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Growth of life insurance sector remains intact despite headwinds: Deepak Parekh

The insurance space has a lot of opportunity, Parekh said, due to longer life expectancy which demands for retirement planning.

July 21, 2023 / 05:17 PM IST
HDFC Chairman Deepak Parekh

Retirement space has a substantial opportunity in India alongside life insurance business, Parekh said.

The growth prospects of India’s life insurance industry remain intact despite headwinds aided by factors such as continuing low insurance coverage, favorable demographics, increasing life expectancy and growing consumer awareness, said Deepak Parekh, Chairman, HDFC Ltd.

"Indian life insurance sector's growth remains intact despite the headwinds observed over the last year,” said Parekh.

“Factors like low insurance coverage, favorable demographics, increasing life expectancy, and growing consumer awareness regarding financial protection bode well for the industry," Parekh said at the company's annual general meeting in Mumbai on July 21.

Further, retirement space has a substantial opportunity in India alongside life insurance business, Parekh added.

HDFC Life Q1 results

HDFC Life Insurance on July 21 reported a net profit of Rs 415 crore for the April-June quarter of FY24, up by 15 percent from Rs 361 crore recorded in the year-ago period.

The net premium income of the insurer came in at Rs 11,479 crore, up 16.5 percent from Rs 9,847 crore in the year-ago quarter.

Following the earnings, shares of HDFC Life on July 21 were trading nearly 4 percent down at Rs 636.50 apiece on BSE at 2:30 pm.

The company reported annualised premium equivalent (APE), which is a measure of new business written by a life insurance company, of Rs 2328 crores, slightly missing market expectations which expected APE to grow to Rs 2340 crores.

The insurer’s solvency ratio improved during the April-June FY24 quarter and at 200 percent, compared to 183 percent a year ago. The solvency ratio of a life insurance company measures its cash flow in comparison to the amount it owes as total life cover.

The company's value of new business, which measures the expected profit from new premiums, grew by 18 percent to Rs 610 crores from Rs 518 crores.

In Budget 2023, Finance Minister Nirmala Sitharaman announced that income from traditional insurance policies where the premium is over Rs 5 lakh will no more be exempt from taxes.

Following this, HDFC Life and several other insurance stocks took a knock. However, it has now got a boost after HDFC Bank-HDFC merged entity was given approval to hold over 50 percent in the company.

Jinit Parmar
Jinit Parmar is a correspondent based out of Mumbai covering banks, banking trends and more, tweets @jinitparmar10 #banks #bankingtrends #RBI
first published: Jul 21, 2023 04:59 pm

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