The protection business will continue to add value to the individual annualised premium equivalent (APE) in the fourth quarter of private life insurer HDFC Life Insurance. A report by Spark Capital said that they expect full year APE growth to be ~35 percent year-on-year for FY18.
HDFC Life will announce its Q4 and annual results for FY18 on Wednesday.
According to the report, while the growth could moderate in Q4 for the life insurer, it would remain robust for the full year on a low base. It added that the value of new business (VNB) margins and operating return of embedded value (ROEV) will remain broadly stable.
However, it said that the margin expansion due to increase in higher protection business will be negated by increase in costs. An increase in protection business is directly proportional to an increase in margins. They expect the VNV margins to rise to 22.2 percent
In the third quarter of FY18, HDFC Life had posted a 15 percent growth in profits for third quarter ended December 30, 2017 as compared to a year ago period. In the first results following its listing on the stock exchanges, the insurer saw new premiums of Rs 7,070 crore being collected for the April-December 2017 period, showing a growth of 33 percent over the same period in FY17.
During the third quarter, the insurer’s total premium showed a growth of 20 percent to Rs 14,610 crore aided by strong new business growth of 33 percent and renewal business growth of 9 percent.
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