HDFC Life expects muted third wave, says reserves should suffice for future claims, BFSI News, ET BFSI
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The insurer is bullish on the impact of COVID, as the number of vaccinations have the crossed 1-billion mark. ” In addition, the recent macroeconomic data augurs well for the economy and is indicative of swifter recovery trends. Consumer sentiment remains buoyant and we are optimistic about sustained increase in business in the coming few months,” the company said in a filing.
The life insurer on Friday announced a 15.9% fall in its consolidated net profit to Rs 274.16 crore in Jul-Sep, as against Rs 326.09 crore a year ago.
Padalkar is optimistic about the second half of FY22, citing new bancassurance partnerships and agency channels. On the acquisition of Exide Life Insurance Co, Padalkar expects HDFC Life to receive the approval from the regulator by late third quarter or early fourth quarter.
Total income of the insurer in the second quarter, however, rose to Rs 20,478 crore against Rs 16,426 crore a year ago, while the net premium income increased by 52% to Rs 11,445 crore from Rs 10,056 crore, the insurer said in a regulatory filing.
“Value of new business (VNB) recorded a robust 30% growth to Rs 1,086 crore over last year. Our profit after tax stands at Rs 577 crore for H1, 26% lower than H1 FY21, on the back of higher claims reserving warranted by the second wave of the pandemic,” said Padalkar.
The insurer settled around two lakh claims in the first half of the fiscal. Gross and net claims amounted to Rs 3,640 crore and Rs 2,466 crore, respectively, against an anticipated net claims of Rs 1,690 crore, the management said in a post-earnings call. The excess Rs 776 crore was paid out of reserves, which stood at Rs 204 crore as on 30 September.
The company’s overall experience has been in line with their projections, and an Excess Mortality Reserve (EMR) of Rs 204 crore is being carried into the second half of FY22, the company said in a filing. Its solvency ratio was at 190% compared with 203% a year ago, while its 13th month persistency was at 84.8% against 83.9% around the same period last fiscal.
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