 "Vibha Padalkar, BFSI")
Vibha Padalkar, managing director (MD) and chief executive officer (CEO) of HDFC Life Insurance, in an interview with Aathira Varier and Subrata Panda, spoke about how the company bucked the industry trend in terms of growth during Q4 of FY25 while outlining the strategy for FY26. Edited excerpts:
Given the industry’s underwhelming show, how would you evaluate the company’s performance in FY25?
We have grown faster than the sector and this has resulted in expansion of our market share. In the private space, we expanded by 30 basis points (bps), and at the sector level, we increased by 70 bps in FY25. We are also happy that Tier-1, II and III markets have seen holistic growth. Our product mix was fairly similar throughout the year and in Q4. Q4 did not see any easing of unit-linked plans (Ulips). So, it (Ulips) stayed just shy of 40 per cent. Retail protection grew faster than the overall company at 25 per cent. We also launched products, especially in the pension and participating (PAR) section. In fact, in Q4, PAR grew by almost 49 per cent on an annual premium equivalent (APE) basis because during market volatility, PAR products tend to do well. We have added almost 30,000 agents in FY25. We saw 117 new branches. Our pan-Indian branch count stands at almost 650. On the corporate agency side, we added almost 40 new partners. Our profit after tax (PAT) grew 15 per cent, aided by almost 18 per cent growth in the back book. Expenses of management and surrender charges are behind us and we have managed to deliver both on PAT as well as growth in new business margins in Q4. So, against a fairly tough macroeconomic environment, competitive intensity and regulatory overhaul, we are fairly happy with this holistic performance.
What is the strategy that made HDFC Life an outlier?
Our growth is very broad based. We are not just dependent on unit-linked insurance plans (Ulips) like some of our peers. Our PAR, non-PAR, and term products continued to grow handsomely. Annuities have also done well. We continue to add distribution touch points. We also roll out new products. They have been received well by the Street. So, it has been a fairly holistic growth. Also, on surrender charges, all our conversations with the partners were long done and dusted and it was business as usual for us.
Did the industry’s growth suffer because of the regulatory overhaul?
I don’t think so. I think, perhaps, one needs to have clarity in terms of strategy. Also, one needs to invest ahead of the curve. There will always be a gap between investment and growth.
What strategy is the company adopting and what kind of growth targets have you set for FY26?
We will grow faster than the sector. In the past, 2x GDP growth is something that the sector was expected to grow by. But we are not pegging it to that just because there are too many moving parts. We have taken our margins to a point where it is one of the best in the industry. So, we will keep it range bound between 25 and 26 per cent. We will hold it there and any margin expansion will be reinvested in our business.
Would you tinker with your product mix?
We would like Ulip to be closer to 30 per cent. So, we will work towards that. We would like term insurance to touch 6 per cent and beyond over next year. Since the term segment is growing faster than the overall company growth, it should grow. Only thing is it tends to be much smaller in ticket size. So, I need to sell a lot of policies.
What kind of reinsurance pressure are you seeing and what would be the impact on term rates?
As of now, it is very selective. In some cohorts, we see some stress but not overall. As of now, it is largely business as usual.
We are in an easing cycle and yields are falling. Markets are very choppy. Will we see domestic savings move to guaranteed products?
We are able to lock in the bonds and that is what we follow. We also follow pricing disciplines so that whatever we are able to lock in, that is what we will give as a guarantee. Also, we expect the yield curve to fall a lot more on the shorter end. And, if transmission starts happening like we are beginning to see, then our non-par guarantee should start looking very attractive. So, we are hoping for that as well.
