HDFC Life Net Profit Up 16% To Rs 365 Cr

HDFC Life Insurance, on Friday, said that it has registered a nearly 16 per cent increase in its third-quarter profit, largely due to higher investment income.

The company's profit after tax rose to Rs 365 crore (USD 44.02 million) for the three months ended 31 December, up from Rs 315 crore in the same period last year.

Investment income is a crucial source of earnings for life insurance companies, as there is a time gap between premiums paid and claims made by customers, insurers can earn returns on investments during this period.

This allows companies to generate a steady stream of income, even when the growth of premium payments slows down.

During the quarter, HDFC Life's investment income more than doubled to Rs 11,370 crore, while its net premium income grew by 6 per cent year-on-year (YoY). In the last two quarters, net premium income had grown by 12.5 per cent and 16.5 per cent, respectively.

However, analysts have noted that the demand for higher-ticket size policies has been subdued due to taxation changes implemented on such policies earlier this year. Despite this, the value of a new business, which measures expected profit from new premiums, has grown by five per cent during the nine months to December. Additionally, new business margins have remained unchanged at 26.5 per cent from a year earlier.

The insurer has also reported a moderate 5 per cent rise in its total annual premium equivalent (APE) sales during the April to December period.

Vibha Padalkar, Managing Director (MD) & Chief Executive Officer (CEO) said, “We continued to be ranked amongst the top 3 life insurers across individual and group businesses. The number of policies clocked a healthy growth of 9 per cent, outpacing private and overall industry. This aligns with our core objective of establishing a sustainable long-term business by broadening our customer reach. We have covered close to five crore lives across our individual and group businesses. Growth from Tier 2 and 3 markets remain strong, witnessing 14 per cent growth year on year. Our retail protection grew by 36 per cent based on individual APE and credit protection clocked 21 per cent growth YoY.”