Indian insurer HDFC Life’s new business growth slows

India’s HDFC Life Insurance Company posted a fall in quarterly new business value on Thursday while reporting a slight profit rise, driven by policy renewals.

India’s tax cuts in September have boosted retail insurance demand but analysts had forecast a soft quarter for HDFC Life with new business growth slowing due to weaker sales through banks and as volatile markets made customers wary about market-linked plans.

“Looking ahead, we expect a gradual shift in the product mix as customers rebalance toward long-term savings and protection in an environment of greater uncertainty,” HDFC Life MD and CEO Vibha Padalkar said in a statement.

The insurer, a unit of HDFC Bank, posted a net profit of 4.96 billion rupees ($53.2 million) for the three months ended March 31, compared with 4.77 billion rupees a year ago.

Earlier in the week, peer ICICI Prudential Life reported a jump in quarterly profit, boosted by new business growth.

HDFC Life’s net premium income rose nearly 9% to 258.29 billion rupees, driven by a 14% rise in policy renewals.

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Annualised premium equivalent — a key measure of new business — rose 1.3% to 52.54 billion rupees, as per a Reuters calculation, slower than 13% growth in the preceding three months.

Value of new business, or expected profit from new policies, fell 8.4% to 12.61 billion rupees, according to a Reuters calculation, as loss of a tax benefit weighed. Margins on new business declined to 24.2% from 25.6% a year earlier.