*Thread on Life Insurance Industry & HDFC Life*
Current Life Insurance Industry in terms of total premium business is 4.6 Trillion, with current penetration of mere 2.7%.
Definitely there is huge potential in Life Insurance compare to other emerging countries (not China)
1/12
In Life Insurance there are 24 players. India is 10th largest in the world & 5th largest in Asia in terms of Life Insurance Business (Industry)
With low penetration, awareness & post COVID, this industry should grow leaps & bounds (pure insurance).
2/12
What these Insurance Organizations sell?
Savings & Protection Plans
Savings Plans are basically combination of "Investments & Insurance"
Eg. ULIP, Endowment Policies, Par & Non Par
Protection Plans are 100% insurance.
Eg. Term Insurance, Group & Annuity
3/12
About HDFC Life ~
a young leading player in domestic life insurance, in Nov'17 listed on NSE & BSE.
Products:
~ ULIP
~ Par & Non Par
~ Group Insurance
~ Annuity
~ Term Insurance
A diversified pdt mix with highest margins & returns ratios.
4/12
🥇In new business premium HDFC Life has highest market share of 22% (among pvt players)
🥇LY insured 6 crores + lives, much ahead of peer orgs
🥇 41% CAGR of Lives Insured in last 5 years
🥇 28% CAGR in New Business Premium
🥇 Focused on Protection Plans than Saving Plans
5/12
In Pvt Insurers, HDFC Life is leader in Protection Plans (Term & Annuity).
In last 5 years,
~ HDFC Life's Protection (Term & Annuity) grown from 21% to 43%
~ HDFC Life's Savings (ULIP & Others) de grown from 79% to 57%
V Good Indictor!
6/12
HDFC Life Subsidiaries ~
1. HDFC Pension
2. HDFC International & Re
(for details visit HDFC Life Website)
7/12
Look at HDFC Life's massive distribution network 👇, in last few quarters, HDFC Life has grown their direct business, selling more policies directly than through channels, improvising on their margins.
8/12
LY No. of Lives Insured by large pvt players
HDFC Life: 6.13 Cr
SBI Life: 0.9 Cr
ICICI Pru: 0.4 Cr
Does 80 C clause impact HDFC Life & Others, not really. As I mentioned above they are shifting from selling Savings Plans to hardcore Insurance ~ Term, Group & Annuity.
9/12
With improvement in life expectancy (by 2050, Indians life expectancy will be 75yrs ), Post COVID Awareness & Education this industry & HDFC Life should do well.
BTW ~ not a recommendation to buy this stock.
10/12
On Valuation, compare to SBI & ICICI Pru, HDFC Life does demands high PE of 90 and high PEV (Price to Embedded Value) of 4.7.
11/12
If you read tweet no. 6, v will understand why PE & PEV are high. HDFC Life is becoming a core Insurance Org.
Their focus is more on selling Protection plans than Savings.
12/12
If you are curious to know how their CEOs are paid annually: 🙂
HDFC Life: 4.88 Cr
ICICI Pru: 7.60 Cr
SBI Life: 0.50 Cr
End
Analyst says valuation at 600 is high, but if we have plans to hold for a decade, do we really need to care short term high valuation?
Disc: Invested
On APE basis, the contraction in business for HDFC Life was just 5% for the first 5 mths of FY21. For SBI Life the contraction was 19% and ICICI Prudential Life Insurance saw a decline of 40%.
livemint.com/market/mark-to…
wow! claim settlement ratio of HDFC Life is better than LIC.
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