Quick Take | HDFC Life posts steady performance with focus on protection business

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26 Aug, 2025 12:21

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Neha Dave
Moneycontrol Research

HDFC Life, one of the top private insurers in India, reported steady performance with net profit increasing by 20 percent YoY for 9M FY19 on the back of strong growth in premium and margin improvement.

In terms of business mix, the share of ULIPs increased to 59 percent in 9M FY19 vs 57 percent in FY18 and remained well within the management’s guided range of 50 percent -60 percent.  HDFC Life’s continuous focus on the relatively high margin protection business (pure term insurance business) was clearly visible as the share of protection business improved to 28.1 percent in 9M FY19 compared to 27.3 percent in same period last year on new business premium basis.

Despite high share of ULIPs, the New Business Margins (post overrun) improved to 24 percent in 9MFY18 compared to 22 percent a year ago.

Persistency ratio was stable at shorter end with 13-month ratio at 86 percent while 61-month persistency dropped to 50 percent (53 percent in 9M FY18).

Overall, return ratios were strong and steady with RoEV (return on embedded value) at 19.7 percent and ROE (return on equity) at 23.4 percent for 9MFY18. Solvency ratio remained almost stable at 191 percent.

Buoyant capital markets in past have helped insurance companies’ improve their profitability as the sector witnessed growth especially for products like ULIPs and improvement in persistency. Going forward, we see large share of growth emanating from the protection business as there exists a huge opportunity in this segment.

India has a high protection deficit among the key Asian countries at 92 percent as per 2014 estimates by Swiss Re. This implies that for every US $100 needed for protection, only US $8 is spent by a typical Indian household, leaving a massive mortality protection gap.  This represents a huge opportunity. We view HDFC Life's focus on protection business as a key differentiator and driver of future profitability.

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