HDFC Life’s for the nine months ended December reported 41% growth in new business premium and a value of new business (VNB) margin of 24%. Its embedded value has grown 20% from a year ago.
The management has indicated that its focus on protection plans continues and that the share will rise, although slowly, as the ticket size is lower than other plans.
The expense of management ratio has dropped from 19% a year ago to 17%. Given that its tie-ups with banks and the network of HDFC Bank Ltd as well as parent HDFC (Housing Development Finance Corp. Ltd) provide enough bandwidth to push products, the life insurer doesn’t need to put in too much money.
However, the commissions for renewal premiums have gone up sharply, the management said, indicating that agents are being compensated for making sure persistency ratios are high. HDFC Life may have an enviable product mix, but nearly 60% of its portfolio is still made up of market-linked products. This has ramifications as the insurer’s investment income was hit because of market risks. Also, persistency ratios drop in such products and the 61st month ratio was 44%.