HDFC Life Insurance Company Ltd Directors Report.




Your Directors are pleased to present the 21st Annual Report of HDFC Life Insurance Company Limited ("the Company"/ "HDFC Life"), together with the audited financial statements for the year ended March 31, 2021.

1. Standalone Financial Performance, Business Review and Outlook Financial Performance:

( crore)

Standalone (Audited)

FY 2020-21 FY 2019-20
a. New business premium 20,107 17,238
(i) Regular premium 6,858 6,044
(ii) Single Premium 13,248 11,194
b. Renewal premium 18,477 15,469
Total Premium 38,583 32,707
Profit After Tax 1,360 1,295

Other Key Parameters:

( crore)
Particulars FY 2020-21 FY 2019-20
Individual APE 7,121 6,145
Group new business premium 10,031 8,775
Assets under Management 1,73,839 1,27,226
Embedded Value 26,617 20,650
Overall new business margins (post overrun) 26.1% 25.9%

Note: Embedded Value and Overall new business margins for FY 2020-21 and FY2019-20 are based on external review; Numbers may not add up due to rounding off effect.

2. Business Review and Outlook

Macro Economic Scenario

FY 2020-21 started with a stringent lockdown aimed at controlling the spread of the COVID-19 pandemic. Post the initial 2-3 months, restrictions were progressively eased during the rest of the year. However, towards the end of the year, the number of infections started rising again, giving indications of a possible second wave. Globally, too, most countries went through a similar trajectory of initial lockdowns, subsequent easing followed by a second wave of infections. Monetary and fiscal authorities, around the world, unveiled various stimulus measures to cushion the economic blow from the pandemic and help their respective economies recover.

In India, most economic parameters bore signs of the effect of the pandemic. Fiscal deficit for the year was revised to 9.5% from the budgeted level of 3.5% of GDP. Government revenues were severely dented with no relief on expenditure as the Government needed to take measures to support the affected sections of the economy. The Reserve Bank of India (RBI) also took multiple measures, including cutting interest rates to increase liquidity, allowing banks to provide moratoriums and restructure loans to affected borrowers, amongst others.

The Governments fiscal policy supported the economy through various measures - from providing food and income support to the most vulnerable sections, to providing investment incentives to industries to push up capital expenditure and consequently improve employment. The Government also increased infrastructure spending to attract private investment and trigger second order effects that would sustain growth. The Government committed to gradually ease fiscal deficit to 4.5% over the next 5 years.

The medium term outlook for the economy is more sanguine as the Government is expected to respond with less stringent and more localised responses to the second wave, while the increase in vaccinations is expected to help reduce further spread in infections.

Industry Update

The pandemic has impacted lives across the world. For organisations it has been a test of resilience and agility to adapt to the situation. The year began with companies prioritising safety of employees, enabling digital servicing of customers and continued engagement with distributors. Continued investments in technology, along with increased adoption and streamlining of digital assets for customer servicing and generating new business, helped the life insurance industry showcase strong growth recovery.

During FY 2020-21, the life insurance industry grew by 7% and garnered Rs. 2,783 billion of new business premium against Rs. 2,589 billion in the previous financial year. The private players grew by 8% and overall industry (including LIC) grew by 3% in terms of Individual weighted received premium (WRP). Development of alternate channels of distribution and product innovation were the key drivers resulting in further consolidation of private players market share to 60% of the individual WRP business. Within the private sector, the top 10 insurers accounted for 88% of the market (in terms of individual WRP) in FY 2020-21, compared to 85% in FY 2016-17. Bancassurance sourced business continues to dominate the channel mix on the back of increasing reach of banks. The share of direct channels including the online channel, has also increased, while share of agency has been constant in the last few years.

Product mix continued to shift towards traditional products with higher focus on non-par savings. The share of ULIPs continued to decline in current financial year. While demand for individual protection saw an initial surge, growth normalised as the year progressed due to difficulty in completing medical underwriting requirements in pandemic conditions. Group protection business linked to loan products (credit life) reflected lower disbursements by lenders, especially in the initial part of the year.

COVID-19 Update

India witnessed a second wave of COVID-19 by the end of FY 2020-21 and the second wave appeared to be far steeper than the first wave. There is a downside risk to GDP growth in the wake of rising number of COVID-19 cases and localised lockdowns in major cities throughout the country. However, on a positive note, the expectation is that once the second wave subsides and a larger proportion of the population is vaccinated, pent-up services demand could push GDP growth during the later part of the year.

In this environment of the new normal, we maintained business continuity by executing our core strategy of maintaining a balanced product mix, a diversified distribution, continuous product innovation and reimagining the insurance landscape through effective use of technology.

Our past investments in technology helped us navigate through the period of uncertainty and we have seen sustained utilisation of our digital assets by our customers, distributors and partners.

3. Company Performance Sustained growth across segments

HDFC Life continued on its trajectory of delivering consistent and predictable performance in FY 2020-21, while outpacing industry growth. Our full year market share amongst private insurers based on individual WRP increased by 130 bps to 15.5% (PY: 14.2%) on the back of 17% growth. Our total new business premium increased by 17% to Rs. 20,107 crore. We maintained our leadership position within the group segment, recording growth of 14% to end at Rs. 10,031 crore. Total premium grew by 18% to Rs. 38,583 crore in FY 2020-21, compared to Rs. 32,707 crore in FY 2019-20 on account of new business growth of 17% and 19% growth in renewal premium.

Despite a difficult operating environment in FY 2020-21, we covered around 4 crore lives and paid over 2.9 lakh death claims, with a payout value of over Rs. 3,000 crore.

Diversification and innovation being the key themes across our business

We have a diversified distribution mix and we offer multiple touch-points for the convenience of our customers. We have pan India presence with 390 branches, partnerships with 300+ banks, NBFCs, MFIs, SFBs, brokers, new-ecosystem partners, over 1,00,000 individual agents and online access to our customers. We continue to expand our distribution by adding marquee names such as YES Bank and SBICAP Securities Ltd in retail business, ONGC, GSK in group annuity business and Indian Oil, Siemens in fund business.

We have grown well across all our key distribution channels, with bancassurance channel registering growth of 29% in FY 2020-21 and accounting for 61% of individual annualised premium equivalent (APE) for FY 2020-21. Agency, direct and broker channels contributed 13%, 19% and 7%, respectively. Protection remains a key focus area within the group segment, contributing 34% of our group business. All the channels continue to be profitable and generate healthy new business margins.

We believe in maintaining a balanced product mix with a focus on increasing the share of protection and retirement products. This is in line with the evolving customer demand for long-term savings products, flexible protection products to provide financial security to their dependants and long-term income products including annuities to get post retirement income. Continuous product innovation across all product categories has been key in this journey. We focus on ensuring that we have a relevant product suite that is able to address customer needs and gaps in current market offerings. Participating savings, non-participating savings, ULIPs, protection and annuity accounted for 34%, 31%, 24%, 7% and 5% of Individual APE, respectively. Protection and annuity segments contributed to around 13% and 5% of total APE.

The current pandemic led to higher awareness about the need for protection and the inadequacy of the current insurance coverage. We remain confident about the medium to long term prospects of protection in India, on the back of the under-penetration, higher awareness, rising affluence and increasing levels of consumer credit. We aim to address the opportunity in a calibrated manner, as we penetrate deeper and wider into the Indian market through appropriate pricing and underwriting.

Another area of opportunity is the retirement segment. We are optimistic on the growth potential of the retiral business opportunity given the changing demographics, increase in life expectancy and no social security. In addition to annuity being an important focus area, we are also focused on addressing the long-term income needs through our product offerings like HDFC Life Sanchay Plus and HDFC Life Sanchay Par Advantage. Our constant endeavour is to identify sources or means to grow our annuity business, including empanelling corporate clients and introducing new product variants while ensuring appropriate pricing and risk management.

Maintaining Profitable Growth

Our embedded value was Rs. 26,617 crore as on March 31, 2021, with a healthy operating return on embedded value (EVOP/ Opening Embedded Value) of 18.5% versus 18.1% last year. While we have had an overall positive operating variance during the year, we experienced a negative mortality variance. This was largely absorbed by the COVID reserve of Rs. 41 crore created by us at the start of FY 2020-21. Based on our actual experience in FY 2020-21 and after factoring in aspects such as latest mortality trends across business and customer segments and geographic spread of COVID 2.0, we have provided for a COVID reserve of Rs. 165 crore for FY 2021-22. We will continue to review the adequacy of this reserve through the course of FY 2021-22. With this approach, we remain confident of our ability to absorb the impact of shocks from one-off events and deliver steady returns with minimal variances through a realistic and disciplined assumption setting approach.

We continue to sustain healthy new business margin of 26.1% versus 25.9% for last year, as a result of profitable product mix and control on costs. Our profit after tax (PAT) grew by 5% over last year to Rs. 1,360 crore in FY 2020-21.

Operating expenses (Opex) to total premium ratio reduced to 12.0% during FY 2020-21 from 13.1% for the previous year, largely on account of healthy growth in revenue and cost control measures taken during the year. We shall continue to invest in strengthening our distribution and enhancing our technological capabilities while calibrating our costs at an overall level.

Our assets under management (AUM) stood at Rs. 1,73,839 crore, with a debt-equity proportion of 64:36 as on March 31, 2021, thereby clocking a 37% growth over the previous year.

Business Outlook

We remain sensitive about the health impact and loss of lives due to the current pandemic and continue to prioritise employee, customer and partner safety. We have been able to demonstrate resilient performance in FY 2020-21

inspite of the challenging environment. However, given the resurgence of COVID, we continue to maintain a cautiously optimistic stance for FY 2021-22 and will evaluate our approach on a dynamic basis. We will strive to achieve sustainable new business growth and maintain an upward trajectory on new business margins, whilst adhering to a robust risk management approach.

The current pandemic has led to higher awareness around the need for protection and the inadequacy of current insurance coverage at a household level. Life insurance has emerged as a prominent theme to protect ones family whilst securing long-term financial goals.

We believe that life insurance in India is a structural longterm growth opportunity given the under-penetration. In addition, pandemic-induced awareness, shift in consumer behaviour and robust demographic trends indicate that we are well placed to capture these multi decade opportunities. We have built a track record of resilient performance across business cycles, and are confident of delivering value to customers, profitable growth to our shareholders consistently. Our agility and timely identification of emerging opportunities across products, services, distribution and technology, while adapting to changing consumer preferences, has enabled us to create value for all our stakeholders.

4. Products

The prevailing uncertainty has made it necessary for one to secure the future for themselves and their families. Our product offerings span across retirement, savings and investments, child, term, health plans and provide options to our customers to provide financial protection for their families. The Company has 36 individual and 12 group products in its portfolio, along with 7 rider benefits.

Economic slowdown and financial distress can easily create uncertainties derailing short-term and long-term plans of the household. To protect against the burden of loans, it is imperative to have to ensure the right provisions are made which can secure ones lifestyle.

In September 2020, we introduced HDFC Life Group Poorna Suraksha, a group term product which has a suite of benefits such as easier on-boarding, long-term coverage, portability and customised underwriting and pricing. This product is available to employees, customers, members of financial institutions, retail chains, educational institutions, government agencies, amongst others. The product also enables members to continue with the insurance coverage after their exit from their current organisation. The product offers the benefits and features of a retail term product on a group platform.

As the world adjusts to a new normal, we introduced Click 2 Protect Corona Kavach that offers the dual protection of life cover as well as medical expenses incurred on COVID-19 treatment. This plan provides comprehensive coverage with 9 plan options for whole life, accidental disabilities, critical illnesses and COVID-19 related co-morbidities while also covering expenses for hospital, home care and Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) treatment.

In January 2021, we introduced HDFC Life Click 2 Protect Life, an innovative term plan that ensures financial protection as per ones changing lifestyle and life stage. The plan offers benefits such as income payouts, whole life cover, premium waiver and rebalancing of death and critical illness benefits with age. Additionally, this plan also provides special premium rates for female lives and non-tobacco users.

Customer needs remain central to our product strategy and we will continue to develop innovative product propositions that addresses their needs at every stage of life.

Human Resource and People Development

At HDFC Life, we believe people are the driving force behind our success. We have institutionalised robust frameworks to attract, train, develop and engage our talent for higher productivity. Digitisation continues to remain at the heart of all our people processes.

It is also our constant endeavor to have a workforce which is representative of our social and customer demographics. Principles of diversity and inclusion are deeply rooted in our way of doing business. As an equal opportunity employer, our culture is one of meritocracy and performance based recognition for our employees, who hail from diverse backgrounds, education and experience. In addition to these, we have certain initiatives meant exclusively for our women employees, such as the Womens mentoring circle, where women employees are mentored and coached by senior women leaders in the organisation. We have also been sensitising our workforce on the LGBTQ+ cohort representation and inclusion.

Our practices, processes and policies have been designed keeping in mind challenges employees face whilst managing their responsibilities at work and at home. Some of these include flexible shift timings, availability of creche facilities, hiring of second career women, a special maternity transition program to assist expectant mothers along with flexible work arrangements, post maternity and paternity leave, sabbaticals, coverage of legally wedded partner or cohabiting partner of any gender under the

Group Health Benefits program, as well as coverage of gender transition surgery, availability of an exclusive helpline for the LGBTQ+ community and their allies, etc.

To meet our ever-evolving business needs, we have been focusing on creating a robust talent pipeline in-house. For career opportunities that arise in the organisation, our internal talent is given the first priority. Through career progression and Internal Job Postings (IJPs), we encourage our employees to opt for cross-functional movements, thereby broadening their professional exposure. Over the years, we have developed alliances with universities and academia for a train and hire model for our frontline sales roles. For managerial levels, our campus hiring programme Jigyasa continues to induct fresh minds from coveted business schools across the country. With digitisation being at the core of our business, our Graduate Trainee Programme has been developed to build a strong new-age technology skill set in the organisation.

We believe that values are the most critical elements that reflect the conduct of an organisation. Our organisation values, in conjunction with clearly identified leadership traits, enable employees to deliver on their responsibilities towards customers, both internal and external, in an effective way. Various scientifically designed assessment tools in external hiring as well as internal career advancement processes ensure that employees are aligned to these values.

At our middle and senior management levels, we have designed and implemented various talent review and succession planning processes. These have enabled us in developing people for higher productivity in their current roles and in building a strong pipeline of future-ready talent.

We are committed to creating and sustaining a high performance culture across the organisation. Our performance management system is deeply entrenched in the principles of balanced scorecard. At the same time, our compensation philosophy ensures that we benchmark ourselves with the external market in order to stay attractive as a potential employer. We ensure that we differentiate and reward high performance.

On the learning and development front, our mission is to meet the organisations strategic needs by facilitating enterprise-wide capability development for employees and distributors. We have been enabling this through adoption of a contemporary and progressive learning ecosystem.

Particulars of Employees

The statement showing particulars of employees pursuant to Section 197 of the Companies Act, 2013 ("the Act") read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, the above mentioned statement is not being sent to the members along with this Annual Report in accordance with the provisions of Section 136 of the Act.

The aforesaid information is available for inspection by the members upto the date of this Annual General Meeting (AGM), on all working days, during business hours, at the registered office of the Company, subject to restrictions, if any, that may be imposed by the local authorities on account of the pandemic. Members who are interested in obtaining the said particulars may please write to the Company Secretary.

The details of remuneration of Directors and Employees as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 including amendments thereof, are given as an Annexure 4 and forms part of this report.


Asset markets across the world had a tumultuous journey over the course of the year. The initial period saw sharp sell-offs across equity and commodity markets. Equity markets in most jurisdictions, tumbled into bear territory i.e. corrected more than 20% from their recent tops. Commodity prices, also, saw sharp corrections.

Huge amounts of liquidity poured in from multiple governments and central banks stimulus measures helped the asset markets recover from their lows. Liquidity flow into equity markets and development of vaccines against COVID-19 led to sharp recovery in the markets which more than offset losses triggered by the advent of the pandemic.

In India, large-cap equity indices had seen correction of about 25% during the previous year. Equity indices bottomed out in the early part of the year and subsequently rallied through the year, with intermittent bouts of correction. The initial period of recovery was triggered by liquidity flows. Subsequently, as the lockdown restrictions were progressively relaxed, industrial/ manufacturing activities picked up and businesses recovered. The trying period of COVID-19 related restrictions induced companies to improve efficiency and reduce debt which helped them post higher profit margins as economic activity recovered. These margin improvements were seen to be sustainable. Moreover, certain sectors benefited from the changes in business and life-styles due to the pandemic. A brighter outlook led to multiple upgrades on earnings growth estimates for companies which propelled equity indices

higher and set new all-time highs. The capital inflows, due to the huge liquidity surplus, globally, added to the positive momentum in the markets. Over the course of the year the large cap equity indices gained about 70% while the mid-cap indices gained 90-100%. This was the best annual gain, in more than a decade, for the equity markets. Foreign investor inflows topped Rs. 2.76 trillion over the course of the year.

The fixed income markets, however, had a mixed year. The large easing measures taken by RBI in the initial part of the year, led to lower bond yields. In addition to the policy measures, RBI supported the bond markets through active intervention by purchasing bonds which reduced bond yields further. The COVID-19 pandemic severely affected the governments revenues and a large increase in market borrowing was required to keep up its spending to support the economy. This additional borrowing was absorbed by the market with minimal impact on yields, due to RBIs support. However, as the economy recovered from the slowdown, the bond market outlook started factoring in higher future interest rates. Bond yields hardened across the yield curve, though the 10-year benchmark saw limited movement as RBI focused on this segment to temper the rise in bond yields. The 10-year benchmark GSec yield ended the year at 6.18%, up from the low level of 5.76% set during the year, though only slightly higher than 6.12% at the end of the previous year.

Investment funds of the Company were managed as per the stated objectives laid down in the Investment Policy, Asset-Liability Management Policy (ALM Policy) and respective funds objectives. These policies lay down the asset allocation and risk appetite guidelines for different funds, some of which have in-built guarantees. Fund allocation is tracked on a regular basis and is backed with suitable assets. During the year, the asset allocation in the Companys conventional and shareholder funds was in line with the ALM policy.

The Companys total AUM as on March 31, 2021 was Rs. 1,73,839 crore. This comprised assets of Rs. 74,759 crore held under the unit-linked funds and Rs. 99,080 crore held under the conventional and shareholders funds. The corresponding numbers for the previous year were Rs. 54,182 crore and Rs. 73,044 crore, respectively.

Information Technology

HDFC Life continues on the journey of leveraging technology to transform its business. The Company has invested in technological platforms and systems for better customer lifecycle management and to improve user experience for its customers and distributors. HDFC Lifes operating model has evolved from a traditional distribution and product play model to a customer centric matrix of platforms, digital channels, ecosystems and traditional avenues led by technology and analytics.

Our digital ecosystem is supported by tie-ups with multiple partners, proprietary platforms and growth engines. These engines translate into five building blocks viz., journey simplification, partner integration, data led ecosystems, service simplification and platforms. These blocks are powered by four engines - Futurance (our structured program to work with start ups in identified areas), architecture resilience, workforce resilience and cyber resilience, that enable operating in a volatile environment.

The Company continues to develop applications for a simplified and frictionless customer on-boarding experience, like Mobile Sales Diary (MSD), InstaGO, InstaMix, LifeEasy, InstaSIP, PoSP, InstaVerify, Chat PCVC, Electronic Consent, Video/Voice Integrated Sales Enabler - WISE, Video and Tele Underwriting.

For our partners, distributors and online aggregators, we offer application programming interface (APIs) and journey design that embed seamlessly into their insurance selling process giving straight-through experience for their customers. We have digital enablers like InstaInsure, HelloSelfie, InstaPlan, InstaPRL, Partner Portal and Corporate Portal to enhance partner engagement. LifeNext is integrated with the leading telecom, fintech, insuretech etc. issuing real-time policy issuance.

In addition to the on-boarding process, the Company constantly strives to enable real-time and convenient ways to serve the customer through multiple applications like InstaServ, VServ, Click2Upload, TrackNow, InstaReceipt, InstaRevival, Life Certificate, Quick Register apart from enhancing Customer MyAccount Portal and App. We have leveraged artificial intelligence, robotics and NLP in areas of customer servicing through Etty (WhatsApp service bot), Elle (chat bot), SPOK (email bot), Elsa (Alexa bot), Zoey (digital Avatar) and Twitter bot.

While in person interaction is important, technology has been an enabler in all aspects of our business. Being cognizant of the current environment and the increasing comfort of our customers to connect with us virtually, we had launched WISE- our video based sales enablement tool in June 2020. This tool enables our sales teams to connect with customers via video and complete the entire sales process, thereby providing a near face-to-face experience. We have seen good adoption of this tool in tier 2 and 3 towns as well.

We have now extended the hybrid model of digital + human interaction to servicing via our tool VServ. Vserv is an industrys first video based Phy-gital mode of servicing. It allows our branch staff to service customers remotely and solve their queries and requests via virtual interactions.

Our chat based customer verification process has seen increasing adoption, with over 50% of verifications being carried out through this mode, thereby reducing dependency on sales persons or our call centre. We have seen increasing trends in online payments by customers whereby about 95% of the policies are being renewed digitally, accounting for 87% of renewal premium being done via digital modes.

In order to identify new opportunities of additional revenue, risk reduction and process optimisation, the Company has taken initiatives to leverage data along with technology and specialised manpower. These have led to capabilities such around vision AI (FaceSense), speech AI (TrueCue), machine learning and predictive models for early claims, persistency, customer propensity, financial consultant engagement, cognitive bots, AI based virtual assistant (Insta).

Through our Futurance program, the Company continues to engage with start-ups and experiment with emerging technologies.

HDFC Life has taken up initiatives to achieve architectural resilience through use of cloud services, middle-ware services, data lake, API platform, low code platforms and workforce resilience through hybrid work model using collaboration platforms, digital re-skilling for employees, improving employee morale and productivity initiatives and launch of Click2Wellness digital platform.

Cyber resilience continues to be the focus area of the Company with appropriate controls and tools implemented for risk mitigation especially while putting in place a new operating model due to the pandemic. As part of the ISO 27001:2013 and ISMS assessment program, independent auditors audit and verify the implementation.

We, at HDFC Life continue in our pursuit for excellence in technology and have been recognised with multiple awards in the space of technology innovation and cyber security initiatives throughout the year.


Our persistency ratios continue to be steady across various cohorts. The 13th month persistency for individual business has improved from 88% in FY 2019-20 to 90% in FY 2020-21. The 61st month persistency remained stable at 53%.

Awards & Accolades

The Company received various awards and accolades during the year under review in areas of financial disclosures, customer service, technology, digital solutions, products, human resources, marketing, etc.

Some of the key ones are:

• Great Place to Work certification for the 11th time; Indias Top 30 Best Workplaces in BFSI 2021 by Great Place to Work

• Awarded the Most Innovative Insurer in the Life category at the FICCI Insurance Industry Awards 2020

• Ranked as the 27th most valuable brand amongst the Top 75 Most Valuable Indian Brands 2020 in the BrandZ report published by WPP and Kantar

• Recognised as Superbrand for the 8th time

• Won the Best Innovation Award in the insurance segment at the ETBFSI Excellence Awards, 2020

• Won Best Security Practices in the Insurance Sector at the DSCI Excellence Awards 2020

• IMC RBNQA Trust - MQH Best Practices award for Creating differentiated engagement & improving performance using SEO (Search Engine Optimisation)

• Frost & Sullivan Project Evaluation and Recognition Program Award 2020 in the Customer Value Leadership Category, Service Sector for the Branch Digitisation project

The complete list of all the awards is mentioned in the Awards & Accolades section of this report.

Regulatory Landscape

During the year under review, the IRDAI issued various regulations and guidelines to facilitate the insurance industry to tide over uncertain times due to the COVID-19 pandemic and to further aid the growth of industry. Some of the key regulations/ guidelines, etc. have been provided hereunder:

Products covering COVID-19

Insurers were allowed to offer COVID-19 related shortterm health insurance policies until March 2021. Later in July 2020, General and Health insurers were directed to mandatorily offer standardised individual health insurance products covering COVID-19, namely "Corona Rakshak" and "Corona Kavach". The IRDAI also issued various norms on portability of group health insurance policies issued to account holders of various banks, and specific norms for such products.

Group Credit Life policies

Insurers were allowed to suitably modify the term and sum assured under group credit life insurance schemes. The modification was to be done with the objective of aligning the cover available under such schemes with the revised

loan repayment schedule for members who had availed the facility of moratorium announced by the RBI (in the wake of the COVID-19 pandemic).

Relaxation in timelines

Following IRDAIs instructions on relaxation of timelines for applicable grace period, collection of premium, filing of quarterly, half-yearly, and annual returns by insurers and insurance intermediaries, the IRDAI further relaxed various timelines including for submission of hard copies of regulatory returns, public disclosures on websites, and compliance with revised standards and benchmarks for hospitals.

Higher FDI limits

The Insurance (Amendment) Act, 2021 has been notified with effect from March 25, 2021 allowing the foreign investment limit in Indian Insurance companies up to 74% from the earlier 49%, omission of restrictions pertaining to Indian owned and controlled and revision in conditions and manner of foreign investments.

Rural and Social Sector obligations

HDFC Life maintains dedicated focus on undertaking rural business and endeavors to tailor its products and processes to support customer needs in this segment.

As part of its overall business, the Company has achieved prescribed regulatory targets of social and rural business, as follows:

• Rural Business - Achieved 21.70% versus prescribed requirement of 20% of overall business

• Social Business - Insured 94,00,794 social lives versus prescribed 30,62,325 social lives


The IRDAI requires life insurers to maintain a minimum Solvency Ratio of 150%. The Solvency Ratio is calculated as specified in the IRDA (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2016. As compared to the minimum requirement of 150%, the Companys Solvency Ratio, as at March 31, 2021, was 201%.

Dividend & Reserves

In cognizance of the IRDAI Circular No. IRDA/F&A/CIR/ MISC/099/04/2020 dated April 24, 2020, the Company did not declare dividend for FY 2020-21. Subsequently, IRDAI had issued Circular Ref. No. IRDA/F&A/CIR/ MISC/032/02/2021 dated February 25, 2021 withdrawing applicability of its earlier Circular dated April 24, 2020. However, IRDAI had advised Insurers to take a view on dividend declaration for FY 2020-21 considering their capital, solvency and liquidity positions.

The Board of Directors of the Company recommended a final dividend of Rs. 2.02 per equity share of face value of Rs. 10/- each, subject to approval of the members of the Company. This translates into a dividend pay-out ratio of 30%.

The Company has formulated a Dividend Distribution Policy, which has been approved by the Board of Directors. In terms of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) the Dividend Distribution Policy is hosted on the website of the Company at about-us/Investor-Relations.

The Company has carried forward profit amounting to Rs. 1,360.10 crore, earned during the year to the reserves. The Company had accumulated profits of Rs. 5,929.40 crore as at March 31, 2021.

Capital, Shares and Debentures

The issued, subscribed and paid-up share capital of the Company as at March 31, 2021 is Rs. 20,20,94,39,660 comprising 2,02,09,43,966 equity shares of face value of Rs. 10/- each.

During the year under review, the Company has allotted 21,45,567 equity shares pursuant to exercise of options by option holders under its various Employee Stock Option Schemes (ESOS).The equity shares allotted under ESOS rank pari-passu with existing equity shares issued and allotted by the Company.

Issue of Non-Convertible Debentures (NCDs)

During the year under review, the Company has issued and allotted 6,000 unsecured, redeemable, nonconvertible debentures ("NCDs") each having a face value of Rs. 10,00,000/- for an aggregate nominal value of Rs. 600,00,00,000/- (Rupees six hundred crore only) in the nature subordinated debt in accordance with Insurance Regulatory and Development Authority of India (Other Forms of Capital) Regulations, 2015 and other applicable laws/ rules and regulations. NCDs are listed on the wholesale debt market segment of the National Stock Exchange of India Limited.

Credit Rating

During the year under review, the rating agencies viz., ICRA Ltd. and CRISIL Ltd., had allotted below given ratings in favor of NCDs issued by the Company:

"[ICRA] AAA" with "stable" outlook, by ICRA Ltd., and "CRISIL AAA/ Stable", by CRISIL Ltd.

Policy on remuneration to Non-Executive Directors

The Remuneration Policy ("the Policy"), including the criteria for remuneration to Non-Executive Directors is recommended by the Nomination & Remuneration

Committee ("NRC") and duly approved by the Board. The key objective of the Policy is to ensure that it is aligned with the overall performance of the Company. The Policy ensures that it is fair and reasonable to attract and retain necessary talent. The Policy is placed on the website of the Company at Relations. The remuneration paid to the Directors is in line with the Policy of the Company and in compliance with guidelines issued by IRDAI. No Stock Options were granted to Non-Executive Directors.

Further details about remuneration to Directors including Whole-time Directors are provided under report on Corporate Governance, which is enclosed as Annexure 1 and forms part of this report.

Directors and Key Managerial Personnel

As on date of this report, the Companys Board comprises of eleven (11) Directors viz., three (3) Non-Executive Directors, six (6) Independent Directors, two (2) Executive Directors including Managing Director & CEO.

(a) Changes in Board Composition

Changes in the Board Composition during FY 2020-21 along with the proposed changes, are furnished below:

• Appointment/ Re-appointment of Director(s)

The Board of Directors, based on the recommendations of the Nomination and Remuneration Committee of the Board ("NRC"), has in its meeting held on March 17, 2021, considered and approved re-appointment of Ms. Vibha Padalkar (DIN: 01682810) as Managing Director & CEO of the Company, and Mr. Suresh Badami (DIN: 08224871) as Executive Director of the Company for a period of five (5) years with effect from September 12, 2021 and September 18, 2021, respectively, subject to the approval of IRDAI and the members at the 21st AGM of the Company.

The Board of Directors, based on the recommendations of NRC, has in its meeting held on April 26, 2021, considered and approved reappointment of Mr. Sumit Bose (DIN: 03340616) as Independent Director of the Company for a second term of five (5) consecutive years with effect from July 19, 2021, subject to the approval of the members at the 21st AGM of the Company, by way of a special resolution. Further, the first term of Mr. Ranjan Mathai, Independent Director of the Company expires on July 21, 2021.

The necessary resolutions for re-appointment of the Directors along with their brief profile have been included in the Notice of the 21st AGM of the Company, for approval of the members.

• Cessation of Director(s)

Ms. Stephanie Bruce (DIN: 08594969) ceased to hold office as Non-Executive Nominee Director of the Company, with effect from the close of business hours on January 13, 2021, pursuant to withdrawal of her nomination by Standard Life (Mauritius Holdings) 2006 Limited. Accordingly, Mr. Rushad Abadan (DIN: 08035538) who was appointed as Alternate Director to Ms. Stephanie Bruce also ceased to hold office as Alternate Director with effect from January 13, 2021.

• Retirement by Rotation

Section 152(6) of the Act provides that not less than two-thirds of the total number of directors of a public company shall be liable to retire by rotation, and that one-third of such directors as are liable to retire by rotation shall retire from office at every AGM of the Company.

In accordance with the provisions of the Act, Mr. Deepak S. Parekh (DIN: 00009078), NonExecutive Chairman, being longest in office since his last appointment, retires by rotation, and being eligible, offers himself for re-appointment at the 21st AGM of the Company.

As required under Regulation 36(3) of the SEBI Listing Regulations, particulars of Directors seeking appointment/ re-appointment/ liable to retire by rotation at this AGM are given in the Annexure to the Explanatory Statement enclosed to the AGM Notice.

None of the Directors are disqualified from being appointed as Director, pursuant to Section 164 of the Act or under any other applicable law.

The Company has obtained a Certificate from M/s. N. L. Bhatia & Associates, practising Company Secretaries (Firms Registration No. P1996MH055800) confirming that none of the Directors on the Board of the Company are debarred or disqualified from being appointed or continuing as Director on the Board by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any other Regulatory Authority.

• Independent Directors

The Company has received declarations from all the Independent Directors confirming that they meet the Criteria of Independence as laid down under Section 149(6) of the Act and the Rules made thereunder.

The Board is of the opinion that all the Independent Directors fulfill the conditions relating to their status as Independent Director as specified under Section 149 of the Act and the Rules made thereunder and applicable provisions of the SEBI Listing Regulations and are independent of the management.

The Company has undertaken the requisite steps for inclusion of the names of all Independent Directors in the databank maintained with the Indian Institute of Corporate Affairs, Manesar (IICA). Accordingly, all the Independent Directors of the Company have registered themselves with IICA for the said purpose. In terms of Section 150 of the Act read with Rule 6(4) of the Companies (Appointment & Qualification of Directors) Rules, 2014 (including any amendments thereunder), Independent Directors are required to undertake online proficiency self-assessment test to be conducted by IICA within a period of two years from the date of inclusion of their names in the Databank. The online proficiency self-assessment test was completed by all the Independent Directors who were required to undergo the same.

(b) Key Managerial Personnel (KMPs) and changes, if any

In terms of the provisions of Sections 2(51) and 203 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following employees were holding the position of Key Managerial Personnel (KMP) of the Company as on March 31, 2021:

Sr No Name of the KMP Designation
1 Ms. Vibha Padalkar Managing Director & CEO
2 Mr. Niraj Shah Chief Financial Officer
3 Mr. Narendra Gangan General Counsel, Chief Compliance Officer & Company Secretary

In terms of the guidelines on Corporate Governance issued by IRDAI, the following senior management employees of the Company were holding positions of KMPs as on March 31, 2021:

Sr. No. Name of the KMP Designation
1 Ms. Vibha Padalkar Managing Director & CEO
2 Mr. Suresh Badami Executive Director
3 Mr. Niraj Shah Chief Financial Officer
4 Mr. Parvez Mulla Chief Operating Officer
5 Mr. Prasun Gajri Chief Investment Officer
6 Mr. Srinivasan Parthasarathy Chief Actuary
7 Mr. Pankaj Gupta Group Head - Distribution Strategy and Alliances
8 Mr. Sanjay Vij Group Head - Bancassurance
9 Mr. Vibhash Naik Chief Human Resource Officer
10 Mr. Narendra Gangan General Counsel, Chief Compliance Officer & Company Secretary
11 Mr. Khushru Sidhwa Head - Audit and Risk Management

There were no changes in the KMPs during the year.

Performance Evaluation of the Board and its Committees

Pursuant to the provisions of the Act, and the SEBI Listing Regulations, the Board has carried out the annual evaluation of its own performance, and that of its Committees and individual Directors. Further, the Independent Directors met separately, without the attendance of non-Independent Directors and members of the Management, and inter alia reviewed the performance of non-independent directors, and Board as a whole; and performance of the Chairman. They further assessed the quality, quantity and timeliness of the flow of information between the Company Management and the Board.

Overall, the independent directors expressed their satisfaction on the performance and effectiveness of the Board, all the committees, non-independent board members, and the Chairman, and on the quality, quantity and timeliness of flow of information between the Company management and the Board. The NRC also undertook a performance evaluation of individual directors and expressed its satisfaction on performance of each director.

There have been no material observations or suggestions, consequent to such evaluation and review.

Fit and Proper criteria

In accordance with the guidelines for Corporate Governance issued by IRDAI, directors of insurers have to meet fit and proper criteria prescribed by IRDAI. Accordingly, all Directors of the Company have confirmed compliance with fit and proper criteria/ norms, prescribed under the guidelines on Corporate Governance issued by IRDAI.

The Company had received declarations from all the Directors in terms of Section 164 of the Act, confirming that they are not disqualified being appointed as director of the other companies.

Directors & Officers (D&O) Liability Insurance

The Company has in place Directors and Officers Liability Insurance (D&O) for all its Directors (including Independent Directors) and Members of the Senior Management Team for such quantum and risks as determined by the Board in line with Regulation 25(10) of the SEBI Listing Regulations.

Succession Planning

The Nomination & Remuneration Committee of the Board oversees matters related to succession planning of Directors, Senior Management and other key executives of the Company.

Meetings of the Board and its Committees, attendance and constitution of various Committees

The details of meetings of the Board and Committees of the Board held during the year, attendance of Directors thereat and constitution of various Committees of the Board, forms part of the Corporate Governance Report, which is enclosed as Annexure 1 to this report.

Management Discussion and Analysis Report, Report on the Corporate Governance and Business Responsibility Report

Pursuant to Regulation 34 of the SEBI Listing Regulations, Management Discussion and Analysis (MD&A) Report and Business Responsibility Report (BRR) is presented in separate sections and forms part of this report.

In compliance with SEBI Listing Regulations, a Report on the Corporate Governance framework of the Company, with certifications as required under applicable Regulations (including guidelines on Corporate Governance issued by IRDAI) in annexed hereto as Annexure 1 and forms part of this report.

Risk Management Framework

The Company has a defined risk management strategy and a framework that is designed to identify measure, monitor and mitigate various risks. With the outbreak of COVID-19 pandemic, the Company was able to manage risks arising out of the pandemic through timely execution of the Business Continuity Management (BCM) framework as well as safeguards for the IT infrastructure and systems as part of the work from home environment.

The Company has received the coveted RIMS 2020 Global ERM Award of Distinction, Honorable Mention for Innovation during the year. The award recognises outstanding integration of ERM with governance and strategy to achieve sustainable, long-term value across organisation.

A Board approved Risk Management Policy has been put in place, which is reviewed periodically, to establish appropriate systems or procedures to mitigate all material risks faced by the Company. The risk management architecture of the Company has been detailed under the Enterprise Risk Management section of the Annual Report.

Internal Audit Framework

The Company has institutionalised a robust and comprehensive internal audit framework/mechanism across all the processes, to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals and, compliance with applicable policies, procedures, laws, and regulations.

The Internal Audit function at HDFC Life works closely with other verticals in the ARM (Audit and Risk Management) Group and other assurance functions, considering relevant material inputs from risk registers, compliance reports and external auditor reports etc. The function also tests and reports compliance to Internal Financial Controls over Financial Reporting.

Internal audits are conducted by in-house Internal Audit team and co-sourced auditors. The function also undertakes follow-up on engagement findings and recommendations, in line with the approved framework.

The Internal Audit function reports its findings and follows up status on these findings to the Audit Committee on quarterly basis.

Internal Financial Controls

The Company has institutionalised a robust and comprehensive internal control mechanism across all the major processes. 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 applicable statutes, safeguarding of assets of the Company, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with corporate policies.

The internal audit, in addition to ensuring compliance to policies, regulations, processes etc., also test and report adequacy of internal financial controls with reference to financial reporting/ statements.

Vigil Mechanism/ Whistle Blower Policy

The Company encourages an open and transparent system of working and dealing amongst its stakeholders. In accordance with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, the Company is required to establish a Vigil Mechanism for Directors and employees to report genuine concerns. The Company has a Policy for Prevention, Detection and Investigation of Frauds and Protection of Whistle Blowers ("the Whistleblower Policy"), which also encourages its employees and various stakeholders to bring to its notice any issue involving compromise/ violation of ethical norms, legal or regulatory provisions, actual or suspected fraud etc., without any fear of reprisal, discrimination, harassment or victimisation of any kind. The details of Whistle Blower complaints/ concerns received, if any, and subsequent actions taken and the functioning of the Whistle Blower Mechanism is reviewed periodically by the Audit Committee and Risk Management Committee of the Board.

Further details of the Vigil Mechanism and Whistle Blower Policy of the Company are provided in the Report on Corporate Governance, which forms part of this report. The Whistle Blower Policy is also available on the Companys website at https://www.hdfclife. com/aboutus/Investor-Relations

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

A. Conservation of Energy

In view of the nature of business activity of the Company, the information relating to the conservation of energy, as required under Section 134(3) and Rule 8(3) of Companies (Accounts) Rules, 2014, is not applicable to the Company.

B. Technology Absorption

Sr. No. Particulars Remarks
Research and Development (R&D)
1. Specific areas, in which R&D is carried out by the Company NA
2. Benefits derived as a result of the above R&D NA
3. Future plan of action Improved automation using Robotic Process Automation/ Artificial Intelligence including Cognitive, Face Recognition, Voice Analytics/ Cloud Computing/ Cyber Security/ Machine Learning, Enhanced/ simplified digital journeys.
4. Expenditure on R&D
a) Capital
b) Recurring NA
c) Total
d) Total R&D expenditure as a percentage of total turnover
Technology absorption, adoption and innovation
1. Efforts made towards technology absorption Major initiatives undertaken/ completed are:
• Upgrade and add capabilities to InstaSuite of applications to reduce the friction in the customer journey.
• Seamless API-based partner integration. Suite of tech offerings, which enable frictionless customer journeys such as Hello Selfie, Credit Mart & other widgets
• Cloud migration to ensure high availability and scalable architecture
• Big Data and analytics models across several business areas and built a range of AI based capabilities
• Robotic Process Automation
• Customer Service further augmented on Mobile Apps
• Quick Claim process - Life Easy, an analytics-driven investigation process
2. Benefits derived as a result of the above efforts (eg product improvement, cost reduction, product development, import substitution and soon) • Cloud migration helped increase application availability by reducing downtimes, ability to scale on demand with optimal performance
• InstA has 1400+ queries for partners, customers and employees and is responding with 99% accuracy over 24 lakh queries/month
• By the use of RPA, the organisation has achieved reduction in TATs upto 90%, improvement in accuracy upto 25% with reduced risk
Sr. No. Particulars Remarks
• Customer servicing touch-points enabled seamless experience during pandemic times
• Microsoft Teams collaboration platform configured for employees and third party to collaborate and work effectively as part of WFH
• ML and predictive analytics initiatives like early claims/ risk models help align new business with our risk appetite, persistency models on probability of customers paying next premium, financial consultant (FC) engagement model to predict FC activity levels
• Easy claims enabled 3-click journey for 99% of noninvestigative claims settled within 24 hours
3. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) -
i. The details of technology imported;
ii. The year of import; NA
iii. Whether the technology been fully absorbed;
iv. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof
4. Expenditure incurred on Research and Development NA

C. Foreign Exchange Earnings and Outgo

Details of foreign exchange earnings and outgo during FY 2020-21 are as follows:

( in crore)
Foreign Exchange Earnings 252.1
Foreign Exchange Outgo 242.5

5. Subsidiary Companies

(i) HDFC Pension Management Company Limited ("HDFC Pension")

HDFC Pension closed FY 2020-21 with assets under management of Rs. 16,384 crore. HDFC Pension is now the largest pension fund manager in India in the retail and corporate NPS category. It continues to be the fastest growing Pension Fund Manager (PFM) registering a Y-o-Y growth of 98%. Market share of the company grew from 31% to 34% over the year.

HDFC Pension was formed with a strategic rationale of being a significant source of annuity business of HDFC Life and we remain enthused about the strong potential of this business. HDFC Pension has 7.61 lakh customers as on March 31, 2021 out of which 5.09 lakh are in the retail segment and 2.52 lakh are in the corporate segment. HDFC Pension ranks #1 in the corporate segment and #2 in the retail segment amongst all PFMs.

Effective April 1, 2019, central government employees were allowed to choose amongst private owned PFMs and hence this has opened up a big opportunity for HDFC Pension. As on March 31, 2021, HDFC PFM market share is 42% in this category.

Additionally, HDFC Pension started operations as a point of presence (POP) in both retail and corporate NPS segments and has positioned itself strongly in this segment as well. HDFC Pension is ranked #1 POP in terms of new corporate registrations and new corporate subscriber registrations in FY 2020-21 and #8 in new retail subscriber registrations amongst 90 plus POPs.

Financials and Business Outlook

A synopsis of financial performance is shown below:

(Rs. in lakh)
Particulars FY 2020-21 FY 2019-20
Gross Income 550.0 349.9
Total Expenses 539.8 430.7
Profit/ (Loss) before Tax 10.2 (80.8)
Provision for Tax 1.6 -
Profit/ (Loss) after Tax 8.6 (80.8)

(ii) HDFC International Life and Re Company Limited ("HDFC International")

HDFC International is as a wholly-owned subsidiary of HDFC Life, having its office in the Dubai International Financial Centre (DIFC).

Financials and Business Outlook

HDFC International has successfully completed five years of operations and is steadily building experience in the GCC Life reinsurance market. It continues to focus on the need for creation of stable and diversified revenue lines while accelerating revenue and profit growth. HDFC International has been working with ceding insurers to provide reinsurance support for long-term individual life policies and also collaborate on facultative arrangement on group programmes.

During FY 2020-21, HDFC International earned a Gross Income of US$ 13.3 million while its expenses stood at US$ 1 million. The period under review ended with the Company declaring its third successive annual profit, with the figure standing at US$ 0.04 million.

HDFC Internationals aim is to partner with insurers and help them realise their potential through reinsurance solutions which enable them to innovate and optimise as per the needs of their market segments.

6. Consolidated Financial Statements

In accordance with Section 129(3) of the Act and SEBI Listing Regulations, Consolidated Financial Statements of the Company along with its wholly- owned Subsidiaries viz., HDFC Pension and HDFC International, have been prepared in accordance with the applicable Accounting Standards issued by Institute of Chartered Accountant of India ("the ICAI") and forms part of this report.

7. Statement containing salient features of the financial statements of Subsidiaries

Pursuant to Section 129(3) of the Act, a statement containing salient features of the financial statements of the subsidiaries in the prescribed Form AOC-1 forms part of the financial statements.

8. Swabhimaan - Corporate Social Responsibility

As part of its initiatives under Corporate Social Responsibility ("CSR"), the Company has undertaken projects in various areas including education, livelihood, health, environmental sustainability,

COVID-19 response, sanitation, etc. The CSR Policy is framed based on the activities permitted under Schedule VII of the Act.

Consistent with the requirements of Section 135 of the Act and applicable CSR Rules, the Company has setup a Board-level CSR Committee to look after the CSR initiatives. The Committee is headed by Mr. Deepak S. Parekh, as the Chairman, and Mr. Ranjan Mathai and Ms. Vibha Padalkar as Members. The composition of the CSR Committee is in accordance with Section 135 of the Act.

The Ministry of Corporate Affairs ("MCA") has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 on January 22, 2021. The said rules strive to increase the transparency and accountability towards CSR activities by the Companies. In accordance with the requirements of the said Rules, the Company has suitably amended the existing Corporate Social Responsibility Policy ("CSR Policy") and put in place the annual action plan for FY 2021-22. The CSR Initiatives/ Projects undertaken by the Company are in accordance with Schedule VII of the Act.

The annual report on CSR activities is enclosed as Annexure 2 and forms part of this report. The updated CSR Policy of the Company as approved by the Board had been hosted on the Companys website at https://

As prescribed under Section 135 of the Act, certain Companies are required to spend at least 2% of their average net profits made during the three immediately preceding financial years, in pursuance of their CSR Policy. Accordingly, the Company had spent Rs. 20 crore towards various CSR activities specified in Schedule VII of the Act, during FY 2020-21.

9. Annual Return

Pursuant to the amendments to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return (Form MGT-7) for the financial year ended March 31, 2021, is hosted on the website of the Company at aboutus/Investor-Relations

10. Related Party Transactions

Pursuant to Section 177 read with Section 188 of the Act, the Audit Committee approves the related party transactions of the Company on a quarterly basis. All

the related party transactions entered during the year under review were in the ordinary course of business and on an arms length basis, thereby not requiring a separate Board/ Shareholders approval.

The Related Party Transactions Policy of the Company ensures timely approvals and reporting of the concerned transactions between the Company and its related parties to the concerned authorities. The Policy on Related Party Transactions is placed on the Companys website at the under mentioned link:

During the year, there were no material transactions with related parties, which were not in the ordinary course of business and not on an arms length basis.

M/s. B.K. Khare & Co., Chartered Accountants, have reviewed the related party transactions for FY 2020-21 and their reports were placed before the Audit Committee for review, along with details of such transactions.

As per the requirements of the Accounting Standards (AS) - 18 issued by the ICAI on Related Party Disclosures, the details of related party transactions entered into by the Company are covered under Notes forming part of the financial statements.

11. Ind AS Roadmap

IRDAI had issued a circular dated June 28, 2017, deferring the implementation date for Ind AS 117, Insurance Contracts, for insurance sector in India for a period of two years to be effective from FY 2020-21. This circular was withdrawn later through IRDAI circular dated January 21, 2020 notifying that effective date of implementation shall be decided after finalisation of IFRS 17 by the International Accounting Standard Board (IASB).

The IASB had issued the new standard IFRS 17, Insurance Contracts, initially with effective date on or after January 1, 2021 which was further deferred from March 2020 to period beginning on or after January 1, 2023. Further, in June 2020, the IASB amended IFRS 17 to address concerns and implementation challenges that were identified after publication of IFRS 17.

In order to remain converged with IFRS amended standards, in December 2020, the ICAI issued an exposure draft of Amendments to Ind AS 117, for comments from public, including in the exposure draft an effective date of implementation to be annual reporting periods beginning on or after April 1, 2023.

The final date of Ind AS implementation is yet to be announced by IRDAI.

12. Statutory Auditors

M/s. G.M. Kapadia & Co., Chartered Accountants (Firm Registration No. 104767W) and M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016), are the Joint Statutory Auditors of the Company.

The Joint Statutory Auditors have not made any qualification/ reservation/ adverse remarks or disclaimer in their report for FY 2020-21.

As per the IRDAI Regulations, a Statutory Auditor can conduct audit of insurance company for a maximum period of 5 years at a time. Further, as per the Act, an audit firm can be appointed as Statutory Auditor for not more than two terms of five (5) consecutive years.

Members may note that appointment of M/s. G.M. Kapadia & Co., Chartered Accountants was approved by the members in the 16th AGM of the Company held on July 14, 2016, for a period of five (5) consecutive years i.e. until the conclusion of the 21st AGM. Appointment of M/s. Price Waterhouse Chartered Accountants LLP, Chartered Accountants was approved by the members in the 19th AGM held on July 23, 2019, for a second term of five (5) consecutive years, i.e. up to the conclusion of the 24th AGM.

As per the provisions of the Act, read with rules made thereunder, the current term of M/s. G.M. Kapadia & Co., Chartered Accountants, ends at the conclusion of the 21st AGM of the Company. The Board of Directors, based on the recommendation of the Audit Committee has recommended re-appointment of M/s. G.M. Kapadia & Co., Chartered Accountants, for second term of five (5) consecutive years from the conclusion of 21st AGM until the conclusion of the 26th AGM of the Company.

The resolution seeking revision in remuneration payable to Joint Statutory Auditors in connection with the audit of the accounts of the Company for the FY 2021-22 and the re-appointment of M/s. G.M. Kapadia & Co., Chartered Accountants for the second term of five (5) consecutive years has been included in the Notice of the 21st AGM for approval of members.

13. Independent Auditors Report

M/s. Price Waterhouse Chartered Accountants LLP, and M/s. G.M. Kapadia & Co., Chartered Accountants, Joint Statutory Auditors of the Company, have audited the financial statements of the Company for FY 2020-21 and their Report is enclosed and forms part of this Report.

Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.

There are no qualifications, reservations or adverse remarks made in the Auditors Report.

14. Reporting of frauds by Auditors

During the year under review, there have been no instances of fraud reported by the Auditors to the Audit Committee of the Board, pursuant to Section 143(12) of the Act and the Rules made thereunder.

15. Legal Update

There are no significant and material orders were passed by the regulators, courts or tribunals that impacted the going concern status of the Company, or which can potentially impact the Companys future operations.

16. Material changes and commitments affecting the financial position

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the Balance Sheet relates and the date of this report.

17. Secretarial Audit Report

Pursuant to the requirements of Section 204 of the Act, and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. N. L. Bhatia & Associates, Practising Company Secretaries (Firm Registration No. P1996MH055800), for conducting the Secretarial Audit for the financial year ended March 31, 2021. The Secretarial Audit Report for FY 2020-21 issued by M/s. N. L. Bhatia & Associates, Practising Company Secretaries is enclosed as Annexure 3 and forms part of this report.

18. Secretarial Standards

The Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

19. Maintenance of Cost Records

Being insurance company, the Company is not required to maintain cost records.

20. Change in the nature of business

During the year under review, there has been no change in the nature of business of the Company.

21. Deposits

The Company has not accepted any deposits during the year under review and hence provisions of the Act relating to acceptance of Public Deposits are not applicable to the Company.

22. Loans, Guarantees or Investments

In line with the clarification given by the Ministry of Corporate Affairs under the Removal of Difficulty Order dated February 13, 2015, the provisions of Section 186 of the Act relating to loans, guarantees and investments not applicable to the Company.

23. Employee Stock Option Schemes

The Company has formulated various Employee Stock Option Scheme(s) ("ESOP schemes") which helps it to retain and attract right talent and in administering the issue of Stock Options to its eligible Employees including that of its subsidiary companies. The NRC administers the Companys ESOP schemes. There has been no material variation in the terms of the options granted under any of the ESOP schemes and all the ESOP schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulations").

The Annual Certificate on compliance with SBEB Regulations, issued by Statutory Auditors of the Company is being made available for inspection at the forthcoming AGM of the Company.

During the year under review, there were no instances of loan granted by the Company to its employees for purchasing/ subscribing its shares.

The statutory disclosures as mandated under the SBEB Regulations, have been hosted on the website of the Company at us/Investor-Relations

24. Sale of shares by Promoters

During the year, Housing Development Finance Corporation Limited ("HDFC Limited") and Standard Life (Mauritius Holdings) 2006 Limited ("Standard Life"), Promoters of the Company sold certain equity shares of the Company. The details of which are furnished below:

HDFC Limited

Date of transaction Number of shares sold % to total paid- up capital*
June 3, 2020 2,60,00,000 1.29
November 13, 2020# 25,48,750 0.13
Total 2,85,48,750

* % to total paid capital refers to paid up capital as on date of transaction mentioned above.

#Pursuant to the directions of the Reserve Bank of India and National Housing Banks Circular No. NHB (ND)/DRS/Policy Circular No. 71/2014-15 dated April 22, 2015, HDFC Limited had reduced its stake to 50% on November13,2020. Hence, as per Section 19 of the Act, the Company has ceased to be a subsidiary of HDFC Limited with effect from November 13,2020.

The sale of shares by HDFC Ltd had resulted in dilution of their shareholding from 51.44% as on March 31, 2020 to 49.97% as on March 31, 2021.

Standard Life

Date of transaction Number of shares sold % to total paid- up capital*
June 4, 2020 4,00,00,000 1.98
December 3, 2020 2,77,72,684 1.38
Total 6,77,72,684

* % to total paid capital refers to paid up capital as on date of transaction mentioned above.

Further, the sale of shares by Standard Life resulted in dilution in its shareholding in the Company from 12.25% as on March 31, 2020 to 8.88% as on March 31, 2021.

25. Appointed Actuarys Certificate

The Appointed Actuary has provided certificate on valuation and actuarial assumptions.

26. Prevention and Redressal of Sexual Harassment Policy, and disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Internal Complaints Committee (ICC):

The Company has instituted an Apex Committee and four zonal Internal Complaints Committees (ICCs) for redressal and timely management of sexual harassment complaints. The central Apex Committee is chaired by a senior woman leader of the Company. The Committee also has an external senior representative member who is a subject matter expert. All zonal ICCs have minimum of 50% women representatives, and their functioning is overseen by the central Apex Committee. The Risk Management Committee of the Board is periodically updated on matters arising out of the Policy/Framework, as well as on certain incidents, if any.

Prevention and Redressal of Sexual Harassment (PRSH) Policy and Awareness:

The Company has zero tolerance towards sexual harassment and is committed to provide a safe environment for all. Organisations PRSH policy is inclusive irrespective of gender or sexual orientation of an individual. It also includes situations around work from home scenarios.

To create awareness on this sensitive and important topic, an informative campaign was driven for all the employees. Also, the Prevention and Redressal of Sexual Harassment (PRSH) module on the Companys self learning application (MLearn) has been revised and made mandatory for all the employees.

Pursuant to the said Act, the details regarding number of complaints received, disposed, and pending during FY 2020-21, pertaining to incidents under the above framework/ law are as follows:

Particulars Numbers
Number of complaints filed during the financial year 35
Number of complaints closed during the financial year 27
Number of complaints pending as on March 31, 2021 8

27. Directors Responsibility Statement

In accordance with the requirements of Section 134 of the Act, the Board of Directors state that:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures (if any);

ii. Such accounting policies have been selected and applied consistently, and judgments and estimates made that are reasonable and prudent, so as to give a true and fair view of the Companys state of affairs, as on March 31, 2021, and of the Companys profit for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The annual accounts have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively; and

vi. Proper systems have been devised to ensure compliance with the provisions of all applicable laws, and such systems were adequate and operating effectively.

28. Appreciation and Acknowledgement

The Directors place on record their gratitude for all the policyholders, shareholders, customers, distributors, and business associates for reposing their trust and confidence in the Company. Directors would also take this opportunity to express their appreciation for the hard work and dedication of the employees and for their untiring commitment; and the senior management for continuing success of the business in difficult times.

The Directors further take this opportunity to record their gratitude to Housing Development Finance Corporation Limited and Standard Life (Mauritius Holdings) 2006 Limited, Promoters of the Company for their invaluable and continued support and guidance and also to Insurance Regulatory and Development Authority of India (IRDAI), Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), Reserve Bank of India (RBI), Pension Fund Regulatory and Development Authority (PFRDA), Life Insurance Council, Stock Exchanges, Depositories, Debenture Trustees and other governmental and regulatory authorities for their support, guidance and co-operation from time to time.

On behalf of the Board of Directors
Deepak S. Parekh
Place: Mumbai Chairman
Date: April 26, 2021 (DIN: 00009078)