe Company's profit for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The annual accounts have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed bythe Company and such internal financial controls are adequate and operating effectively;and

vi. Proper systems have been devised to ensure compliance with theprovisions of all applicable laws and such systems were adequate and operatingeffectively.

28. Appreciation and Acknowledgement

The Directors place on record their gratitude for all thepolicyholders shareholders customers distributors and business associates for reposingtheir trust and confidence in the Company. Directors would also take this opportunity toexpress their appreciation for the hard work and dedication of the employees and for theiruntiring commitment; and the senior management for continuing success of the business indifficult times.

The Directors further take this opportunity to record their gratitudeto Housing Development Finance Corporation Limited and Standard Life (Mauritius Holdings)2006 Limited Promoters of the Company for their invaluable and continued support andguidance and also to Insurance Regulatory and Development Authority of India ('IRDAI')Securities and Exchange Board of India ('SEBI') Ministry of Corporate Affairs ('MCA')Reserve Bank of India ('RBI') Pension Fund Regulatory and Development Authority('PFRDA') Life Insurance Council Stock Exchanges Depositories Debenture Trustees andother governmental and regulatory authorities for their support guidance and co-operationfrom time to time.

On behalf of the Board of Directors
Deepak S. Parekh
Place: Mumbai Chairman
Date: April 26 2021 (DIN: 00009078)