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

As per the Swiss Re Institute sigma No 3/2017 report, in 2016, global life premiums are estimated to have increased by 2.5%; premium growth declined in the developed 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%. Regarding the market share of life insurance, Asia is the largest continent, accounting for 38% of the 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 worldwide insurance industry, around 55% of premium comes from life insurance and the rest from the non-life segment; in emerging markets, approximately 54% comes from life insurance. By contrast, the share of life insurance is over 78% for India.
The financial inclusion initiative from govt, the increased use of technology, the availability of 4G technology, and the Financialization of Savings play a vital role in the sector. For private players, the share of bancassurance in new business premiums has been growing steadily over the past few years, which is also one large force.

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

  • Participating Life insurance: An insurance contract that pays dividends to the policyholder. 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 does not pay Dividends or Bonuses. in simple words, life insurance is life insurance that provides coverage at a fixed rate of payments for a limited time, the relevant term.
  • Non-participating Protection term Health: Protecting Health issues and covering hospital expenses.
  • Non-Participating Other :
  • Unit-linked Insurance plan: Its product of a combination of Investment and Insurance
The company’s product portfolio comprised 31 individual and ten group products, as well as eight optional rider benefits. The company also has a Wide product suite that caters to customers’ specific needs during each stage of their lives. HDFC Pension, a wholly-owned subsidiary of the company, is the second-largest private pension fund manager. In 2016, the company set up its international subsidiary named HDFC global in UAE for Reinsurance.

Shareholding Pattern:  As per DRHP, 61.41 is held by HDFC. 34.86% owned by Standard Life Mauritius. The public owns the remaining.

Financials and ratios  :  [table id=88 /]

Future Prospects:  The company, despite having HDFC and Standard Life as promoters and backing from HDFC bank for bancassurance, Connection from HDFC Mutual funds for selling ULIP, is not the most significant player in Insurance. Capital adequacy is much better in ICICI Prudential, Bancassurance is better in SBI Life, SBI life is a leader in ULIP, and still, HDFC standard life is trading at a Very high valuation?. In my view, the promoter is essential, but it will not help you in day-to-day work.