HDFC Life Insurance has started the new financial year on a strong note. The private insurer reported an 11.46 per cent increase in its consolidated net profit for the first quarter (April to June) of the current fiscal year. The profit rose to ₹611.19 crore, compared to ₹548.35 crore during the same period last year. This growth is largely due to the company bringing in more money through premiums.

The net premium income of the company saw a healthy jump of 15 per cent to reach ₹16,727 crore. Break-up data shows that renewal premiums (money paid by old customers to keep policies active) grew by nearly 19 per cent. Single premium products (where one large payment is made at the start) also grew by 15.5 per cent. However, first-year premiums for new policies saw a slightly slower growth of 7.3 per cent.

Key performance metrics used by insurance experts showed steady progress. The Annualised Premium Equivalent or APE (a measure used to compare different types of policy sales) grew by 9 per cent to ₹3,515 crore. Similarly, the Value of New Business or VNB (the expected profit from new policies sold during the period) also grew by 9 per cent to ₹879 crore. This shows the company is finding a good balance between selling more policies and staying profitable.

The VNB margin, which represents the profit rate on new business, stood at 25 per cent. The company mentioned that a change in Goods and Services Tax (GST) rules slightly reduced this margin. Without the 60 basis points impact of GST (one basis point is 0.01 per cent), the margins would have been higher at 25.6 per cent. The management expects to fix this impact in the coming months as the business grows.

For bank officers watching these results, the performance of sales channels is very important. Managing Director Vibha Padalkar noted that business from HDFC Bank remains a bit slow or 'subdued' because of overall trends within the bank. However, she mentioned that the company's share of business within the bank is improving. Other channels, like independent agents and other bank partners (non-bank alliances), grew much faster at 17 per cent.

In terms of keeping customers, the 13-month persistency (the percentage of customers who pay their second-year premium) fell slightly to 84 per cent. This was mostly due to lower collections in ULIPs (Unit Linked Insurance Plans, which are linked to the stock market). On the bright side, the 61st-month persistency (customers staying for five years) improved by 150 basis points to 65 per cent.

Looking ahead, HDFC Life plans to focus more on growing its overall business size rather than just trying to increase profit margins. Bankers should watch how the HDFC Bank sales channel picks up speed in the next quarter. If the bank starts selling more policies to its huge customer base, the insurer's growth could accelerate further. Customers can expect the company to keep offering a wide range of products to maintain this momentum.