HDFC Standard Life insurance Company analysis

Industry profile  :  Basic concept of Insurance is offsetting the Risk. Insurance is basically contract which is readable. There are some types of insurance contracts which if you return to Insurance company, you will receive money against it. But basically insurance is contract which is help you to offset the risk.

As per Swiss Re Institute sigma No 3/2017 report, in 2016, global life premiums are estimated to have increased 2.5%; premium growth declined in the advanced markets by 50 bps, but accelerated in the emerging markets. Life premiums in the emerging markets grew 17% in 2016 versus 12% in 2015, well above the overall growth of 2.5%. In terms of the market share of life insurance, Asia is the largest continent, accounting for 38% of premium collected. India’s share is just ~2.4% in the global life insurance market as of 2016, indicating the vast potential for growth in India’s life insurance industry. In the global insurance industry, around 55% of premium comes from life insurance and the rest from the non – life segment; in emerging markets, around 54% of premium comes from life insurance. By contrast, the share of life insurance is over 78% for India.
The financial inclusion initiative from govt, increased use of technology, availability of 4G technology, Financialization of Savings are playing key role in sector. For private players, the share of bancassurance in new business premium has been growing steadily over the past few years. which is also one large force.

Company Profile  :  The company  is leading Life insurance company in India promoted by HDFC and Standard life Aberdeen. It was first private Life insurance company in India. The company is having nearly all types of Life insurance Products.

  • Participating Life insurance : An insurance contract that pays dividends to the policy holder. Dividends are generated from the profits of the insurance company that sold the policy and are typically paid out on an annual basis over the life of the policy.
  • Non Participating Protection Term :  Insurance Contract which do not pay Dividend or Bonus. in simple word Term life insurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term.
  • Non participating Protection term Health : Protecting Health issues and covering Expenses of hospital.
  • Non Participating Other :
  • Unit linked Insurance plan : Its product of combination of Investment and Insurance
Product portfolio of company comprised 31 individual and ten group products, as well as eight optional rider benefits. Company also having Wide product suite caters to specific needs of customers during each stage of their lives. HDFC Pension, wholly owned Subsidiary of company, is second largest Private pension fund manager. In 2016, the company set up its international subsidiary named HDFC international in UAE for Reinsurance.

Shareholding Pattern  :  As per DRHP, 61.41 held by HDFC. 34.86% held by Standard Life Mauritius. Remaining is held by public.

Financials and ratios  : 

 2012 - 132013 - 142014 - 152015 - 162016 - 17
Premium received in Rs. Cr11,502.2412,062.9114,829.9016,312.9719,445.48
Reinsurance expenses56.1986.4767.45134.20170.62
Net premium11446.0511976.4414762.4516178.7719274.86
Income from Investment2,542.655,073.0812,249.271,790.5711,140.64
Total income14,016.2617,290.7327,090.6218,066.4530,554.42
Net benefits Paid3,902.844,661.928,162.388,176.909,842.18
Commission 647.26514.10623.47701.85792.02
Operating Expenses1,216.011,280.521,488.831,871.832,385.28
Expenses ratio16.27%14.98%14.30%15.90%16.48%
Loss Ratio34.09%38.92%55.29%50.54%51.06%
Combined ratio50.37%53.91%69.60%66.44%67.21%
Investment income ratio22.21%42.35%82.97% ( ???)11.06%57.79%
Net profit447.73725.29785.51818.40892.13
EPS2.243.643.934.104.44
Return on Equity20.53%33.53%30.90%26.32%23.24%
FLOTs ( Funds for future appropriation)343.68225.86415.46705.48866.78
Solvency Ratio217.4%193.9%196.1%198.4%191.6%
NAV6.79.712.715.619.2

Future Prospectus  :  The company even though having HDFC and Standard Life as promoter and having backing from HDFC bank for bancassurance, Connection from HDFC Mutual funds for selling ULIP is not largest player in insurance. Capital adequacy is much better in ICICI Prudential, Bancassurance is better in SBI Life, SBI life is leader in ULIP and still HDFC standard life is trading at Very high valuation?. In my view the promoter is beyound doubt important but it will not help you in day to day work.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter