BENGALURU (Reuters) -India’s HDFC Life Insurance reported a 14% year-on-year rise in first-quarter profit on Tuesday, driven by robust demand for its group policies and a decline in claims paid.
The insurer’s profit rose to 5.46 billion rupees ($63.63 million) for the three months ended June 30 from 4.78 billion rupees a year earlier.
The company’s quarterly net premium income increased 16% to 144.66 billion rupees, driven by a 17% rise in single premiums and an 18.5% jump in renewal premiums.
Claims paid dropped to 86.80 billion rupees from 88.28 billion rupees last year.
Analysts said the strong growth in group insurance plans during the April-June quarter boosted premium income for insurers.
Group insurance policies cover a group of people under one contract and are generally utilised by firms for their employees.
However, growth in market- or unit-linked insurance plans (ULIPs) has started slowing after a strong last fiscal due to volatility in India’s equity markets.
The blue-chip Nifty 50 has recovered about 15% from a one-year low hit in April. However, the benchmark index is still down nearly 4.5% from record highs touched last September due to market gyrations resulting from global trade concerns and the India-Pakistan conflict in May.
ULIPs, which have lower margins, accounted for 38% of HDFC Life’s overall product mix, down from 39% as of March-end.
“We anticipate a gradual shift, rather than a sharp swing in favour of traditional products over the course of the year.” Managing Director and CEO, Vibha Padalkar, said in a statement.
HDFC Life’s value of new business (VNB), or expected profit from new policies, rose 12.7%, while VNB margin improved slightly to 25.1% for the quarter, compared to 25% a year ago.
Its annualised premium equivalent (APE) sales, which is the annualised total value of all single- and recurring-premium policies, rose 12.5% to 32.25 billion rupees.
($1 = 85.8110 Indian rupees)
(Reporting by Nishit Navin; Editing by Sonia Cheema and Eileen Soreng)
