HDFCLIFE - HDFC LIFE INSURANCE COMPANY LIMITED Share Price

Q1: Avinash Singh: Can you explain the drop in solvency ratio and plans for capital raise? Also, how do you plan to manage acquisition costs and how will distributors share this burden?

A1: The solvency ratio dropped due to dividend payouts (4.5%), retiring Rs.600 crores in subordinated debt (6%), and GST impacts (150 bps). We plan to raise up to Rs.750 crores in subordinated debt soon. To manage acquisition costs, we will engage with distributors and vendors while adjusting product mixes to enhance margins. Growth is also expected to offset some cost impacts, as we've seen a 50%+ growth in retail protection post-GST in September.

Q2: MW Kim: What sales contribution do you target from Tier-2 and Tier-3 cities, and how does interest rate impact sensitivity for asset liability management?

A2: Tier-2 and Tier-3 cities contribute about 65-70% of our APE. We aim to maintain this as we expect growth to continue in these regions. Regarding interest rate sensitivity, our hedging approach hasn't changed significantly and remains cost-effective. As we adjust pricing in response to interest rate movements, the costs are incorporated into our pricing decisions, maintaining manageable levels.

Q3: Shreya Shivani: Which products are most impacted by GST, and what's the estimated VNB margin hit if no action is taken?

A3: The most impacted products from GST are unit-linked products due to capped charges. Without action, we anticipate a gross VNB margin impact of about 3% annually. We aim to neutralize this over the next couple of quarters.

Q4: Prayesh Jain: Are there benefits from growth that can offset the gross impact of GST?

A4: You're correct; we expect some growth benefits to emerge that could help offset the gross impact of GST. While we foresee challenges due to fixed cost absorption, an expected uptick in the second half could mitigate some of these effects, depending on how the market develops.

Q5: Nischint Chawathe: How much flexibility do you have in terms of future capital raises, and what caused the recent decline in policyholder surplus?

A5: We're comfortable at a solvency level of 180-185%, which supports our growth without needing equity capital soon. The decline in policyholder surplus is due to growth strains in certain product segments, primarily as we expand our individual protection business, impacting P&L in the short term.

Q6: Gaurav Sharma: Why has the contribution of non-par savings in the agency channel declined, and how will you manage the changes in commission structures?

A6: The drop in non-par savings is a result of our pricing strategy. We're focusing on maintaining quality over quantity and will increase growth in non-par as we push for rational pricing post-GST. Any commission changes will be tailored to specific distributions, ensuring equitable adjustments based on product mix.