HDFC Life Insurance Company Limited announced its Q3FY26 financial results for the quarter ended December 31, 2025, showing steady growth in profitability despite challenging market conditions. The company reported a net profit after tax of ₹421.00 crores for the quarter, marking a 1.00% increase from ₹415.00 crores in the corresponding quarter of the previous year.

Financial Performance Overview

The company's financial performance for Q3FY26 demonstrated resilience across key metrics. Net premium income for the quarter reached ₹18,242.00 crores, compared to ₹16,771.00 crores in Q3FY25, representing a 9.00% year-on-year growth. The company maintained stable operational metrics with renewal collections growing 15.00% year-on-year.

Business Momentum and Market Share

Individual new business momentum strengthened during the December quarter, with individual annualised premium equivalent growing 11.00% year-on-year, achieving a healthy two-year CAGR of 17.00%. This performance helped the insurer gain 20 basis points of market share, taking its overall industry share for the first nine months of FY26 to 10.90%.

Growth was primarily led by protection-focused products. Retail protection business surged 70.00% year-on-year in Q3, while growth for the nine-month period stood at 42.00%, significantly ahead of the broader industry. This was reflected in the quality of business as well, with retail sum assured rising 55.00% in Q3 and 33.00% over nine months of FY26.

Nine-Month Performance and Value Metrics

For the nine-month period ended December 31, 2025, HDFC Life demonstrated stronger growth momentum. Net profit after tax increased by 7.00% to ₹1,414.00 crores from the previous year. The Value of New Business (VNB) for the nine months rose 7.00% year-on-year to ₹2,773.00 crores, with margins largely stable at 24.40%.

The company noted that margins benefited from a better product mix but were partly offset by the impact of GST changes and labour code-related costs. Excluding these one-time factors, underlying PAT growth for both the quarter and the nine-month period stood at 15.00%.

Operational Metrics and Asset Management

Operational metrics remained stable during the quarter. Persistency ratios were broadly steady, with 13-month persistency at 85.00% and 61-month persistency at 63.00%. Assets under management, including those of its wholly owned pension subsidiary, stood at ₹5.30 lakh crores.

Embedded value stood at ₹61,565.00 crores, with an operating return on embedded value of 15.60% on a rolling 12-month basis. The solvency ratio remained comfortable at 180.00%, supported by ₹749.00 crores of subordinated debt raised during the third quarter.

Corporate Governance and Future Outlook

The Board of Directors approved significant changes to the company's audit structure. KKC & Associates LLP has been recommended for appointment as one of the joint statutory auditors for a four-year term, replacing M/s G.M. Kapadia & Co. after completion of their 10-year tenure.

Management indicated that the pickup in momentum during Q3 was driven by policy reforms and improved affordability following GST exemptions, particularly in the protection segment. The company expects this trend to continue into the March quarter, supporting a balanced full-year performance.

The life insurance sector is showing early signs of recovery after a challenging start to FY26, according to Pankaj Pandey, Head of Research at ICICI Securities, who has identified select stocks as attractive investment opportunities despite sector-wide headwinds. In an exclusive interaction with ET Now, Pandey highlighted HDFC Life Insurance , LTIM, and KPIT as his top investment picks.

Life Insurance Sector Performance

The life insurance industry faced significant challenges in the opening quarter of FY26, with Pandey characterizing the period as "pretty soft." The sector recorded modest growth of approximately 5.5% during this period, reflecting the subdued market conditions that have impacted the broader insurance landscape.

Market Outlook and Investment Strategy

Despite the challenging operating environment, Pandey noted that early signs of recovery are beginning to emerge in life insurance growth patterns. However, he cautioned that margin pressures are likely to continue affecting the sector in the near term, suggesting that investors should remain selective in their approach to insurance sector investments.

The identification of HDFC Life Insurance, LTIM, and KPIT as top picks indicates ICICI Securities' confidence in these companies' ability to navigate the current market challenges and deliver value to investors despite broader sector headwinds.

Strategic Positioning

The research head's comments suggest that while the life insurance sector faces near-term challenges, certain companies are well-positioned to benefit from the emerging recovery trends. The selection of these specific stocks reflects a strategic approach to identifying value opportunities within a recovering but still pressured market environment.

The mixed outlook for the life insurance sector, combining early recovery signals with persistent margin pressures, underscores the importance of selective stock picking and thorough fundamental analysis in the current market conditions.

Source: https://www.etnownews.com/markets/hdfc-life-ltim-kpit-top-picks-by-pankaj-pandey-of-icici-securities-article-153435085