HDFC Life to launch 3-4 products in pension, unit linked space in six months, says CFO Niraj Shah

Niraj Shah- HDFC Life

HDFC Life Insurance Company will launch three to four products in the pension and unit-linked space in the next six months, Executive Director and Chief Financial Officer, Niraj Shah said in an interview with Moneycontrol.

“We have three to four products planned in the coming quarter and the first half of next year. We expect to launch a pension product in the next month, protection product and also a unit linked product. We will have products across all these categories in the next three to six months,” Shah said in an interview.

He further said that the company will raise Rs 1,000 crore through the fourth quarter of the current financial year.

On October 7, the company had raised Rs 1,000 crore through bonds, from the total approved amount of Rs 2,000 crore.

Edited excerpts:

What is your claim ratio and how do you want to keep it in the coming quarters?

Claim settlement ratio for us is usually upwards of 99.5 percent and we don't expect any change in that. Our basic philosophy is that all claims need to be paid except for anyone who's trying to do a fraud against us.

Claim settlement ratio has normalised completely since the Covid pandemic; it had gone up significantly up during that period and that was reflecting in our operating variance as well as in the embedded value.

How are your margins playing out?

Margins are excepted to be range bound. We have a target of 15 percent VNB growth and that is a function of top line growth and margins. At this point in time, we expect the top line growth to be higher than VNB growth. So, margins compared to last year will be slightly lower, but not very dramatically different.

Absolute margins for the quarter four will be better than the (previous) nine months because typically, the last quarter is the largest quarter in terms of business and efficiencies in terms of scale are very high there. We don't expect any change in that trend.

Do you have any fund raising plan in Q4 of FY25?

We had the approval from our board for Rs 2,000 crore of subordinated debt. We (have) raised Rs 1,000 crores so far, and we are very likely to raise the remaining Rs 1,000 crore by the end of this year.

Do you have change in plans in terms of investment in G-sec as there is expectation of rate cut?

Not surely because our investments are guided by the products that we write. All our products are long term products and hence they require investment in long term paper, and that is largely only the government paper - 30, 40, 50 year bonds. Our demand for government securities will always be fairly strong and our holding in government securities is sitting between 55 to 60 percent. We don't expect that to change in any fashion.

On the ULIP side, definitely things can be different because we will take calls on duration based on our view of the interest rate. If the interest rate is expected to go down, our duration will be high, and high duration will mean more government securities. If we believe the interest rates are going up, then we will be lower on duration, which then means more on corporate bonds.

Any new products in the pipeline in coming months?

Yes, we have three to four products planned in the coming quarter and the first half of next year. In all categories, we expect to launch a participating product very shortly.

We expect to launch a pension product in the next month, protection product and also a unit linked product. We will have products across all these categories in the next three to six months.

How you see the speculations that IRDAI will bring norms on banca to reduce overdependence on parent banks?

We haven't heard anything from the regulator or from the government. Of course, there is some news flow around it and it's difficult for us to react. Whatever comes in, whether it's the government or the regulator will recognise that in a country like India, which is vast, bancassurance will continue to play a very important role in increasing penetration and any restriction on that is something that could affect that process.

We are operating in bancassurance, 100 percent of our partnerships are open architecture. If the government wants to increase the level of participation in this channel, then open architecture is probably one thing that will have to happen along with that. If that were to happen, for us, we believe it's a positive because we're already in open architecture.

Our bancassurance business today is about 51 percent of our new business premium, and within that, the parent bank is in the 40 percent.

Have you filed an appeal before the appellate authority after the GST demand notice?

We haven't reached that stage yet. We are awaiting the assessment order at the first.

In the data leak incident, what step has the company taken and have you found the root cause?

We have done a few things. First, we have strengthened our current technology architecture to the extent that we have identified where the leak had come from.

Second, we have appointed experts to help us to understand more and strengthen our systems further.

We have appointed two consultants for that. Further, we have filed an injunction with the high court as well, which will actually ensure that the customer data does not get published on any social media.