HDFC Life Plans To Double Its Value Of New Business In Next Four Years

Solvency Margin Concerns

The insurer saw its solvency margin slip to 176% from 190% at the end of March 2022, largely on account of the acquisition of Exide Life. It will look to raise capital in the form of debt and equity to be at 180-190% solvency level.

“We would need between Rs 1,000 and Rs 1,500 crore of equity over the next 3-4 years to support growth and keep solvency above 180% level. At Rs 1,000 crore, we will have 190% and at Rs 1,500 crore, it will be higher than that.”

HDFC-HDFC Bank Merger Benefits

As part of the HDFC Ltd.–HDFC Bank Ltd. merger, there is a proposal to allow the stake of HDFC Bank to be increased to 51% from the current 47%.

The proposal is with the regulators and subject to their approval, Padalkar said.

HDFC Life expects to up-sell and cross-sell its products in a better manner, post the HDFC-HDFC Bank merger and once it becomes a subsidiary of HDFC Bank.

Currently, it allows sale of term loans attached to home loans. Once the merger process is complete, it hopes to gain better access to the bank’s customer base, which will enable it to provide better products, thereby pushing further growth through the Banca channel, Padalkar said.

The insurer saw its protection products grow at 24% during the year, which is more than double the industry growth rate. “We hope to grow in the double digits in FY23,” said Padalkar, adding that it will be one of the levers for growth.

Padalkar expects the life insurance company will be able “to achieve a fine balance” between reaching the 30% VNB margin and not losing market share.