Canara HSBC Life Insurance Company Limited

10 Oct 2025 , 03:16 PM

New Delhi based Canara HSBC Life Insurance is a joint venture between Canara Bank (a leading public sector bank), HSBC Insurance and Punjab National Bank. The company offers a diversified suite of life insurance solutions (individual, group and unit linked solutions). These include savings, protection, pension and annuity products. Its IPO is an Offer for Sale that provides liquidity to the promoters and existing shareholders.

Offer details of the IPO

• Total Offer Size – The total offer size for the IPO is upto INR 2,517.75 crore. The entire issue is an offer for sale of up to 237,500,000 equity shares.
• The shares being sold by existing shareholders are held by:
• Canara Bank (Promoter) – 137,750,000 shares
• HSBC Insurance (Asia-Pacific) Holdings Limited (Promoter) – 4,750,000 shares
• Punjab National Bank (Investor) – 95,000,000 shares

 

Price Band: INR 100 to INR 106 per Equity Share

 

Book‑Running Lead Managers (BRLMs)

• BNP Paribas
• JM Financial Limited
• SBI Capital Markets Limited
• Motilal Oswal Investment Advisors Limited
• HSBC Securities and Capital Markets (India) Private Limited

 

Indian Life‑Insurance Market – Overview

The India Life Insurance sector is highly regulated and governed by the Insurance Regulatory and Development Authority of India (IRDAI). The sector constitutes a combination of bank-led insurers (commonly referred to as “bancassurance” players) and non-bank-led insurers, along with the public sector giant, Life Insurance Corporation of India (LIC). The industry offers a wide range of products, which can be categorised into the following key segments.

Table: Key Segments

Segment	Core offering	Typical distribution channel
Individual Life	Term, whole‑life, ULIP, participating/non‑participating savings, annuities & pension	Bancassurance, brokers, corporate agents, direct‑digital
Group Life	Group term, credit‑life, gratuity, super‑annuation, group ULIP	Corporate agents, banks, payroll‑based platforms
Health & Accident	Individual & group health, critical‑illness riders	Bancassurance, brokers, digital aggregators
Annuities & Pension	Immediate & deferred annuities, pension‑linked plans	Bancassurance, direct sales
Unit‑Linked & Index‑Linked	ULIP, iSelect, index‑linked plans	Digital platforms, brokers
Composite Licensing (new from 2024‑25)	Ability to write life, health & general business under a single licence	All channels, subject to stricter capital & compliance norms

Source: RHP

Key growth Drivers:

• Regulatory Momentum – Initiatives like “Use‑and‑File” product filing, composite licensing, a regulatory sandbox, and the “Insurance for All by 2047” agenda are expanding product choices and making it easier for new players to enter the market.
• Digital Transformation – AI-driven underwriting, e-policy issuance, chatbots, and account-aggregator ecosystems are helping reduce distribution costs and improve policy persistency.
• Growth of Non-Bank Players – Private-sector insurers have outperformed the industry average in recent years, supported by better expense-ratio efficiency and aggressive digital outreach.
• Under-Penetration – Life-insurance premium as a share of GDP is only 2.8% (CY 2023), compared to over 5% in many Asian peers, leaving significant room for growth, particularly in tier-2 and tier-3 cities and among the rising middle-income population.

Table: Growth‑Rate Snapshot (Past vs Future)

Segment (Key)	Past CAGR* (most recent 5‑yr period)	Future CAGR† (forecast to FY 2028)	Comment
Overall Life‑Insurance Industry (total premium)	6.0 % (FY 2019‑FY 2025)	10‑12 % (FY 2025‑FY 2028)	The industry has accelerated from a modest 6 % to a double‑digit trajectory, buoyed by composite licensing and digital distribution.
Private‑sector (non‑bank) insurers	11.9 % (FY 2019‑FY 2025)	11‑13 % (FY 2025‑FY 2028)	Private players are growing faster than the aggregate market, reflecting higher expense‑ratio efficiency and stronger online channels.
Bank‑led insurers	5.6 % (FY 2019‑FY 2025)	9‑11 % (FY 2025‑FY 2028)	Bancassurance is benefitting from expanded bank networks and the “Insurance for All” push, but still trails private peers.
Individual In‑Force Sum Assured	12.3 % (FY 2017‑FY 2024)	9‑10 % (FY 2025‑FY 2028)	Absolute sum assured has nearly doubled, though the pace is expected to moderate as GDP growth accelerates.
Total Premium (excluding fund‑based group business)	5.61 % (FY 2023‑FY 2025)	8‑10 % (FY 2025‑FY 2028)	The recent shift to non‑fund‑based products is delivering higher premium growth.
ULIP / Linked Premium Share (Non‑Bank players)	23 % of new‑business premium (FY 2023) – declining to 21 % (FY 2024)	18‑20 % (FY 2025‑FY 2028)	Market volatility in equities is curbing ULIP demand; a modest decline in the share of linked premium is projected.
Life‑Insurance Funds as % of Household Financial Savings	19 % (peak FY 2021‑FY 2023) → 17 % (FY 2024)	17‑18 % (FY 2025‑FY 2028)	Funds are growing in absolute terms, but household savings are expanding faster, keeping the ratio roughly steady.

Source: RHP

The Indian life‑insurance market has evolved from a supply-constrained phase to a phase of 10%+ growth. Regulatory reforms and entry of private insurers has been a key growth driver. Recently, firms have leveraged digitalisation to accelerate their growth profiles. Also, bank‑led players are expected to close the gap with private insurers as they have the advantage of leveraging their extensive branch network.

Canara HSBC Life Insurance Company Limited – Company Overview

New Delhi based Canara HSBC Life Insurance Company Limited is a joint venture between Canara Bank (51%), HSBC Insurance (26%), and Punjab National Bank (23%). Its key distribution channel is bancassurance as it leverages the extensive branch network of Canara bank. In addition, it leverages digital platforms and regional rural banks for enhanced reach. For the digital channel, it partners with Policybazaar and Robinhood Insurance Brokers. In addition, reinsurance is arranged via overseas reinsurers, while group affiliates support technology, asset management, and capital raising, serving both retail and corporate customers nationwide.

Competitive Positioning

Canara HSBC Life Insurance Company Limited is a leading bank-led insurer in India. It ranks 3rd in sum assured and group coverage, 5th in individual WPI premium share (≈ 1.8% FY 25), with the highest claim-settlement ratio (99.38% FY 25). Its products include savings plans, ULIPs, term and group protection, annuities, pensions, and riders, with over 70% of new-business premium from non-linked, non-participating products. Distribution leverages Canara Bank’s ~117 million customers and digital channels.

Strengths

• Robust Capital & Solvency – Maintains an internal capital target of 165% of required solvency margin with a strong free surplus (≈ ₹10 bn).
• Low Cost Structure – 4th lowest expense ratio and 2nd lowest commission ratio among bank-led peers, supporting higher profitability.
• High Persistency & Claim Settlement – 13-month persistency improved by 721 bps (best among bank-led players); claim settlement ratio >99%.
• Strong Bancassurance Footprint – Largest distribution channel in the sector with low acquisition cost per policy.
• Diversified Product Suite & Fast Profitability – Offers life-stage products across segments and has achieved 13 consecutive profitable years.

Weaknesses

• Channel Concentration – Over 80% of new-business premium comes from bancassurance; regulatory changes or partner disruption may affect growth.
• Branch-Productivity Gap – Policies per branch (~16.8) are below peer average (~38.2), indicating an under-utilised branch network.
• Higher IT Expenditure – Highest IT costs among peers, pressuring margins until automation efficiencies materialise.
• Limited Digital Penetration – Digital-only sales remain a small share, potentially limiting reach to younger tech-savvy customers.
• Regulatory & Geographic Risks – Changes in IRDAI rules and limited overseas operations increase vulnerability; a slightly higher surrender ratio affects retention.

Financial Profile

Robust Revenue Growth: Canara HSBC Life Insurance Company Limited’s total premium grew from ₹71,973.83 mn in FY 2023 to ₹80,274.62 mn in FY 2025 (CAGR ≈5.61%), despite a slight dip in FY 2024. Other income, PAT, PBT, and net worth also improved, supported by a strategic shift to non-fund-based business, operational efficiency, and AUM growth (CAGR 16.74%), reflecting consistent profitability and financial strength.

Better Profitability: Canara HSBC Life Insurance Company Limited’s PAT grew from ₹911.94 mn in FY 2023 to ₹1,133.17 mn in FY 2024 (+24.26% YoY) and ₹1,169.81 mn in FY 2025 (+3.23% YoY), while PBT rose from ₹998.23 mn to ₹1,238.73 mn (+24.09% YoY) and ₹1,281.45 mn (+3.45% YoY). Operating RoEV was 19.53% in FY 2025, and Embedded Value increased from ₹42,719.35 mn to ₹61,107.40 mn, reflecting consistent profitability and financial efficiency.

Table: Peers Comparison

Name of company	Revenue from operations (in ₹ million)	Closing price as of October 3, 2025 (in ₹)	EPS (₹) Basic	EPS (₹) Diluted	NAV (per share) (₹)	P/E ratio
Canara HSBC Life Insurance Company(	80,274.62	106.00*	1.23	1.23	15.97	86.17*
SBI Life Insurance Company Limited	849,846.30	1,785.10	24.09	24.07	169.49	74.16
HDFC Life Insurance Company Limited	710,751.40	759.20	8.41	8.41	75.03	90.27
ICICI Prudential Life Insurance Company Limited	489,507.10	601.10	8.21	8.16	82.57	73.66

Source: RHP; * – based on upper end of price band

Table: KPI Comparison

Company	Particulars (Units)	FY 2023	FY 2024	FY 2025	CAGR
Canara HSBC Life Insurance Company Limited	WPI (₹ million)	16,575.69	17,026.49	21,786.83	14%
	APE (₹ million)	18,837.15	18,877.94	23,393.88	12%
	Renewal business premium (₹ million)	34,807.46	42,276.19	49,059.27	–
	Individual number of policies (Nos.)	186,679	184,726	194,121	–
	Profit Before Tax (₹ million)	998.23	1,238.73	1,281.45	–
	Profit After Tax (₹ million)	911.94	1,133.17	1,169.81	13%
	Claims settlement ratio (%)	98.77	99.16	99.38	–
	EV (₹ million)	42,719.35	51,798.61	61,107.40	–
	VNB (₹ million)	NA	3,775.99	4,460.84	–
	Operating RoEV (%)	NA	18.48	19.53	–
	Solvency Ratio (%)	251.81	212.83	205.82	–
	AUM (₹ million)	302,044.00	373,804.41	411,664.11	–
	Total cost ratio (%)	17.36	18.89	18.70	–
	Operating expenses to GWP ratio (%)	11.62	13.12	12.39	–
SBI Life Insurance Company Limited	WPI (₹ million)	152,179.47	172,344.53	193,534.93	12%
	APE (₹ million)	168,150.00	197,230.00	214,170.00	13%
	Renewal business premium (₹ million)	377,270.10	431,923.30	494,077.90	–
	Individual number of policies (Nos.)	2,197,129	2,261,118	2,202,627	–
	Profit Before Tax (₹ million)	17,584.50	19,421.10	24,946.70	–
	Profit After Tax (₹ million)	17,205.72	18,937.78	24,133.00	18%
	AUM (₹ million)	3,043,344.80	3,855,902.70	4,474,669.10	–
	Total Cost Ratio (%)	9.61	8.89	9.68	–
	Operating Expenses to GWP Ratio (%)	5.06	4.89	5.28	–
HDFC Life Insurance Company Limited	WPI (₹ million)	109,204.50	113,764.28	133,636.66	11%
	APE (₹ million)	133,360.00	132,910.00	154,790.00	8%
	Renewal business premium (₹ million)	284,482.83	334,451.24	376,828.80	–
	Individual number of policies (Nos.)	995,188	1,165,913	1,267,146	–
	Profit Before Tax (₹ million)	12,822.10	15,696.66	18,779.40	–
	Profit After Tax (₹ million)	13,682.77	15,740.82	18,108.20	14%
	AUM (₹ million)	2,388,427.15	2,922,842.46	3,363,988.10	–
	Total Cost Ratio (%)	19.71	19.31	19.83	–
	Operating Expenses to GWP Ratio (%)	14.69	10.97	8.79	–
ICICI Prudential Life Insurance Company Limited	WPI (₹ million)	67,376.04	72,134.85	83,072.37	11%
	APE (₹ million)	86,400.00	90,460.00	104,070.00	10%
	Renewal business premium (₹ million)	225,202.60	245,568.20	257,201.60	–
	Individual number of policies (Nos.)	601,683	619,026	659,968	–
	Profit Before Tax (₹ million)	9,003.10	9,205.30	13,316.80	–
	Profit After Tax (₹ million)	8,134.90	8,506.70	11,855.20	18%
	AUM (₹ million)	2,482,157.80	2,897,279.20	3,039,790.90	–
	Total Cost Ratio (%)	16.14	18.15	18.04	–
	Operating Expenses to GWP Ratio (%)	11.48	9.54	8.11	–

Source: RHP