Canara HSBC Life Insurance Company Ltd Management Discussions

ECONOMIC OVERVIEW

Global Economy Overview

The global economy reflected resilience in 2025, navigating ongoing challenges such as increased tariffs, heightened trade policy issues, fiscal consolidation across major economies, and persistent geopolitical disparities. Ongoing geopolitical tensions, including conflicts in Eastern Europe and the Middle East and the Russia-Ukraine war, continued to disrupt global supply chains, energy markets, and investor sentiment, resulting in periodic volatility in commodity prices and financial conditions. However, economies gradually adapted through diversified trade routes, stronger energy security measures, and policy support, supporting a more stable and balanced recovery.

According to the International Monetary Fund (IMF), global growth remained steady at 3.4% in 2025. Headwinds from shifting trade policies are offset by surging technology- related investment, including artificial intelligence (AI), fiscal and monetary support, and broadly accommodative financial conditions.

The Advanced Economies expanded at a moderate pace, at approximately 1.9% in 2025, reinforced by relatively stable labour markets, accommodative financial scenarios and recovering demand. Similarly, Emerging Markets and Developing Economies (EMDEs) saw steady growth, rising to 4.4% in 2025. This outlook was supported by improving manufacturing and services activity, continued infrastructure investment and resilient domestic consumption.

Globally headline inflation is expected to rise 4.4% in 2026. Inflation remains above target in the United States, while it remains subdued across much of the rest of the world.

(Source: IMF World Economic Outlook April 2026)

Outlook

The global economy faces renewed uncertainty in 2026, mainly due to the ongoing conflict in West Asia, particularly tensions involving the United States, Israel, and Iran. If geopolitical tensions persist, prolonged disruptions in oil, LNG, fertilisers, and critical industrial inputs could lead to sustained inflation, tighter financial conditions, and weaker global growth. However, improving diplomatic efforts, strategic energy diversification, and stronger regional cooperation are expected to gradually ease these pressures, supporting supply chain stability, moderating inflation, and fostering a balanced and resilient global economic recovery.

Global growth is projected to moderate to 3.1% in 2026 and improve slightly to 3.2% in 2027, supported by stable demand, technology investments, and improving trade opportunities, despite risks from geopolitical tensions and trade policy uncertainty. Advanced economies are expected to grow at

1.8% in 2026, while EMDEs are projected to grow by 3.9%, supported by domestic demand and infrastructure spending.

Growth in the United States (U.S.) remains a key driver of the global outlook. The IMF has raised its forecast for U.S. GDP to about 2.3% in 2026 and 2.1% in 2027. Central banks are expected to remain cautious, while governments focus on fiscal discipline, targeted policy support, and supply chain resilience. Overall, the outlook reflects a balance between headwinds and emerging growth drivers, with investment-led productivity gaining momentum across sectors.

(Source: IMF World Economic Outlook April 2026)

Indian Economy

Overview

The Indian economy was positioned as the worlds sixth- largest economy, with an estimated size of US$ 4.15 trillion in 2025. This highlights the countrys resilience, expanding domestic demand, and strong investment-led growth momentum. The economy recorded steady growth during the year, maintaining its position as one of the worlds fastest- growing major economies. Resilient consumer spending and significant public investment largely offset the impact of higher U.S. tariffs. According to the Second Advanced Estimates of National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MOSPI), Indias growth trajectory remains favourable, with real GDP estimated to grow by 7.6% in FY26, compared to 7.1% in FY25.

The Government has set an ambitious vision, targeting a US$ 30-35 trillion developed economy by 2047. Continued government spending on infrastructure, advancing digital infrastructure and a calibrated monetary stance are expected to support industrial activity and consumption-led sectors. Indias manufacturing sector in early 2026 shows strong momentum, with the HSBC India Manufacturing PMI rising to 57.5 in February 2026 from 55.4 in January 2026, driven by accelerated output and strong domestic demand.

On the backdrop of evolving macroeconomic and financial developments, the RBI has reduced the policy repo rate by 25 basis points to 5.25% in its first bimonthly meet of FY27 and maintained a neutral stance, after a cumulative rate cut of 125 basis points since February 2025. The status quo on these two indicators reflects a measured approach amid evolving macroeconomic conditions.

Indias exports are expected to reach US$ 1 trillion in FY27, supported by the recent trade agreement with the United States and the European Union. The surge is likely to be bolstered owing to the reduction of the US tariff on Indian products from 50% to 18%. Initiatives such as Make in India 2.0 will prioritise emerging and high-growth sectors. The PLI scheme continues to function as a catalyst for scaling manufacturing, boosting exports, and enhancing Indias competitiveness. These measures, coupled with heightened public-infrastructure spending, mobilised approximately 2 lakh crore in 2025, advancing national priorities such as Aatmanirbhar Bharat.

(Source:, Fortune India, IMF, MOSPI, IMF April 2026)

Outlook

Indias growth is projected to moderate, owing to improved household consumption, strong public investment, impacts of tax reform, and lower interest rates. The Reserve Bank of India (RBI) has also lowered its CPI inflation forecast for FY26 to 2.0%, down from 2.6%.

Indias Union Budget FY27 emphasises public investment by raising the capital expenditure (capex) outlay to a record 12.2 lakh crore. This is nearly 9% increase from the previous years estimate of 11.2 lakh crore is intended to sustain economic momentum and fulfil the governments “Viksit Bharat” vision for a developed India. Capital expenditure is prioritised in the budget, with allocations directed towards roads, railways, ports, airports, power transmission and urban infrastructure. [Source: PIB, Careratings]

INDUSTRY OVERVIEW

Indian Insurance Industry

Overview and Regulatory Environment

Indias insurance sector continues to witness stable growth, with the domestic market likely to be valued at US$ 221.9 billion in 2026 and expected to reach US$ 361.0 billion by 2033, growing at a CAGR of 7.2%, during the forecast period from 2026 to 2033. This growth has been driven by increased awareness, favourable regulatory support such as ‘Insurance for All by 2047 and greater participation from the private sector.

Insurance penetration stood at 3.7%, with life insurance at 2.7% and non-life at 1%, while insurance density increased marginally to US$ 97, indicating significant untapped market potential. Moreover, the Indian Life and Non-Life Insurance Market size is projected to be US$ 156.20 billion in 2026, and reach US$ 244.5 billion by 2031, growing at a CAGR of 9.40% from 2026 to 2031. Additionally, in the Indian life and non-life insurance market, the retail segment held a 65% share in 2025 and is projected to grow at a 12.4% CAGR through 2031

Indias life insurance sector has surged past US$ 1 trillion in Assets Under Management, boosted by increased savings and a significant digital shift. Technology, regulatory support, and evolving customer behaviour are transforming policy purchases online, making life insurance a core savings and protection tool. This digital evolution offers policyholders wider choices and competitive pricing. The Life Insurance market in India has recorded a consistent premium growth over the years.

During FY25, the Life insurance industry recorded premium income of 8.86 lakh crore, registering 6.73% growth. The private sector life insurers have clocked a growth of 12.07% in premiums, while the public sector life insurer recorded a growth of 2.75% in premiums. Renewal premium continues to contribute the majority of total premium underwritten by Life insurers in 2024-25 at 55.09%, while the balance of 44.91% is contributed by the new business premium. The growth in new business premium is 5.12% compared to renewal business at 8.08%.

The Indian Insurance Industry ranks as the fifth-largest life insurance market among emerging economies, growing 32-34% annually and is expected to be the sixth-largest insurance market within a decade, leapfrogging Germany, Canada, Italy and South Korea. The Indian life insurance sector demonstrates a shift toward protection and nonparticipating (non-par) products, reinforced by their higher profitability and capital efficiency. Non-participating (nonpar) products offer guaranteed returns and greater income visibility, making them attractive for customers seeking long-term financial security and stable savings outcomes. In contrast, ULIPs (Unit Linked Insurance Plans) are market- linked products that combine life insurance protection with investment opportunities, allowing policyholders to benefit from equity and debt market performance. ULIPs also experience strong growth as versatile, tax-efficient, market- linked investment tools combined with life insurance. Over time, the investment benefits from market-linked returns and compounding, building a firm financial cushion. The growth is further driven by the removal of GST on charges and a digital-first approach.

The group insurance and credit life segment remains linked to increasing retail lending, as Indias retail lending portfolio expanded to 162.7 lakh crore, reflecting an 18.1% year-on- year (YoY) increase, with 690 million active loan accounts. The growth is supported by strong loan originations, improving asset quality, and evolving product mix and lender dynamics, with gold loans dominating the segment. Long-term growth of this segment is ensured by increasing credit penetration and insurance-linked lending.

Life insurers are focussing on annuity and pension products, owing to an ageing population, to drive long-term growth. The shift reflects rising longevity, limited social security coverage, and growing awareness around the need for stable postretirement income. Pension and annuity segments together consist of 18.87% of the total life insurance industry, as of March 2025. Additionally, Indias pension ecosystem is expanding, with total National Pension System (NPS) subscribers reaching 211.7 lakh subscribers with assets worth 16.1 crore. Despite the rapid financialisation of household savings, Indias pension assets stand at only about 14% of GDP, significantly lower than comparable economies. In response, insurers are increasingly emphasising guaranteed income, deferred annuity, and variable annuity products, which offer a stable and predictable cash flow.

‘Insurance for All by 2047 is an initiative by the Insurance Regulatory and Development Authority of India (IRDAI) to provide life, health, and property coverage to every Indian citizen by 100 years of independence. It emphasises universalising protection, improving insurance penetration and fostering innovation, closing the coverage gap. Recently, IRDA has proposed mandatory adoption of Indian Accounting Standards for all insurers by 1^st April 2026, aligning the sector with global financial reporting norms, to improve transparency in insurer financials. With IRDAI transitioning to Risk-Based Capital (RBC) norms, moving away from a universal solvency model to align capital requirements with actual risk profiles, insurers are expected to adopt more disciplined underwriting and pricing strategies. On the distribution front, IRDAI is undertaking reforms to rationalise commissions and reduce high distribution costs. The regulatory body is also planning to launch the ‘Bima Sugam digital Marketplace to improve accessibility, transparency, and customer experience.

Additionally, the Pension Fund Regulatory and Development Authority regulates pension products such as the National Pension System (NPS), complementing the insurance sector in retirement planning. The Reserve Bank of India (RBI) influences the sector indirectly through regulating bancassurance partnerships and the overall financial ecosystem. The Securities and Exchange Board of India (SEBI) governs the capital market, impacting ULIP-linked investments.

(Source: Mordor intelligence, IBEF, CRIF, PIB, PIB, IRDAI, Persistence market research, IRDAI, IBEF, ICRA)

Key Industry Drivers

Indias insurance industry is supported by a strong set of structural and demographic growth drivers that continue to expand the sectors long-term potential. Low insurance penetration, rising incomes, favourable demographic trends, increasing digital adoption, expanding distribution networks, and supportive regulatory reforms are collectively enhancing insurance accessibility and awareness across the country. At the same time, growing demand for protection, health, savings, and retirement solutions is creating new opportunities for insurers to deepen market reach and drive sustainable growth.

• Low Insurance Adoption: Life insurance penetration in India declined to 2.7% in FY25 from 2.8% in the previous year, while non-life insurance penetration remained at 1.0%. This, compared to the global insurance penetration of 7.3% in 2024 highlights a large untapped market in India and strong long-term growth opportunities across life and non-life insurance segments.

• Premium Growth: The industry is experiencing steady growth in premiums, reinforced by increasing demand and customer adoption. Life insurance new business premiums are growing rapidly, positioning India among the fastest- growing insurance markets globally.

• Favourable Demographics: Indias ageing population is creating stronger demand for protection, health, and retirement-focussed insurance products. The share of the 60+ population is projected to rise significantly to 36.1% by 2100 from a much lower base, while decadal growth of the 60+ population has increased from 31.3% (1981-91) to an estimated 40.6% (2021-31), highlighting long-term opportunities for insurers in retirement and pension solutions.

• Expanding Household Distribution: By 2036, Indias middle-class and affluent households are expected to account for 93% of total consumer spending, up from 80% in 2026. This rising share of income and spending reflects stronger financial capacity and creates significant long-term demand for life, savings, and retirement insurance products.

• Expanding Bancassurance and Distribution: With the expansion of bancassurance and distribution networks, insurance accessibility is significantly driven by extensive Bank late channels and agent networks. Moreover, embedded insurance products such as credit life and group products are also gaining momentum.

• Digital Transformation and Insurtech Integration: India processed over Rs. 308 lakh crore in FY26, strengthening digital payments and supporting faster policy issuance, premium collection, and claims servicing across insurance channels.

• Policy Support: Regulatory reforms, including increasing FDI limits to 100% and initiatives such as ‘Insurance for All by 2047, are strengthening capital inflows, accessibility and competition. With GST removal and regulatory easing for life insurance products, insurance affordability and demand are booming.

• Health Awareness and Healthcare Costs: Rising health awareness and healthcare costs are driving demand for insurance with improved health insurance premiums, reflecting adoption across the sequence.

• Shift Toward Protection and Retirement Products:

The industry is transitioning toward annuity, protection and guaranteed income products. This shift is driven by rising life expectancy and limited social security coverage, supporting long-term growth.

• Growth in Credit and Lending: The expansion of retail lending is reinforcing growth in credit life and group insurance.

(Source: IRDAI, Statista, World Economic Forum, Businessworld)

Industry Trends Growth of Private Players

Private insurers remain a dominant player in the Indian insurance sector, driven by distribution capabilities, product innovation, and customer-centric strategies. Their share in new business premiums is steadily increasing, owing to strong bancassurance and digital channels, enabling them to outperform public sector insurers. In FY25, private insurers accounted for 43.0% of the first-year premium share in the life insurance segment, while LIC held 57.0%.

Distribution Landscape

• Bancassurance: Bancassurance continues to emerge as a key growth driver in Indias insurance sector, supported by the strong integration of banking and insurance services across widespread branch and digital networks. The market is experiencing robust momentum as banks and insurers deepen their strategic collaborations to deliver integrated financial solutions through established distribution networks. Rising demand for convenient one-stop financial services, with expanding digital infrastructure and mobile banking penetration, is accelerating adoption across urban and semi-urban centres. Progressive regulatory frameworks introduced by the IRDAI are creating a more transparent and customer-centric environment, while technological innovations in artificial intelligence (AI) and data analytics are expanding the Indian bancassurance market share.

• Agency Channel: The agency channel continues to be a cornerstone of insurance distribution, driven by strong customer relationships and advisory-led selling, especially in life insurance. Individual agents remained the largest distribution channel in FY25, contributing 49.44% of individual new business premiums. Agents are widely perceived as trusted advisors for long-term financial planning, improving customer confidence and policy retention. Strong agent relationships also support better persistency ratios and renewal premiums, strengthening long-term profitability for insurers.

• Direct Digital Channels: Digital and direct channels are witnessing rapid growth, contributing to premiums and expanding at a high growth rate, supported by online platforms, web aggregators, and increasing customer preference for convenience and transparency.

• Brokers & Corporate Agents: Brokers and corporate agents play a critical role in group insurance, commercial lines, and customised solutions, particularly in non-life insurance segments.

• New Entrants in the Market: Indias insurance sector continues to attract new entrants, supported by regulatory reforms and higher foreign investment limits. The proposed increase in FDI limit to 100% under the Insurance Laws (Amendment) Bill, 2025, is also expected to encourage more global insurers to enter the market, strengthening innovation, capital inflow, and long-term sector growth.

(Source: IBEF, IRDAI)

Government Initiatives

The Government of India, in collaboration with IRDAI, has launched the ‘Insurance for All by 2047 vision, aimed at achieving universal insurance coverage across life insurance segments. The initiative focusses on improving accessibility, affordability and awareness through targeted rural outreach, digital onboarding, and state-level implementation. Government investments in digital public infrastructure, such as Unified Payments Interface (UPI), Aadhaar-enabled services, and expanding financial connectivity, are also strengthening insurance distribution, improving policy issuance, premium collection, and claims servicing across urban and rural markets.

Additionally, the Insurance Laws (Amendment) Bill, 2025, aims to improve insurance adoption, regulatory compliance, and policyholder protection. Further, from September 2025, GST on individual life insurance premiums have been removed altogether, making protection products more affordable and supporting higher insurance penetration.

Government-backed schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), and Ayushman Bharat (PM- JAY) continue to expand affordable life, accident, and health insurance coverage, while the roadmap toward Universal Health Coverage by 2033 supports long-term growth in health insurance adoption.

(Source: PIB)

Regulatory Initiatives

FY26 marked a significant advancement in Indias insurance regulatory framework, aligned with the vision of “Insurance for All by 2047”. The focus remained on strengthening governance, policyholder protection, operational resilience, and market conduct in a rapidly evolving, digital-first environment.

The regulatory approach continues to shift toward a principle-based and outcome-focussed framework, placing greater accountability on Boards and Senior Management to ensure robust governance, fair customer outcomes, and sustainable growth.

A key development was the amendment enabling up to 100% FDI in insurance, expected to boost capital inflows, innovation, and penetration. Regulatory emphasis also remained on effective implementation of IRDAI reforms, including policyholder protection (PPHI), conduct risk, solvency, and compliance standards.

Customer-centric initiatives such as Bima-ASBA and post-underwriting premium collection are strengthening transparency and consent frameworks. The industry also progressed toward the Risk-Based Capital (RBC) regime, enhancing risk sensitivity and capital efficiency.

With the listing of the Companys equity shares during FY26, the regulatory landscape applicable to the Company has further expanded to include enhanced governance, disclosure, and compliance expectations applicable to listed entities under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable securities laws. This includes increased focus on transparency, investor communication, insider trading controls, related party governance, ESG disclosures, and stakeholder engagement.

Regulatory attention on data protection, cyber resilience, and digital governance continues to intensify, alongside scrutiny of distribution practices to prevent mis-selling.

A notable fiscal reform was the GST exemption on individual life insurance products, expected to improve affordability and drive penetration. The introduction of new labour codes is also set to streamline compliance and support workforce welfare.

Amid these developments, the Company has further strengthened its governance, risk management, compliance, and customer-centric processes, and remains committed to high standards of transparency, ethics, and regulatory alignment.

(Source: PIB, IRDAI)

Outlook

According to a Swiss Re report - ‘Indias economic and insurance market outlook 2026-2030, Indias economic resilience, rooted in strong macro buffers and reform momentum place it well to navigate global uncertainty and sustain medium-term growth momentum. Against this backdrop, Indias insurance sector is set for a steady expansion through 2026 and beyond, after a muted phase in 2024-2025 when real premium growth slowed to an average of 2.5%. Long-term growth drivers remain intact, positioning India as one of the worlds fastest-growing insurance markets in the medium term.

Indias insurance market is expected to grow at an annual rate of 6.9% in real terms from 2026 to 2030, higher than that of major emerging and advanced insurance markets. The Chinese market, for example, is expected to grow by around 4% and the US by 2% over the same period. Reforms by the IRDAI and broader policy changes by the government are bringing more transparency and reshaping the industry structure for the next phase of accelerated growth. Key measures include a higher FDI limit in the insurance sector, modernisation of distribution and GST reforms. These changes can bring new capital, widen access to insurance and spur insurance demand.

The financial market outlook also remains supportive for the life insurance industry, as stable interest rates, rising household savings, and increasing participation in longterm financial products continue to strengthen demand for protection, retirement, and savings-linked insurance plans. Life insurance continued to remain a key savings avenue, with life insurance funds accounting for nearly 20% of household financial savings in FY25, supporting long-term protection and retirement planning. For life insurance, where India is the second-largest life insurance market amongst the emerging economies, annual growth of 6.8% over the next 5 years is expected. This can be attributed to widening distribution networks, increasing demand for retirement products and credit growth.

The growing role of GIFT City is also creating new opportunities for the life insurance sector by attracting global insurers, reinsurers, and financial institutions through tax incentives and a simplified regulatory framework. This is expected to improve capital flows, product innovation, and cross-border insurance business. Enhanced policyholder protection, simplified business processes, stronger regulatory framework all these factors together provide a compelling growth story over a period for the Indian Insurance sector.

(Source: Swiss Re Report, Swiss Re, Care Ratings)

OPPORTUNITIES AND THREATS Opportunities

Low Insurance Penetration and Protection Gap

Despite being one of the fastest-growing insurance markets globally, insurance penetration in India remains significantly below global averages. Life insurance penetration stood at 2.7% in FY25, while overall insurance penetration remained substantially lower than the global average. This underpenetration, coupled with a sizeable mortality and protection gap, presents a significant long-term opportunity for insurers to expand coverage across protection, savings, health and retirement segments.

Financial Year	Life Insurance Penetration (%)	Non-Life Insurance Penetration (%)	Total Insurance Penetration (%)
FY25	2.70%	1.00%	3.70%
FY24	2.80%	1.00%	3.70%
FY23	3.00%	1.00%	4.00%
FY22	3.20%	1.00%	4.20%
FY21	3.20%	1.00%	4.20%
FY20	2.80%	0.90%	3.70%
FY19	2.70%	0.90%	3.60%
FY16	2.70%	0.70%	3.40%

Rising Affluence and Expanding Middle Class

Indias growing economy, rising disposable incomes and increasing financialisation of household savings are strengthening the demand for life insurance products. By 2036, middle-class and affluent households are expected to account for the overwhelming majority of consumer spending, creating a larger addressable market for long-term savings, wealth creation and retirement-oriented insurance solutions.

Demographic Shifts and Retirement Opportunity

India is witnessing a gradual but significant demographic transition. Increasing life expectancy, a growing elderly population and evolving family structures are creating greater awareness of retirement preparedness and income security. As longevity rises and traditional support systems continue to evolve, demand for pension, annuity and guaranteed income products is expected to increase substantially over the coming decades.

Year	Elderly Population (Aged 60+)	Share of Total Population (%)	Old-Age Dependency Ratio (per 100 working- age adults)
2021	13.8 Crore	10.10%	15.7
2026	16.3 Crore	11.70%	17.5
2031	19.3 Crore	13.10%	20.1
2036 (Proj.)	22.7 Crore	14.90%	22.8

Source: PIB

Digital Adoption and Distribution Expansion

Rapid digital adoption, widespread smartphone penetration and the growth of digital payment ecosystems are transforming customer engagement across the insurance value chain. At the same time, expanding bancassurance partnerships, agency networks and embedded insurance models are improving accessibility and enabling insurers to reach underserved customer segments more efficiently.

Supportive Regulatory Environment

The Governments vision of ‘Insurance for All by 2047, ongoing regulatory reforms and the proposed increase in foreign direct investment limits are expected to enhance capital availability, product innovation and market competitiveness. These developments are likely to accelerate insurance adoption and support sustainable industry growth.

Threats

Intensifying Competition

The Indian insurance sector continues to attract new participants, digital-first players and insurtech-led business models. Increasing competition across protection, savings and retirement products may exert pressure on market share, customer acquisition costs and profitability.

Regulatory and Taxation Changes

The insurance industry operates within a dynamic regulatory environment. Changes in product regulations, distribution frameworks, taxation policies or capital requirements could influence customer preferences, product economics and business performance.

Persistency and Customer Retention Challenges

As customers gain access to a wider range of financial products and investment alternatives, maintaining policy persistency and long-term customer engagement remains a key challenge. Insurers must continue to enhance customer experience, product relevance and service quality to strengthen retention.

Cybersecurity and Technology Risks

The increasing digitisation of insurance operations, while creating significant opportunities, also heightens exposure to cyber threats, data privacy concerns and technology- related disruptions. Sustained investment in cybersecurity infrastructure, governance and resilience will remain critical.

Macroeconomic and Financial Market Volatility

Life insurance business performance, particularly in savings and investment-linked products, remains sensitive to fluctuations in economic growth, interest rates, inflation and capital market conditions. Prolonged market volatility may affect customer sentiment, investment returns and new business growth.

COMPANY OVERVIEW

Canara HSBC Life Insurance Company Limited (hereafter referred to as ‘Canara HSBC Life Insurance or ‘the Company), a public listed company, is a joint venture with Canara Bank (36.5%) and HSBC Insurance (Asia-Pacific) Holdings Limited (25.5%), as promoters. The remaining 38% is held by other public shareholders and investors. As a bancassurance-led insurance company with its corporate office at Gurugram, Haryana and more than 100 branches, Canara HSBC Life Insurance brings together the trust and market knowledge of its promoters. For more than 18 years now, Canara HSBC Life Insurance has sold insurance products to customers through multiple channels and a well-diversified network of Canara Bank, HSBC and its other bancassurance partners located in Tier 1,2 and 3 cities across the country. Canara HSBC Life Insurance has a vast portfolio of life insurance solutions and offers various products across individual and group spaces, comprising life, term plans, retirement solutions, credit life and employee benefit segments through partner banks and digital systems. With an aim to provide simpler insurance and a faster claim process, Canara HSBC Life Insurance intends to keep the promises of their customers alive with their ‘Promises Ka Partner philosophy.

During FY26, the Company strengthened its product portfolio through the launch of new offerings across savings and retirement segments. It also maintained a strong claim settlement performance, reflecting high customer trust and efficient claims management. The overall claim settlement ratio was 99.6% compared to 99.3% in FY24.

The consistently high settlement ratio above 99% highlights the companys strong operational efficiency, prompt claim processing, and commitment to policyholder service, strengthening its position in the life insurance market.

Distribution Channel Bancassurance Channel

Bancassurance remains the Companys primary distribution channel, led by its long-standing partnership with Canara Bank, which continues to be a key growth driver. With a network of 18,357 branches across India, the partnership provides strong pan-India coverage, brand trust, and deep customer reach. The Company also benefits from a credit- linked protection flywheel and a strong presence in Tier 3 and Tier 4 markets, enabling access to underserved rural and semi-urban markets. With a customer base of over 100 million and an addressable base of approximately 80 million customers, alongside a current penetration of less than 2%, the Company has significant headroom for improving insurance adoption.

Its partnership with HSBC serves as a premium growth engine, providing access to affluent retail and NRI customers through HSBCs premium banking franchise. This channel focusses on wealth-linked insurance, protection solutions, and global mobility products, while continued branch expansion is expected to further improve reach and customer acquisition.

Strengthening its bancassurance platform, Canara HSBC Life Insurance entered into a partnership with Equitas Small Finance Bank, enabling wider access to its product suite across 994 outlets in 18 states and UTs, with a strong footprint in South and West India. This supports the Companys strategy of deeper insurance inclusion and wider market access. Additionally, the Company partnered with Bihar Grameen Bank and Niwas Housing Finance Limited strengthening its distribution reach and improving access to customers across diverse geographic and customer segments.

Agency Channel

To diversify its multi-channel growth strategy, the Company launched its Agency channel in October 2025, focussing on building a nationwide advisor franchise. The agency model supports direct customer engagement through advisory-led selling and helps strengthen long-term customer relationships and persistency. As agents are often viewed as trusted financial advisors, this channel aims to further strengthen customer confidence, especially for protection, savings, and retirement products.

The agency channel also provides strategic diversification beyond bancassurance, reducing concentration risk and creating a more sustainable long-term distribution model. It offers greater control over customer acquisition, cross-selling opportunities, and renewal premium generation, supporting stable and scalable growth over time. The agency channel collected 140 million Annualised Premium Equivalent (APE) and onboarded approximately 500 distributors in FY26.

Alternate Channels

Regional Rural Banks (RRBs) strengthen the Companys rural outreach with presence across 7 RRBs in 6 states and a network of over 4,648 rural branches. This channel focusses on first-time insurance buyers and offers strong potential for protection products through assisted sales and deeper financial inclusion.

The digital platform continues to support customer acquisition through the Companys online presence, improving accessibility and convenience. The defence segment offers tailored long-term savings solutions for armed and paramilitary forces across India. In addition, the direct distribution channel focusses on advisory-led, face-to-face engagement using a lead-based selling approach to improve customer service and policy conversion.

Customer Centricity

Canara HSBC Life Insurance remains focussed on improving customer experience through a technology-led and customer- first approach across onboarding, servicing including persistency, claims, and product delivery. The onboarding process includes straight-through processing without much manual intervention, instant customer verification through mobility/digital applications enabling customer journey, and an in-house Generative AI-powered underwriting engine that reduces process overheads caused by excessive back and forth and improves policy issuance efficiency. With its tie- ups with all prominent medical centres, the Company also provides facility of inhouse medicals to allow for ease of medical assessment for customers.

The Company follows a digital model, leveraging digital engagement while maintain the customer connect. Customers can access insurance solutions through bancassurance partnerships with Canara Bank and HSBC, supported by over 18,356 branches, along with agency, RRBs, digital platforms, IVR, WhatsApp bots, SMS, and online portals. The Customer App enables real-time servicing and access to customer policies including grievance tracking, instant policy access, self-service requests, and wellness services, with nearly 80% DIY adoption and 85% IVR self-service usage.

The Company continues to strengthen its customer proposition through products across protection, savings, wealth creation, and retirement segments, including Young Term Plan, Promise2Protect, Promise4Life, IncomeNow, Alpha Wealth, Promise4Wealth, and Pension4Life. Faster claims processing through automation and straight-through claims has supported strong customer trust, reflected overall claim settlement ratio of 99.6% in FY26.

Digital Services

Canara HSBC Life Insurance has developed a seamless digital issuance journey to improve customer convenience and efficiency. It begins with holistic consumer profiling and financial need assessment, led by AI, ML-driven predictive models to enhance engagement and retention. The onboarding process is a fully digitised application submission across web, sales apps, and partner integration, while e-KYC, minimal documentation and real-time validation enable faster processing. The underwriting process is strengthened through digital verification tools, such as face recognition, liveness checks, and integrating external sources such as CIBIL, NSDL, IIB etc. for better decision-making. Backed by a scalable digital environment comprising 400 + APIs, 100+ digitally connected branches and straight-through processing, the Company ensures a faster and risk-optimised policy issuance experience.

The Company provides an end-to-end digital experience across servicing and claims through multiple channels such as mobile application WhatsApp, IVR and partner-assisted platforms. Consumers benefit from anytime-anywhere access to policies, services, digital claim submission, e-communication and self-service features (DIY), improving convenience and engagement.

With over 5.5 Lakh app downloads, strong user adoption and nearly 88% digital servicing, the Company has strengthened its digital capabilities. Moreover, claims are largely settled through digital assistance, reflecting effective processes, faster turnaround and a superior customer experience.

About Listing

The equity shares of Canara HSBC Life Insurance were listed on the NSE and BSE on 17^th October, 2025 pursuant to the Initial Public Offering comprising a 100% Offer for Sale (OFS) by existing shareholders, namely Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Limited and Punjab

National Bank. As the IPO was entirely an OFS, the Company did not receive any proceeds from the issue and there was no dilution in the total equity share capital of the Company. However, the shareholding of the existing shareholders stood diluted to the extent of shares offered under the IPO, resulting in a diversified public shareholding post listing in compliance with applicable SEBI Regulations and listing requirements. (Source: ICICI Direct)

Business Review

Canara HSBC Life Insurance, with a growth rate of 19% on Individual Weighted Premium Income, continues to outperform both private players, which grew by 12% year- on-year and the industry, which grew at 10% year-on-year, during this period.

Segment-wise Review

Unit Linked Insurance Plans (ULIP): The ULIP segment remained a key growth driver due to customer preference towards linked products, recording 50.8% in FY26 from 53.7% in FY25.

Protection Business (Retail & Group): The Companys retail protection business grew almost 3 times quarter-on-quarter. The Protection business on the individual side and the group also improved along with the rider attachment, almost touching 90% of the policies. Growth was driven by GST-led demand and increased focus on pure protection offerings.

Credit Life (Group Protection): Credit Life business continued to see healthy growth of over 46% during FY26, reaching 2,049 million from 953 million, supported by strong bancassurance partnership, particularly with Canara Bank. Improved attachment rates (45-50%) in loan disbursements led to higher penetration, making it a key profitability driver within the protection segment.

Annuity Business: The annuity segment delivered healthy growth with over 29% YoY increase in Annualised Premium (AP) from 3,067 million in FY25 to 3,818 million in FY26. The Company focussed on deferred annuity products, which offer stable long-term returns to retirement solutions.

Savings (Participating & Non-Participating): The traditional savings segment remained relatively moderate, with overall savings contributing nearly 13%, including around 5% from participating products during 9M FY26.

Renewable Premium: The Company maintained strong momentum in renewable premiums, recording 61,287 million, with an approximate 25% growth from 49,059 million in FY25, which translates into further improvement in the persistency across all key cohorts.

FINANCIAL HIGHLIGHTS OF FY26 Financial performance review

The Company demonstrated consistently strong growth across key operating and financial matrices, supported by new business generation, improving persistency and a favourable shift in product mix. The overall performance highlighted improved profitability, cost management and steady expansion in embedded value and market share.

Key performance indicators

Particulars	FY26	FY25	YoY (%)
Individual weighted premium income (“WPI”) C crore)	2,593.0	2,178.7	19%
Annualised premium equivalent (“APE”) (Rs. crore)	2,798.7	2,339.4	20%
Renewal business premium (Rs. crore)	6,128.7	4,905.9	25%
Total Premium Income (NB+RB) (Rs. crore)	10,045.6	8,027.5	25%
Profit after tax (Rs. crore)	126.6	117.0	8%
Value of new business (“VNB”) (Rs. crore)	627.3	446.1	41%
VNB margin (%)	22.4%	19.1%	3.3%
Embedded value (“EV”) (Rs. crore)	7,233.3	6,110.7	18%
Dividend (Rs. crore)	38	38	0%
Assets Under Management (AUM) (Rs. crore)	46,118.2	41,166.4	12%
Profit Before Tax (Rs. crore)	141	128	10%

Significant ratios

Particulars	FY26	FY25
Product mix (In Total APE basis)
ULIP	50.8%	53.7%
Traditional	49.2%	46.3%
Persistency
13th-month persistency	85.4%	82.5%
Operating return on EV (“Operating RoEV”) Ratio	20.8%	19.5%
Solvency Ratio	189.9%	205.8%
Market share (on Industry)	2.0%	1.8%
Total expense ratio	18.7%	18.7%

Distribution Mix

The Companys distribution is predominantly driven by the bancassurance channel, which contributes nearly 92% of total Weighted Premium Income (WPI). Within bancassurance, the contribution is heavily concentrated with its primary partner banks.

The Company continues to invest in diversifying its distribution network to reduce dependence on bancassurance and strengthen long-term growth. While bancassurance remains a key channel, it is expanding across agency, brokers, direct sales, digital platforms, and fintech partnerships. The agency channel is launched in October 2025 and has already scaled to a 500-member team as on 31^st March 2025 with the plan of penetrating the metros and tier 1 markets in the initial years. The unified phygital platform enables paperless onboarding and wider access across urban and rural, and digital-first segments. This multi-channel approach supports business resilience, better product mix, and improved longterm profitability.

Banks	Contribution to Total Business (%)
Canara Bank	About 72%
HSBC Bank	About 14%
Regional Rural Banks (RRBs)	About 6%

OUTLOOK

Canara HSBC Life Insurance remains firmly optimistic about the long-term growth prospects of the Indian Life Insurance sector, underpinned by a robust growth trajectory and a strengthening financial position. The Company expects protection to continue its upward trend. Over a period of time, the Company anticipates that its Protection business will be double digit contribution in the overall sales, and that will be contributed equally from the Individual protection and the Group side of protection. This will be effective in terms of enhancing the margin further in this area. While bank assurance remains a key driver of its success, the Company is strategically investing in alternative distribution channels to ensure sustainable and diversified growth. The Company had launched Agency channel in last financial year and shall continue to invest and grow the same as a long-term channel diversification strategy as well as the substantial growth engine.

The Company remains optimistic about its medium-to- long-term growth, supported by a strong macroeconomic environment and reforms in the Indian insurance sector. Regulatory developments, including increased FDI limits and initiatives aimed at expanding insurance penetration, are expected to create sustained growth opportunities.

RISK MANAGEMENT

Prudent risk management remains integral to Canara HSBC Life Insurances ability to protect policyholders, safeguard shareholder interests and support sustainable growth.

The Companys enterprise-wide risk management framework is embedded in business operations and supported by defined accountabilities, ongoing oversight and strong governance.

The Company is exposed to market, credit, liquidity, insurance, operational, strategic, revenue performance and reputational risks and its framework enables timely identification, assessment, monitoring and mitigation of these risks, supporting informed decision-making, disciplined risk appetite management and overall business resilience.

The framework is anchored by Board-level governance, independent risk oversight and a three-lines-of-defence model, ensuring clear risk ownership, effective challenge and independent assurance.

The Companys risk management framework is underpinned by a disciplined process of reporting, monitoring, assessment and mitigation. These elements support informed decisionmaking and maintain alignment with the approved risk appetite statement :

• Regular reporting to the Risk Committee and governance forums supports informed decision-making and enterprise oversight

• Ongoing monitoring of controls and key indicators helps identify emerging risks

• Structured assessment enables understanding of inherent and residual risks and supports resource allocation

• Appropriate responses are determined through analysis, including control, transfer, avoidance, acceptance or financing of risk

Within the overall corporate governance framework, the Company follows a three-lines-of-defence model with clear segregation of roles and responsibilities to safeguard customer and shareholder interests:

A Board-level Risk Management Committee oversees implementation of the framework and is supported by the risk function to ensure risks remain within approved appetite and aligned to business objectives and long-term strategy.

The Company has implemented risk policies and frameworks aligned with regulatory requirements and industry practices to protect customers and shareholders.

Overall, the Companys risk management framework supports disciplined growth, protects stakeholder interests and strengthens resilience amid a changing business and regulatory environment.

For further details, please refer to the Risk Management chapter on pages 58-61.

HUMAN RESOURCES

Canara HSBC Life Insurance remains committed to attracting, training and retaining talent by fostering an environment where every individual feels integrated and empowered to reach their utmost potential. We embrace a systematic approach that prioritises equity, inclusivity and the celebration of individual uniqueness. Our tailored benefits and programmes reflect this commitment by addressing diverse needs shaped by factors such as tenure, position, work shift, educational background, pay status, gender, age, ability, nationality and race/ethnicity. We thrive on a pervasive ‘For All culture that permeates our operations, from hiring through onboarding to ongoing training, ensuring each employee feels included and valued. The Company believes this culture fosters engagement, improved retention rates and sustained business growth.

In our service-oriented industry where human interaction is paramount, we nurture human potential through agile training programmes, adapting to evolving needs, internal job postings opening avenues for growth within the organisation and supportive coaching, recognising individual strengths. Our ‘Continued Learning Enabling Policy empowers employees with opportunities for career-level tailored reimbursements on learning professional courses, functional courses or certifications. The Company also has various rewards and recognition programs in place to motivate its employees to work progressively towards innovation and process efficiency.

Furthermore, the Company has been certified as a Great Place to Work by the Great Place to Work Institute, India, marking five consecutive years of this recognition, and has been named among top 25 best companies to work for BFSI in 2026. As of 31^st March 2026, the Company had 9,697 employees (including part-time employees) under its payroll.

For more details, please refer to the pages 50-51

INTERNAL CONTROL AND ITS ADEQUACY

The Company has a robust internal control mechanism across key processes and systems. The Company has put in place adequate policies and procedures to ensure that the system of internal financial control is commensurate with the size, scale and complexity of its operations. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with the applicable statutes, safeguarding of assets, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with corporate policies.

The Company has a mechanism for testing the controls at regular intervals for design and operating effectiveness. Further, the statutory auditors provide an audit opinion on adherence to Internal Financial Controls.

In addition, internal audits are undertaken to review significant operational areas regularly. The Audit Reports, submitted by the Internal Auditors, are reviewed by the Audit Committee and corrective action is initiated to strengthen the controls and enhance the effectiveness of the existing systems. Statutory and Internal Auditors are also invited to the Audit Committee meetings to ascertain their views on the adequacy of internal control systems. The management believes that strengthening internal controls is a continuous process and it will, therefore, continue its efforts to keep pace with changing business needs and environment.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors, including changes in economic conditions, regulatory developments, market dynamics and other risks beyond the Companys control. The Company undertakes no obligation to publicly update or revise any forward-looking statements.