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Have currency and the appetite for acquisition; eyeing entity with strong distribution & back-book, says HDFC Life

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HDFC Life posts a steady performance in Q3 with value of new business growth at the same pace as Q2. The company is already ready for transition to the new product regime and has launched a par product that will correct the mix in Q4.

HDFC Life posted a steady set of numbers in Q3 with value of new business growth at the same pace as Q2. The company is all ready for transition to the new product regime and has launched a par product that will correct the mix in Q4.
The company is also keen on acquisition. Vibha Padalkar, MD and CEO, HDFC LIFE said, “We would look at acquisitions that have these things- one is that have a strong distribution and have a good back book. So, we remain enthused as we have the currency and the appetite.”
Throwing more light on the performance of the industry, she said, “Overall, the insurance industry has done exceedingly well. In the 9 months, growth in the individual business of around 16-17 percent was heartening and for the company per se, growth in the individual annual premium equivalent (APE) of 31 percent was stellar.
“What is also good is some of the new products that the industry is focusing on. So, it’s not just riding on a unit linked product or a participating product but there is product innovation driven by some companies like HDFC Life. This means the growth that one is seeing is lot more sustainable and to some extent even decoupled from the fortunes of what is happening in the macro environment,” she said in an interaction with CNBC-TV18.
For the company, the value of new business margin in Q3 was 24.7 percent and same quarter last year it was 23.5 percent. However, it makes sense to look at margins on an annual basis or a nine-month basis because there could be expenditure in a particular quarter but there is a lag because you work on a product launched and it is launched in the following quarter etc. "So, a quarter is too less a period for one to look at margins," she said.
Speaking about product mix and the non-participating (non-par) products Padalkar said, “You will see that non-par, standalone  in Q3 has gone down to 35 percent. In Q1 we had about 67 percent,  in the half year it continued to remain in the high 50 percent, progressively, standalone has gone down  to 35 percent. It will go down even further by a few percentage points, by the time we end Q4. Consequently you'll see a slightly higher number in participating policies.”
When asked if Standard Life was looking to sell more she said, “Unfortunately, I don't have a visibility of their plans. They are locked in 9 percent as per the regulator until March 21. But apart from that, it really is their prerogative as to what strategy they want to follow.”
Talking about the Vodafone exposure in the non-par policies she said, “I don't want to comment on individual scripts. The various names that are talked about - you mentioned one but there are several more, even if we have an exposure there is nothing material in there.”