to,
THE MEMBERS
HDFC LIFE INSURANCE COMPANY LIMITED
Your Directors are pleased to present the 24th Annual Report of HDFC Life Insurance Company Limited ("the Company"/"HDFC Life"), together with the audited financial statements for the year ended March 31, 2024.
1. Standalone Financial Performance, Business Review and Outlook Financial Performance:
( in crore)
Particulars Standalone (Audited)
| FY 2023-24 | FY 2022-23 | |
| a. New business premium | 29,631 | 29,085 |
| (i) Regular premium | 11,111 | 11,324 |
| (ii) Single premium | 18,521 | 17,761 |
| b. Renewal premium | 33,445 | 28,448 |
TOTAL PREMIUM |
63,076 | 57,533 |
PROFIT AFTER TAX |
1,569 | 1,360 |
Other key parameters: |
( in crore) | |
| Particulars | FY 2023-24 | FY 2022-23 |
| Individual APE | 11,509 | 11,401 |
| Group new business premium | 14,948 | 14,243 |
| Assets under management | 2,92,220 | 2,38,782 |
| Embedded value (EV) | 47,468 | 39,527 |
| Overall new business margins (post overrun) | 26.3% | 27.6% |
Note: EV reviewed by Milliman Advisors LLP
2. Business Review and Outlook Industry Outlook
Life insurance products in India are continually evolving, moving beyond a simple savings tool for providing longer term propositions and an enhanced safety net. As per a Swiss Re study, total insurance premiums in India is expected to grow by 7.1% in real terms over the next five years, well above the average for global (2.4%), emerging (5.1%) and advanced (1.7%) markets. Despite the recent budget changes, the life insurance industry has demonstrated remarkable resilience. A powerful combination of economic growth, a burgeoning middle class, innovative products and supportive regulations will fuel expansion of life insurance market.
During FY 2023-24, the life insurance industry collected 3,77,960 crore of new business premiums and grew by 2% vis-a-vis previous year. Further, the private players grew by 8% and overall industry (including LIC) grew by 5% in terms of individual
weighted received premium (WRP). Strong demand for unit linked savings plan products, increase in number of policies sold and product innovation across all product categories were the key drivers of growth. This was further supported by expansion in distribution, resulting in consolidation of market share of the private sector to 67.8% of individual WRP. Within the private sector, the top 10 insurers accounted for close to 90% of the market (in terms of individual WRP) in FY 2023-24. Bancassurance and agency continue to be the dominant distribution channels.
The medium to long-term growth opportunity for life insurance sector remains intact. We believe that the life insurance industry is well positioned to address the opportunities in the protection, retirement and long-term savings segments.
3. Company Performance
Sustained growth across segments
We continued to deliver consistent all-round performance and be ranked amongst the top three private life insurers in the industry. Total new business premium increased to 29,631 crore. In addition, we maintained our leadership position within the group business in FY 2023-24, with a private industry market share of 23.9%. Total premium grew to 63,076 crore in FY 2023-24, while renewal premium grew to 33,445 crore.
Despite the budget changes, pertaining to taxation of maturity proceeds of policies with more than 5 lakh premium, impacting high ticket size business, we delivered a healthy growth. Our stated aspiration of a double-digit growth for the full year was achieved with us clocking 11% growth for FY 2023-24, on a normalised basis (i.e. after adjusting for the one-off business of 1,000 crore in March 2023). We achieved individual APE growth of 1% on an unadjusted basis. Despite the unique circumstances of fiscal year FY 2022-23, overall APE and Value of New Business grew by 12% and 14%, respectively on a 2-year CAGR basis. Further, positive momentum continued across ticket sizes up to 5 lakh with robust growth of 19%. In a tough environment, marked by intense competition and disruption in business due to FY 2022-23 budget announcement, we witnessed minimal decline in new business margins versus peers, while also outpacing overall industry growth in FY 2023-24 based on individual WRP on a normalized basis. We continued to broaden our customer base and deepen our reach in new markets by expanding our distribution, both proprietary and corporate.
More than 70% of individual customers on-boarded in FY 2023-24 were new to HDFC Life and almost half of these were below the age of 35 years. Tier 2 and 3 markets recorded a growth of 13%. Further, we covered 66 million lives in FY 2023-24 and growth in number of policies was strong at 11%.
Diversification and innovation being our key parameters
We continue to have a diversified distribution mix, which aids in providing multiple touch-points across geographies for the convenience of our customers. Our 500+ pan-India branches, 2 lakh+ individual agents, over 300 partnerships with banks, NBFCs, MFIs, SFBs, brokers, new-ecosystem partners and our online platform aids in widening our presence. Our bancassurance channel, led by HDFC Bank, grew by over 17% in FY 2023-24, based on individual APE. We are witnessing robust growth across our partnerships. We consistently innovate on our product offerings, enhance our service quality and invest in our technological capabilities to meet the needs of our partners diverse customer segments.
While growth in our Agency channel was slower due to a high base last year, it has shown a robust growth of 14% on a 2-year CAGR basis. We are steadfast in our efforts to build capacity for future growth. Our objective is to broaden our footprint and enhance our reach through a multi-faceted approach, which includes strategically adding branches, attracting high-performing distributors and continually investing in technology and capability enhancement.
FY 2023-24 was a landmark year for product launches fuelled by relentless product innovation (Click 2 Achieve, Smart Protect, Sanchay Legacy, amongst others). We are committed to delivering products which are relevant and tailored to meet our customers evolving requirements. This strategic focus was one more reason that enabled us to deliver growth in the prevailing environment, while laying the building blocks for FY 2024-25. We maintained a healthy balance in terms of product mix with ULIP at 35%, non-par savings at 30%, participating products at 23%, retail term at 5% and annuity at 6%. Share of protection products in our total new business premium (NBP) increased from 29% in FY 2022-23 to 32% in FY 2023-24. Retail protection grew by 27% based on individual APE and we believe that the growth momentum will sustain going forward given the opportunity. Further, annuity and
protection put together contributed to nearly half of our NBP in FY 2023-24. We are enthused about the growth potential of annuity and protection segments in India, as these segments remain underpenetrated. While we observed aggressive pricing strategies by certain peers, we will continue to pursue a balanced approach to growth through product innovation while maintaining pricing and underwriting discipline.
Maintain profitable growth
Renewal premiums were 33,445 crore with 13th month persistency for limited and regular pay policies at 87%. Our 61st month persistency ended at 53%, up from 52% in the previous year. Our new business margins are 26.3% compared to 27.6% previous year. The drop was primarily due to operating leverage gap caused by the one-time 1,000 crore additional APE received in FY 2022-23, post the budget changes and higher ULIP proportion on account of buoyant equity markets. Sale of longer tenure products and higher attachment of protection helped in mitigating the impact of product mix to some degree. Our embedded value (EV) stood at 47,468 crore as on March 31, 2024, with an operating return on EV of 17.5% for FY 2023-24. Profit after tax for FY 2023-24 stood at 1,569 crore, a Y-o-Y increase of 15%. Solvency as on March 31, 2024, stood at 187%. Our assets under management (AUM) stood at 2,92,220 crore, up by 22%, with a debt-equity proportion of 67:33 as on March 31, 2024.
The current business mix sets a strong platform for us to continue delivering robust top line and VNB growth in FY 2024-25 and beyond. Our business objectives entail further enhancing our presence across geographies and customer segments and realizing the potential of our distribution channels. In line with this long-term strategy, we will continue to invest in people, technology and infrastructure.
Update on Subsidiaries
HDFC Pension Management Company Limited ("HDFC Pension") achieved a milestone by crossing 75,000 crore of AUM, showcasing robust growth of 70%, aided by buoyant equity markets. HDFC Pension maintained its leadership with a market share of 43%.
We are enthused to share that HDFC International Life and Re Company Limited commenced operations at GIFT City branch, where we are catering to NRIs and the Indian diaspora with a need for dollar denominated products across different segments.
Business Outlook
The vast unmet need for protection and retirement products in our country are compelling opportunities. We aim to be at the forefront of developing innovative solutions to bridge this gap. To capitalize on these long-term opportunities, we are focusing on key drivers such as product innovation by identifying whitespaces, scaling up our proprietary business led by the Agency channel, consolidating our counter share at HDFC Bank and continued focus on new distribution tie-ups. We have delivered consistent, predictable and sustained performance by doubling key metrics over multiple blocks of 4 to 5 years. We will continue to move ahead with this aspiration while prioritizing VNB growth to build a profitable business in the long run.
4. Products
We, at HDFC Life, understand the importance of providing customers the flexibility to choose from multiple options as per ones lifestyle and life stage. We believe in offering solutions that not only provide financial security but also support to fulfill ones dreams and goals. The Company has 65 Individual and 18 Group products and 13 riders in its portfolio.
HDFC Life Smart Protect Plan
In May 2023, we launched HDFC Life Smart Protect Plan, a unit linked life insurance plan that addresses long-term savings needs with life protection benefits. The plan provides flexibility to customize benefits with multiple plan options. Further, this plan rewards the customers with loyalty additions and maturity boosters.
HDFC Life Click 2 Protect Elite
In September 2023, we launched HDFC Life Click 2 Protect Elite, a non-linked, non-participating, Individual, pure risk premium life insurance plan. It is a simple protection plan designed for high net-worth individuals.
HDFC Life Sanchay Legacy
In September 2023, we launched HDFC Life Sanchay Legacy, a non-linked, non-participating, individual, pure risk premium/ savings life insurance plan. Sanchay Legacy is a term plan that helps build a legacy corpus for the family in a tax efficient manner. The plan provides flexibility to the customer to choose life protection or life protection with ROP benefits for the whole of life. Life cover continues to increase at a pre-defined rate till the end of policy term. Further, the plan provides 100% acceleration of death benefit on diagnosis of the 19 critical illnesses, anytime during the policy term. The plan also provides
the option to decrease premium up to 50% of the original annualized premium after 5 completed policy years, thereby ensuring that customers continue to remain protected even in uncertain financial times.
HDFC Life Health Plus Rider
In September 2023, we also launched HDFC Life Health Plus Rider, an individual, pure risk premium, health insurance rider. It offers comprehensive coverage against 60 critical illnesses, where a lumpsum payout is provided on diagnosis of any of the covered critical illness. The customer can also choose protection against cancer, where the rider provides lumpsum payout on diagnosis of early stage / major stage of cancer. Additionally, this rider provides an option of increasing rider sum assured where cover continues to increase every year.
HDFC Life Group Future Secure Plan
In September 2023, we launched HDFC Life Group Future Secure Plan, a non-participating group unit linked insurance plan which enables companiestobuild a corpus to fund their employee benefit schemes like superannuation, gratuity, leave encashment, PRMS and other benefit schemes (including benevolent schemes). It also provides the option of securing the invested capital with the capital guarantee benefit option.
HDFC Life Click 2 Achieve
In December 2023, we launched HDFC Life Click 2 Achieve, a non-linked, non-participating, individual, savings life insurance plan that offers flexibility to customize the benefits as per customer needs. This product offers 2 plan options - Smart Student and Dream Achiever. Under the Smart Student option, stable income is payable for 3 to 5 years commencing from age of 16 or 18 years. It also provides outstanding achievement award on meeting specific criteria. Under the Dream Achiever option, the customer can choose to receive immediate income, periodic income, money back or lump sum benefits as per the need while staying protected with life cover across the policy term.
HDFC Life Waiver of Premium Rider
In February 2024, we launched the new HDFC Life Waiver of Premium Rider, which waives off all future premiums, including premiums for riders brought at inception in the unfortunate event of death, disability or critical illness of the policyholder. This ensures continuity of benefits under the base policy, without the burden of premium payment and to secure financial future of the beneficiaries.
We will continue our focus on developing innovative product propositions that focuses on addressing customer needs at every stage of life.
5. Human Resource and People Development
At HDFC Life, our people are the cornerstone of our Companys success, and we continually offer them unique platforms to grow and become the best version of what they can be.
Our Diverse and Inclusive Culture
Our constant endeavor is to have a workforce that represents uniqueness of our society. We mindfully create opportunities to bring this diversity on board and celebrate them the way they are. Diversity, Equity and Inclusion (DEI) is a way of doing business and not just a people agenda.
As an equal opportunity employer, our meritocratic and performance driven culture hails everyone irrespective of their backgrounds, education, and experience. At the same time, we strive to create an equitable environment for women and LGBTQ+ community through our inclusive offerings. Our policies such as Maternity Transition Program, Second Careers Program, LGBTQ+ helpline, gender transition policy stand testimony to companys sensitivity towards life stages of a woman and LGBTQ+ and resultant support mechanisms.
Our Employee Resource Groups led by business leaders are our ways of making inclusion an organization agenda and not just the HR prerogative.
Employee Care and Wellbeing at the Core
To foster the spirit of care, we have mindfully built a supportive ecosystem of momentous practices, processes and policies.
Employee wellness and care continues to be at the core of all that we do. Our all-encompassing wellness program gives employees opportunities to participate in several fitness regimes or consult doctors for self and families. Confidential help lines have also been set up to create a psychologically safe ecosystem for employees dealing with physical or mental health issues.
Keeping in mind the multitude of challenges employees face while playing different roles at work or home we have designed several policies that include paternity leave irrespective of the gender, recognition as primary and secondary care-giver, coverage of legally wedded partner or cohabiting partner of any gender, under the Group Health Benefits program, etc.
Our compassionate leave policy and compassionate employment allows employees to bereave the loss of their loved ones and also offers employment to the family of the deceased employee.
Fairness and Transparency in Career & Development Processes
To meet our ever-evolving business needs, we have invested in building our homegrown robust talent pipeline. Our internal talent is given priority for career opportunities in the organization. We encourage our employees to opt for cross-functional movements through career progression and Internal Job Postings (IJPs), thereby broadening their professional exposure. Our internal job portal application matches the contemporary job posting experience and allows everyone to apply for jobs they want to explore.
On the learning and development front, our mission is to meet the organizations strategic needs by facilitating enterprise-wide capability development for employees and distributors. We have been enabling this by adopting a contemporary and progressive learning ecosystem which includes classroom training, bite-sized courses, online courses and self-paced gamified learning. Our mobile learning application replicates the feature of most contemporary hyper- personalized apps available to employees while availing other services.
We have designed and implemented various talent review and succession planning processes at our middleandseniormanagementlevels.Throughseveral development initiatives, these managers are equipped to perform better in their current roles and build a strong pipeline of future ready talent.
Maintaining flow of external talent to infuse new ideas
Over the years, we have developed alliances with universities and academia to train and hire a model for our frontline sales roles. For managerial levels, our campus hiring program Jigyasa continues to induct fresh minds from coveted business schools across the country.
Living the EPICC Life
We believe that values are the most critical elements that reflect the conduct of an organization. Five members of the Executive Committee have been appointed as Chief Values Officers who spearhead the EPICC (Excellence, People Engagement, Integrity, Customer Centricity and Collaboration) cascade and its assimilation into the organization DNA.
In conjunction with clearly identified leadership behaviours, our organizations values enable employees across levels to deliver on their responsibilities towards internal and external customers effectively. Various scientifically designed assessment tools in external hiring and internal career advancement processes ensure that employees are aligned to these values.
Performance Management and Compensation Philosophy
We are committed to creating and sustaining a high-performance culture across the organization. Therefore, our performance management system is deeply entrenched in the principles of the balanced scorecard. At the same time, our compensation philosophy ensures we benchmark ourselves with the external market to stay attractive as potential employer. We ensure that we differentiate and reward high performers.
Particulars of Employees
The remuneration paid to the Directors, Key Managerial Personnel and Senior Management are in line with the Section 197 of the Companies Act, 2013 ("Act") read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 including amendments thereof and in accordance with the Remuneration Policy duly formulated by the Board in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and Guidelines on Remuneration of Directors and Key Managerial Persons of Insurers issued by IRDAI.
The details of said remuneration are given under Annexure 4 and forms part of this report.
The statement showing particulars of employees pursuant to Section 197 of 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.
In terms of the provisions of Section 136 of the Act, the Integrated Annual Report is being sent to the shareholders, excluding the aforementioned information/ statement. The said information is available for inspection by the members up to the date of this Annual General Meeting, on all working days, during business hours, at the Registered Office of the Company situated at Lodha Excelus, 13th Floor, Apollo
Mills Compound N.M. Joshi Marg, Mahalaxmi, Mumbai City, Mumbai, Maharashtra, 400011. Members who are interested in obtaining the said particulars may please write to the Company Secretary or send an email at investor.service@hdfclife.com
6. Investments
FY 2023-24 saw a consolidation across most developed and emerging economies, after the post-Covid pent-up demand led surge in growth and inflation in the previous year. The pick-up in growth and inflation had led to steep rate hikes by most central banks in the previous year. FY 202324 saw culmination of these rate hike cycles across economies. The US Fed had led the world by raising policy interest rates by a cumulative 525 bps in a span of a little more than a year. Most other central banks followed suit, though to varying degrees. The Reserve Bank of India (RBI) raised policy interest rates by a cumulative 250 bps in about the same time period. The rate hikes did have the intended effect of lowering inflation. Inflation in the US which had peaked above 9%, eased closer to 3% by the end of the year, though the path to achieving the target of 2% inflation is still uncertain. Similarly, domestic inflation too eased from the peak of 7.9% to the average level of 5.4% for FY 2023-24.
The sharp rate hikes, however, had a lower than feared impact on economic growth, with the US economy ending calendar year 2023 with a 3.4% growth, and a strong labour market that added an average of about 225,000 jobs every month in 2023. The robust economy, despite the sharp rate hikes, disrupted the widely held expectations of a sharp weakening and recession in the US economy, the expected hard landing, and led to a re-set of expectations of the timing and extent of rate cuts by the US Fed.
The change in expectations for US rate cuts has led to a change in expectations for rate cuts from the RBI as well. Domestic inflation is forecast to ease to 4.5% for FY 2024-25, from the 5.4% in the previous year, though the RBI remains cautious over the path of food inflation. Similar to the US, domestic growth has held up well despite the rate hikes over the past two years, with GDP growth estimated at 7.6% for FY 2023-24 and forecasted to be 7% for FY 2024-25. The strength in the domestic economy is led by strong gains in domestic capital expenditure by the public sector and Government, as also increasing focus on domestic manufacturing.
The favourable economic setup of benign inflation and robust growth were reflected in the asset
markets. Equity markets saw sharp gains during the year, with the themes of domestic manufacturing, capex, infrastructure, among others leading the gains. Public sector financials, too, saw impressive gains as the benefits of improved asset quality were factored into their valuations. The significant portion of the companies benefiting from these themes were spread across the mid-cap and small- cap space, leading to sharp differences in returns across the market capitalization range. Over FY 2023-24, the Nifty-50 index gained almost 29%, while the Midcap-100 index gained about 60% in the same period.
The debt markets, however, had a largely range- bound year, as expectations of rate cuts from the RBI were subdued. The markets pricing of rate cuts from the RBI showed expectations of a shallow rate cut cycle, commencing around the second half of FY 2024-25. The 10-year benchmark government bond yield moved about 23 bps through the year, as it ended FY 2023-24 at 7.05%, down from 7.28% at the end of the previous year.
The 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.
Companys total AUM as on March 31, 2024 was 2,92,220 crore. This comprised assets of 95,542 crore held under the unit-linked funds and 1,96,678 crore held under the conventional funds and shareholders funds. The corresponding numbers for the previous year were 79,201 crore and 1,59,581 crore, respectively.
7. Information Technology
Technology continues to disrupt all the businesses with GenAI and related technology taking centre stage. During the previous year, GenAI has seen a major set of offerings with multiple language models (LLMs) being launched by all the big tech companies. Apart from GenAI, the broader technology industry is also making strides towards AI integrated process enablement, both in front end and back end processes.
Today, the base cloud engineering has evolved to multi cloud architecture supported by large data platforms. HDFC Life is continually upgrading its technology to be ahead of the curve. As part of Project Inspire, we will have a multi cloud infrastructure supported by newly proposed data platforms and a next generation technology stack.
As a part of our journey of continuous improvement, we performed major upgrades in our key systems. This enabled near zero down time in major systems, particularly during peak periods. Some of the initiatives are listed below:
• Upgrades to our enterprise technology stacks throughout the year to make them compatible to the growing business needs;
• Infosec issues have been addressed to comply with different regulations;
• Zero downtime achieved on critical systems;
• Introducing a fully automated process for policy issuance;
• Digital video check integrated within our underwriting process to improve claim experience;
• Aadhaar consent automation and Income Tax database access provisioned; and
• Major upgrade for connecting business partners through APIs for credit protect business.
In addition to this, we launched multiple AI applications across different customer and partner focussed assets. A few initiatives have been highlighted below:
• New early claims model for full/ limited underwriting;
• NLP based platformtoassist front line sales teams in answering customer queries, understanding products, tracking their incentives;
• Deep learning based automated underwriting model with higher straight through processing (STP) rate across savings products;
• GenAI based galaxy platform for all current and future applications.
Also, we initiated Project Inspire, a digital transformation program. The key work streams within the Project Inspire are as follows:
Work Stream |
Description |
Unified Data Platform |
Creating a definitive source of data truth, while implementing a Testing CoE and hierarchy management modules for process optimization |
Product Configurator |
Platform to configure new products with the ability to manage complexity with significantly faster speed to market |
Customer Relationship Management |
To improve customer experience, streamline operations and improve competitiveness |
Hierarchy Management |
To manage distributor and employee hierarchies along with audit logs of changes |
Incentive and commission management |
To seamlessly support our current state processes while introducing enhanced capabilities |
Business Process Management |
Build a robust solution in a headless architecture to drive operational efficiency, enhance customer experience, derive data driven insights with scalable solutions for expanding business needs |
Communication Management |
Single replacement of multiple existing communication platforms enabling a 360 degree view of customer and partner interactions |
Testing centre of Excellence (TCoE) |
A build, operate and transfer model to cater to software testing requirements through a robust testing framework |
Virtual Office |
A single unified front end application for employees, customers, vendors, agents, partners with micro-service capabilities to enable a modular architecture |
8. Awards & Accolades
Your Company received various awards and accolades during the year under review across diverse areas including corporate governance, financial disclosures, technology, digital solutions, products, human resources, marketing, etc. Some of the key ones are as follows:
• Won Golden Peacock Award for Excellence in Corporate Governance 2023 by Institute of Directors, India
• Secured the Leadership category in Indian Corporate Governance Scorecard Assessment 2023 undertaken as on December 31, 2023, by the Institutional Investor Advisory Services (IiAS)
• Featured in Best Workplaces Asia 2023 by Great Place To Work
• Featured in Indias Best Workplaces for Millennials 2023 by Great Place To Work
• Recognised amongst Indias Top 50 Best Workplaces for Women 2023 (large category) by Great Place To Work
• Ranked amongst the 100 Best Company for Women in India 2023 by Avtar and Seramount
Featured amongst the top 75 Valuable Indian Brands at the Kantar BrandZ 2023 List, with an improvement in rank from #43 to #41
Recognised for Excellence in CX at The Economic Times CX Summit 2023
Winner in the Best Customer Oriented Company in India category at the 4th Emerging Asia Conclave and Awards
Bagged Guinness World Record title for its Insure India campaign
Won the highest Gold Trophy in 37th QCFI Quality Convention
Winner in the Overall Achievement in Life Insurance category at the 15th ASSOCHAM Global Insurance Summit & Awards
Winner in the Best Innovation category at the Banking Frontiers InsureNext Conclave & Awards 2024
Recognised as Indias leading life insurance company at the Dun & Bradstreet BFSI & Fintech Summit 2024
The Integrated Annual Report of the Company was awarded with platinum for FY 2022-23 and ranked 47th among Top 100 reports worldwide at the LACP Vision Awards 2022-23
9. Regulatory Landscape
The Insurance Regulatory and Development Authority of India ("IRDAI"/ "Authority") issued several principle- based regulations following a comprehensive review of the regulatory framework. These regulations encompass pivotal domains such as safeguarding of policyholders interests, rural and social sector responsibilities, electronic insurance marketplace, insurance products, operation of foreign reinsurance branches, as well as aspects of registration, actuarial, finance, investment and corporate governance. This comes after the notification of the regulation on Expenses of Management of insurers in January, 2024.
Some of the key regulations/ guidelines issued by the IRDAI during the year under review are highlighted below:
In March 2023, the IRDAI notified the IRDAI (Payment of Commission) Regulations 2023 and IRDAI (Expenses of Management of Insurers transacting Life insurance business) Regulations 2023, which repealed the previous regulations. Subsequently, in January 2024, the IRDAI notified the IRDAI (Expenses of Management, including commission of Insurers) Regulations, 2024, which consolidated and repealed the previous regulations issued in 2023. These regulations continue to specify the maximum limit of expenses that can be incurred by an insurer at an overarching level rather than per line of insurance business and continue to permit insurers to pay commission to agents and intermediaries within these limits.
IRDAI, with an objective to specify minimum rural, social sector, and third-party motor insurance business that insurers are required to underwrite under the Insurance Act, 1938, issued IRDAI (Rural, Social Sector, and Motor Third Party Obligations) Regulations, 2024. The compliance and measurement of these statutory obligations has been revised where the unit of measurement under the rural obligations will now be Gram Panchayat and the scope of social sector has been extended to cover cardholders and beneficiaries under various schemes.
With an objective to empower and protect the interests of policyholders, to increase the penetration of insurance in India and enhance accessibility by allowing the establishment of a digital public infrastructure, IRDAI issued IRDAI (Bima Sugam - Insurance Electronic Marketplace) Regulations, 2024. This marketplace serves as a one stop solution for all insurance stakeholders, including customers, insurers, intermediaries, and agents, thereby, promoting transparency, efficiency and collaboration across the entire insurance value chain.
Further, in order to promote growth of insurance sector by simplifying the process of registration of insurers, transfer of shareholding, other forms of capital, an amalgamation of insurers, listing of shares of insurers on stock exchange and to promote ease of doing business, the IRDAI (Registration, Capital Structure, Transfer of Shares & Amalgamation Insurers) Regulations, 2024 were notified. By streamlining these procedures, the regulations seek to enhance the ease of doing business within the insurance industry, facilitating smoother operations and promoting overall sectoral growth.
The IRDAI also notified the IRDAI (Corporate Governance for Insurers) Regulations, 2024, with the objective to provide a framework for insurers to adopt sound and prudent principles and practices of their governance structure as well as to establish a framework for the roles and responsibilities of the Board and the management of insurers. This is for the first time that the governance aspects under the existing guidelines are notified in the form of regulations, which highlights the importance of governance in the functioning of an insurance company.
In order to protect policyholders interest and to facilitate insurers to respond faster to emerging market needs and also to design innovative products the Authority issued IRDAI (Insurance Products) Regulations, 2024. These regulations aim to promote good governance in product design and pricing, including strengthening of the principles governing guaranteed surrender value and special surrender value along with disclosures thereof. It also ensures that the insurers adopt sound management practices for effective oversight and due diligence. Additionally, the regulations encourage the development of innovative insurance products that cater to the requirements of different segments/ strata of the society and provide wider choices while also considering the interests of policyholders and maintaining regulatory compliance, thereby, fostering a competitive marketplace.
IRDAI also notified the IRDAI (Protection of Policyholders Interests and Allied Matters of Insurers) Regulations, 2024, which consolidates eight regulations into a unified structure, focusing on several key objectives aimed at ensuring fair treatment of prospects during solicitation and sale of insurance policies and protecting the interests of policyholders throughout their engagement with insurers and distribution channels. These regulations emphasize the adoption of standard procedures and
best practices by insurers and distribution channels to fulfill their obligations towards policyholders, including grievance redressal and policyholder-centric governance. Additionally, the regulations aim to promote prudent practices in risk management related to outsourcing activities by insurers. Furthermore, the regulations ensure that the opening or closing of places of business by insurers, both domestically and internationally, is conducted in a manner that prioritizes the interests of the policyholders.
IRDAI also released several discussion papers/ draft guidelines on topical matters pertaining to the ordinary course of business and operations.
10. Rural and Social Sector Obligations
HDFC Life maintains dedicated focus on undertaking rural business, and endeavors to tailor its products and processes to support these businesses, considering customer needs.
As part of its overall business, the Company has achieved prescribed regulatory targets of social and rural business, as follows:
Prescribed |
Achieved |
|
Rural Business |
20% of overall |
23.66% of overall |
business |
business |
|
Social Business |
34,42,632 social |
74,86,026 social |
lives insured |
lives insured |
11. Solvency
The Solvency Ratio is calculated as specified in the IRDAI (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2016.
| As at March 31, 2024 |
|
| IRDAI prescribed minimum Solvency Ratio | 150% |
| Companys Solvency Ratio | 187% |
12. Dividend and Dividend Distribution Policy
The Board after assessing the performance, capital buffers, solvency, and liquidity levels of the Company has recommended a final dividend of 2/- per equity share of face value of 10/- each, subject to approval of the members of the Company. The dividend pay-out ratio for the year ended March 31, 2024 is 27%.
The Company has formulated a Dividend Distribution Policy which has been approved by the Board. In terms of Regulation 43A of SEBI Listing Regulations the Dividend Distribution Policy is hosted on the website of the Company which can be accessed by this link at https:// www.hdfclife.com/about-us/Investor-Relations.
13. Transfer to Reserves
The Company carried forward profit after tax of 1,568.86 crore, earned during the year ended March 31, 2024 to the Reserves. The accumulated profit of the Company is 8,258.58 crore as at March 31, 2024.
14. Share Capital and Debentures
The issued, subscribed and paid-up share capital of the Company as at March 31, 2024, is 21,50,94,41,270 comprising 2,15,09,44,127 equity shares of face value of 10/- each.
During the year, the Company has allotted 15,47,995 equity shares pursuant to the exercise of options by options 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.
Debentures
As on March 31, 2024, the Company has 9,500 outstanding Non-Convertible Debentures ("NCDs") having a face value of 10 lakh each. NCDs are listed on the wholesale debt market segment of the National Stock Exchange of India Limited.
The Company had paid annual interest to all the debenture holders on due date as mentioned below:
ISIN |
Outstanding Interest |
Due Date |
|
NCDs (in ) |
Payment Date |
||
INE795G08027 |
350 crore |
June 22, 2023 |
June 22, 2023 |
INE795G08019 |
600 crore |
July 28, 2023 |
July 29, 2023 |
There was no unclaimed interest amount lying with the Company.
Credit Rating
During the year, the rating agencies viz., ICRA Ltd. and CRISIL Ltd., have re-affirmed the below allotted ratings in favor of NCDs issued by the Company:
ICRA Ltd. "[ICRA] AAA" with "stable" outlook CRISIL Ltd. "CRISIL AAA/ Stable"
15. Transfer of unclaimed dividend and shares to Investor Education & Protection Fund (IEPF)
The details with respect to transfer of unclaimed dividend and shares to IEPF forms part of the Corporate Governance Report.
16. Update on Holding Company / Promoters
(a) HDFC Limited/ HDFC Bank Limited
During the year, Housing Development Finance Corporation Limited ("HDFC Limited"), erstwhile Promoters of the Company had acquired 37,582,123 equity shares of the Company representing 1.75% of the total issued and paid-up share capital from the secondary market. Post the said acquisition, HDFC Limited held 50.40% of the total share capital of the Company. Accordingly, the Company had become a subsidiary of HDFC Limited w.e.f. June 30, 2023.
Further, pursuant to the effectiveness of the Composite Scheme of Amalgamation HDFC Limited, has been amalgamated into HDFC Bank Limited w.e.f. July 1, 2023. Accordingly, HDFC Bank Limited has become the holding and promoter Company of HDFC Life, in place of HDFC Limited.
(b) abrdn (Mauritius Holdings) 2006 Limited
abrdn (Mauritius Holdings) 2006 Limited ("abrdn"), one of the erstwhile promoters of the Company sold its stake in the Company in various tranches. Consequent to the sale of stake held by abrdn and post obtaining the requisite approvals from the stock exchanges, abrdn was reclassified from "Promoter" to "Public" category with effect from December 12, 2023, in accordance with Regulation 31A of the SEBI Listing Regulations.
Consequent to the above, HDFC Bank Limited has become the sole Promoter of the Company.
17. Subsidiary and Associate Companies (Including Joint Venture)
(i) HDFC Pension Management Company Limited ("HDFC Pension") ["Wholly-owned Subsidiary"]
HDFC Pension, a wholly-owned subsidiary of HDFC Life, started its operations in August 2013. It is the fastest growing Pension Fund Manager (PFM) under the NPS architecture (y-o-y growth of 69.5% in AUM) with an AUM of 76,955 crore as on March 31, 2024. In FY 2019-20, HDFC Pension started its operation as a Point of Presence (POP) in both retail and corporate NPS segments. As of end of FY 2023-24, HDFC Pension had over 2,500 Corporate and over 3.2 lakh NPS customers.
A synopsis of financial performance is shown in below table:
( in lakh)
| Particulars | FY 2023-24 | FY 2022-23 |
| Gross Income | 5,032 | 3,378 |
| Total Expenses | 4,790 | 2,722 |
| Profit/ (Loss) before Tax | 242 | 655 |
| Provision for Tax | 61 | 165 |
| Profit/ (Loss) after Tax | 181 | 490 |
(ii) HDFC International Life and Re Company Limited ("HDFC International") ["Wholly-owned Subsidiary"]
HDFC International was set up with the primary objective ofoffering lifeand health (re)insurancein the Middle East and North Africa (MENA) region and other markets of strategic importance. HDFC International has its office in the Dubai International Financial Centre (DIFC), Dubai.
HDFC Internationals focus remains to diversify, derisk and dominate the niche position by building a stable and sustainable revenue model, while ensuring the business remains predictable and profitable. It continues to grow, scale and expand by optimizing available resources, thereby catering to select ceding insurers. During FY 2023-24, the international subsidiary commenced it commercial operation of HDFC International Life and Re, IFSC Branch (HDFC Life International"), its first overseas branch located at Gujarat International Finance Tec (GIFT City) - IFSC, India. Since its launch, an array of innovative life and health insurance plans have been introduced to address the needs of global Indians.
For FY 2023-24, HDFC International generated gross written premiums (GWP) of USD 24.4 million registering a 42% y-o-y growth including, business effecting from both reinsurance and direct insurance lines of business. For the period under review, HDFC International reported a net profit of USD 0.33 million on a consolidated basis.
Further, S&P Global ratings assigned its "BBB" insurer financial strength rating on HDFC International for the sixth consecutive year.
(iii) The Company does not have any Associate or Joint Venture companies as on March 31, 2024.
18. Directors and Key Managerial Personnel
The Companys Board is constituted in compliance with the Act, SEBI Listing Regulations and IRDAI Corporate Governance Guidelines.
As of close of the business hours on April 18, 2024, the Board comprises of twelve (12) Directors viz., two
(2) Non-Executive Directors, seven (7) Independent Directors and three (3) Executive Directors. Further, there is an appropriate mix of Executive, Non-Executive and Independent Directors on the Board.
(a) Changes in Board Composition
Changes in the Board composition during FY 2023-24 and up to the date of this report along with the proposed changes, are given below:
Integrated Annual Report 2023-24 185
• Appointment/ Re-appointment of Director(s)
i. Dr. Bhaskar Ghosh, Independent Director
The Board in its meeting held on April 26, 2023 appointed Dr. Bhaskar Ghosh (DIN: 06656458) as an Additional Director, categorized as an Independent Director for a term of five (5) consecutive years with immediate effect. At its said meeting, the Board also appointed Mr. Niraj Shah (DIN: 09516010) as an Additional Director, categorized as Whole-time Director (Designated as Executive Director & Chief Financial Officer) for a period of three (3) years with effect from April 26, 2023. The said appointments were further approved by the shareholders at the 23rd Annual General Meeting (AGM) held on July 21, 2023.
ii. Ms. Bharti Gupta Ramola, Independent Director
The Board in its meeting held on October 13, 2023, re-appointed Ms. Bharti Gupta Ramola (DIN: 00356188) as an Independent Director, for a second term of five (5) consecutive years with effect from February 12, 2024 and the same was approved by the shareholders vide postal ballot on January 17, 2024.
iii. Mr. Kaizad Bharucha, Non-Executive, Nominee Director
Pursuant to the nomination letter received from HDFC Bank Limited, Promoter/ Holding Company, Mr. Kaizad Bharucha (DIN: 02490648) was appointed as an Additional Director, categorized as Non-Executive, Nominee Director with effect from November 28, 2023. The shareholders approved the said appointment, vide postal ballot on January 17, 2024.
iv. Mr. Venkatraman Srinivasan, Independent Director
The Board in its meeting held on April 18, 2024, appointed Mr. Venkatraman Srinivasan (DIN: 00246012) as an Additional Director, categorized as Independent Director with effect from April 18, 2024, for a term of five (5) consecutive years subject to the approval of the shareholders in the 24th Annual General Meeting (AGM). His brief profile and other details as required under the provisions of the Act and SEBI Listing Regulations is provided in the Notice of the 24th AGM and the explanatory statement under Section 102 of the Act, annexed to it.
Mr Venkatraman has not been debarred from holding the office of Director by virtue of any order passed by SEBI or any other such authority.
v. Mr. Keki M. Mistry, Non-Executive Director and Chairman of the Board
The Board in its meeting held on April 18, 2024, approved the appointment of Mr. Keki M. Mistry (DIN: 00008886), Non-Executive Director as the
Chairman of the Board with immediate effect subject to approval of Insurance Regulatory and Development Authority (IRDAI). IRDAI on May 7, 2024, accorded its approval for the appointment of Mr. Keki M. Mistry as the Chairman of the Board.
• Retirement/ Cessation of Director(s)
i. Ms. Renu Sud Karnad, Non-Executive Director
Ms. Renu Sud Karnad (DIN: 00008064) ceased to hold office as Non-Executive Director, with effect from the close of the business hours on July 21, 2023, consequent to her retirement from the Board.
The Board expressed its deep appreciation for the immense contributions made by
Ms. Karnad during her association with the Company.
ii.Mr. VK Viswanathan and Mr. Prasad Chandran
Mr. VK Viswanathan (DIN: 01782934) and Mr. Prasad Chandran (DIN: 00200379) shall cease to be Independent Directors of the Company, upon completion of their two (2) consecutive terms of five (5) years each on April 24, 2024.
The Board placed on record its deep appreciation for the immense contributions made by
Mr. VK Viswanathan and Mr. Prasad Chandran during their association with the Company.
•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.
In accordance with the provisions of the Act, Mr. Keki M. Mistry (DIN: 00008886), Non-Executive Director, being longest in office since his last appointment, retires by rotation and being eligible, offers himself for re-appointment at the 24th AGM. A resolution seeking members approval for his re-appointment forms part of the Notice of 24th AGM of the Company.
• Chairman of the Board/ Company
Mr. Deepak S. Parekh (DIN: 00009078) has decided to step down as the Chairman and Non-Executive Director with effect from close of the business hours on April 18, 2024. Accordingly, he ceased to hold office as the Non-Executive Chairman of the Company with effect from the close of the
Being the founder Chairman, Mr. Parekh has played a pivotal role in building one of the largest, listed private sector life insurance companies in India. Under his leadership, the Company has stood its ground through various challenges and intense competition, consistently doubling its topline, Value of New Business (VNB) and Embedded Value over multiple blocks of 4 year cohorts.
Consequent to the resignation of Mr. Deepak S. Parekh, the Board unanimously appointed Mr. Keki M. Mistry (DIN: 00008886) as the Non-Executive Chairman of the Board with immediate effect.
Mr. Keki M. Mistry has been associated with the Company since December 2000. He is also a Director on the Boards of several other prominent companies.
(b) Meetings of the Board and its Committees, attendance and constitution of various Committees
The details of meetings of the Board and its Committees 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 and forms part of this report.
(c) Independent Director Declarations
Your 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 under Regulation 16(1) (b) of SEBI Listing Regulations. Also, all Independent Directors have confirmed that their names have been added in the data bank maintained by the Indian Institute of Corporate Affairs (IICA) for independent Directors, in accordance with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and that they have complied with the Code of Independent Directors prescribed in Schedule IV of the Act.
In terms of regulatory requirement, Independent Directors are required to undertake online proficiency self-assessment test 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.
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.
(d) 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 KMPs of the Company as on March 31, 2024:
Sr. No. |
Name |
Designation |
1 |
Ms. Vibha Padalkar |
Managing Director & CEO |
2 |
Mr. Suresh Badami |
Deputy Managing Director |
3 |
Mr. Niraj Shah |
Executive Director & CFO |
4 |
Mr. Narendra Gangan |
General Counsel, Chief Compliance Officer & Company Secretary |
In terms of the guidelines/ regulations on the Corporate Governance issued by IRDAI, the following employees of the Company were holding positions of KMPs as on March 31, 2024:
Sr. No. |
Name |
Designation |
1 |
Ms. Vibha Padalkar |
Managing Director & CEO |
2 |
Mr. Suresh Badami |
Deputy Managing Director |
3 |
Mr. Niraj Shah |
Executive Director & CFO |
4 |
Mr. Prasun Gajri |
Chief Investment Officer |
5 |
Mr. Narendra Gangan |
General Counsel, Chief Compliance Officer & Company Secretary |
6 |
Mr. Vibhash Naik |
Chief Human Resource Officer |
7 |
Mr. Vineet Arora |
Chief Operating Officer |
8 |
Mr. Rangarajan B N |
Chief Risk Officer |
9 |
Ms. Eshwari Murugan |
Appointed Actuary |
(e) Performance Evaluation of the Board and its Committees
In line with the approval of Nomination & Remuneration Committee (NRC), the Company has put in place a framework for evaluation of the Directors, Chairman, 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 including the Chairman. 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. The evaluation was conducted on broad parameters as per the SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the SEBI.
The evaluation criteria for the Directors was based on their participation, contribution and offering guidance and understanding of the areas which were relevant to them in their capacity as members of the Board. The evaluation criteria for the Chairman of the Board, besides the general criteria adopted for assessment of all Directors, included leadership abilities, effective management of meetings and preservation of interest of stakeholders. The evaluation criteria for the Committees were based on effective discharge of its terms of reference and their contribution to the functioning of the Board.
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 an evaluation of individual Directors performance and expressed its satisfaction on performance of each Director.
There have been no material observations, consequent to such evaluation and review.
(f) Policy on appointment and remuneration of Directors (Remuneration Policy)
The Remuneration Policy (the Policy), including the criteria for remuneration to directors, key managerial personnel and other employees is recommended by the NRC and duly approved by the Board. Pursuant to the provisions of Section 178 of the Act, Regulation 19 of the SEBI Listing Regulations and IRDAI Guidelines on Remuneration of Directors /KMPs the Company has formulated the Policy. The policy lays down the criteria for identification of persons who are qualified and fit and proper to become Directors on the Board including criteria for determining qualifications, positive attributes and independence of a Director.
The Policy is hosted on the website of the Company at https://www.hdfclife.com/about-us/Investor-Relations. The remuneration paid to the Directors is in line with the Policy and in compliance with IRDAI Guidelines
on Remuneration of Directors and Key Managerial Persons of Insurers. The Company has not granted stock options to any of its Non-executive Directors.
Further details about remuneration to Directors including Whole-time Directors are provided under the report on Corporate Governance which is enclosed as Annexure 1 and forms part of this report.
(g) Fit and Proper Criteria for investors and continuous monitoring requirement
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 the Directors of the Company have confirmed compliance with fit and proper criteria/ norms, prescribed under the guidelines on Corporate Governance issued by IRDAI.
Your Company had received declarations from the Directors in terms of Section 164 of the Act, confirming that they are not disqualified from being appointed as director of any company.
Further, based on the disclosures and confirmations received from the Directors, the Board is of the opinion that the Directors of the Company are eminent persons with integrity and have necessary expertise and experience to continue to discharge their responsibilities as the Director of the Company.
(h) Directors & Officers (D&O) Liability Insurance
The Company has in place D&O Liability Insurance 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.
(i) Succession Planning
The Company has a well-defined succession planning process to facilitate the development and career planning of high potential talent, mitigate vacancy risk arising from attrition and ensure business continuity. A framework is in place for identifying key roles and measuring the depth of leadership cover for each role by identifying successors who can move to the role either immediately or over a period, or by restructuring the role to mitigate vacancy risk and ensure business continuity, where successors are not immediately available to fill the vacancy.
The NRC oversees matters related to succession planning of the Company. NRC has undertaken a
comprehensive succession planning program over a period and has carried out a rigorous review for an orderly succession to the Board with an end-objective of having a Board which is diverse, future-ready and addresses the long-term requirements of the Company and the Senior Management.
19. Risk Management Framework
The Company recognises that risk is an integral element of the business and the managed acceptance of risk is essential for generating shareholder value.
The Company has a well defined Risk Management Strategy and a Risk Framework that is designed to identify, measure, monitor and mitigate various risks.
A Board approved Risk Management Policy has been put in place, which is reviewed periodically, to establish appropriate systems/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.
20. Internal Audit Framework
The Company has a robust and comprehensive internal audit framework and independent review mechanism across all the processes and systems 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 governance functions, considering relevant material inputs from the risk management framework, compliance reports and external auditor reports, etc. The internal audit function also carries out management self-assessment of adequacy of Internal financial controls and operating effectiveness of such controls in terms of Sarbanes Oxley (SOX) Act and the Act.
Internal audits are conducted by in-house internal audit team and also by the independent co sourced auditors under the supervision of the Audit Committee.
The Internal audit function reports key findings and the follow up status on these findings to the Audit Committee on quarterly basis.
An Internal Audit Charter duly approved by the Audit Committee is in place, which covers scope of work, accountability, reporting, responsibility, authority and periodic assessment of the internal audit framework.
Concurrent Audit of Investments
As required under the IRDAI (Investment) Regulations, an independent chartered accountant firm appointed by the Audit Committee carries out the concurrent audit of investment operations as per IRDAI investment regulations/ guidelines and guidance note on Internal/ Concurrent Audit of Investment functions of Insurance Companies, issued by the Institute of Chartered Accountants of India. Any significant findings in the concurrent audit are presented to the Audit Committee and reviewed by the Investment Committee.
21. Internal Financial Controls
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 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 evaluating compliance to policies, regulations, processes etc., also test and report adequacy of internal financial controls with reference to financial reporting/ statements.
22. 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 their genuine concerns.
The Whistle Blower Policy aims to provide a mechanism to ensure that concerns are appropriately raised, independently investigated and addressed. The purpose of the policy is to encourage employees/ stakeholders to report matters without the risk of subsequent victimisation, discrimination or disadvantage. The Whistle Blower policy covers all employees, including Directors of the Company and other stakeholders. The policy encourages any employee, stakeholder or Director to report any breach of any law, statute or regulation, issues related to accounting policies and procedures, acts resulting in financial loss or loss of reputation, misuse of office, suspected/actual fraud and criminal offences, noncompliance to anti-bribery and anticorruption policy etc.
Besides, it also includes leak of any unpublished price sensitive information (UPSI) pursuant to SEBI Regulations or any such information prescribed pursuant to any regulations/laws, as amended from time to time. Such complaints are reported to the Audit Committee of the Board.
In terms of the Whistle Blower Policy of the Company, no employee of the Company has been denied access to the Audit Committee of the Board.
Further details of the Whistle Blower Policy of the Company are provided in the Report on Corporate
Governance and forms part of this report. The Whistle Blower Policy is hosted on the Companys website at https://www.hdfclife.com/aboutus/Investor-Relations
23. 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) of the Act and Rule 8(3) of Companies (Accounts) Rules, 2014, is not applicable to the Company.
B. Technology Absorption
Research and Development (R&D)
| Sr. No. |
Particulars | NA Remarks |
| 1. | Specific areas, in which R&D is carried out by the Company | |
| 2. | Benefits derived as a result of the above R&D | NA |
| 3. | Future plan of action | • Micro-services driven approach to identify, enrich and upload
customer acquisition documents • Upgraded platform to offer riders at all touch points of policyholder journey • Promoting zero touch policy issuance by integrating publicly available ecosystem services and a unified data layer as single customer data source • Multiple enhancements at points of sales and servicing journeys to smoothen partners processes • Integration of Gen AI capabilities on our own language models for journeys across policy lifecycle • New portals for partners, sales teams planned over the year • AI capabilities to be harnessed for upfront risk assessment • Blockchain driven integration with partners to create real time secure contracts and communication threads • Multi cloud strategy to be rolled out to aid technology upgrade plans |
| 4. | Expenditure on R&D a) Capital b) Recurring c) Total d) Total R&D expenditure as a percentage of total turnover |
NA |
Technology absorption, adoption and innovation |
||
| 1. | Efforts made towards technology adoption | • Electronic data and document integration with major TPAs • Policy demat facility rolled out • New underwriting model built for improved risk management • More seamless document collection, eligibility verification through InstaCheck • Integrated Account Aggregator (AA) to facilitate efficient bank statement collection • Maturity payout simplification through automated maturity payout process for all touch points • Faster application submissions and improved user journeys through LOCO platform • Whatsapp as a channel of choice for customers and sales teams for collecting policy onboarding documents |
| 2. | Benefits derived as a result of the above efforts (e.g. product improvement, cost reduction, product development, import substitution and so on) |
• TPA integrations have made medical documents available real time
for faster policy issuance • New underwriting model combines with the updated underwriting process to filter out suspect cases which otherwise pass through the system • Instacheck enables Sales to communicate eligible coverage at quote stage • AA enables secure, consent-based data sharing making it easy for customers to share information with single OTP • Timely and convenient maturity payouts through digital mode • DigiVPC process enabled digital processing of over 3,000 cases • Instant closure of documentation on WhatsApp |
| 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; iii. Whether the technology been fully absorbed; iv. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof |
NA |
| 4. | Expenditure incurred on Research and Development | NA |
C. Foreign Exchange Earnings and Outgo
Details of foreign exchange earnings and outgo during FY 2023-24 are as follows:
( in crore)
Foreign Exchange Earnings 96.6
Foreign Exchange Outgo 145.6
24. 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 i.e. HDFC Pension Management Company Limited and HDFC International Life and Re Company, 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.
25. 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.
26. Swabhimaan - Corporate Social Responsibility (CSR) & Environmental, Social, and Governance (ESG)
HDFC Life is committed to making a tangible difference to society through its CSR initiatives under the banner of Swabhimaan. Aligned with the UN Sustainable Development Goals and Indias National Development Agenda, the focus areas include Education, Livelihood, Healthcare, Sanitation, and Environmental Sustainability.
Over the years, as a responsible corporate citizen, HDFC Life has contributed to nation building as enshrined in Section 135 of The Act. Driven by the ethos of Sar Utha KeJiyo, the Company empowers individuals to live with pride, ensuring the interventions uplift communities and foster sustainable change. Through strategic partnerships and direct projects, HDFC Life maximises the impact on target beneficiaries, adhering to the highest standards of corporate responsibility.
The CSR & ESG Policy lays down the guidelines for undertaking CSR initiatives in accordance with the Companies (Corporate Social Responsibility Policy), Rules, 2014, as amended from time to time.
Embracing the spirit of collective action, the Swabhimaan Agent of Good program encourages employees to volunteer with family, friends or colleagues, amplifying the Companys impact and fostering a culture of giving back.
The CSR & ESG Policy and details of projects/ programs undertaken are available on the Companys website at: https://www.hdfclife.com/about-us#CsrRedirect
The Swabhimaan interventions are in line with Schedule VII of the Act, and the projects/ programs are identified and assessed by the Head of CSR with the CSR Monitoring and Evaluation team, and post their due diligence is recommended to the CSR & ESG Board Committee for directions and approvals.
The detailed annual report on CSR activities is enclosed as "Annexure 2" and forms part of this report.
27. Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 notified by MCA, the draft of the Annual Return of the Company for the financial year ended March 31, 2024, is hosted on the website of the Company at https://www.hdfclife.com/ aboutus/Investor-Relations with the information
available up to the date of this report, and the final return shall be updated upon submission with the RegistrarofCompanies,within60daysfromthedateofthe 24th AGM of the Company.
28. Related Party Transactions
Pursuant to Section 177 read with Section 188 of the Act, the Audit Committee approves the related party transactions 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 except for transactions in the ordinary course of business and on arms length basis with HDFC Bank which were considered as material transactions, for which Shareholders approval was taken as per the requirement of SEBI Listing Regulations in the 23rd AGM of the Company held on July 21, 2023.
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 hosted on the Companys website at the under mentioned link. https://www.hdfclife.com/aboutus/Investor-Relations
During the year, there were no material transactions with related parties, which were not in the ordinary course of business and not at arms length basis. Accordingly, no disclosure is made in respect of related party transaction in Form AOC-2 in terms of Section 134 of the Act and Rules framed thereunder.
M/s B.K. Khare & Co., Chartered Accountants, have reviewed the related party transactions for FY 2023-24 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.
29. Ind AS Roadmap
IRDAI vide its circular dated January 21, 2020 notified that the effective date of implementation of Ind AS shall be decided after the finalisation of IFRS 17, Insurance contracts, by the International Accounting Standard Board ("IASB"). The IASB has issued the new standard IFRS 17, Insurance Contracts, with effective date on or after January 1, 2023.
While IRDAI has formed an expert committee on implementation of Ind AS in the insurance sector, the effective date for Implementation of Ind AS standard for insurance companies is yet to be notified.
As per directions issued by IRDAI, vide its letter dated July 14, 2022, the Company has set up a steering committee comprising members from finance, actuarial and technology teams. The steering committee has been meeting at regular intervals to initiate implementation of Ind AS standards. The Company had appointed an external partner to perform an initial impact assessment. During the year, the outcome of the initial impact assessment was submitted to the IRDAI within the stipulated time lines. The Company is in the process of evaluating a technology partner. The Audit Committee and Board of Directors have been updated regularly about the progress of Ind AS Implementation.
30. Statutory Auditors and their Report
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 report of the Joint Statutory Auditors forms part of this report. The said report does not contain any qualifications, reservations, adverse remarks or disclaimers for the period under review.
Audit observations, if any, and corrective actions taken by the Management are presented to the Audit Committee of the Board from time to time.
Change in one of the Joint Statutory Auditors
The Board in its meeting held on January 12, 2024, approved the appointment of M/s BSR & Co LLP, Chartered Accountants, (Firm Registration No. 101248W/W-100022) as one of the Joint Statutory Auditors of the Company, effective from conclusion of the 24th AGM, pursuant to the completion of term of M/s Price Waterhouse Chartered Accountants LLP at the ensuing 24th AGM, subject to approval of the Shareholders.
The resolution for the appointment of M/s BSR & Co LLP, Chartered Accountants along with their brief profile have been included in the Notice of the 24th AGM.
31. Secretarial Auditor and their 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 NL Bhatia & Associates, Practicing Company Secretaries (Firm Registration No. P1996MH055800), for conducting the Secretarial
Audit for the financial year ended March 31, 2024.
The Secretarial Audit Report for FY 2023-24 issued by M/s NL Bhatia & Associates, Practicing Company Secretaries is enclosed as Annexure 3 and forms part of this report.
There are no qualifications, reservations, adverse remarks or disclaimers made by the Secretarial Auditors in their report.
32. 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.
33. Legal Update
There are no significant and material orders 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.
34. Material changes and commitments affecting the financial position
There have been no material changes and commitments, affecting the financial position of your Company, which have occurred between the end of the financial year to which the financial statement relates and the date of this report.
35. Secretarial Standards
Your 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").
36. Maintenance of Cost Records
Being an Insurance Company, your Company is not required to maintain cost records.
37. Change in the nature of business
During the year under review, there has been no change in the nature of business of the Company.
38. Deposits
Your Company has not accepted any deposits under Chapter V of the Act, during the year under review and hence provisions of the Act, relating to acceptance of Public Deposits are not applicable to the Company.
39. Loans, Guarantees or Investments
The provisions of Section 186 of the Act except sub-section (1) relating to loans, guarantees and investments are not applicable to the Company.
40. Employee Stock Option Schemes
Your 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 SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulations").
The Annual Certificate on compliance with SBEB Regulations, issued by the Secretarial Auditors of the Company is being made available for inspection at the forthcoming AGM.
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 https://www.hdfclife.com/about- us/Investor-Relation
41. Prevention and Redressal of Sexual Harassment Policy, and disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
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. Organizations 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, PRSH awareness campaign was driven for all employees for deeper understanding around the nuances of PRSH through a series of small case. Channel-wise leaders were equipped with accurate and insightful PRSH data, in order to empower them to lead discussions and initiatives that promote a respectful and safe workplace atmosphere. Through dedicated forums, such as team meetings, workshops, or training sessions, channel-wise leaders acted as ambassadors engaging their teams in constructive dialogues around PRSH. They highlighted key statistics and best practices to raise awareness
and encouraged open communication ensuring that every team member understands their rights and responsibilities regarding sexual harassment prevention. PRSH awareness session was also conducted for PAN India HR Team. Enhancements were made to the E- Learning module of PRSH in response to current complaint trends. All employees were encouraged to complete the mandatory PRSH training module on the Companys self learning application (MLearn).
Pursuant to the said Act, the details regarding number of complaints received, disposed, and pending during the FY 2023-24 are as follows:
Particulars |
Numbers |
Number of complaints pending at the beginning of the financial year |
141 |
Number of complaints received during the financial year |
61 |
Number of complaints disposed during the financial year |
60 |
Number of complaints pending as at the end of the financial year |
15 |
Note: 1. The said complaints were resolved within defined TAT.
Internal Committee (IC):
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has instituted an Apex Committee and four Zonal Internal Committees (ICs) 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 ICs 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 PRSH Policy/ Framework, as well as on certain incidents, if any.
42. Certification from a Practicing Company Secretary
A Certificate has been obtained from M/s. NL Bhatia & Associates, Practicing Company Secretaries (Firm Registration No. P1996MH055800), regarding compliance of conditions of Corporate Governance as stipulated in SEBI Listing Regulations. The said Certificate forms part of the Report on Corporate Governance annexed hereto as Annexure 1.
Further, the Company has obtained a Certificate from M/s NL Bhatia & Associates, Practicing Company Secretaries (Firm Registration No. P1996MH055800), confirming that none of the Directors 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 Authorities.
43. Management Discussion and Analysis Report, Report on the Corporate Governance and Business Responsibility and Sustainability Report
Pursuant to Regulation 34 of the SEBI Listing Regulations, Management Discussion and Analysis (MD&A) Report and Business Responsibility & Sustainability Report ("BRSR") is presented in separate sections of the Annual Report 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/ regulations on Corporate Governance issued by IRDAI) is annexed hereto as Annexure 1 and forms part of this report.
44. Proceeding under Insolvency and Bankruptcy Code, 2016
The Company has not filed any application or no proceeding is pending against the Company under the Insolvency and Bankruptcy Code, 2016, during FY 2023-24.
45. Details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof
The Company has not made any one-time settlement with the banks or financial institutions, therefore, the same is not applicable.
46. Integrated Reporting
Your Company has prepared Integrated Annual Report for FY 2023-24.
The said report encompasses both financial and non financial information to enable various stakeholders to have a more holistic understanding of the Companys long-term perspective.
47. 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, 2024, 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.
48. Appreciation and Acknowledgement
Your 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. Your Directors would also take this opportunity to express their appreciation for hard work and dedicated efforts put in by the employees and for their untiring commitment; and the senior management for continuing success of the business in difficult times.
Your Directors further take this opportunity to record their gratitude to HDFC Bank Limited, Promoter 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
Sd/-
Deepak S. Parekh
Place: Mumbai Chairman
Date: April 18, 2024 (DIN: 00009078)
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