Private sector insurer HDFC Life Insurance has reported a 15 per cent year-on-year (YoY) increase in its Q1 FY25 net profit, reaching Rs 479 crore, in line with market expectations.
The robust profit growth was driven by strong performances in both first-year and renewal premiums. HDFC Life’s net premium income for the April-June quarter rose by 9 per cent to Rs 12,548 crore, compared to Rs 11,508 crore in the same period last year.
The annualised premium equivalent (APE), which measures new business written by the insurer, grew by 23 per cent, slightly below market expectations of 24 per cent growth, standing at Rs 2,866 crore for the quarter.
However, HDFC Life’s new business margin, representing the present value of future profits from new business, shrunk by 120 basis points, a marginally better outcome than the anticipated 130 basis points decrease. The new business margin for the quarter was 25 per cent. The value of new business (VNB) saw an 18 per cent YoY increase, reaching Rs 718 crore for April-June.
Niraj Shah, Executive Director and Chief Financial Officer of HDFC Life, highlighted that the fundraise will ensure solvency levels above 180 per cent, crucial for the protection business, which requires substantial capital. These funds will help maintain solvency levels as risk-based capital requirements come into effect and support the expansion of operations.
For Q1 FY25, HDFC Life reported a solvency ratio of 186 per cent, down from 200 per cent in the previous year. The insurer’s persistence ratio remained strong, with the 13th-month persistency ratio at 88 per cent and the 61st-month ratio at 56 per cent for the quarter under review.
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