HDFC Life Q2 net profit falls 16 pc to Rs 276 cr on higher reserves for COVID claims

HDFC Life Insurance Company on Friday reported a nearly 16 per cent decline in consolidated net profit to Rs 275.91 crore in the September quarter, primarily due to higher reserves set aside for expected COVID claims.

The life insurer had posted a net profit of Rs 327.83 crore in the year-ago period.

Total income of the insurer during the July-September period of FY22 rose to Rs 20,478.46 crore from Rs 16,426.03 crore in the same period a year ago, it said in a regulatory filing.

The net premium income increased to Rs 11,445.53 crore in the latest quarter from Rs 10,056.71 crore in the year-ago period.

The decline in profit after tax was primarily on the back of higher claim reserving warranted by the second wave of the coronavirus pandemic, Vibha Padalkar, MD and CEO of HDFC Life Insurance, told reporters in a conference call.

Overall, 2 lakh claims were settled during the first half of the current fiscal year, she said, adding the second COVID wave has largely receded.

''We settled around 2 lakh claims in H1FY22. The gross and net claims amounted to Rs 3,640 crore and Rs 2,466 crore, respectively. While individual claims tapered off, group claims intimations were high in Q2F22, both on expected lines. The overall experience has been well within our projection,'' Padalkar said.

HDFC Life Insurance created an Excess Mortality Reserve (EMR) of Rs 700 crore as on June 30, which has been sufficient to cover the claims received till date.

''Further, we have created an additional EMR of Rs 60 crore in the second quarter,'' she noted.

She hoped that the intensity of any subsequent COVID wave will be muted and added that recent macroeconomic data augurs well for the economy and was indicative of a swifter recovery.

''Our business performance remains strong with 22 per cent growth and private market share of 16.2 per cent in terms of individual WRP (Weighted Received Premium) in H1 FY22,'' she said.

New Business Margin (NBM) expanded by 130 basis pointss to 26.4 per cent in the first half of this fiscal, higher than 25.1 per cent a year ago.

''Value of New Business (VNB) was Rs 1,086 crore, recording a robust growth of 30 per cent over last year. Our profit after tax stands at Rs 577 crore for H1, 26 per cent lower than H1 FY21, on the back of higher claims reserving warranted by the second wave of the pandemic,'' she said.

About the Exide Life acquisition, Padalkar said the insurer has received shareholders' approval for issuance of equity shares to Exide Industries and the deal is subject to receipt of final approval from Irdai and CCI.

''We have filed the requisite application with Irdai and CCI and are engaging with the authorities as necessary,'' she said.

On pricing of insurance policies, she said, ''we have received intimation on repricing just as almost every company would have done. This is expected to kick in from quarter four, it might be delayed a little bit here and there. Ongoing discussions are happening, as we speak, the final quantum is yet to be pinned down''.

''It will be risk-based pricing approach, meaning wherever we see higher levels of claims, I do it in certain cohorts, certain age groups and so on, or certain variants, rather than just a excel spreadsheet of passing on everything to customers,'' she added.

Shares of HDFC Life closed marginally down at Rs 690.65 apiece on the BSE.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)