HDFC Life Sees New Business Margins Hit By A Percent Due To Regulatory Reforms

HDFC Life Insurance Co. expects its new business margin to be impacted by the insurance regulator's new norms aimed at safeguarding policyholders’ interests. The life insurer anticipates a gross impact of approximately 100 basis points on their new business margin due to the new reforms due to the higher surrender value on early exits.

"We are confident in our ability to largely mitigate this impact without compromising the value proposition for our customers. We expect these measures to positively impact the long-term growth prospects for the industry," the company said in its exchange filing.

The company will be implementing the new regulations by Sept. 30.

The Insurance Regulatory and Development Authority issued a master circular on Wednesday that mandated all life insurance companies to provide facilities for partial withdrawal under pension products, enabling policyholders to meet their specific financial needs.

This new mandate will enable policyholders to meet liquidity requirements for important life events like higher education or child marriage; the purchase or construction of residential houses or flats; medical expenses; and the treatment of critical illnesses.

IRDAI also said that the free-look period—which allows policyholders to review the terms and conditions of the policy—has been increased to 30 days. Earlier, it was 15 days.

Shares of HDFC Life rose as much as 3.28% during the day to Rs 591.50 apiece on the NSE. It was trading 2.87% higher at Rs 572 apiece, compared to a 0.40% advance in the benchmark NSE Nifty 50 as of 9:30 a.m.

The stock has risen 0.60% in the last 12 months. The total traded volume so far in the day stood at 9.1 times its 30-day average. The relative strength index was at 61.33.

Thirty out of the 33 analysts tracking HDFC Life have a 'buy' rating on the stock and three recommend a 'hold', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 22.9%.