BENGALURU: India’s HDFC Life Insurance reported a higher second-quarter profit on Wednesday, driven by strong demand for retail insurance products and a pickup in market-linked plans.
Net premium income for the quarter rose 13% to 187.77 billion rupees ($2.13 billion), supported by an 11% increase in one-time premiums, and a 17% growth in premiums from older policies which were renewed.
However, commission paid for sales jumped 25%, hitting the bottom line.
The insurer’s net profit rose 3.3% year-on-year to 4.47 billion rupees for the quarter ended September 30.
Analysts said that robust retail demand for life insurance helped HDFC Life in July–September while demand for market-linked products also recovered.
Market-linked policies, which generate lower margins, made up 42% of HDFC Life’s product mix at September-end, up from 36% a year earlier, and 38% at the end of June.
The value of new business rose nearly 8% to 10.09 billion rupees, according to a Reuters’ calculation. The margin on the new business value stood at 24.5%, down from 25% at June-end.
Annual premium equivalent sales — a key metric of new policy growth — rose 10% to 74.13 billion rupees for the half year.
Analysts have warned that the government’s move to cut goods and services tax on life insurance products to 0% from 18% could weigh on insurers’ profitability in the coming quarters.
While the tax cut improves affordability for customers and may aid volume growth, it eliminates insurers’ ability to claim input tax credit on services used to deliver these products.
Shares of HDFC Life ended 2.4% higher ahead of the results.
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