HDFC Life on Monday reported a 15 per cent year-on-year increase in net profit to Rs 478 crore in the April-June quarter of FY25 (Q1FY25), driven by healthy growth in the back book. The back book surplus of the life insurer grew by 18 per cent from last year.
The value of new business (VNB) of the insurer increased 18 per cent year-on-year to Rs 748 crore in Q1FY25 against Rs 610 crore in the corresponding period a year ago. VNB is the present value of all future profits to shareholders measured at the time of writing the new business contract.
The company reported a contraction in VNB margin at 25 per cent in Q1FY25 compared to 26.2 per cent in the corresponding period last year. VNB margin is a measure of the profitability of life insurance companies. Analysts had anticipated a contraction in the margin of private life insurance companies, given the increased sales of unit-linked products during the quarter due to buoyant equity markets.
The company’s new business premiums grew by 9 per cent year-on-year to Rs 6,400 crore in Q1FY25 against Rs 5,869 crore in the year-ago period. Its annualised premium equivalent (APE) was up 23 per cent year-on-year to Rs 2,866 crore. APE is the sum of annualised first-year regular premiums and 10 per cent weighted single premiums and single premium top-ups.
“We have started the year on a strong note, achieving 31 per cent year-on-year growth in individual APE, which implies a two-year compound annual growth rate of 21 per cent. This robust growth is driven by a comprehensive performance across all metrics,” said Vibha Padalkar, managing director and chief executive officer of HDFC Life.
HDFC Life reported a solvency ratio of 186 per cent compared to 200 per cent in the year-ago period.
The company reported a healthy persistency ratio, with the 13th-month persistency ratio at 88 per cent in Q1FY25 compared to 87 per cent in Q1FY24. Meanwhile, the 61st-month persistency ratio was at 56 per cent during the same period compared to 53 per cent in the year-ago period.
The company plans to raise funds worth Rs 2,000 crore through the issuance of non-convertible debentures (NCDs) in one or more tranches on a private placement basis over a period of one year, subject to necessary approvals.
First Published: Jul 15 2024 | 3:15 PM IST
