HDFC Life: Information analysis

Note: This article has no recommendation to either buy or avoid this IPO. Instead, we have presented all the relevant information based on which you can make your own decision. One more note: As regular readers of our IPO analyses would have noticed, we do not approach insurance IPOs in the same format that we use for non-financial companies. The reason is that a large proportion of the questions are irrelevant to these companies. This is partly because of the tight nature of the regulatory environment they operate in, and partly due to the complex, long-term risks that they face. Investing in Indian insurance companies is still a novel activity, and there will likely be surprises ahead that neither analysts nor investors can predict at this point. HDFC Life is in the business of life insurance. Set up in 2001 as a joint venture between Housing Development Finance Corporation Limited and Standard Life Assurance Company, which is part of Standard Life Aberdeen PLC, HDFC Life was among the first private life insurer to start after the sector was opened up. HDFC Life had a market share of 5% based on total premiums for FY17. Over the last five years, its total premium has grown by 14% CAGR to Rs 19,445 crore, while net profits have grown at a robust 27% CAGR to Rs 887 crore. Its new business premium which is the expected earnings from the policies written within the last one year till FY17 grew at a five-year CAGR of