For the April-June quarter (Q1FY21), the private insurer reported a 2.87 per cent jump in pre-tax profit to Rs 450 crore from Rs 438 crore in Q1FY20. The insurer's net profit rose 6 per cent to Rs 451 core from Rs 425 crore reported in the year-ago quarter.
Value of new business (VNB), a measure of profitability for life insurers, was down 43 per cent to Rs 291 crore in Q1FY21 from Rs 509 crore. New business margin was also down 550 basis points to 24.3 per cent in Q1FY21 compared to 29.8 per cent in Q1FY20.
“HDFC Life remains focused on maintaining a balanced product mix across the savings/protection businesses, with emphasis on product innovation / superior customer service. However in the near term, Individual Protection/PAR segments are likely to see healthy growth while ULIP trends should remain sluggish,” analysts at Motilal Oswal Financial Services said in its result update report.
Besides, it said that VNB margins have moderated over the past few quarters, and they estimate these to gradually improve to 26 per cent by FY22E. "However, persistency trends are likely to moderate, especially in the ULIP segment, while it should remain strong in the Protection segment," it said.
Those at Emkay Global Financial Services believe that HDFC Life Insurance’s balanced product mix provides it a cushion against any business cyclicality, while at the same time, taking advantage of the grossly underpenetrated protection market. We expect the trend in margins to improve gradually with the rising share of protection plans as well as increasing penetration in deeper geographies.