HDFC Life will evaluate equity raising options to beef up solvency margins which at the end of the first quarter were at 178 per cent, closer to the regulatory requirement of 150 per cent. In the corresponding quarter a year ago, the solvency ratio was at 203 per cent. Market analysts on Wednesday estimated that the life insurer may look to expand the solvency margin to the 200-220 per cent mark.

“We completed raising sub debt worth Rs 350 crore during this quarter (Q1 FY23). Post the dividend payout of Rs 1.70 per share our solvency stands at 178 per cent. In order to further strengthen solvency to fuel growth, we will continue to evaluate raising equity capital as needed,” said Vibha Padalkar, MD and CEO of HDFC Life, at the quarterly earnings call.

The life insurer’s premium flows into retail protection products have remained tepid during the quarter amid high inflation. “While elevated inflation has not materially impacted savings products, premium flow into retail protection has remained tepid for the quarter, possibly due to postponement of expenditure on account ofthe tight household budget.

“However, we see this as a temporary phenomenon and with a resolution of the ongoing global conflict and easing off of macroeconomic stress, we expect to see traction in the second half of this year,” she said. The life insurer’s total annual premium equivalent during the quarter was Rs 1904crore, up 22 per cent over the previous year. Profit after tax during the quarter was Rs 365crore, up 21 per cent over the previous year. The insurer’s market share in the overall new business and individual new business in the private sector was at 19 per cent and 14.6 per cent respectively. The life insurer said it is expecting to receive the final nod from IRDAI and merge the subsidiary during the second half of FY23.