• Company Info.

    HDFC Life Insurance Company Ltd.

    Directors Report

    Market Cap.(`) 100440.70 Cr. P/BV 17.80 Book Value (`) 27.97
    52 Week High/Low ( ` ) 511/344 FV/ML 10/1 P/E(X) 78.60
    Book Closure 23/07/2019 EPS (`) 6.33 Div Yield (%) 0.33
    You can view full text of the latest Director's Report for the company.
    Year End :2018-03

    Directors' Report


    The Directors are pleased to present the 18th Annual Report of HDFC Standard Life Insurance Company Limited ("Company" / "HDFC Life"), together with the Audited Financial Statements of the Company, for the year ended March 31, 2018 ("FY 2018").

    Standalone Financial Performance, Business Review and Outlook Financial Performance

    (Rs, Crs)


    FY 2018

    FY 2017



    Individual business:

    a. New business premium



    (i) Regular premium



    (ii) Single premium



    b. Renewal premium









    Other key parameters


    FY 2018

    FY 2017

    Individual APE



    Group new business premium



    Assets Under Management



    Embedded value



    Overall new business margins



    (post overrun)

    Note: Embedded Value and New business margins for FY 2018 and FY 2017 based on external review

    Business Review and Outlook Industry Outlook

    The growth trajectory in life insurance business continued post demonetisation drive, in FY 2018, aided by the macroeconomic factors and demographic profile.

    Within the life insurance industry, private life insurers maintained faster growth momentum and consolidated their market share in Individual segment while Life Insurance Corporation of India ("LIC") continues to dominate the Group segment.

    Improving macro trends in emerging markets and India, increase in financialisation of savings and robust equity markets was reflected in 24% growth in Individual New Business Weighted Received Premia (WRP) and 4% growth in Group premia for the private players, during FY 2018. At an industry level, the sector witnessed growth of 19% in Individual New Business WRP and 5% in Group premia during FY 2018.

    There has been a steady increase in the proportion of business generated through Bancassurance contributing 54% of total individual reported new business during nine months ended December 31, 2017 across all private players (Source: Public disclosures). On the product front, capital market performance and transparent product structures have helped increase the pull for Unit Linked Insurance Products ("ULIP"). With an objective to boost profitability, private players have also been focusing on protection (Term) business in last few years.

    Company Performance Business Performance

    The total new business premium during FY 2018 increased by 32%, to Rs, 11,350 Crs versus Rs, 8,621 Crs for last year. Of this, our individual Annual Premium Equivalent ("APE") grew by 31% to Rs, 4,887 Crs and group new business premium showcased strong growth of 22%.

    Our total premium during FY 2018 was Rs, 23,564 Crs compared to Rs, 19,445 Crs during FY 2017, registering a robust growth of 21% driven by strong new business growth and 13% growth in our total renewal premium, from Rs, 10,824 Crs, to Rs, 12,215 Crs.

    The Company continues to focus on its stated long term strategy as described below:

    Driving balance across the business:

    HDFC Life continued to widen its presence and distribution touch-points, through several new tie-ups and partnerships comprising 149 Bancassurance partners across NBFCs (Non-Banking Financial Company), MFIs (Micro Finance Institutions), SFBs (Small Finance Bank), etc. and 22 partnerships within non-traditional ecosystems as on March 31, 2018. Last year Company had 126 partnerships across the two sub categories, reiterating our focus on ensuring balance in distribution and enhancing penetration through such partnerships.

    HDFC Life has a diversified distribution mix, with Bancassurance channel accounting for 33% of its total new business premium for FY 2018, 7% contribution by Agency Channel, 10% by Direct Channel, 2% by Broker Channel and Group business contributing 48%. Within group segment, protection continued to be a key focus area and formed 50% of the Company’s group new business. During FY 2018, all the channels delivered healthy double digit growth over last year and continued to be independently profitable, based on post overrun new business margins.

    HDFC Life strives to maintain a balanced product mix with ULIPs contributing 57% and Conventional products forming 43% of the Individual APE. The Company also continued its focus on protection business, wherein its contribution to individual new business APE increased to 5%, up from 4% in the last year. Contribution of the Protection segment to total new business received premium increased from 22% in FY 2017 to 26% during FY 2018.

    The new business sum assured increased by 22% to Rs, 473,445 Crs (from Rs, 388,757 Crs last year), clearly demonstrating the focus on protection driven business. Underlying number of lives insured by the Company during the year increased from 2.1 Cr lives last year to 3.3 Cr lives.

    Re-imagining life insurance business, leveraging technology, and catering to continuously evolving customer preferences:

    With the increasing digital footprint and adaptation of technology across financial services sector, the Company continues to focus on identifying niche areas to leverage technology and reimagining the life insurance journey. In order to remain competitive, while improving ease of customer on-boarding and servicing, the Company continued to invest in innovation across business operations which are reflected in the new distribution partnership tie ups and new products being sold by the Company.

    HDFC Life has been a pioneer in introducing niche products catering to untapped protection and pension needs in India. During FY 2018, the Company continued to drive product innovation, launching new products like Cardiac Care, Group Health, Pension Guarantee Plan etc., targeting varied customer needs.

    Digitisation remained a key theme for the Company to migrate customers online, both directly and through deep integration with the partners. These are reflected across enhancements in consumer journey on mobile app, content management system enabling faster rollout of new business rules and e-Insurance account integrations for dematerialisation of insurance policies amongst other things.

    HDFC Life continued to focus on mobility driven solutions, which are augmented through asset light operations, paperless customer journey, straight through processing and mobile enabled sales and service approach.

    HDFC Life has a technologically advanced and mobile friendly corporate website. During FY 2018, 99.9% of its new business was initiated through digital platforms. 74% of the Renewal payment came through online modes. HDFC Life leverages automation and robotics thereby automating 88 internal processes. About 96% of the front line sales force is active on digital platforms and 54% of post sales verification calls were completed through InstaVerify (video based authentication mobile app). More than 44,000 queries and transactions were processed through policy servicing mobile app InstaServ.

    The persistency ratios continue to trend strongly across various cohorts. The 13th month persistency based on total premium including individual and group business increased to 87% versus 84% last year, however 61st month persistency was at 51% compared to 59% last year. This reduction was primarily due to the impact of specific cohorts of business written in FY 2013.

    Maintain profitable growth

    In FY 2018, HDFC Life earned Profit after tax (PAT) of Rs, 1,109 Crs, versus Rs, 892 Crs in FY 2017, i.e. an increase of 24%. The Company ended FY 2018 with an accumulated profit of Rs, 2,394 Crs, post payment of dividend (including dividend distribution tax (DDT)) of Rs, 329 Crs.

    The Embedded Value (IEV methodology) was Rs, 15,216 Crs as on March 31, 2018 with robust Operating return on Embedded Value (EVOP/Opening Embedded value) of 21.5% during FY 2018 versus 21.7% for last year.

    HDFC Life continues to maintain healthy post overrun new business margin (based on actual expenses) of 23.2% versus 22.0% for last year.

    The Operating expenses (Opex) to total premium ratio was at 13.5%, which reflects continued investment in growth opportunities i.e. strengthening our distribution and technology.

    The Assets under Management (AUM) of the Company crossed the milestone of Rs,1 trillion mark during FY 2018 which reflected a growth of 16% to Rs, 106,603 Crs as on March 31, 2018 versus Rs, 91,742 Crs, as on March 31, 2017 backed by healthy business performance and persistency, HDFC Life maintained a steady debt-equity proportion of 61:39 as on March 31, 2018.

    HDFC Life continues to harness the long term growth potential of the sector, with specific focus on protection. The Company had a robust year with strong growth and continued to deliver consistent performance across all metrics. The balanced product mix, diversified distribution network and customer centric approach has helped deliver profitable growth and shareholder value. In line with the stated strategy, the Company will continue to work hard and invest in leveraging technology and re-imagine the life insurance business.

    Policyholder and Customer Service

    Customer Centricity is a core value at HDFC Life and the Company is constantly working towards empowering the customer to realise all policy specific needs instantly and effortlessly. With this vision, several initiatives spanning departments and policy stages were undertaken during FY

    2018 including the following:

    1. I mproved customer onboarding with faster issuance by deployment of an automated underwriting tool which processes 88% of the applications. 60% customers are now verified through the Instaverify app making it a seamless process, and the Company expect this to grow with additional features of offline mode verification and vernacular capabilities. Issuance of policies in Demat mode took off in a big way during FY 2018, with more than 1 lac policies issued.

    2. The Company's digital service platforms are aligned to changing customer expectations and enabled with a range of self serve capabilities. The customer service portal - My Account - was revamped this year with new services such as profile updates, nominee changes etc. More than 85% ULIP transactions are now processed through My Account. Our customer mobile app has registered more than 36,000 users and is continuously being enhanced with launch of additional features such as renewals, revivals, policy preview etc.

    3. SPOK, the Company's email bot fulfils premium statements and unit statements requests instantly and has catered to thousands of requests. Neo, our bot for Twitter, fulfill requests such as fund value and premium due date etc for customers on the social platform. These automated service options are also available on the Company's online Webchat platform including option of agent assistance. Focusing on availability of service through a customer preferred touch-point the Company leveraged its partner network by integrating with HDFC Bank Netbanking portal for payments and access to policy details. InstaServe, the Company's platform for providing digitally enabled servicing to the customer at branches also saw significant adoption.


    ULIP Life (10)

    Par Life (7)

    Non Par Life (2)




    - HDFC SL Crest


    HDFC Life ClassicAssure Plus

    - HDFC Life Sanchay

    - HDFC SL ProGrowth Super II


    HDFC Life Super Savings Plan

    - HDFC SL Sarvgrameen Bachat Yojana

    - HDFC SL ProGrowth Maximizer


    HDFC Life Super Income Plan

    - HDFC SL Young Star Super Premium


    HDFC Life YoungStar Udaan

    - HDFC SL ProGrowth Flexi


    HDFC Life Sampoorn Samridhi

    - HDFC SL ProGrowth Plus


    - HDFC Life Smart Woman


    HDFC Life Uday

    - HDFC Life Click 2 Invest - ULIP


    HDFC Life Pragati

    - HDFC Life Sampoorn Nivesh

    - HDFC Life Capital Shield

    Pension/Annuity (8)

    Protection (7)

    Group (11)

    Rider (8)






    HDFC Life Pension Super


    HDFC Life Click2 Protect

    - HDFC Group Term


    HDFC Life Income Benefit




    on Accidental Disability


    HDFC Life Single Premium


    HDFC Life CSC Suraksha

    - HDFC Life Group Credit


    Pension Super




    HDFC Life Critical Illness


    HDFC Life Click 2 Retire


    HDFC Life Click 2 Protect

    - HDFC Life Group Pension

    Plus Rider


    HDFC Life Assured

    3D Plus



    Total and Partial

    Pension Plan


    Click 2 Protect Health

    - HDFC Life Group Unit

    Permanent Disability


    HDFC Life New Immediate


    HDFC Life Cancer Care

    Linked Pension Plan


    Annuity Plan


    HDFC Life Easy Health

    - HDFC Life New Group


    Accidental Death Benefit


    HDFC Life Personal


    HDFC Life Cardiac Care

    Unit Linked Plan


    Critical Illness Benefit

    Pension Plus

    - HDFC Life Group Variable


    Total Permanent Disability


    HDFC Life Guaranteed

    Employee Benefit Plan


    Pension Plan

    - HDFC Life Group Credit


    HDFC Life Critical Illness


    HDFC Life Pension

    Protect Plus

    Plus Rider

    Guaranteed Plan

    - HDFC Life Pradhan Mantri Jeevan Jyoti Bima Yojana

    - HDFC Life Group Jeevan Suraksha

    - HDFC Life Group Credit Suraksha

    - HDFC Life Group Health Shield

    Accident Death Benefit

    4. Newer payment options for renewal are witnessing significant adoption. eSI and SI-on-cards was enabled on QuickPay and MyAccount. Standing instructions can now be registered online without needing the customer to go through burdensome paperwork. Renewals for NRI customers have also been made easier by providing options for payment through international cards. Customer touch points are now supported by a robust backend Customer Servicing & Policy Servicing ("CSPS") platform. It has enabled real time resolution or hourly Turnaround Time ("TAT") with more than 90% transaction closure in 24 hours and with better service quality. CSPS also provides a synchronised view of transactions and communications, which is available across touch-points, providing a unified view.

    HDFC Life's product portfolio comprises of solutions catering to the varied individual customer needs across Protection, Pension, Savings, Investment and Health category. HDFC Life also offers different products for varying needs of employers, ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.

    HDFC Life has continuously focused on creating differentiators to meet customer needs and expectations. The Company has proactively identified and owned niche customer segments and product categories, to drive innovation in the industry. The Company aspires to attain leadership position in select identified segments, by delivering unique sales, products and service experience.

    During FY 2018, HDFC Life launched an innovative deferred pension single premium annuity plan known as HDFC Life Pension Guaranteed Plan. This is the only annuity product that can be bought up to 10 years before the planned retirement age with an income guaranteed today that will start at the planned retirement date.

    HDFC Life has also introduced HDFC Life Click2Protect 3D plus, which is first of it's kind in the Indian life insurance industry and provides comprehensive cover against death, terminal illnesses and disability, along with competitive premium prices and flexible features such as whole life coverage, various income options and top-up option that increases coverage against the inflation rate.

    A niche health product known as HDFC Life Cardiac Care plan was also launched which provides financial support against 18 cardiac ailments.

    Given the low penetration of health insurance in India, the Company further explored opportunities in this space in order to increase the spectrum of coverage by introducing HDFC Life Group Health Shield and Click 2 Protect Health.

    HDFC Life is the first life insurer to introduce a comprehensive health product under group platform covering Critical Illness, Surgeries, Daily Hospital Cash, Cancer Cover, Cardiac cover and Personal Accident.

    Click2Protech Health is a Combi offering wherein the customers can purchase a HDFC Life's Click2Protect 3D plus along with Apollo Munich's Optima Restore as one product at a discounted price. These two products combined into one offer the benefit of comprehensive protection and health indemnity benefits at an affordable cost.

    At the end of FY 2018, HDFC Life had 34 Individual and 11 Group products, with 8 Riders available for it's customers.

    Human Resource and People Development

    What makes HDFC Life a 'Great Place to Work' year on year? This question never ceases to monopolise our thought processes. And not surprisingly, the consistent and vehement answer to this is always found to be inextricably linked to the quality of people that make us who we are.

    To preserve this valuable strength, HDFC Life is resolutely working towards making the Company, not just a happy place to work, but the happiest and best place to work! This is being attempted through five key levers that form the bedrock of our people strategy:

    A. Our guiding light - HDFC Life Values:

    Despite rapid growth in the last few years, the Company continues to cherish its roots and the principles that have enabled this momentum. Being front runners in the industry that secures people's life and money, it is of utmost criticality that the Company's business rules and people processes are designed with the right set of principles reflecting the customer at the center of all our dealings. HDFC Life Values define the way of work at HDFC Life. Right from bringing the right person on board, to promotions, career development and all other business and people initiatives at HDFC Life, Values remain our guiding light. The Company strives to hire the best talent from the market, each of whom is most synergistic with HDFC Life's culture and competence requirements. As an added filter the Company has also institutionalized tests and tools at all the above stages of employee life cycle to weed out those who may potentially not live by organizational requirements.

    B. Competence driven people development and growth:

    Talent management works on the philosophy of having the most skilled and engaged employees discharging their current roles, while developing a strong bench of ready talent. HDFC Life continued with its robust talent review and development processes, which assessed potential and developmental needs of talent across the board. Output of these reviews aggregated into structured learning interventions that were executed by top institutions like ISB, INSEAD and the IIMs.

    Internal talent was given ample opportunities to take up managerial roles, through a transparent, fair and scientific Internal Job Posting (IJP) process. Cross functional movements of talent were encouraged and enabled through talent review and assessment process to provide holistic understanding of business to employees. Testimony to the robustness of the process is the fact that the Company was able to fulfill 71% of the vacancies at leadership level through internal talent.

    The Company’s Learning & Development ("L & D") framework boasts of specialized, talented and experienced resources who ensure that interventions get customised to specific and special training needs, thereby maximizing impact and efficacy. During the course of the year, the core focus area has been implementation of the digital learning solution - Mlearn, our mobile learning app which instantly enhanced the learner reach and flexibly.

    C. Fostering happiness at work:

    To understand the pulse of employee satisfaction at work, HDFC Life undertakes employee engagement surveys. The overall Employee Index Score for the FY 2018 continues to be higher than the IBM 75th Percentile Benchmark, standing testimony to the fact that we keep our employees engaged. HDFC Life's employee connect program, Sparsh is an established platform for employee recognition and connect. This platform also ensures transparency and open dialogue among management and employees. Various awards like Employee of the Year, Employee of the Quarter, Best Values Ambassador etc, reward not just performance, but also alignment to HDFC Values.

    D. Performance driven compensation and rewards schemes:

    Our employees are our most valuable assets and indispensable for our continued success. HDFC Life expects to continue investing in hiring talent and to provide competitive compensation programs to our employees. As of March 31, 2018, HDFC Life had 17,601 full-time employees. Competition for qualified personnel in our industry is intense, so our compensation and rewards philosophy has been designed to be competitive with bias for high performance. This helps us in two ways - employees strive to earn more and thus perform and the Company tends to attract high performers from the market who are ready to walk an extra mile with us.

    E. Technology for people:

    Aligning to our vision to be the "Digital Insurer" in the country, the Company has set up ecosystems and sales enablement processes for customer convenience. Replicating the same for employees, the Company's journey is being built on the twin substratum’s of technology and innovation. The resultant first state of the art output offering, the HR mobile application, has built an enviable mobility platform that is rapidly transforming employee workforce productivity across the length and breadth of the organization.

    F. Particulars of Employees

    The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, annexed as 'Annexure 5' to the Directors' Report.

    In accordance with the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and particulars of the top ten employees in terms of remuneration drawn and of the aforesaid employees are set out in the Annexure to this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013 read with the rule, the Directors' Report is being sent to all shareholders of the Company excluding the said annexure. Any shareholder interested in obtaining a copy of the annexure may write to the Company.


    During FY 2018, there was significant improvement in economic activity across the world. The outlook for the US economy improved markedly as US President unveiled a sharp reduction in domestic corporate tax rates. Other large economies in Europe saw a revival in activity aided by the easy monetary policy maintained by their respective Central Banks. The revival in growth also led to a pick-up in commodity prices and helped the commodity exporting countries to improve their macroeconomic parameters.

    Meanwhile, India witnessed a momentous change in its economy over the last year, with the introduction of the Goods and Services Tax (GST). The GST replaced a raft of different State and Central indirect taxes with uniform taxation rates across the country. The GST is expected to improve the efficiency of economic activity as well as help drive the economy to greater formalization, as businesses that had largely stayed outside the formal reporting framework, join in under the GST regime.

    The initial two quarters of the year witnessed a slowdown in economic growth as businesses adjusted inventory and output around the time of the GST introduction. However, the subsequent quarters have seen a rebound in activity. The synchronous growth in global economy and an improvement in the rural economy after a near normal monsoon season has helped sustain the revival in growth.

    Earnings growth for listed companies picked up during the year as the revival in growth helped companies report higher revenues and profits. The equity markets had another stellar year supported by an increase in domestic financial savings into equities. The positive momentum of the markets was interrupted in the last two months of the year, as risk appetite, globally, took a hit on fears of aggressive rate hikes in the US.

    Bond markets, however, had a year of modest gains as bond yields firmed up sharply during the second half of the year. The concerns over a slippage in the fiscal deficit for the Government along with a hardening of global bond yields pushed domestic yields higher.

    The investment funds of the Company are managed as per the stated objectives laid down in the Investment Policy, Asset-Liability Management Policy ('ALM'), 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 FY 2018, the asset allocation in the Company's conventional and shareholder funds was in line with the ALM policy.

    HDFC Life's total AUM as on March 31, 2018, was Rs, 1,06,603 Crs. This comprised assets of Rs, 57,185 Crs held under the unit-linked funds and Rs, 49,418 Crs held under the conventional funds and shareholdersRs, funds. The corresponding numbers for the previous year were Rs, 53,800 Crs and Rs, 37,942 Crs respectively.

    Information Technology

    HDFC Life intends to be the leading digital insurer in the country. This aspiration has been embedded into the business and operating model of the Company and all new or existing processes are being made digital ready. All business functions within the organisation are aligned to this objective. The objective of the technology department is to cater to these growing needs by leveraging technology to deliver revenue generating experiences that win, serve, retain customers and grow the business while keeping operational costs low. Technology is applied in areas that add value to distributors, customers & employees:

    A. Sales and Distribution

    The objective here is to provide distributors a seamless customer onboarding process which integrates with their primary business, avoids redundant data entry, is accessible anywhere, anytime and drives fast processing. The Technology Enabled Business Transformation (TEBT) program has, over the last 24 months, created a service driven architecture that has enabled the Company to be a preferred partner on technology capabilities. The Company has been working with its Bancassurance relationships and integrating with the bank CRM systems. STP (Straight

    Through Process) which was implemented for one of the partner banks has now been extended to multiple partners enabling a frictionless customer onboarding process.

    HDFC Life continues to use mobility across its business very effectively and new capabilities have been introduced in the current year with a focus on sales productivity. The features include India stack integration with auto form filling (e.g. with Aadhaar including IRIS authentication, and UPI), credit bureau integration, geo-location capabilities, auto financial planning, pre approved offers, expert on call, virtual sales assistant bot among others. The Company has also built an industry first "Uber model" for lead management and fulfillment. This allows the sales person to grab a lead that is geographically nearest to him and reach the customer in the shortest possible time.

    HDFC Life has built a high performance platform for its group business especially group credit protect and group health business lines which in addition to allowing seamless integration capabilities to the distribution partners, is capable of processing very high volumes in an extremely short time.

    The online business of HDFC Life continues to grow and the Company is cognizant of the need to be constantly more agile and responsive in this space. The Company has therefore embarked on the journey to build the next generation online platform which will allow for a better user experience and deeper partner integration.

    B. Customers

    The objective here was to provide instant, consistent and predictable service and increase the self service capabilities available to the customer.

    Customer Servicing and Policy Servicing module (CSPS) was developed on the digital platform in line with this objective. More than 90% of customer request are now processed over the counter and more than 50% are closed within 10 minutes.

    For service requests received via email, the Company has deployed NLP based artificial intelligence capability and on twitter the Company has deployed chats bots which respond to customer request which are objective in nature thereby providing instant response and can manage scale at a very low cost. The Company has developed a virtual service assistant which enables the customer service executive at any touch point to respond to customer queries on any product/process, since inception of the Company, instantaneously. The customer portal, mobile applications (customer app and sales app) have been enhanced with additional servicing capabilities thereby aligning to the objective of self service.

    C. Employees

    The last two years have seen a rapid adoption of Robotics Process Automation (RPA) with over 50 Bots running within the Organisation across multiple functions. This has led to productivity gains among the workforce and has provided the capability to cater to the higher growth aspirations of the organisation in a cost efficient manner. Our revamped employee mobile app enables our employee to do multiple activities such as geo based attendance tracking, leave management, learning modules, complaints management, mediclaim etc. Our learning app is designed with self learning nuggets which are short videos/training which can enhance the knowledge of our employees on the go.

    D. Technology Update

    HDFC Life has established a new technology vertical to focus on the ecosystem partners. This vertical has employees who have started their careers with technologies available on the cloud and hence they are able to connect with their counterparts in the ecosystems which are mostly companies born in the cloud. HDFC Life has partnered with Amazon and is also working with Google to build various capabilities on the cloud which also is powered by infrastructure which can scale on demand. The Company is the first in the Indian financial services industry to create a data lake on the cloud. This data lake is the foundation for our data monetisation strategy and key to our plans with our ecosystem partners. The Company will be experimenting with data science and machine learning based solutions in the coming year. The Company has a strategy to build key capabilities in house and also partner with new age system integrators.

    HDFC Life was instrumental in setting up an informal life insurance industry blockchain consortium which was supported by Ernst Young. This consortium identified multiple use cases and created proof of concept for couple of them. The consortium will continue to work to identify and implement some of the use cases in the coming year.

    The Information Security Group continues to align with the National Institute of Standards and Technology (NIST) and Federal Financial Institutions Examination Council (FFIEC) for cyber security risk assessment which categorises the risk and provides visibility on the maturity level of the Organisation. A slew of cyber security initiatives have been implemented this year based on the roadmap presented to the Board. The Company has implemented security controls such as Next-Gen Firewall, Advance Persistent Threat Protection, Security Incident and Event Management, Brand Reputation & Anti-Phishing Management, DMARC for Email Security, Cyber Insurance.

    HDFC Life has been recertified on ISO 27001:2013. The technology team received 13 industry recognitions this year for achieving excellence in Strategic Enterprise IT deployments including the Celent Model Insurer Asia and Data Center Summit Award.


    The Company received various awards and accolades during the year under review across financial disclosures, customer service, technology, digital solutions, products, human resources, marketing, etc. The Company received the 'Economic Times Great Place to Work' award during FY 2018. The Company also received Gold award at the LACP Vision Awards 2016/17 for the third consecutive year and award for Excellence in Financial Reporting for their Annual Report FY 2017 from ICAI (The Institute of Chartered Accountants of India).

    Regulatory Landscape

    During FY 2018, the Insurance Regulatory and Development Authority of India ("IRDAI" / "Authority") issued various regulations/ guidelines to further aid the growth of industry. Some of the key regulations/ guidelines etc., as notified include:

    - Guidelines on Information and Cyber Security for Insurers to ensure that adequate systems and procedures are in place for ensuring that there is no leakage of information and information is shared only on need-to-know basis. Guidelines further prescribed that uniform framework for information and cyber security should be implemented for insurers and an in-built governance mechanism should be put in place.

    - IRDAI (Insurance Web Aggregators) Regulations, 2017 notified in April 2017 laid down new provisions for payment of remuneration for direct online sales and allowed selling of existing products through web aggregators including for those products where the web aggregator is not mentioned as a distribution channel in the File & Use document. The web aggregators are now permitted to undertake outsourcing activities through tele-marketing and distance mode.

    - A new set of Outsourcing Regulations came into force replacing the erstwhile guidelines on the same providing better clarity and definition of Outsourcing thereby helping in identifying activities to be considered/ excluded from the purview of Outsourcing further bringing clarity in regulatory reporting of such activities.

    - Protection of Policyholders Regulations 2017 were notified in June 2017 replacing the earlier regulations. The new regulations introduced the requirement to have a Board approved policy emphasising on various governance and control mechanisms to ensure that the insurer safeguards the policyholder's interests throughout the policy term and beyond, at the claims stage as well.

    - Brokers Regulations were notified in January 2018 replacing the earlier regulations. The said regulation emphasises on business conduct both at the broker and insurer's end. New provisions have been introduced which require filing of regulatory returns to ensure compliance with the obligations mentioned under the said regulations.

    - A Master Circular on Unclaimed amounts was notified which broadly consolidates various directives issued by IRDAI on the matter earlier and brings in clarity over time-periods and operational procedures for treating amount due to the policyholder but not yet paid by the insurer for various operational reasons.

    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:

    - Rural business - Achieved - 20.71% versus prescribed requirement of 20% of overall business

    - Social business - Insured - 65,29,691 social lives versus prescribed 10,42,822 social lives


    The IRDAI requires life insurers to maintain a minimum Solvency Ratio of 150%. The Solvency Ratio is calculated as specified in the IRDA (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2016. As compared to the minimum requirement of 150%, the Company's Solvency Ratio, as at March 31, 2018, was 192%.

    Dividend & Reserves

    During FY 2018, HDFC Life declared an interim dividend of Rs, 1.36 per equity share (face value of Rs, 10/- each) as compared to Rs, 1.10 per equity share (face value of Rs, 10/- each) for FY 2017. The interim dividend was paid to the Shareholders in December 2017. The Board has recommended the same to be confirmed as the Final Dividend for FY 2018. Necessary resolution is being proposed for the purpose at the ensuing 18th Annual General Meeting ("AGM").

    The dividend declared is in accordance with the principles and criteria as set out in the Dividend Distribution Policy which has been approved by the Board of Directors of the Company. In terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") the Dividend Distribution Policy of the Company is disclosed on the website at

    The Company has carried forward a total of Rs, 780.2 Crs to its Reserves. The Company had accumulated profits of Rs, 2,393.7 Crs on March 31, 2018.

    Capital & Shares

    The Company's paid up equity share capital increased marginally from ' 19,984,752,830 as on March 31, 2017 to ' 20,117,400,430 as on March 31, 2018 pursuant to allotment of 7,524,475 equity shares upon exercise of Options under Employees Stock Option Scheme 2014; allotment of 4,755,460 equity shares upon exercise of Options under Employees Stock Option Scheme 2015 and allotment of 984,825 equity shares upon exercise of Options under Employees Stock Option Scheme 2016. The said allotments were made post requisite approval from the Authority.

    The Shareholding Pattern is provided as a part of Form No. MGT-9 which is annexed as 'Annexure 3' to the Directors' Report.

    Update on Merger Proposal and Initial Public Offering

    On August 8, 2016, the Board of Directors of HDFC Life, Max Life Insurance Company Limited ("Max Life"), Max Financial Services Limited ("Max Financial") and Max India Limited ("Max India") at their respective board meetings, approved entering into definitive agreements for the amalgamation of the businesses between the above entities through a composite Scheme of Arrangement. This transaction was mutually terminated on July 31, 2017 since the parties did not receive the requisite regulatory approvals.

    Subsequently, the Company completed its Initial Public Offer by way of an offer for sale up to 299,827,818 equity shares of face value of ' 10 each of the Company, by promoters of the Company i.e. Housing Development Finance Corporation Limited and Standard Life (Mauritius Holding) 2006 Limited. The Shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 17, 2017.

    Remuneration Policy

    Unclaimed Suspense Accounts

    Pursuant to Regulation 39 read with Part F of schedule V of SEBI Listing Regulations, 2015 details of unclaimed suspense accounts provided by our Registrar and Transfer Agent i.e. Karvy Computershare Private Limited are given below:



    Category/Name of the Shareholder

    No. of Shareholders

    No. of Shares


    Aggregate number of shareholders and the outstanding shares lying unclaimed as on April 1, 2017




    Aggregate number of shareholders and the outstanding shares lying unclaimed on the date of transfer of shares to unclaimed suspense account i.e. as on November 15, 2017 (the shares were allotted pursuant to offer for sale under IPO)




    Number of shareholders who approached listed entity for transfer of shares from suspense account during the year




    Number of shareholders to whom shares were transferred from suspense account during the year




    Aggregate Number of shareholders and the outstanding shares lying unclaimed as on March 31, 2018



    In terms of the said Regulation, voting rights on the equity shares lying in the said Unclaimed Suspense Account shall remain frozen till the rightful owner claims such shares.

    The remuneration policy, including the criteria for remunerating Non-Executive Directors is recommended by the Nomination & Remuneration Committee and approved by the Board. The key objective of the remuneration policy is to ensure that it is aligned to the overall performance of the Company. The policy ensures that it is fair and reasonable to attract and retain necessary talent, linked to attaining performance benchmarks and involves a judicious balance of fixed and variable components. The remuneration policy is placed on the website of the Company at The remuneration paid to the Directors is in line with the remuneration policy of the Company and in compliance with guidelines issued by the Insurance Regulatory and Development Authority of India.

    Remuneration of Directors Non-Executive Directors

    The remuneration for Non-Executive Directors consists of sitting fees and remuneration for Independent Directors consists of sitting fees and commission. The fees payable to the Non-Executive Directors including Independent Directors for attending a Meeting of the Board or Committee thereof is decided by the Board of Directors from time to time within the limits prescribed under the provisions of the Companies Act, 2013.

    The Board after considering performance of Non-Executive Directors and subject to the approval of members of the Company at the ensuing Annual General Meeting, has approved the proposal for payment of profit related commission for a period of five years effective from FY 2018 to each Non-Executive Independent Director of the Company. The payments would be subject to the regulatory provisions applicable to the Company and availability of net profits at the end of each financial year. Sitting fees paid to Non-Executive Independent Directors are outside the purview of the above limits.

    Details of the remuneration of Non-Executive Directors including Independent Directors are provided in Form No. MGT-9 which is annexed to this report.

    Executive Directors

    The Nomination & Remuneration Committee determines and recommends to the Board the amount of remuneration, including performance bonus and perquisites, payable to the Executive Directors subject to approval of members of the Company and approval of the Insurance Regulatory and Development Authority of India. The annual increments of the Executive Directors are linked to their performance and are decided by the Nomination & Remuneration Committee.

    Details of the remuneration of Executive Directors are provided in Form No. MGT-9 which is annexed as 'Annexure 3' to the Directors' Report.

    Disclosures pursuant to IRDAI Guidelines

    IRDAI guidelines on Remuneration of Non-executive Directors and Managing Director/Chief Executive Officer/ Whole Time Directors of Insurers (IRDAI Guidelines) issued vide reference no. IRDA/F&A/GDL/LSTD/155/08/2016 dated August 5, 2016 requires the Company to make following disclosures on remuneration on an annual basis in their Annual Report:

    A. Qualitative Disclosures

    i. Information relating to the design and structure of remuneration processes and the key features and objectives of remuneration policy.

    Information relating to the design and structure of remuneration processes The Nomination & Remuneration Committee ("the Committee") is the body which oversees the remuneration aspects. The functions of the Committee include reviewing and approving, on an annual basis, the corporate goals and objectives with respect to the compensation for the Chief Executive Officer/ Whole Time Director/s. The Committee also evaluates at least once a year the Chief Executive Officer's/ Whole Time Director's performance in light of the established goals and objectives and based upon these evaluations, set their annual compensation, including salary, bonus and equity and non-equity incentive compensations. The compensation structure is within the overall limits as laid down by the members of the Company, and further subject to statutory and regulatory approvals including that of the Insurance Regulatory and Development Authority or such other body or authority as may be applicable.

    The Company has under the guidance of the Board and the Committee, followed compensation practices intended to drive meritocracy and fairness. The Committee has oversight over compensation and defines Contribution Management System (CMS) and Variable Pay for Performance (VPP) philosophy for Executive Directors and the organizational performance norms for VPP based on the financial and strategic plan approved by the Board. The Committee assesses organizational performance as well as the individual performance for Executive Directors. Based on its assessment, it makes recommendations to the Board regarding compensation for Executive Directors and VPP for employees, including senior management and key management personnel.

    Objectives of remuneration policy

    The purpose of the remuneration policy is to put in place a framework for remuneration of Directors, Key Managerial Personnel and other employees, keeping in view various regulatory and other requirements. This policy is guided by the set of principles and objectives as particularly envisaged under Section 178 of the Companies Act 2013, which inter alia include principles pertaining to determining the qualifications, positive attributes, integrity and independence of Director etc.

    Key features of remuneration policy Attract and retain: Remuneration packages shall be designed to attract high caliber executives in a competitive global market and remunerate executives fairly and responsibly. The remuneration shall be competitive and based on the individual responsibilities and performance.

    Motivate and reward: Remuneration shall be designed to motivate delivery of the Company's key business strategies, create a strong performance-orientated environment and reward achievement of meaningful targets over the short and long-term.

    Non-monetary benefits: The Executives will be entitled to customary non-monetary benefits such as company cars and company health care, telephone etc. In addition thereto, in individual cases company housing and other benefits may also be offered.

    ii. Description of the ways in which current and future risks are taken into account in the remuneration process

    HDFC Life ensures the effectual positioning of the compensation in line with the overall risk framework of the organization. Different aspects of remuneration have been designed to ensure their applicability over a timeframe and cover the associated risks.

    - The total compensation is aligned to the predefined balanced scorecard covering the people, financial, customer, and operational indicators of performance.

    - The compensation payouts are regulated by compliant guidelines of the Malpractice matrix under the enterprise risk management framework of the organization. Deferred payouts are guided and controlled by the framework in cases of integrity or any such related parameter.

    - Significant component of the remuneration are spread across the time horizon risk in the form of Short Term and Long Term Incentive Plans.

    iii. Description of the ways in which the insurer seeks to link performance during a performance measurement period with levels of remuneration

    HDFC Life follows a compensation philosophy of pay for performance and meritocratic growth in the organization. There is linkage between pay and performance. In line with Company's pay for performance philosophy the compensation is designed to ensure that every employee will have at least a part of the total Compensation which will be linked to individual and/or Company performance. For senior management, the variable payouts depend upon the individual contribution and overall performance of the organization. The performance is assessed on predefined balanced scorecard and the payout rate varies with the level of performance where significant merit increase and variable payouts are awarded to top performers. The organization strives for higher variabalisation at senior levels thereby ensuring more focus on performance driven payouts.

    B. Quantitative Disclosures

    The following table sets forth, for the period indicated, the details of quantitative disclosure for remuneration of Executive Directors:

    (Rs, Crs)




    As on March 31, 2018


    Number of WTD/ CEO/ MD having received a variable remuneration award during the financial year



    Number and total amount of sign on awards made during the financial year



    Details of guaranteed bonus, if any, paid as joining/ sign on bonus



    Total amount of outstanding deferred remuneration, split into cash, shares and share linked instruments and other form



    Total amount of deferred remuneration paid out in the financial year



    Breakup of amount of remuneration awarded for the financial year to show fixed and variable, deferred and nondeferred








    Share Linked Instrument


    Evaluation of performance of the Board

    SEBI had issued a guidance note on board evaluation to be carried by listed companies, which inter alia contained the process of evaluation, including the criteria to be adopted for evaluation, action plan, disclosures to stakeholders, frequency of evaluation and responsibilities.

    Pursuant to listing of equity shares of the Company on Stock Exchanges, the Company has assessed the methodology and criteria to evaluate the performance of the Board as a whole and its Committees as well as the performance of each Director individually, including the Chairman and aligned the template with the criteria laid in the said guidance note. The said criteria inter alia includes various parameters like involvement, quest for improvement, teamwork, governance, knowledge & competency, understanding & fulfillment of functions, initiatives, availability & attendance, commitment, contribution in board meetings and integrity.

    Pursuant to and in line with the requirements prescribed under the Act and guidance note, the Board of Directors carried out an annual evaluation of its performance, and that of its Committees and Individual Directors. Further, the Independent Directors met separately, without the attendance of Non-Independent Directors and Members of the Management, and inter alia reviewed the performance of Non-Independent Directors, and Board as a whole; and performance of the Chairman. They further assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board.

    Overall, the Independent Directors expressed their satisfaction on the performance and effectiveness of the Board, all the Committees, Individual 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 Independent Directors opined that the Company's Board was a benchmark Board and expressed their satisfaction with the conduct and efficiency of the Board and Board Committees'.

    The Nomination & Remuneration Committee also undertook an evaluation of Individual Director's performance and expressed its satisfaction on performance of each Director.

    There has been no material adverse observation or conclusion, consequent to such evaluation and review.


    As on the date of this Report, the Company's Board comprises of 15 Directors, including one Alternate Director. There are 13 Non-Executive Directors (including 7 Independent Directors, and 1 Alternate Director) and2 Executive Directors. The Company's Board also has 2 women Directors, which includes its Executive Director & Chief Financial Officer.

    Changes during the year under review

    Mr Ravi Narain and Dr Surendra Dave resigned from the Directorship of the Company wef August 1, 2017 and August 10, 2017 respectively.

    The Board of Company was further strengthened during the year with the induction of Mr Ketan Dalal, Mr AKT Chari and Dr JJ Irani as Additional Directors wef July 17, 2017, August 4, 2017 and August 11, 2017 respectively, designated as Independent Directors. This has also added diversity to the Board, resulting in enhanced Board independence.

    A brief profile of newly appointed Independent Directors is given below:

    1. Mr. Ketan Dalal is an Independent Director of the Company. He has been on the Board since July 17,

    2017. He is a fellow member of the Institute of Chartered Accountants of India, having qualified in 1981. In 1997, he (along with 3 other professionals) founded RSM, an Indian Tax practice, which merged into PwC in April 2007. In 2017, he founded a boutique structuring and tax firm, Katalyst Advisors LLP. He was a member of the 'Working Group on Non-resident taxation' formed by Ministry of Finance in 2003. He is a member of the Managing Committee and the Chairman of the Direct Tax Committee of IMC. He has been a member of several SEBI Committees including SEBI's High Powered Advisory Committee on consent orders and compounding and Group of experts to advise SEBI on matters relating to Financial Sector Legislative Reforms Commission.

    2. Mr. AKT Chari is an Independent Director of the Company. He has been on the Board since August 4, 2017. He holds a bachelor’s degree in electrical engineering from Madras University in 1962. He previously held the position of Chief General Manager/ Adviser in Industrial Development Bank of India, where he handled project finance activities of the institution in various industrial and infrastructure sectors. Later he worked as Chief Operations Officer/ Head project finance in IDFC Limited, where he was engaged in financing infrastructure projects, in multiple sectors.

    3. Dr. Jamshed J Irani is an Independent Director of the Company. He has been on the Board since August 11, 2017. He holds a Master's degree in science from Nagpur University and Master's in Metallurgy from University of Sheffield, United Kingdom. Further, he also holds a Doctorate from University of Sheffield, United Kingdom. He received the Padma Bhushan from the President of India in 2007 for his services to trade and industry in India. Additionally, he was conferred the honorary Knighthood (KBE) for contribution to Indo-British Trade and Cooperation. Dr. Irani has been a Director of the Housing Development Finance Corporation Limited (HDFC) since 2008. Currently, Dr. Irani is an Independent Director of HDFC Ltd. and Repro India Limited.

    In line with the provisions of the Act, the appointment of Mr. Ketan Dalal, Mr AKT Chari and Dr JJ Irani, are proposed to be regularised at the forthcoming Annual General Meeting for a period of 5 years from the date of their initial respective appointments, and the relevant disclosures for their appointment forms a part of the Notice of the 18th Annual General Meeting.

    During the year under review, in line with the applicable provisions under the Act, Mr Luke Savage and Mr James Aird had vacated office as Alternate Directors to Sir Gerry Grimstone and Mr. Norman Keith Skeoch respectively, at such times when Sir Gerry Grimstone and Mr. Norman Keith Skeoch had visited India to attend Board Meetings; and they were re-appointed as Alternate Director to Sir Gerry Grimstone and Mr. Norman Keith Skeoch with the Board's approval, following the date of the relevant Board Meetings. Further, Mr Rushad Abadan was appointed as Alternate Director to Sir Gerry Grimstone with effect from February 2, 2018 in place of Mr Luke Savage.

    Independent Directors

    The Company has seven Independent Directors on the Board i.e. Dr. JJ Irani, Mr. AKT Chari, Mr. VK Viswanathan, Mr. Prasad Chandran, Mr. Sumit Bose, Mr. Ranjan Mathai and Mr. Ketan Dalal. In accordance with the provisions of the Act, the Independent Directors are not liable to retire by rotation, and have been appointed for a term of 5 years.

    Declaration by Independent Directors All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and Regulation 16 of the SEBI Listing Regulations. The said declaration was noted by the Board of Directors at its Meeting held on April 18, 2018.

    Directors retiring by rotation (being Directors other than Independent Directors)

    In accordance with the provisions of the Act read with the Articles of Association of the Company, Mr. Deepak Parekh and Ms. Vibha Padalkar, being Non-Independent Directors, are liable to retire by rotation at the ensuing 18th Annual General Meeting of the Company. They are eligible for re-appointment. Resolutions for the purpose of their reappointments are being proposed at the 18th Annual General Meeting. Profiles of these Directors are included in the Notice of the 18th Annual General Meeting.

    'Fit and Proper' criteria

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

    The Company has also received declarations from all its Directors as per Section 164 of the Act, confirming they are not disqualified from being appointed as Directors of the Company.

    The details of the Board and Committee meetings, and the attendance of Directors thereat, forms part of the Corporate Governance Report, which is annexed as Annexure 1 to this Directors' Report.

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

    In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report forms part of this report.

    A report on the Corporate Governance framework within the Company, with required certification as required under the IRDAI Regulations and SEBI Listing Regulations, is annexed hereto as Annexure 1 and forms part of this report.

    In accordance with the SEBI Listing Regulations, the Business Responsibility Report (BRR) forms part of this report.

    Legal Update

    During the FY 2018, no significant and material orders were passed by the regulators, courts or tribunals, that impacted the going concern status of the Company, or which can potentially impact the Company's future operations.

    Secretarial Standards

    During the FY 2018, the Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to board and general meetings.

    Key Managerial Personnel

    Changes in the Key Managerial Personnel (KMP) during the year.

    Name of KMP*

    Appointment / Resignation/ No change

    With effect from

    Mr. Amitabh Chaudhry

    Managing Director and Chief Executive Officer

    No change


    Ms. Vibha Padalkar

    Executive Director and Chief Financial Officer

    No change


    Mr. Manish Ghiya

    Executive Vice President, Company Secretary and Head - Compliance and Legal


    July 17, 2017 (close of the day)

    Mr. Narendra Gangan

    Executive Vice President, Company Secretary and Head - Compliance and Legal


    July 18, 2017

    * Designated as the "Key Managerial Personnel" of the Company as per Companies Act, 2013.

    Risk Management Policy

    The Company has a defined Risk Management Strategy and a Framework which is designed to identify, measure, monitor and mitigate various risks. A Board approved Risk Management Policy has been put in place to establish appropriate systems or procedures to mitigate all material risks faced by the Company. The said Policy is reviewed periodically by the Risk Management Committee of the Board.

    The risk management architecture of the Company has been detailed under the Enterprise Risk Management section of the Annual Report.

    Internal Audit Framework

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

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

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

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

    Internal Financial Controls

    The Company has institutionalized a robust and comprehensive internal control mechanism across all the major processes. The Company has put in place adequate policies and procedures to ensure that the system of internal financial control is commensurate with the size, scale and complexity of its operations. These systems provide a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company, prevention and detection of frauds, accuracy and completeness of accounting records and ensuring compliance with corporate policies.

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

    Vigil Mechanism

    The Company has put in place a Whistleblower Policy and Framework. More details are provided in the Corporate Governance Report, which is annexed as Annexure 1 to this report.

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

    Section 134 of the Act, read with the Companies (Accounts) Rules, 2014, requires disclosure of certain specified information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo in the Directors’ Report.

    The disclosure relating to conservation of energy does not apply to companies in the Life insurance sector and hence, the Company is exempted there from. Disclosure in respect of technology absorption, and foreign exchange earnings and outgo is given below.

    Technology Absorption

    Specific areas, in which R&D is carried out by the Company

    Not applicable

    Benefits derived as a result of the above R&D

    Not applicable

    Future plan of action

    Block chain / Robotic Process Automation / Artificial Intelligence and Cognitive Computing / Cyber Security/ Machine Learning

    Expenditure on R&D

    Not applicable

    a) Capital

    b) Recurring

    c) Total

    d) Total R&D expenditure as a percentage of total turnover

    Technology absorption, adoption and innovation

    1. Efforts made towards technology absorption

    Major Initiatives Undertaken/ Completed are:

    - Revamped customer servicing portal

    - Expansion of straight through processing for multiple partners

    - Reengineered processes for customer and policy servicing

    - Robotics process automation for payouts, actuarial, medicals and group business processes

    - Optical Character Recognition (OCR) for medical reports

    - ISO 27001:2013 Recertification

    - Geo based tracking and lead allocation for sales

    2. Benefits derived as a result of the above efforts (eg product improvement, cost reduction, product development, import substitution and so on)

    Benefits derived in terms of process / product improvement / cost

    reduction include:

    - More than 90% of transactions are processed over the counter

    - 50% of PS transactions closed within 10 minutes

    - 85% of Payouts processed within 8 calendar days

    - Audit trail with 360 degree view of customer interaction history

    - Online customer authentication

    - Integration with Aadhaar for address updation

    - Enhanced productivity with improved AHT’s

    - Elimination of manual trackers and dependency on multiple systems

    - Robotic process automation improves productivity and TAT's within departments eg. customer payout process have a reduced TAT of T 1 down from T 8.

    - OCR now converts data on the medical reports into value which are stored in the system and also highlights values which are not within normal range which improves underwriter productivity.

    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


    Expenditure incurred on Research and Development


    Foreign Exchange Earnings and Outgo

    The details of foreign exchange earnings and outgo during the FY 2018 are as follows:

    - Earnings

    Rs, 114.4 Crs

    - Outgo

    Rs, 170.5 Crs

    Subsidiary Companies 1. HDFC Pension Management Company Limited ("HDFC Pension")

    Financials and Business Outlook A synopsis of financial performance of HDFC Pension during FY 2018 is as below:


    FY 2018

    FY 2017

    Gross Income



    Total Expenses



    Profit/ (Loss) before Tax



    Provision for Tax



    Profit/ (Loss) after Tax



    During the FY 2018, the general business environment had been good for Pension Funds with the industry keeping up the momentum in line with the previous financial year.

    The overall Assets Under Management ('AUM') of all the Pension Funds combined, i.e. corporate and retail sector, grew from Rs, 7,017.7 Crs as on March 31, 2017 to Rs, 11,965.8 Crs as on March 31, 2018, registering a growth of approximately 69%. The overall subscriber base of corporate sector grew by nearly 38%, with approximately 1,000 new Corporate joining the National Pension System ('NPS') architecture. The retail sector grew by almost 58%, with 6,91,578 subscribers as on March 31, 2018, in comparison to 4,37,088 subscribers as on March 31, 2017.

    During the FY 2018, HDFC Pension registered an AUM growth of approximately 120%, crossing the milestone of Rs, 2,500 Crs and also registered itself as the number one player amongst Private Pension Fund Managers in terms of AUM. As on March 31, 2018, HDFC Pension's AUM stood at Rs, 2,560.3 Crs as compared to Rs, 1,163.0 Crs as at the end of previous financial year. In the Corporate sector NPS, HDFC Pension sourced 525 new corporate in FY 2018 commanding more than 45% market share in that particular space. The Company consolidated itself in the retail sector as well by registering a subscriber growth of 93%.

    Legal matter

    In 2014, the Pension Fund Regulatory & Development Authority ("PFRDA") issued a Request for Proposal ("RFP") inviting bids from Sponsors to select new pension fund managers. The bid submitted by HDFC Life as a sponsor to HDFC Pension was rejected by the PFRDA on the ground that it did not meet certain eligibility criteria under the RFP. The Hon'ble Delhi High Court, however, set aside the rejection, directing the PFRDA to grant a Letter of Appointment to HDFC Life thereby allowing the Company to continue its business. While the PFRDA issued a letter of appointment to HDFC Life, it also challenged the Hon'ble High Court's decision before the Hon'ble Supreme Court of India by way of a Special Leave Petition ("SLP"). The Hon'ble Supreme Court, by its order dated July 31, 2017, has dismissed the PFRDA's SLP and refused to interfere with the Hon'ble High Court's decision. Accordingly, the Letter of Appointment issued to HDFC Life stands unqualified, with the appointment of HDFC Pension as a pension fund manager being confirmed.

    2. HDFC International Life and Re Company Limited ("HDFC International Life & Re")

    In FY 2016, HDFC Life established HDFC International Life and Re Company Limited ("HDFC International Life & Re"), a Wholly Owned Subsidiary, in the Dubai International Financial Centre (DIFC). HDFC International Life & Re was established with the primary objective of offering life reinsurance capacity in the UAE and other GCC nations.

    HDFC International Life & Re is regulated by the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business in the UAE. It operates in the DIFC, offering reinsurance capacity to ceding insurers. It provides bespoke risk-transfer solutions, prudent underwriting solutions and value added services among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance capacity in UAE, Oman and Bahrain and is working towards expanding its footprint across the GCC (Gulf Cooperation Council) and MENA (Middle East & North Africa) regions.

    HDFC International Life & Re's vision is to go deep into the processes of ceding insurers and see how it can impact the overall value chain and life cycle, as a very involved, informed and innovative reinsurer. This will be achieved on the back of technology initiatives and solutions that they intend to bring into the market.

    Financials and Business Outlook

    During the FY 2018, HDFC International Life & Re earned a Gross Income of US$ 1,929,588 while its expenses stood at US$ 512,866. The period under review ended with a loss of US$ 260,599.

    HDFC International Life & Re continues to operate with technical profit, which is testimony to the strength of its underlying underwriting and risk assessment processes.

    HDFC International Life & Re has successfully completed two financial years of operations and is steadily building experience in the GCC Life Reinsurance market. HDFC International Life & Re has expeditiously accelerated with revenue growth of 10 times of the previous year's revenues and has focused on the need for creation of stable and diversified revenue lines. Working closely with clients is the central focus of the strategy and HDFC International Life & Re looks to establish meaningful and long term business associations which are mutually win-win. HDFC International Life & Re has been working with ceding insurers to provide reinsurance support for long term individual life policies and also collaborate on facultative arrangement on group programs.

    As HDFC International Life & Re get into the third year of operation, their aim is to continue building compelling reinsurance propositions which enable its clients to either break into new segments, expand market share or offer truly unique customer benefits. They are building technology enabled models which allow for differentiation from existing processes and propositions and look to deliver capital efficiencies by means of bespoke reinsurance and risk solutions.

    HDFC International Life & Re's aim is to become partners in the journey of the insurers to help them realize their potential through reinsurance solutions which enable and empower them to innovate and optimize as per the needs of their market segments.

    Swabhimaan / Corporate Social Responsibility

    As part of its initiatives under Corporate Social Responsibility ("CSR"), the Company has undertaken projects in various areas including Education, Livelihood, Health, and Rural Development. These Projects are undertaken in line with the CSR Policy and are in accordance with Schedule VII of the Act, read with the Rules framed under the said Act.

    A more detailed write-up including details of the CSR projects undertaken, their monitoring, details on the implementing agencies, amounts spent and the requisite

    Responsibility Statement are given in Annexure 2 of this Report, and forms part of this Directors' Report.

    Annual Return

    As per the provisions of the Act, an extract of the Annual Return of the Company (in the prescribed Form No. MGT.9) has been annexed as Annexure 3 to the Directors' Report, and forms part of this report.

    Related Party Transactions

    As per Section 177, read with Section 188 of the Act, the Audit Committee of the Board of Directors approves the related party transactions of the Company on a quarterly basis. Related party transactions entered during the year under review were in the ordinary course of business and on an arm's length basis, thus not requiring Board/ Shareholders' approval.

    The Related Party Transactions policy of the Company ensures proper approval and reporting of the concerned transactions between the Company and related parties. The policy on Related Party Transactions is placed on the Company's website at

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

    M/s GM Kapadia & Co, Chartered Accountants, reviewed the related party transactions for each quarter, and their report was placed at the meetings of the Audit Committee, along with details of such transactions.

    As per Accounting Standard (AS) 18 on 'Related Party Disclosures', the details of related party transactions entered into by the Company are also included in the Notes to Accounts.

    Ind AS Roadmap

    The Ministry of Corporate Affairs (MCA) issued a press release on January 18, 2016, announcing the Indian Accounting Standards (Ind AS) roadmap for banking, insurance and Nonbanking Financial Companies (NBFCs), requiring companies to prepare Ind AS based standalone and consolidated financial statements for FY 2019 with comparatives of FY 2018. Consequently, IRDAI issued a circular dated March 1, 2016, to guide and facilitate insurance companies towards Ind AS implementation. In compliance with the above circular, the Company has formed a Steering Committee headed by Executive Director and Chief Financial Officer, along with members from cross-functional areas to initiate

    Ind AS implementation process in the Company. The Company has also nominated the nodal officer to IRDAI, to facilitate smooth implementation of Ind AS.

    In accordance with the above referred circular dated March 1, 2016, the Company started submitting the preformed Ind AS financial statements from quarter ended December 31, 2016 to IRDAI.

    During the FY 2018, the International Accounting Standards Board on May 18, 2017, issued the much awaited IFRS 17 Insurance Contracts which replaces IFRS 4, which was brought in as an interim Standard. The developments around release of IFRS 17 have resulted in the IRDAI reviewing the position in the matter of Implementation of Ind AS in the insurance sector in India.

    Consequently, IRDAI issued a circular dated June 28, 2016, approving the Regulatory override whereby the implementation of Ind AS in the Insurance Sector in India has been deferred for a period of two years till 2020-21 and required insurance companies to continue with the quarterly submission of proforma Ind AS financial statements to the IRDAI till the revised implementation date.

    Secretarial Audit Report

    The Secretarial Audit as required under the Act, was undertaken by M/s NL Bhatia & Associates, Practising Company Secretary. The Auditor has not made any qualification, reservation or adverse remark or disclaimer in his Report for FY 2018.

    The Secretarial Audit Report for the FY 2018 is annexed as Annexure 4 and forms part of this Report.


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

    The Joint Statutory Auditors have not made any qualification, reservation, adverse remark or disclaimer in their report for FY 2018. Further, during the FY 2018, the Joint Statutory Auditors have not come across any reportable incident of fraud to the Audit Committee or Board of Directors.

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

    M/s Price Waterhouse Chartered Accountants LLP, and M/s GM Kapadia & Co, Chartered Accountants hold office as joint statutory auditors until the conclusion of 19th Annual General Meeting ("AGM") and 21st AGM respectively, subject to ratification of their appointment by the Members at every AGM.

    The Company has received a confirmation from M/s Price Waterhouse Chartered Accountants LLP, and M/s GM Kapadia & Co, Chartered Accountants to the effect that their appointment, if ratified, at the ensuing AGM would be in terms of Sections 139 and 141 of the Companies Act, 2013 and rules made there under. The board proposes to the members to ratify the said appointments of M/s Price Waterhouse Chartered Accountants LLP, and M/s GM Kapadia & Co, Chartered Accountants.

    Accordingly, in view of the provisions of the Act, and IRDAI Regulations, the members are requested to ratify the proposal for appointment of M/s Price Waterhouse Chartered Accountants LLP, and M/s GM Kapadia & Co, Chartered Accountants for FY 2019. The Resolution seeking ratification of their appointment is included in the Notice of the ensuing AGM.


    The Company has not accepted any deposits during the year under review.

    Loans, guarantees or investments

    In terms of the provisions of sub-Section 11 of Section 186 of the Act, read with the clarification given by the Ministry of Corporate Affairs under the Removal of Difficulty Order dated February 13, 2015, the provisions of Section 186 of the Act relating to loans, guarantees and investments do not apply to the Company.

    Employees Stock Option Scheme

    In line with the practice of incentivizing the employees through issue of stock options, the Company has in the past granted stock options and continues to grant stock options to its eligible employees (including employees of its subsidiary companies) under the various employee stock option schemes formulated from time to time.

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

    In line with the requirements under the Act, the Company has formulated Employee Stock Option Scheme(s) 2014, 2015 and 2016 for the purpose of administering the issue of Stock Options to its eligible Employees including that of its subsidiary companies. There has been no material variation in the terms of the options granted under any of these schemes and all the schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. However, the above Schemes, formulated prior to Initial Public Offering by the Company, were aligned with SEBI (Share Based Employee Benefits) Regulations,

    2014 ("Regulations"). The disclosures as required under the Regulations have been placed on the website of the Company at Investor-Relations.

    During FY 2018, the members of the Company approved the issuance of 45,00,000 stock options representing 45,00,000 equity shares of ' 10 each under Employee Stock Option Scheme-2017 and 5,36,394 stock options representing 5,36,394 equity shares of ' 10 each under Employee Stock Option (Trust) Scheme-2017 through a postal ballot. The Nomination & Remuneration Committee of Directors of the Company at its Meeting held on March 14, 2018 had approved the grant of 31,65,606 stock options under Employee Stock Option Scheme-2017 and 5,36,394 stock options under Employee Stock Option (Trust) Scheme-2017.

    Material changes and Comments affecting the financial position

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

    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 Company's state of affairs, as on March 31, 2018, and of the Company's 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.

    Appreciation and Acknowledgement

    The Directors thank the policyholders, shareholders, customers, distributors, and business associates for reposing their trust in the Company. The Directors also thank the Company's employees for their continued hard work, dedication and commitment; and the Management for continuing success of the business.

    The Directors further take this opportunity to thank Housing Development Finance Corporation Limited and Standard Life Aberdeen for their invaluable and continued support and guidance. The Directors also thank the Insurance Regulatory and Development Authority of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, Reserve Bank of India, Pension Fund Regulatory and Development Authority, Life Insurance Council, National Stock Exchange of India Limited, BSE Limited, depositories and other governmental and other bodies and authorities for their support, advice and direction provided from time to time.

    On behalf of the Board of Directors


    Mumbai Deepak S. Parekh

    April 18, 2018 Chairman

  • HDFC Life Insurance Company Ltd.

    Company News

    Market Cap.(`) 100440.70 Cr. P/BV 17.80 Book Value (`) 27.97
    52 Week High/Low ( ` ) 511/344 FV/ML 10/1 P/E(X) 78.60
    Book Closure 23/07/2019 EPS (`) 6.33 Div Yield (%) 0.33
    You can view the latest news of the Company.

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