HDFC Life Insurance Company Ltd (HDFCLIFE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, you are connected to the HDFC Life Insurance Company's earnings conference call. We would request you to please stay connected, the call will begin shortly. Participants, you are connected to HDFC Life Insurance Company Limited earnings conference call. We would request you to please stay connected, the call will begin shortly. Thank you.
Moderator: Ladies and gentlemen, good day, and welcome to the H1 FY '27 earnings conference call of HDFC Life Insurance Company. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Ms. Vibha Padalkar, MD and CEO of HDFC Life. Thank you, and over to you, ma'am.
Vibha Padalkar (HDFC Life Insurance Company): Thank you, Rutuja. Good evening, everyone, and thank you for joining our earnings conference call for the half year ended September 30, 2026. Our results, along with the investor presentation, press release and regulatory disclosures, are available on our website and with the stock exchanges. Joining me on today's call are Niraj Shah, Executive Director and Chief Financial Officer; Vineet Arora, Executive Director and Chief Business Officer; Eshwari Murugan, Appointed Actuary and Chief Actuary; and Kunal Jain, Head, Investor Relations, Business Planning and Strategy. Let me begin with a broader environment. In its latest policy, the Reserve Bank of India raised its FY '27 growth projection to 7.1% from 6.7%, reflecting continued resilience in domestic economic activity, while the fiscal position remains well managed. At the same time, the RBI raised the policy repo rate by 25 basis points to 5.5% and moved to a stance of calibrated tightening, given elevated energy prices and a below-normal monsoon, which remain the key risks to inflation. Broadly, we expect macro conditions to remain stable, which, in turn, should support steady growth for the life insurance industry. Moving on to business performance. In quarter 2, individual weighted received premium grew 11%, ahead of the private industry at 10%, with market share improving 10 basis points to 16.2% in quarter 2. This took our H1 individual APE growth to 9%. Overall APE grew faster at 13% in quarter 2 and 11% in H1. The number of individual policies grew 9% in H1, ahead of the industry. We expect to sustain this momentum and grow in line with the industry in FY '27. Growth was broad-based across channels. Individual APE sourced by HDFC Bank grew 12% in quarter 2, slightly ahead of company growth. We have sustained our counter share, building on the momentum we saw late in quarter 1, and supported by deeper engagement with the bank across branches, products and processes. And we expect our share to steadily improve going forward. Other bancassurance partnerships also grew well,
Vibha Padalkar (HDFC Life Insurance Company): Bank and we look forward to scaling the relationship, deepening our presence across its network and extending our reach to a wider customer base. Other non-bank corporate alliances clocked robust growth in quarter two of 13%. Agency continues to grow faster than the company and the broader agency market at 13% in H1, and our position in this channel has strengthened. Investment in expanding our branch network is yielding good results. Branches opened over the last 30 odd months now contribute about 17% of agency business versus 12% a year ago. Agent additions and activation remain healthy and front-line productivity has improved. The channel mix is also strengthening with protection and annuity together contributing about 30% versus 15% in the previous period. Even as we continue to perform well across our partner channels, investing in and building our propriety channels remains a key priority. Next on product mix, in H1, unit-linked products contributed 45% of individual APE, non-par savings 22%, annuity 12%, participating products 13% and retail protection 8%. Retail protection grew 33% in H1, a 2-year CAGR of 30%, with growth broad-based across geographies and customer cohorts. Its share of individual APE grew rose to 8% from about 7% last year. Rider attachment also continues to be healthy, and protection and riders together now account for 11% of individual APE. In the second-half of last year, protection grew 57%, following the GST exemptions. This year, we expect growth to normalize as the base starts kicking in and remain strong on a 2-year CAGR basis. Our retail sum assured grew by 21% in H1, with market share increasing by 20 basis points to 15.4% in H1. Credit protect grew 19% in H1, with growth broad-based across cohorts. Non-par savings and annuity together contributed 34% of individual APE. With interest rates at elevated levels, this is an opportune time for customers to lock in long-term guaranteed returns. In line with our focus on driving growth here, we will continue to use the current interest rate environment to sharpen the value we offer customers across both segments. Unit-linked demand remains resilient despite equity market volatility. Moving on to financial and operating metrics. Value of new business for H1 was ₹1,737 crores, a growth of 12%, ahead of APE. VNB growth for quarter 2 was 15%. New business margin was 24.7% compared with 24.5% in H1 FY2026. The improvement was driven by a strong product mix and the continued mitigation of the GST impact we'd absorbed last year. Embedded value stood at ₹56,461 crores with rolling 12-month operating ROEV of 14.9%. Profit after tax for H1 was ₹1,119 crores, a growth of 13%. Assets under management stood at ₹4.1 trillion, up 14% year-on-year. Our 13th month persistency stood at 83% and 61st month at 66%. Persistency was softer on renewal collections in our ULIP group amidst equity market volatility, and in a specific cohort of non-par business written last year. We are working closely with our distribution partners and expect to see some recovery by the end of this year. Our solvency ratio stood at 180% as of September 30, 2026, well above the regulatory requirement of 150%. The board has approved raising up to ₹500 crores of subordinated debt, which we expect to complete during the current quarter, further strengthening our capital position as we invest for growth. Moving on to subsidiaries and ESG. The pension business continued to scale with assets under management of ₹1.8 lakh crores as of September 30, 2026, up 28% year-on-year. We also continue to see an attractive
Vibha Padalkar (HDFC Life Insurance Company): released consultation paper on the economic surrender value which propose significant changes for the industry. The regulator has encouraged industry partners to share their impact supported by data and keeping policyholder interest at the center of conversation. As an industry, our shared goal is Insurance for all by 2047. Getting there will require widening reach, building greater transparency and trust, and improving affordability for customers. More attractive products and distribution partner, being advice, service and reach to customer will remain centric. Our business has been built around many of the principal consultation emphasizes, diversified distribution with growing proprietary channels, a calibrated expense model and a long-standing focus on quality of business and customer outcomes. This positions us well to keep investing in deepening and widening our reach. With the consultation still underway and the industry engaging with regulator, we will be better placed to comment on specifics once the framework is finalized. To conclude, momentum is building across our business. We grew ahead of the industry in quarter two. Growth was broad based across channels, our investments in agency continued to deliver and our VNB growth has been ahead of APE. We remain confident in the long-term opportunity for the industry and in our ability to further strengthen our position within it. For a more detailed presentation, sorry, for a more detailed discussion on our performance and outlook, please refer to the investor presentation. We will now be happy to take your questions.
Moderator: Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Prayesh Jain from Motilal Oswal Financial Services. Please go ahead.
Prayesh Jain (Motilal Oswal Financial Services): Yeah, hi everyone, good evening, and congrats on a decent set of numbers and happy to see the growth coming back at HDFC Bank. What has changed in HDFC Bank, you know because we had seen a slow phase in the last in the last few quarters and the growth seems to have come back in the last couple of months. So, what has changed and how how it is sustainable? And second question is on the consultation paper. We have a decent share of credit life business. How do you see that getting impacted if the regulations are implemented as it is? You know how do you see that part of the business kind of playing out? Yeah, so those will be my two questions and probably a third one I'll ask after this.
Vibha Padalkar (HDFC Life Insurance Company): Yeah, hi, Prayesh. As far as the bank is concerned, you know, we've done a lot of granular work and there are many aspects to it rather than one and it's I would just say that it is a lot more bottoms up in terms of engagement at a branch level, a very, very granular level of engagement and we we expect this momentum to continue to to build. And also, I think, the interest rate environment has helped. You know, the underlying product protection has grown very well. So, it's a multifold effort. Our own populating our people in terms of which branches, you know, very, very nuanced. So, many small and big things that have continued to work for us. Vineet, you want to add anything on HDFC?
Vineet Arora (HDFC Life Insurance Company): Not much to add. I think it's also a I think at macro level, there were last year, there was, you know, till about July, August, there was some additional incentives and contests running, which was withdrawn about a year back in the HDFC Bank. And and now that, you know, one full year has passed, the entire momentum of insurance is also coming back into the full growth for the bank channel. Along with that, like Vibha mentioned, lot of small, small you know, corrections and challenges around credits and people and everything else has been taken in this year, especially in the last, you know, 4 3, 4 months, which has now stabilized and we can see that good momentum coming back. Looking at where we are, we do believe that
Vineet Arora (HDFC Life Insurance Company): we should continue to see reasonable growth in the HDFC Bank channel.
Vibha Padalkar (HDFC Life Insurance Company): So, as regards your second question on consultation paper and credit life in particular, see this is a consultation paper, early days. You know we have made representations collectively at different forums and so on. We are also hearing and understanding where the regulator is coming from. I think the objective remains the same as to how do we give the best value for each customer. However, as far as credit protect is concerned, the need for protection at the bottom of the pyramid continues. I think that point is well taken and we have made those points as well. And how do we make insurance a lot more inclusive, and credit life very effectively does that. So, I think things will evolve. The need for protection doesn't go away, so in some avatar or the other, I think it will it will definitely be there in a similar kind of a quantum, but a little bit early in the day to say as to what's the final form or shape.
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