Thread by @_KiranRajput

*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.