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‘Composite licence for insurance sector to be good for India’

A composite licence for insurance sector is something that exists worldwide, and it will also be good for India to have it, says HDFC Life Insurance MD & CEO Vibha Padalkar. In an interview with Mithun Dasgupta, Padalkar says as far as health insurance segment is concerned, that is something her company has been keen on from a product innovation point of view. Excerpts:

HDFC Life Insurance reported over 15% year-on-year growth in its standalone net profit for Q3. What were the factors that contributed to this growth?

The company’s renewal premium growth was very strong. Our new business premium growth was also very strong. Our market share has been robust at 15.3% for the quarter. Our annuity business has been fairly profitable, which has seen around 60% growth on a standalone basis. So, all of these factors have helped. Last year, we were affected by Covid claims and we had to make higher reserves. So, that also benefitted.

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What is the outlook for Q4?

We see a fairly positive outlook. Almost in all factors and compared to other nations, India is an oasis of stability. And that is helping us in terms of people investing into insurance policies as well as borrowing. We are the No. 1 in the credit life business. Our credit life business has grown by over 50%. With a bit of market stability, we could do very well in terms of sentiments. Even if the GDP growth is not close to 7% and comes down to 6% (in the current fiscal), it should be fairly good for our business.

Declaring the results, you said after the company’s merger with Exide Life, integration and synergy realisation from the combined business is progressing as per plan. Could you please elaborate?

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There has been a complete integration in terms of our sales channels, including agencies, especially in tier II and III towns. Agents of erstwhile Exide Life can now sell HDFC Life products. Tech integration is underway. Integration of brokers and corporate agents has also happened. The branch network is being optimised, some of that is also beginning to happen. We had certain objectives in our mind wherein we had said within a period of 18 months, we would be margin-neutral versus prior year. Because Exide Life was clearly much lower in terms of new business margin. But, I am happy to share that end of this quarter (Q3FY23) itself, we have reached margin neutrality for the combined entity. The combined new business margin for 9MFY23 was at 26.5%, and it was the same compared with the corresponding period of FY22. So, we are ahead by almost two quarters than what we had told earlier. And, overall persistency ratio is almost there in terms of before and after the merger. We are at a reasonably comfortable solvency ratio of 209%. As of now, for organic growth, we do not see any requirement for capital raising going forward. For inorganic growth of course, there is a different possibility.

What is your view on the proposed composite licences, which is currently at a draft stage? Would HDFC Life see it as an opportunity?

The composite licence is something that exists worldwide. And, it will be good for India also to have it. Every group will look at it as does it make sense to be separate, does it make sense to be one. These things will evolve once the form and shape of the regulatory concept become clear. Our group will also evaluate once that happens. But, as far as health is concerned, that is something we have been keen on more from a product innovation point of view. We are definitely interested in health-related products, not only Mediclaim, our interest is not just to redistribute the pie, but how could we grow the pie. I think that is important. I was part of the health committee set up by the regulator representing life insurers. And a report was submitted to them about 18 months ago. Recently, the development and penetration committee, chaired by me, submitted a report to the regulator. In that also we asked for allowing life insurance companies to sell health products. Because, worldwide, health and life go together.

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