HDFC Life Insurance Company (HDFCLIFE) Q4 15/16 earnings summary

Executive summary

• FY16 total premium rose 10% to ₹16,313 Cr; Indian GAAP PAT increased 4% to ₹818 Cr, while AUM grew 11% to ₹74,247 Cr.

• Growth came alongside higher investment in distribution, technology and product development; the operating expense ratio rose to 11.6% from 10.2%.

• 13th-month persistency improved to 79% from 73%; solvency was 198%, against the 150% regulatory minimum.

Financial highlights

• Gross premium income increased 10% YoY to ₹16,313 Cr; net premium income was ₹16,179 Cr, up 10%.

• Indian GAAP PAT rose 4% to ₹818 Cr from ₹786 Cr; EPS was ₹4.10 basic and diluted, versus ₹3.94 and ₹3.93.

• AUM rose 11% to ₹74,247 Cr; net premium retained grew 23% to ₹8,057 Cr.

• Investment income fell to ₹1,959 Cr from ₹12,450 Cr, mainly on unit-linked mark-to-market losses; corresponding reserve movements made the UL impact profit-neutral.

• Other income included a one-off ₹34 Cr interest receipt on an income-tax refund.

Outlook and guidance

• Target remains profitable growth with quality business; digital ecosystems, technology and new distribution avenues are planned investment priorities.

• Upfront investment costs may lift the operating expense ratio in the near term; benefits from distribution, digital, product and customer-experience initiatives are expected over coming years.

• Medium- to long-term priorities include outperforming industry growth in revenue and profitability, improving new-business profits and building embedded value.