HDFC Life says recent premium hike impacts only 0.1% of business

The stock of HDFC Life has declined over 6 percent during the April-June period this year, as compared to 7 percent rise in the benchmark Nifty 50 index

After reports indicated that major life insurance companies have increased the premiums on their term insurance policies, HDFC Life Insurance stated that the current pricing adjustments are part of an ongoing process that will adapt to changing market dynamics.

HDFC Life reported strong April-June quarter (Q1FY25) results, largely in line with market expectations. During its Q1 earnings call, the management explained that the pricing adjustments are a continuous exercise across the industry, affecting annuities, protection, non-participating, and participating policies.

Clarifying recent media reports suggesting a 10 percent increase in term life insurance premiums for individuals over 60, HDFC Life clarified that the actual change was 5 percent.

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"There hasn't been any significant change. For the segment covering individuals above 60 years, we have increased premium pricing by 5 percent. We believe this is reasonable and impacts only 0.1 percent of our business," they said.

Looking ahead, the management expressed confidence in growing their market share despite the measured premium price increases.

The private sector insurer's net profit jumped by 15 percent on-year to Rs 479 crore, supported by strong growth in both first year premiums and renewal premiums. Its net premium income came in at Rs 12,548 crore, up 9 percent from Rs 11,508 crore in the corresponding period previous year.

The company’s annualised premium equivalent (APE), which is a measure of new business written by a life insurance company, grew 23 percent YoY to Rs 2,866 crore in Q1FY25. However, new business (VNB) margin, which is the present value of future profits associated with new business written during the quarter, shrunk 120 basis points.

The stock of HDFC Life declined over 6 percent during the April-June period this year, as compared to 7 percent rise in the benchmark Nifty 50 index.

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