Shares of HDFC Life Surges After Reports On Change In Surrender Value

HDFC Life Surges on Surrender Value Speculation

On March 04, 2024, the share price of HDFC Life Insurance increased by 18.00% to ₹610.30 due to news indicating that the Insurance Regulatory and Development Authority of India (IRDAI) would consider rationalisation of the proposed surrender value.

Surrender value is the amount received by an insurance policyholder if they decide to terminate or surrender their life insurance policy before its maturity or before the insured event occurs. This value depends on factors like the duration of the policy, terms of the insurance contract and the amount of premiums paid.

HDFC Life Insurance shares opened at ₹593.45, and the stock touched the day high of ₹620.40 and closed at ₹610.30. The stock has delivered a return of ~3.45% and ~25.76% in the past 1 month and past 1 year, respectively.

Growth in Financial Prospects

Founded in 2000, HDFC Life is one of the leading long-term life insurance solutions providers in India. The company provides numerous individual and group insurance solutions that meet various customer needs such as Protection, Pension, Savings, Investment, Annuity and Health. HDFC Life generates revenue from the sale of over 80 products (including individual and group products) and optional riders in its portfolio, catering to a diverse range of customer needs.

During Q3 FY 2024, the company continued to be ranked among the top 3 life insurers across individual and group businesses. It witnessed a growth of 9% in the number of policies outpacing private and overall industry. This aligns with its core objective of establishing a sustainable long-term business by broadening its customer reach. Growth from Tier 2 and 3 markets remains strong, witnessing 14% growth year on year. The company’s retail protection grew by 36% based on individual Annualized Premium Equivalent (APE), and credit protection clocked 21% growth YoY.

Industry Prospects

The insurance sector in India is one of the high-end industries that is expanding. The insurance sector has been growing, and this increase can be linked to rising earnings and greater industry understanding. With an annual growth rate of 32–34%, India ranks 6th among emerging global life insurance markets.

There are 57 insurance companies in India’s insurance market; 24 of them specialise in life insurance, while the remaining 34 offer non-life insurance products. The only public sector life insurer is the Life Insurance Corporation (LIC). Within the non-life insurance business, there are 6 public-sector insurers.