India's HDFC Life Insurance reports weaker new business margin for FY 2024

BENGALURU (Reuters) - India's HDFC Life Insurance Company reported a decline in new business margin for the last financial year on Thursday, pressured by rising customer preference for low-margin products over high-value policies.

The value for new business (VNB), the expected profit from new policies, fell 4.7% to 35.01 billion rupees ($419.3 million) for the year ended March 31, dragging VNB margin to 26.3% from 27.6% a year earlier.

The continued decline in high-value policies due to the government's move to tax total returns and a rising share of low-margin unit-linked insurance plans (ULIPs) will lead to compressed VNB margins for life insurers, analysts said.

A strong domestic equity market fuelled investment in ULIPs. The NSE Nifty 50 Index rose 2.7% in the March quarter, logging its fourth straight quarterly gain and scaling record highs, amid buying by domestic and foreign investors and strong macroeconomic data.

HDFC Life Insurance said its unit-linked segment made up 35% of its overall product mix by individual annualized premium equivalent (APE) for the financial year 2024. The share was 19% a year earlier.

APE, a key metric for insurers, is a gauge of sales that gives the annualized total value of all single premium and recurring premium policies. Total APE sales dipped 0.3% to 132.91 billion rupees for the year.

HDFC Life Insurance's net premium income rose 5.5% to 204.88 billion rupees for the three months ended March 31, compared to a 6% growth in the previous quarter. Its investment income registered an over six-fold jump.

The insurer, a unit of HDFC Bank, reported a near 15% rise in fourth-quarter profit after tax at 4.12 billion rupees from a year earlier.

Separately, the company announced that Keki M Mistry has been appointed as the new chairman as Deepak S Parekh steps down, with effect from Thursday.

The company's shares pared gains to trade 0.2% higher post results after climbing as much as 3.2% earlier in the session.

($1 = 83.5020 Indian rupees)

(Reporting by Dimpal Gulwani in Bengaluru; Editing by Eileen Soreng)