Private sector life insurer, HDFC Life, has reported a 33 per cent decline in standalone net profit at Rs 302 crore in Q1FY22. This, due to higher claim payout by the company and higher provisions being set aside to mitigate the impact of higher claims because of Covid pandemic. The firm has set up an additional reserve of Rs 700 crore to service further claims.
The company said it has settled around 70,000 claims in Q1FY22, and the gross and net claims amounted to Rs 1,598 crore and Rs 956 crore, respectively. “In the quarter gone by, we witnessed a steep rise in death claims, with peak claims in wave 2 at around 3-4 times of the peak claim volumes in the first wave,” the company said.
According to the company, the provision of Rs 165 crore, which the company had created after Q4FY21, was adequate to meet the liability due to extra death claims during Q1FY22.
“With signs of the second wave receding, over the past month, we have seen a gradual pick-up in economic activity, across parts of the country. We see greater customer engagement and an increased interest in life insurance policies,” the company added.
The insurer’s total premium was up 31 per cent year-on-year (YoY) to Rs 7,656 crore, with new business premium up 44 per cent and renewal premium up 20 per cent. The new business margin for Q1 FY22 stands at 26.2 per cent, higher than 24.3 per cent in Q1 last year and 26.1 per cent in FY21, with the value of new business at Rs 408 crore, a growth of 40 per cent over last year.
The total annaulised premium equivalent (APE) of the insurer was up 22 per cent YoY to Rs 1,561 crore, with individual APE logging a 22 per cent rise in the same period. Assets under management of the company increased by 30 per cent to Rs 1.81 trillion.
The solvency ratio of the insurer at the end of Q1FY22 stood at 203 per cent. “The company has also assessed its solvency position as at the Balance sheet date and is at 203 which is above the prescribed regulatory limit of 150%.Further, based on the Company’s current assessment of the business operations over next one year, it expects the solvency ratio to continue to remain above the minimum limit prescribed by the Insurance regulator," the insurer said.
The thirteenth-month persistency of the insurer has remained stable at 90 per cent in Q1FY22, and so has the 61st-month persistency at 53 per cent.
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