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HDFC Life Insurance Company Ltd.

BSE: 540777 Sector: Financials
BSE 00:00 | 16 Apr 690.95 -3.15






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OPEN 695.90
VOLUME 49708
52-Week high 746.00
52-Week low 451.25
P/E 103.13
Mkt Cap.(Rs cr) 139,637
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 695.90
CLOSE 694.10
VOLUME 49708
52-Week high 746.00
52-Week low 451.25
P/E 103.13
Mkt Cap.(Rs cr) 139,637
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company director report




(Formerly HDFC Standard Life Insurance Company Limited)

Your Directors are pleased to present the 20th Annual Report of HDFC LifeInsurance Company Limited ("Company"/ "HDFC Life") together with theAudited Financial Statements for the year ended March 312020.

Standalone Financial Performance Business Review and Outlook Financial Performance:

(Rs in crore)


Standalone (Audited)

FY 2020 FY 2019
a. New business premium 17238 14971
(i) Regular premium 6044 5058
(ii) Single premium 11194 9913
b. Renewal premium 15468 14215
Total Premium 32707 29186
Profit After Tax 1295 1277

Other Key Parameters:

Particulars FY 2020 FY 2019
Individual APE 6145 5204
Group new business premium 8775 7327
Assets under Management 127226 125552
Embedded Value 20650 18301
Overall new business margins (post overrun) 25.9% 24.6%

Note: Embedded Value and Overall new business margins for FY2020 and FY2019 are basedon external review

Business Review and Outlook Macro Economic Scenario

The year gone by proved to be quite tumultuous for the Indian economy. The newgovernment continued to grapple with the economic slowdown triggered by the NBFC/ HFCdefaults that had hit the economy. Household income savings and consumption data hadshowed that the Indian consumption trends were increasingly supported by rising householdleverage as the growth of consumption had outstripped income growth over the previousyears. The urban and the industrial sector did not see any turnaround and the quarterlyGDP slowed to 4.7% in the October-December 2019 quarter the lowest over the previous 7years. The government and the RBI took multiple steps through the year to provide stimulusand stem the weakness in growth.

The last quarter of the year brought forth a nightmare for the global economy as anovel Coronavirus (Covid-19) first affected a province in China and thereafter spreadrapidly across the world. The lockdowns in India as well as across most large economiesresulted in economic activity coming to a grinding halt. Oil prices along with othercommodity prices saw sharp correction in prices as did equities. RBI provided asignificant monetary boost to the economy through big interest rate cuts liquiditysupport and moratorium on borrowings from the banking system. The Government also unveiledits first set of fiscal measures to support the weaker sections of the population.

Industry Update

In FY 2020 the life insurance industry continued to showcase healthy growth in termsof new business premiums despite challenges faced in the broader financial servicesmarket. Growth in premium was seen by both private players and Life Insurance Corporationof India (LIC). Private players grew by 12% in overall new business received premium whileLIC grew by 25%. Within private players the top 7 players continue to grow faster thanthe private industry and gain market share.

The bancassurance channel continued to be a major source of new business for theprivate players. However the channel's share in total business came down on account ofincreasing focus on proprietary channels i.e. Agency and Direct. Proprietary channelscontributed ~40% of new business in 9M FY 2020.

In terms of products private players have increased their focus on theunder-penetrated protection opportunity both in retail as well as the group segments.There was a decline in the share of ULIPs. This can be attributed to tepid capital marketsand relative attractiveness of the conservative traditional products given the macroenvironment. Non-participating savings emerged to a key focus area for most of the privateplayers.

Covid-19 Update

We continue to drive our business on the back of our stated strategy of balancedproduct mix diversified distribution continuous product innovation and reimagininginsurance through effective use of technology.

Our business continuity plan was put in motion and duly tested during this period. Theinitial focus was to ensure safety of our employees and providing seamless service to ourexisting customers. Enhancing the already digitised customer journey for both existing andnew policies helped us convert our existing pipeline and maximise renewal premiums. Whilenew engagements have been impacted meaningful part of our business has moved to non face-to-face models. Our past investments in technology and a robust online channel helped usin this journey. We believe that this situation will lead to greater adoption of digitalassets by our distributors partners customers and we are seeing increasing evidence ofthe same.

Our calibrated approach puts us in a position to adapt faster than the market. Benefitsof a balanced product mix are even more evident in this turbulent environment. We continueour measured approach with respect to pricing and underwriting to address the multi-decadeprotection opportunity. We will dynamically keep reviewing the situation and our endeavourremains to be agile and adapt to the changing environment in the shortterm.

Over the medium to long-term we expect the life insurance industry to continue to growon the back of robust macro factors favourable demographics increasing financialisationof savings recent regulatory developments enabling innovation digitisation amongst otherfactors.

Company Performance Sustained growth across segments

We have witnessed strong growth across both the individual and group segments in FY2020 despite the disruption on account of the lockdown in March 2020. Our market shareamongst private insurers based on Individual WRP increased to 14.2% (PY: 12.5%) on theback of strong growth of 19% while our total new business premium increased by 15% to Rs17258 crore. We maintained our leadership position within the group segment recordinggrowth of 20% to end at Rs 8775 crore. Total premium grew by 12% to Rs 32707 crorecompared to Rs 29186 crore in FY 2019 underpinned by new business growth of 15% and 9%growth in renewal premium.

Diversification and Innovation being the key themes across our business

In line with our stated strategy of maintaining a diversified distribution mix wecontinued to expand our reach beyond the traditional modes of distribution. We currentlywork with over 230 partners across NBFCs (non-banking financial companies) MFIs (microfinance institutions) SFBs (small finance banks) etc. and more than 40 partnerships inthe new ecosystems.

We have grown well across all our distribution channels with our proprietary (agencyand direct channels) and Broker channel growing by 32% and 164% respectively based onIndividual APE. Our bancassurance channel accounted for 23% of total new business premiumfor FY 2020. Agency Direct Broker channels and Group business contributed 7% 17% 3%and 51% respectively. Protection remains a key focus area within the group segmentcontributing 49% of our group business. All the channels continue to be profitable basedon post overrun new business margins.

Product innovation has been one of the key pillars of our strategy and a keydifferentiator. We continue to address the mortality morbidity longevity and interestrate risks of our customers. Our newly launched products within the non-par (Sanchay Plus)and par (Sanchay Par Advantage) segments received good response from our customers. With aview to maintaining a balanced and profitable product suite participating savings nonparticipating savings ULIPs protection and annuity accounted for 19% 41% 28% 8% and4% of Individual APE respectively. Protection and Annuity segments contributed to around27% and 16% of total new business premium.

In line with the growth in protection new business sum assured grew by 50% to Rs911067 crore (from Rs 605820 crore last year). Number of lives insured increased from5.1 crore last year to 6.1 crore.

Re-imagining life insurance business leveraging technology and catering tocontinuously evolving customer preferences

Technology has been a key differentiator for us and we continue to invest intechnology to transform our business model from a product-centric one to a model where wekeep the customer at the centre of our thought process. Our suite of mobile applications"Insta suite" comprising various sub modules helps facilitate sales teams toonboard customers efficiently. In addition to the on-boarding process we have also takenvarious initiatives to provide a simple and fast journey reducing our policy conversionTAT from 2 days in FY 2015 to less than 4 hours in FY 2020.

We have built platforms powered by advanced analytics automation and artificialintelligence to manage our diversified distribution mix comprising of both traditional andnew-age ecosystem partners. Our Instalnsure offering provides pre-approved insurancesolutions for select customer segments using underwriting algorithms and deep integrationwith partner systems.

Our self-service bots on e-mail Twitter WhatsApp and chat provide 24*7 servicing tocustomers. Moreover about 96% of all requests are now serviced in less than 8 hours.

Our focus on simplifying the customer journey involved the rollout of initiatives likeLifeEasy and Customer360. LifeEasy is an analytics-driven investigation process which hasenabled us to settle 99.96% of claims (non- investigated cases) within 1 day of intimationin Q4 of

FY 2020. Customer 360 is a real-time customer interaction aggregator developed tounderstand customer needs holistically and offer better service.

During FY 2020 99.9% of new business was initiated through digital platforms. Around85% of the renewal payments came through online modes. 210+ bots were deployed acrossinternal processes and 60% of post sales verification calls were completed through InstaVerify (a video-based authentication mobile app).

Persistency ratios continue to be steady across various cohorts. The 13thmonth persistency for individual business has improved from 84% in FY 2019 to 88% in FY2020. The 61st month persistency improved from 51% in FY 2019 to 54% in FY2020.

Maintaining Profitable Growth

Our embedded value was Rs 20650 crore as on March 31 2020 with a healthy operatingreturn on embedded value (EVOP/Opening Embedded Value) of 18.1% versus 20.1% for lastyear. This was due to lower interest rates and after strengthening persistency assumptionsand setting aside a reserve for higher mortality claims on account of Covid-19.

We continue to maintain healthy post overrun new business margin (based on actualexpenses) of 25.9% versus 24.6% for last year. The profit after tax (PAT) for HDFC Lifegrew by 1% over last year to Rs 1295 crore in FY 2020.

The operating expenses (Opex) to total premium ratio remained stable at 13.1% during FY2020 despite continued investment in growth opportunities and innovation.

Our assets under management (AUM) were Rs 127226 crore with a debt-equity proportionof 71:29 as on March 312020 thereby clocking a 1% growth over last year. The accretionto AUM was offset by decline in equity markets.

Business Outlook

We believe that there is significant growth potential for life insurance given theunder-penetration and robust demographic trends and that it is well placed to capturethese multi decade opportunities. We have built a track record across business cycles overthe past decade and are confident of delivering value to customers and profitable growthto our shareholders going forward as well.


Life Insurance products are seen as an ideal solution to secure long-term financialgoals. HDFC Life provides a variety of life insurance solutions to meet the diverse needsof its customers across life and health protection retirement savings and investments.We have 37 individual and 11 group products along with 6 rider benefits.

Economic slowdown and financial distress can easily create uncertainties for thebreadwinner of the family potentially derailing short-term and long-term plans of thehousehold. To protect against such unforeseen circumstances it would be imperative tohave additional sources of income which can secure one's lifestyle.

The general principle of investing however suggests that investment should mirrorlife goals with short-term goals met through liquid and fixed income assets while medium/long term goals are better met through varying combination of debts and equities.Customers who believe in this philosophy would prefer to have some equity exposure to meettheir lont-term needs.

At HDFC Life we have identified this customer need of securing long-term income andintroduced many first- to-market products like HDFC Life Pension Guaranteed Plan which waslaunched in early 2018 and our recent product HDFC Life Sanchay Plus which has gainedgood acceptance from our customers. Both products have enabled customers with low riskappetite to generate guaranteed supplementary income according to their life-stage need.

In November 2019 we have launched a unique offering in the traditional participatingspace called HDFC Life Sanchay Par Advantage. This product has many unique features likewhole life cover immediate or deferred income option to receive guaranteed incomeoption to accumulate income if not needed with ability to withdraw as and when requiredmaking this a truly customised product. Further the investment strategy for this productallows exposure to equity offering potential of superior returns over the longer term.

We will continue our focus on developing innovative product propositions that focus onaddressing customer needs at every stage of life.

Human Resource and People Development

At FHDFC Life we believe people are the driving force behind our success. We havewell-defined policies in place to attract talent train and develop them for higherproductivity create an engaged workforce by imbibing a culture of meritocracy andproviding performance-based recognitions and rewards.

Our core focus areas are right hiring developing people for higher productivity andcreating an engaged talent force. Digitisation continues to remain at the heart of all ourpeople processes.

We have been taking various measures to build a diverse and rich talent pool and alsocreate a robust pipeline. For career opportunities that arise in the organisation ourinternal talent is given the first priority. Through career progressions and Internal JobPostings ('IJPs') we encourage our employees to opt for cross functional movementsthereby broadening their professional exposure. Over the years we have developedalliances with universities and academia for a train and hire model for our frontlinesales roles. For Managerial levels our campus hiring programme 'Jigyasa' continues toinduct fresh minds from coveted business schools across the country. With digitisationbeing the core business requirement our Graduate Trainee Programme' has been developed tobuild a strong new-age technology skill set in the organisation.

We believe that values are the most critical elements that reflect the conduct of anorganisation. Our organisation values in conjunction with clearly identified leadershipbehaviours enable employees across levels to deliver on their responsibilities towardsinternal and external customers in an effective way. Various scientifically designedassessment tools in external hiring as well as internal career advancement processesensure that employees are aligned to these values.

We have also institutionalised various talent review and succession planning processesacross Middle and Senior Management levels. These have enabled us in developing people forhigher productivity in their current role and in building a strong pipeline offuture-ready talent.

We are committed to creating and sustaining a high performance culture across theorganisation. Therefore our performance management system is deeply entrenched in theprinciples of balanced scorecard. At the same time our compensation philosophy ensures webenchmark ourselves with the external market in order to stay attractive as a potentialemployer. We ensure that we differentiate and reward high performance internally.

On the learning and development front our mission is to meet the organisation'sstrategic needs by facilitating enterprise-wide capability development for employees anddistributors. We have been enabling this through adoption of a contemporary andprogressive learning ecosystem.

Particulars of Employees

The statement showing particulars of employees pursuant to Section 197 of the CompaniesAct 2013 (the 'Act') read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report. However theabove mentioned statement is not being sent to the Members along with this Annual Reportin accordance with the provisions of Section 136 of the Act.

The aforesaid information is available for inspection by the Members up to the date ofthis AGM on all working days during business hours at the Registered Office. Members whoare interested in obtaining the said particulars may please write to the CompanySecretary.

The details of remuneration of Directors and Employees as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 including amendments thereof are given as an 'Annexure5' and forms part of this report.


The year gone by posed multiple challenges from an investment management perspective.The clear majority secured by the incumbent NDA coalition at the general elections heldat the beginning of the year was positive for policy continuity and led to expectationsof greater political stability and a renewed focus on pursuing economic reforms.

The initial quarters of the year were characterised by slowing growth as the domesticeconomy grappled with the lingering effects of NBFC and HFC defaults over the previousyear. The rural and agriculture sector was weak due to the after-effects of poor monsoonin the previous year. The industrial sector too was plagued by slow demand growth andlow capacity utilisation affecting revenues and margins.

The government and the RBI took several fiscal and monetary measures to help revivegrowth. Among the key fiscal measures the government cut corporate tax rates aggressivelyto support manufacturing companies as well as promote fresh investments. The RBI too cutinterest rates cumulatively by 135 bps over the course of calendar year 2019. The domesticeconomy continued its weakening trend and hit a low of 4.7% growth in the October-December2019 quarter.

The global economic growth too slowed down due to the escalating trade war betweenthe US and China primarily as well as other countries. Major developed economies'central banks eased monetary policies to stem the weakening activity. Towards the end ofthe year the US and China agreed to a 'Phase 1' deal that halted the tit-for- tat tariffimpositions and paved the way for negotiations to reach a more comprehensive agreement.

The equity markets had their fair share of volatility during the year. Notwithstandingthe strong electoral mandate for the union government equity markets were quite listlessin the initial quarters as the weakening economy weighed on sentiments. Consumption growthstayed tepid through the year which affected top line growth of the consumption sector -both durables as well as non-durables. Capex trends in the industrial sector andinfrastructure too were weak while export-oriented sectors were affected by the insipidglobal trends. However expectations of turnaround and a pick-up in growth in the latterhalf of the year saw equity markets regain their momentum. Underlying corporate earningswere also forecast to pickup as the cycle of elevated NPA provisioning for financial firmswas waning while the corporate tax rate cuts provided an additional boost to earnings.Weak global growth also helped firms lower their input costs and shore up margins. Theupward momentum was reinforced by strong capital inflows from foreign investors taking thelarge cap equity indices to fresh lifetime highs.

During the last quarter of the year rapid spread of the novel corona virus (Covid-19)in a Chinese province and thereafter to a large number of countries across the globe andmore specifically in Europe and the US put a tight squeeze on global activity. Lockdownwas imposed by certain countries including India to control the spread of the highlycontagious virus. The lockdowns and the sharp deterioration in activity are expected totip the global economy into a severe recession in the coming quarters. Equity marketsaround the world saw sharp and severe corrections with a number of indices slipping intobear markets. The large cap Nifty index too slipped during the last quarter and endedthe year 26% below the levels prevailing at the end of the previous year while the MidCap indices fell around 31 - 35% in the same period.

The fixed income markets meanwhile had a positive year on the back of listless growthand easing monetary policy. RBI cut policy interest rates and added liquidity into thebanking system through Open Market Operations ('OMO') purchases and unsterilised forexpurchases.

In March 2020 in addition to the earlier rate cuts RBI took aggressive measures tostem the weakness in the corona virus afflicted economy. RBI cut interest rates by anadditional 75 to 90 bps and added huge amounts of liquidity to help stem the deteriorationin activity levels. Over the course of the year RBI also resorted to number ofunconventional measures to improve the transmission of its rate actions to the realeconomy. RBI used Long Term Repos (LTROs) for the first time in India to add liquidity aswell as resorted to simultaneous purchase and sale of different maturity securities in theopen market (Operation Twist) to influence the shape of the yield curve. The 10-yearbenchmark government security yield eased from 7.35% to 6.12% over the year.

Our investment funds were managed as per the stated objectives laid down in theInvestment Policy Asset-Liability Management Policy (ALM Policy') and respective funds'objectives. These policies lay down the asset allocation and risk appetite guidelines fordifferent funds some of which have in-built guarantees. Fund allocation is tracked on aregular basis and is backed by suitable assets. During the year the asset allocation inour conventional and shareholder funds was in line with the ALM policy.

Your Company's total AUM as on March 31 2020 was Rs 127226 crore. This comprisedassets of Rs 54182 crore held under the unit-linked funds and Rs 73044 crore held underthe conventional funds and shareholders' funds. Corresponding numbers for the previousyear were Rs 63378 crore and Rs 62174 crore respectively.

Information Technology

We continue our journey of leveraging technology to transform our business. We haveinvested in technological platforms and systems to improve customer lifecycle managementand improve efficiencies for our customers and distributors. HDFC Life's operating modelhas evolved from a traditional distribution and product play model to a matrix ofplatforms digital channels ecosystems and traditional avenues led by technology andanalytics.

HDFC Life is a key player in the digital ecosystem supported by strong tie-ups withmultiple partners proprietary platforms and growth engines. These engines ultimatelytranslate to five building blocks viz. Journey simplification Partner integration Datalabs Service simplification and Platforms and ecosystems.

In our effort to simplify the Customer on-boarding process we continue to develop asuite of mobile applications such as InstaMix InstaGo Mobile Sales Diary (MSD)InstaVerify and InstA.

Your Company continues to integrate its products and processes with online aggregatorand net banking customer journeys. The integration options enable aggregators/ banks todesign and embed insurance purchase in their own customer journey.

This enables superior customer experience and ensures that best practices as well asproduct updates and features are seamlessly integrated. In addition to the on-boardingprocess we constantly strive to reduce friction in the customer journey with the intentto provide a simple and seamless journey across the value chain. To enable the same wecontinue to invest and leverage on our capabilities in cloud computing artificialintelligence and robotics amongst others.

Information Security and Cyber Security continues to be the focus areas of HDFC Life.As part of the ISO 27001:2013 and ISMS assessment programme independent auditors andIRDAI auditors validated and certified the controls implemented by us.

Your Company has successfully managed the current Covid-19 lockdown situation byproviding necessary technology platform and support to enable employees to work from homewithin a short period of time. We also enabled a solution for teams to collaborate. Thisperiod aligned with the financial year end and we were able to process new business andservice customers due to the digital capabilities built over the years.

In line with our constant quest for excellence the technology team at HDFC Lifecontinues to receive recognition and has received 18+ awards for various Technology andCyber Security initiatives and achievements throughout the year.

Awards & Accolades

Your Company had received various awards and accolades during the year under reviewacross financial disclosures customer service technology digital solutions productshuman resources marketing etc.

Your Company was recognised as one of 'India's Top 25 Best Workplaces in BFSI 2020' byGreat Place To Work. Your Company's Annual Report 2018-19 won the Silver Shield forExcellence in Financial Reporting at the Institute of Chartered Accountants of India('ICAI') 2019 and Platinum Shield at the LACP Vision Awards 2018-19.

Your Company had received the 'Best Marketing Strategy of the Year' at the InsuranceIndia Summit & Awards 2019 and was adjudged the most 'Trusted Brand' in the Reader'sDigest Trusted Brand Survey. Kantar BrandZ recognised your Company as the Most ValuableLife Insurer and ranked HDFC Life at 27th in the '75 Most Valuable IndianBrands'. Your Company was also adjudged Superbrand 2019-20. For its digital campaignsyour Company has received the Gold award for Branded Content and Bronze Award for MediaPartnership at the Campaign Media 360 2020 Awards. At the ET Brand Equity India DG+Awards HDFC Life won Gold in the Best BFSI Campaign category at the Smarties India 2019Awards your Company won the Best Use of Mobile Audio and also won the Bronze Award forBest Brand-lnfluencer collaboration at the IAMAI India Digital Awards 2020.

At the ABP News BFSI Awards 2019 your Company has won several awards including'Technology Initiative of the Year' 'Best Digital Transformation Initiative of the Yearin Life Insurance (LI) Sector' 'Best Service Excellence Initiative of the Year in the LIsector' 'Best Emerging Technology Initiative of the Year in the LI sector''Best DataAnalytics of the Year) and most importantly the 'Best Life Insurance Company of the Year'.We have received 'Sales Champion Award in the Life Insurance - Large category' at theprestigious The Economic Times Insurance 6th Annual Summit 2019. The BusinessToday - Money Today Financial Services Awards 2020 recognised our flagship term productHDFC Life Click2Protect 3D Plus as the 'Best Term Plan of the Year'. For our CSRinitiatives (Swabhimaan) we have received the 'Change Maker'Award 2020 and the FICCIappreciation plaque.

Regulatory Landscape

During the year under review the Insurance Regulatory and Development Authority ofIndia ("IRDAI"/ "Authority") issued various regulations/ guidelines tofurther aid the growth of industry. Some of the key regulations/guidelines etc. asnotified include:

The Linked and Non-Linked Product Regulations were notified in July 2019 replacing theerstwhile Regulations. The new Regulations lay down the contours of the new products andrequired all existing products to be either modified to comply with the new requirementsor to be withdrawn.

The amendments to the IRDAI (Registration of Insurance Marketing Firm) Regulations2015 were notified in August 2019 which replaced the earlier regulations. The newRegulations provided for putting in place a Board Approved Policy for utilisation ofInsurance Marketing Firms for penetration of insurance.

The Regulatory Sandbox Regulations were notified in August 2019 which provided aplatform for insurers and insurance intermediaries to make applications for innovativeinsurance offerings which would promote the overall development of the sector while beingwithin the purview of the extant regulatory framework. Each approved proposal would beallowed a timeframe of six months from the date of approval to run the project. Manyinsurers and intermediaries filed innovative product offerings under the Sandbox frameworkand IRDAI has so far accorded approval to such applications across two tranches.

Alongside the Linked and Non-Linked Product Regulations the Circular on BenefitIllustration and Other Market Conduct Aspects was notified by IRDAI in September 2019which specified different templates of the Benefit Illustration that has to beincorporated under the Product Filing procedure. Further it also laid down certainguidelines and pre-requisites on market conduct in particular for online sellingprocesses.

Pursuant to the Ministry of Finance (Department of Revenue) notification allowing banksto conduct e-KYC validation through UIDAI IRDAI issued a communication in November 2019for submitting an application by the Life Insurers for grant of Aadhaar AuthenticationLicense for e-KYC validation through UIDAI. All insurers seeking this license were askedto submit their applications through the Life Insurance Council for onward evaluation byIRDAI and subsequent recommendation for the same to UIDAI. UIDAI would be submitting theconsolidated list of applications to the Central Government for further consideration andapproval. Based on the decision of the Central Government UIDAI shall provide the AUA/KUAlicense to the approved entities.

A Master Circular on Point of Sales (POS) Products and Persons - Life Insurance wasissued in December 2019 which allowed the inclusion of regular products also by POSpersons by including a Key Features Document (KFD) with the same and as long as thepremium and sum assured thresholds were within the POS-Products applicable limits.Further it provides for new product contours to be followed for POS-Products.

The revised guidelines on Stewardship Code for Insurers in India was notified inFebruary 2020 mandating insurers to review and update their respective StewardshipPolicies within three months and get such updated Stewardship Policies approved by theirBoard of Directors. The revised guidelines emphasise on better governance managingconflict of interest greater influence on investee companies and overall ensuringcompliance with the extant regulatory framework.

In light of the various preventive measures taken by the central and state governmentsacross the country in order to prevent the rapid outbreak of the Covid-19 pandemic inMarch 2020 IRDAI notified certain regulatory directives in terms of digital avenues forpolicyholder servicing safeguarding the health of employees intermediaries and otherassociates of insurers enabling work from home to the maximum extent possible for theemployees having a functional 'Business Continuity Plan' in place judiciously expeditingthe settlement of Covid-19 claims etc. Further certain relaxations were providedpertaining to grace period extension for policies having their renewals due in March &April 2020 filing of monthly quarterly and annual regulatory returns despatchingphysical policy documents an additional period of thirty days in respect of policiesissued during a certain timeframe etc.

Rural and Social Sector Obligations

FHDFC Life maintains dedicated focus on undertaking rural business and endeavours totailor its products and processes to support these businesses considering customer needs.

As part of our overall business we have achieved prescribed regulatory targets ofsocial and rural business as follows:

• Rural Business - Achieved - 20.02% versus prescribed requirement of 20% ofoverall business

• Social Business - Insured - 18096495 social lives versus prescribed 2570002social lives


The IRDAI requires life insurers to maintain a minimum solvency ratio of 150%. Thesolvency ratio is calculated as specified in the IRDA (Assets Liabilities and SolvencyMargin of Insurers) Regulations 2016. As compared to the minimum requirement of 150%your Company's solvency ratio as at March 31 2020 was 184%.

Dividend & Reserves

Your Company has taken cognizance of IRDAI Circular No.IRDA/F&A/CIR/MISC/099/04/2020 dated April 24 2020 and accordingly proposed not todeclare any Dividend to its Members for FY 2020 with a view to conserve cash.

Your Company has formulated a 'Dividend Distribution Policy' which has been approved bythe Board of Directors. In terms of Regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ('SEBI Listing Regulations') the 'DividendDistribution Policy' is hosted on the Company's website at

Your Company has carried forward a total of Rs 1295 crore to the reserves. YourCompany had accumulated profits of Rs 4569 crore as at March 31 2020.

Capital and Shares

The issued subscribed and paid-up share capital of your Company as at March 31 2020is Rs 20187983990 consisting of 2018798399 equity shares of Rs 10/- each.

During the year under review your Company allotted 1417242 equity shares of Rs 10/-each pursuant to exercise of options under its various Employee Stock Option Schemes('ESOS'). The equity shares allotted under ESOS rank pari-passu with existing equityshares issued and allotted by the Company.

The Shareholding Pattern is provided as a part of Form No. MGT-9 which is enclosed as'Annexure 3' forms part of this report and also available on the Company's website at

Inclusion of HDFC Life in 'Futures & Options'trading at NSE

National Stock Exchange of India Limited ('NSE') vide its Circular dated February 242020 has introduced trading in 'Futures & Options' (F&O) Contracts in thesecurities of HDFC Life effective from February 28 2020.

Policy on remuneration to Non-Executive Directors

The Remuneration Policy including the criteria for remuneration to Non-ExecutiveDirectors is recommended by the Nomination & Remuneration Committee ('NRC') of theBoard and duly approved by the Board. The key objective of the Remuneration Policy is toensure that it is aligned to the overall performance of the Company. The policy ensuresthat it is fair and reasonable to attract and retain necessary talent linked to attainingperformance benchmarks and involves a judicious balance of fixed and variable components.The Remuneration Policy is hosted on the Company's website at remuneration paid to the Directors is in line with the Remuneration Policy of theCompany and in compliance with guidelines issued by IRDAI.

No Stock Options were granted to Non-Executive Directors.

Further details about remuneration to Directors including Whole-time Directors areprovided under report on Corporate Governance which is enclosed as 'Annexure 1' and formspart of this report.

Directors and Key Managerial Personnel

As on date of this report your Company's Board comprises 13 Directors viz. (4)Non-Executive Directors (6) Non-Executive Independent Directors (2) Executive Directorsincluding (1) Managing Director & CEO; and (1) Alternate Director.

(a) Changes in Board Composition

Changes in Board Composition during FY 2020 and up to the date of this report isfurnished below:

• Appointment/ Re-appointment of Director(s)

(i) Ms. Stephanie Bruce (DIN: 08594969) was appointed as 'Additional Director' in thecategory of 'Non-executive Nominee Director' i.e. Nominee of Standard Life (MauritiusHoldings) 2006 Limited ('SL Representative') with effect from October 28 2019.

Approval of Members is being sought at the forthcoming Annual General Meeting ('AGM')of your Company for regularisation of appointment of Ms. Stephanie Bruce as Non-ExecutiveNominee Director SL Representative.

(ii) Mr. Rushad Abadan (DIN: 08035538) was appointed as Alternate Director to Ms.Stephanie Bruce with effect from February 5 2020.

• Cessation of Directorships

(i) Sir Gerry Grimstone (DIN: 01910890) was liable to retire by rotation at the 19thAGM of the Company held on July 232019 however he did not seek his re-appointment atthe AGM and thereby ceased to hold office as Non-Executive Nominee Director with effectfrom July 232019.

Accordingly Mr. Rushad Abadan (DIN: 08035538) who was appointed as Alternate Directorto Sir Gerry Grimstone also ceased to hold office as Alternate Director.

(ii) Mr. Norman Keith Skeoch (DIN: 00165850) ceased to hold office as Non-ExecutiveNominee Director with effect from October 22 2019 pursuant to withdrawal of hisnomination by Standard Life (Mauritius Holdings) 2006 Limited.

Accordingly Mr. James Aird (DIN: 01057384) who was appointed as Alternate Director toMr. Norman Keith Skeoch ceased to hold office as Alternate Director with effect fromOctober 222019.

(iii) Dr. J J Irani (DIN: 00311104) ceased to hold office as Independent Director witheffect from October 23 2019 pursuant to resignation due to his personal commitments.

Your Directors wish to place on record their appreciation for the invaluablecontributions made by all the above Nominee Directors of Standard Life (MauritiusHoldings) 2006 Limited and by Dr.J J Irani.

• Retirement by rotation

Section 152(6) of the Act provides that not less than two-thirds of the total number ofdirectors of a public company shall be liable to retire by rotation and that one-third ofsuch directors as are liable to retire by rotation shall retire from office at everyAnnual General Meeting ('AGM') of the Company.

In accordance with the provisions of the Act Ms. Renu Sud Karnad (DIN: 00008064) Non-Executive Director being longest in office since her last appointment retires byrotation and being eligible offers herself for re-appointment at the 20th AGMof your Company.

As required under Regulation 36(3) of the 5EBI Listing Regulations particulars ofDirectors seeking appointment/ re-appointment/ liable to retire by rotation at this AGMare given in the Annexure to the AGM Notice.

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

Your Company has obtained a Certificate from M/s N. L Bhatia & AssociatesPracticing Company Secretaries pursuant to Regulation 34(3) read with Schedule V para Cclause 10 (i) of the SEBI Listing Regulations that none of the Directors on the Board ofthe Company were debarred or disqualified from being appointed or continuing as Directoron the Board by the Securities and Exchange Board of India Ministry of Corporate Affairsor any other Statutory Authority.

• Woman Directors

Section 149 of the Act read with Rule 3 of the Companies (Appointment andQualification of Directors) Rules 2014 requires specified companies to have at least oneWoman Director. Further under Regulation 17 of the SEBI Listing Regulations specifiedcompanies are required to have at least one Independent Woman Director in their Board byApril 1 2020.

Ms. Bharti Gupta Ramola (DIN: 00356188) was inducted as Independent Woman Director onthe Board of your Company with effect from February 122019.

The Board of your Company is diversified and there are other women directors on theBoard as mentioned below:

(i) Ms. Renu Sud Karnad (DIN: 00008064) Non-Executive Director

(ii) Ms. Stephanie Bruce (DIN: 08594969) Non-Executive Nominee Director

(iii) Ms. Vibha Padalkar (DIN: 01682810) Managing Director & Chief ExecutiveOfficer

• Independent Directors

Pursuant to Section 149(7) of the Act read with the Companies (Appointment andQualifications of Directors) Rules 2014 your Company has received declarations from allthe Independent Directors confirming that they meet the 'Criteria of Independence' as laiddown under Section 149(6) of the Act and the Rules made thereunder.

In the opinion of the Board all the Independent Directors fulfil the conditionsrelating to their status as Independent Director as specified in Section 149 of the Actand the Rules made thereunder and applicable provisions of the SEBI Listing Regulationsand are independent of the management.

Your Company has undertaken the requisite steps for inclusion of names of IndependentDirectors in the Databank maintained by the Indian Institute of Corporate Affairs('IICA'). Accordingly all the Independent Directors of the Company have registeredthemselves with IICA for the said purpose. In terms of Section 150 of the Act read withRule 6(4) of the Companies (Appointment & Qualification of Directors) Rules 2014Independent Directors are required to undertake online proficiency self-assessment test tobe conducted by IICA within a period of one (1) year from the date of inclusion of theirnames in the Databank. The online proficiency self-assessment test was made available byIICA from April 1 2020 and the same has been communicated to the concerned IndependentDirectors for onward compliance.

(b) Changes in Key Managerial/ Management Personnel (KM P's)

In terms of the provisions of Sections 2(51) and 203 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the followingemployees were holding the position of Key Managerial Personnel ('KMP') of the Company:

Name of the KMP Designation
1 Ms. Vibha Padalkar Managing Director & CEO
2 Mr. Niraj Shah Chief Financial Officer
3 Mr. Narendra Gangan EVP Company Secretary & Head - Compliance & Legal

In terms of the guidelines on Corporate Governance issued by IRDAI the followingsenior management employees of the Company were holding positions of KMPs as on March 312020:

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 Senior EVP - Chief Actuary & Appointed Actuary
7 Mr. Pankaj Gupta Senior EVP (Sales) & Chief Marketing Officer
8 Mr. Sanjay Vij Senior EVP (Bancassurance) & Chief Values Officer
9 Mr. Vibhash Naik EVP - Human Resources Learning and Development
10 Mr. Narendra Gangan EVP Company Secretary & Head - Compliance & Legal
11 Mr. Khushru Sidhwa EVP-Audit& Risk Management

There were no changes in the KMPs during the year under review.

Evaluation of the Performance of the Board Committees of the Board and IndividualDirectors

Pursuant to the provisions of the Act and the 5EBI Listing Regulations the Board ofDirectors carried out an annual evaluation through an online module of its performanceand that of its Committees and Individual Directors. Further the Independent Directorsmet separately without the attendance of Non-Independent Directors and the members of themanagement and inter alia reviewed the performance of Non-Independent Directors Board asa whole; and performance of the Chairman. They further assessed the quality quantity andtimeliness of flow of information between the Company Management and the Board.

Overall the Independent Directors expressed their satisfaction on the performance andeffectiveness of the Board all the Committees Individual Non-Independent Board Membersthe Chairman and on the quality quantity and timeliness of flow of information betweenthe Company Management and the Board. The Nomination & Remuneration Committee alsoundertook an evaluation of Individual Director's performance and expressed itssatisfaction on performance of each Director.

There have been no material observations or suggestions consequent to such evaluationand review.

'Fit and Proper' Criteria

In accordance with the guidelines for Corporate Governance issued by IRDAI directorsof insurers have to meet 'fit and proper' criteria prescribed by IRDAI. Accordingly allDirectors of the Company have confirmed compliance with 'fit and proper' criteria/ normsprescribed under the guidelines on Corporate Governance issued by IRDAI.

Your Company has also received declarations from all the Directors in terms of Section164 of the Act confirming that they are not disqualified from being appointed as Directorof the other companies.

Directors & Officers (D&O) Liability Insurance

While Regulation 25(10) of the SEBI Listing Regulations requires the Companies to takeDirectors and Officers Liability Insurance (D&O) for all its Independent Directorsyour Company has in fact taken D&O Insurance for all its Directors (includingIndependent Directors) and Members of the Senior Management Team for such quantum andrisks as determined by the Board.

Succession Planning

The Nomination and Remuneration Committee of the Board ('NRC') oversees matters relatedto succession planning of Directors Senior Management and other Key Executives of theCompany.

Meetings of the Board and its Committees attendance and constitution of variousCommittees

The details of meetings of the Board and Committees of the Board held during the yearattendance of Directors there at and constitution of various Committees of the Boardforms part of the Corporate Governance Report which is enclosed as'Annexure1 to thisreport.

Management Discussion and Analysis Report Report on the Corporate Governance andBusiness Responsibility Report

Pursuant to Regulation 34 of the SEBI Listing Regulations Management Discussion andAnalysis ('MD&A') Report and Business Responsibility Report ('BRR') is presented inseparate sections forms part of this report.

In compliance with SEBI Listing Regulations a report on the Corporate Governanceframework of the Company with certifications as required under applicable Regulations(including guidelines on Corporate Governance issued by IRDAI) in annexed hereto as'Annexure 1' and forms part of this report.

Risk Management Policy

Your Company has a defined Risk Management Strategy and a Framework that is designed toidentify measure monitor and mitigate various risks. A Board approved Risk ManagementPolicy has been put in place to establish appropriate systems or procedures to mitigateall material risks faced by the Company. The said Policy is reviewed periodically by theRisk Management Committee of the Board. The risk management architecture of the Companyhas been detailed under the Enterprise Risk Management section of the Annual Report.

Internal Audit Framework

Your Company has institutionalised a robust and comprehensive internal auditframework/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 other verticals in the ARM(Audit and Risk Management) Team and other assurance functions considering relevantmaterial inputs from risk registers compliance reports and external auditor reports etc.The function also tests and reports compliance to Internal Financial Controls overFinancial Reporting.

Internal audits are conducted by in-house Internal Audit team and co-sourced auditors.The function also undertakes follow-up on engagement findings and recommendations in linewith the approved framework.

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

Internal Financial Controls

Your Company has institutionalised a robust and comprehensive internal controlmechanism across all key processes. Your Company has also put in place adequate policiesand procedures to ensure that the system of internal financial control is commensuratewith the size scale and complexity of its operations. These systems provide a reasonableassurance in respect of providing financial and operational information complying withapplicable statutes safeguarding of assets of the Company prevention and detection offrauds accuracy and completeness of accounting records and ensuring compliance withcorporate policies.

The internal audit in addition to ensuring compliance to policies regulationsprocesses etc. also test and report adequacy of internal financial controls withreference to financial reporting/ statements.

Risk management is an integral part of the overall business strategy and planning forHDFC Life and is used to proactively manage risks and create value for our stakeholders.The Enterprise Risk Management (ERM) framework within the Company operates as a feed-insystem to various internal and external stakeholders management and the Board ofDirectors. It encompasses a comprehensive set of practices which has been integrated at agrassroot level within all functions serving the core business as well as shared services.

Vigil Mechanism/Whistle Blower Policy

Your Company encourages an open and transparent system of working and dealing amongstits stakeholders. In accordance with Section 177(9) of the Act and Regulation 22 of SEBIListing Regulations your Company is required to establish a Vigil Mechanism for Directorsand employees to report genuine concerns. Your Company has a Policy for PreventionDetection and Investigation of Frauds and Protection of Whistle Blowers ("theWhistleblower Policy") which also encourages its employees and various stakeholdersto bring to its notice any issue involving compromise/ violation of ethical norms legalor regulatory provisions actual or suspected fraud etc. without any fear of reprisaldiscrimination harassment or victimisation of any kind. The details of Whistle Blowercomplaints/ concerns received if any and subsequent actions taken and the functioning ofthe Whistle Blower Mechanism is reviewed periodically by the Audit Committee and RiskManagement Committee of the Board.

Further details of the Vigil Mechanism and Whistle Blower Policy of the Company areprovided in the Report on Corporate Governance forms part of this report. The WhistleBlower Policy is also available on the Company's website at

Particulars regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo

A. Conservation of Energy

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

B. Technology Absorption

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 Robotic Process Automation/ Artificial Intelligence including Cognitive Face Recognition Voice Analytics/ Cloud Computing/ Cyber Security/ Machine Learning/ Full Collaboration workforce using G Suite
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 Al-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 (e.g. product improvement cost reduction product development import substitution and so on) • Turnaround Time (TAT) for policy conversion has reduced from 2 days in FY 2015 to <4 hours in FY 2020. InstA our Virtual assistant handles over 13 lakh queries per month across about 960 query types. We rank #1 in spontaneous awareness amongst internet users (Private life Insurers).
• Approximately 82% cases are issued via 'straight through processing'. System integration has helped customers fill an application form within 10 minutes for a large partner bank. Instalnsure journey is live with 7 key partners.
• Cloud migration will help increase scalability and performance. Current migration is at 30% and expected to be 70% by the next financial year.
• Your Company has Machine Learning ('ML') models and algorithms serving multiple functions including new business (e.g. prediction of customers with high purchase power) on-boarding (e.g. predicting possible fraud or early claims) customer retention (e.g. predicting customers who may renew proactively) and employee management (e.g. identifying employees with high attrition risk). Our propensity models have helped increase appointment rates with customers by ~42%. Within the on-boarding process the Risk+ model has helped convert additional premiums at lower risk and avoid potential payouts of about Rs 210 crore through effective screening of high risk cases.
• 210 bots across 27 functions automating process making it more consistent and predictable.
• InstaServ enables 75% of customers' requests instantly. Insta Receipt receipts cheques in 30 seconds reducing TAT by 90%.
• Enabling certain segments of customers to notify a claim through a simple three-clickjourney in less than 5 minutes.
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 are as follows:

Foreign Exchange Earnings 178.6
Foreign Exchange Outgo 169.7

Subsidiary Companies

1. HDFC Pension Management Company Limited ("HDFC Pension")

HDFC Pension remains the #1 privately owned Pension Fund Manager in India in terms ofAUM as also the fastest growing Pension Fund Manager under the NPS architecture. Its AUMas on March 31 2020 was Rs 8265 crore which is a growth of 60% over the last year. Itsmarket share amongst all private owned pension fund managers grew from 54% in March 2019to 60% in March 2020.

HDFC Pension has 5.5 lakh customers as on March 31 2020 out of which 3.6 lakh are inthe retail segment and 1.9 lakh in the corporate segment.

The subsidiary was formed with a strategic rationale of being a feeder to our annuitybusiness and we remain enthused about the strong potential of this business. EffectiveApril 12019 central government employees have been allowed to choose amongst privateowned PFMs thereby opening up a big opportunity for HDFC Pension.

Additionally HDFC Pension started its operations as a Point of Presence ('POP') inboth retail and corporate NPS segments and has positioned itself strongly in this segmentas well.

Financials and Business Outlook

A synopsis of financial performance is shown below:

Particulars FY 2020 FY 2019
Gross Income 349.9 274.2
Total Expenses 430.7 308.9
Profit/ (Loss) before Tax (80.8) (34.7)
Provision for Tax - -
Profit/ (Loss) after Tax (80.8) (34.7)

2. HDFC International Life and Re Company Limited ("HDFC International")

In the year 2016 HDFC International was established as a wholly-owned subsidiary inDubai International Financial Centre (DIFC). HDFC International was set up with theprimary objective of offering life reinsurance capacity in the UAE and other GCC nations.

HDFC International is regulated by the Dubai Financial Services Authority("DFSA") and is licensed to undertake life reinsurance business. It operates inand from the DIFC and currently offers reinsurance solutions to ceding insurers based inthe Gulf Cooperation Council ("GCC") and Middle East & North Africa("MENA") regions. It provides risk-transfer solutions prudent underwritingsolutions and value added services among others across individual life group life andgroup credit life lines of business.

In December 2018 HDFC International has been assigned a long-term insurer financialstrength rating of "BBB" with a stable outlook by S&P Global Ratings. InDecember 2019 S&P Global Ratings reaffirmed long-term insurer financial strength of"BBB" while maintaining the outlook as "Stable".

Financials and Business Outlook

During FY 2020 HDFC International earned a Gross Income of US$ 7.3 million while itsexpenses stood at US$ 0.8 million. The period under review ended with the Companydeclaring its second successive annual profit with the figure standing at US$ 0.4million.

HDFC International has successfully completed four financial years of operations and issteadily building experience in the GCC Life reinsurance market. It has continued to focuson the need for creation of stable and diversified revenue lines while acceleratingrevenue and profit growth. HDFC International looks to establish meaningful and long-termbusiness associations which are mutually win-win. HDFC International has been working withceding insurers to provide reinsurance support for long-term individual life policies andalso collaborate on facultative arrangement on group programmes.

HDFC International's aim is to become partners in the journey of the insurers to helpthem realise their potential through reinsurance solutions which enable and empower themto innovate and optimise as per the needs of their market segments.

Consolidated Financial Statements

In accordance with Section 129(3) of the Act and SEBI Listing Regulations ConsolidatedFinancial Statements of the Company alongwith its wholly-owned Subsidiaries viz. HDFCPension Management Company Limited ("HDFC Pension") and HDFC International Lifeand Re Company Limited ("HDFC International") have been prepared in accordancewith the applicable Accounting Standards issued by ICAI and forms part of this report.

Statement containing salient features of the financial statements of Subsidiaries

A statement containing the salient features of the financial statements of thesubsidiaries in the prescribed Form AOC- 1 as required under Rule 5 of the Companies(Accounts) Rules 2014 forms part of the financial statements.

Swabhimaan/ Corporate Social Responsibility

As part of its initiatives under Corporate Social Responsibility ("CSR")your Company has undertaken projects in various areas including Education LivelihoodHealth and Environmental Sustainability. The CSR Policy is framed basis the activitiespermitted under Schedule VII of the Act. The annual report on Corporate SocialResponsibility activities is enclosed as 'Annexure 2' and forms part of this report. TheCorporate Social Responsibility Policy of the Company as approved by the Board has beenhosted on the Company's website at

Consistent with the requirements of Section 135 of the Act and applicable CSR Rulesyour Company has set up a Board-level CSR Committee to look after the CSR initiatives. TheCommittee is headed by Mr. Deepak S Parekh as the Chairman Mr. Ranjan Mathai and Ms.Vibha Padalkar as Members. The composition of the CSR Committee is in accordance withSection 135 of the Act.

The CSR initiatives/projects undertaken by your Company are in accordance with ScheduleVII of the Act. As prescribed under Section 135 of the Act certain companies are requiredto spend at least (2%) of their average Net Profits made during the three immediatelypreceding financial years in pursuance of their Corporate Social Responsibility Policy.Accordingly your Company had spent Rs 19.77 crore towards various CSR activitiesspecified in Schedule VII of the Act during FY 2020.

Extract of the Annual Return

As per the provisions of the Act an extract of the Annual Return of the Company in theprescribed Form MGT - 9 is enclosed as Annexure 3' and forms part of this report and isalso available on the Company's website at

Related Party Transactions

Pursuant to Section 177 read with Section 188 of the Act read with Regulation 23 of theSEBI Listing Regulations the Audit Committee of the Board approves the related partytransactions of the Company if any on a quarterly basis. All the related partytransactions entered during the year under review were in the ordinary course of businessand on an arm's-length basis thus not requiring Board/ Members approval.

The Company's Policy on Related Party Transactions ensures timely approvals andreporting of the concerned transactions between the Company and its related parties to theconcerned authorities. The Policy on Related Party Transactions is hosted on the Company'swebsite at

During the year there were no material transactions with related parties which arenot in the ordinary course of business and on an arm's-length basis.

M/s G.M. Kapadia & Co Chartered Accountants and Joint Statutory Auditors of theCompany reviewed the related party transactions for each of the quarter up to quarterended December 31 2019 and their report was placed at the meetings of the AuditCommittee for review along with details of such transactions.

For the quarter ended March 31 2020 M/s B.K. Khare & Co. Chartered Accountantsreviewed the related party transactions and their report was placed at the meeting of theAudit Committee for review along with details of such transactions.

As per Accounting Standard (AS) 18 issued by ICAI on 'Related Party Disclosures' thedetails of related party transactions entered into by the Company are also included in theNotes to Accounts forms part of this Report.

Ind AS Roadmap

The Ministry of Corporate Affairs (MCA) had laid down the roadmap for implementation ofIndian Accounting Standard ('Ind AS') for the insurance sector beginning from April 12018 onwards with one year comparatives through press release on January 18 2016.Subsequently the International Accounting Standard Board (IASB) issued the new standardIFRS 17 - Insurance Contracts on May 18 2017 with effective date on or after January 12021. Consequently the Insurance Regulatory Development Authority of India ('IRDAI/Authority/ Regulator') issued a circular dated June 28 2017 deferring the implementationof Ind AS for insurance sector in India for a period of two years to be effective from FY2021 and required insurance companies to submit proforma Ind AS financial statements onquarterly basis to the Regulator.

The IASB has since then been deferring the implementation dates during FY 2019 theeffective date of IFRS 17 to periods beginning on or after January 1 2022 and in March2020 further delayed the effective date of IFRS 17 to periods beginning on or afterJanuary 1 2023.

Hence the Authority vide its Circular dated January 21 2020 notified that theeffective date of implementation of Ind AS shall be decided after the finalisation of IFRS17 by IASB and accordingly the Circular dated June 28 2017 stands withdrawn and therequirement of quarterly proforma Ind AS financial statements as directed under the saidcircular has been dispensed with. The Final dates for Ind AS implementation are yet to beannounced by the Authority.

Statutory Auditors

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

The Joint Statutory Auditors have not made any qualification reservation adverseremark or disclaimer in their report for FY 2020. Further during FY 2020 the JointStatutory Auditors have not come across any reportable incident of fraud to the AuditCommittee or the Board of Directors.

As per the IRDAI Corporate Governance Guidelines a Statutory Auditor can conduct auditof Insurance Company for a maximum period of 5 years at a time. Further as per the Actan audit firm can be appointed as Statutory Auditor for not more than two terms of fiveconsecutive years.

The Ministry of Law and Justice has pursuant to the Companies (Amendment) Act 2017read together with the Ministry of Corporate Affairs' (MCA) notification dated May 7 2018has done away with the requirement of ratification of appointment of Statutory Auditors atevery AGM as per the first proviso of Section 139 of the Act and the Companies (Auditand Auditors) Second Amendment Rules 2018. Therefore no approval of Members is beingsought for ratification of appointment of Joint Statutory Auditors at every AGM.

Appointment of M/s G.M. Kapadia & Co Chartered Accountants was approved by theMembers in the 16th AGM of your Company held on July 14 2016 for aconsecutive period of 5 years i.e. until the conclusion of the 21st AGM.Appointment of M/s Price Waterhouse Chartered Accountants LLP Chartered Accountants wasapproved by the Members in the 19th AGM held on July 23 2019 for a secondconsecutive term of 5 years i.e. up to the conclusion of the 24th AGM.

The resolution seeking revision in remuneration payable to Joint Statutory Auditors inconnection with the audit of the accounts of the Company for FY 2021. has been included inthe Notice of the 20th AGM for approval of Members.

Independent Auditors' Report

M/s G.M. Kapadia & Co. Chartered Accountants and M/s Price Waterhouse CharteredAccountants LLP Joint Statutory Auditors of the Company have audited the financialstatements for FY 2020 and their report enclosed to the financial statements forms partof this report.

Audit observations if any and corrective actions taken by the Management arepresented to the Audit Committee of the Board from time to time.

There are no qualifications reservations or adverse remarks/ observations made in theAuditors' Report.

Reporting of frauds by Auditors

During the year under review there have been no instances of fraud reported by theAuditors pursuant to Section 143(12) of the Act and the Rules made thereunder to the AuditCommittee of the Board.

Legal Update

There are no significant and material orders that were passed by the regulators courtsof tribunals that impacted the going concern status of your Company or which canpotentially impact your Company's future operations.

Material changes and commitments affecting the financial position

There have been no material changes and commitments affecting the financial positionyour Company which have occurred between the end of the financial year to which theBalance Sheet relates and the date of this report.

Secretarial Audit Report

Pursuant to the requirements of Section 204(1) of the Act read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Companyhas appointed M/s N. L. Bhatia & Associates Practising Company Secretaries (Firm'sRegistration No. P1996MH055800) for conducting the Secretarial Audit for the financialyear ended March 312020. The Secretarial Audit Report in Form MR-3 for FY 2020 asreceived from M/s N. L. Bhatia & Associates Practising Company Secretaries isenclosed as 'Annexure 4' and forms part of this report.

There are no observations/qualifications/adverse remarks in the Report of theSecretarial Auditor.

Compliance with Secretarial Standards issued by lCSI

Your Company is complying with the applicable provisions of Secretarial Standards on'Meetings of the Board of Directors' (SS-1) and 'General Meetings' (SS-2) issued by theInstitute of Company Secretaries of India ("ICSI").

Maintenance of Cost Records

Being an Insurance Company your Company is not required to maintain cost records asper sub-section (1) of Section 148 of the Act read with Companies (Cost Records and Audit)Rules 2014.

Change in the nature of business

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


Your Company has not accepted any deposits during the year under review and henceprovisions of the Act relating to acceptance of Public Deposits are not applicable to theCompany.

Loans Guarantees or Investments

In line with the clarification given by the Ministry of Corporate Affairs under the"Removal of Difficulty" Order dated February 13 2015 the provisions of Section186 of the Act relating to loans guarantees and investments do not apply to the Company.

Employee Stock Option Scheme(s)

In line with the practice of incentivising the employees through issue of stockoptions your Company has in the past granted stock options and continues to grant stockoptions to its eligible employees (including employees of its subsidiary companies) underthe various employee stock option schemes formulated from time to time.

Your Company has formulated various Employee Stock Option Scheme(s) which helps it toretain and attract right talent and in administering the issue of Stock Options to itseligible Employees including that of its subsidiary companies. The Nomination andRemuneration Committee (NRC) administers the Company's ESOP schemes. There has been nomaterial variation in the terms of the options granted under any of these schemes and allthe schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations2014 ("SBEB Regulations").

The Annual Certificate on compliance with SBEB Regulations issued by StatutoryAuditors of the Company is being made available for inspection at the forthcoming AGM ofthe Company.

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

The statutory disclosures as mandated under the SBEB Regulations have been hosted onthe Company's website at

Sale of shares by Standard Life (Mauritius Holdings) 2006 Limited

During the year under review Standard Life (Mauritius Holdings) 2006 Limited('Standard Life') one of the Promoters of your Company sold 250132381 equity shares ofthe Company in tranches details of which are furnished below. The above sale of shares byStandard Life has resulted in dilution of their shareholding in the Company from 24.66% ason March 31 2019 to 12.25% as on the date of this report.

Date of transaction Number of shares sold
May 03 and May 062019 33032381
August 14 2019 67100000
October 302019 100000000
March 27 2020 50000000
Total 250132381

Appointed Actuary's Certificate

The certificate of the Appointed Actuary on valuation and actuarial assumptions isattached to the financial statements and forms part of this report.

Prevention of Sexual Harassment Policy and disclosure under Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013

Your Company is committed to providing a work environment that ensures every employeeis treated with dignity and respect and afforded equitable treatment. Your Company hasimplemented a robust framework on Prevention of Sexual Harassment which is in line withthe Sexual Harassment of Women at Work Place (Prevention Prohibition and Redressal) Act2013. Your Company has instituted an Apex Committee and four (4) zone wise InternalCommittees (ICs) in line with the regulatory requirement for redressal of sexualharassment complaints (made by the victims) for ensuring timebound treatment of suchcomplaints. The Apex Committee is chaired by a senior woman executive of the Company. TheApex Committee has an external senior woman member who is an expert on the subject matter.All zonal ICs have minimum of 50% women representatives and their functioning is overseenby the Apex Committee. The Risk Management Committee of the Board is periodically updatedon matters arising out of the Policy/Framework as well as on certain incidents if any.

Pursuant to the said Act the details of the total reported and closed cases pertainingto incidents under the above framework/law are as follows:

Particulars Numbers
Number of complaints pending as on the beginning of the financial year 9
Number of complaints filed during the financial year 32
Number of complaints closed during the financial year 37
Number of complaints pending as on the end of the financial year 41


1 The said complaints were resolved within defined TAT immediately aftercompletion of the financial year.

Directors' Responsibility Statement

In accordance with the requirements of Section 134 of the

Act the Board of Directors state that:

i. In preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures (if any);

ii. Such accounting policies have been selected and applied consistently andjudgements and estimates made that are reasonable and prudent so as to give a true andfair view of the Company's state of affairs as on March 312020 and of the Company'sprofit for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets 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 by the Company andsuch internal financial controls are adequate and operating effectively; and

vi. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively.

Appreciation and Acknowledgement

Your Directors wish to place on record their gratitude for all the policyholdersshareholders customers distributors and business associates for reposing their trustand confidence in the Company. Your Directors would also take this opportunity to expresstheir appreciation for hard work and dedicated efforts put in by the employees and fortheir untiring commitment; and the entire senior management for continuing success of thebusiness in difficult times.

Your Directors further take this opportunity to record their gratitude to HousingDevelopment Finance Corporation Limited ('HDFC Ltd.') and Standard Life (MauritiusHoldings) 2006 Limited Promoters of your Company for their invaluable and continuedsupport and guidance and also to Insurance Regulatory and Development Authority of India('IRDAI') Securities and Exchange Board of India ("SEBI') Ministry of CorporateAffairs ('MCA') Reserve Bank of India ('RBI') Pension Fund Regulatory and DevelopmentAuthority ('PFRDA') Life Insurance Council Stock Exchanges Depositories and othergovernmental and regulatory authorities for their support guidance and co-operation fromtime to time.

On behalf of the Board of Directors
Deepak S Parekh
Place: Mumbai Chairman
Date: April 27 2020 (DIN: 00009078)