PS: There are times when I do get paid for writing on my own blog too. It is for you to decide how much to trust my write up. Personally I am not applying for this IPO, but I am a shareholder of Hdfc Ltd, lotsa friends and relatives (yes within the meaning  of the Cos. Act) hold shares in Hdfc life. To that extent I could be biased.

Insurance is about risk cover, safety, and assurance. For most of us who were born in the 1960s or ’70s Hdfc is (was?) clearly a trusted name. Well at least till 1994. Then you know what happened. Then of course 2001 happened. Google and figure out.

This issue comes from one of the most trusted private sector financial powerhouses – HDFC. Excellent PR. Undeniably.

How to sell insurance IPO? Use some real powerful words: under penetrated market, our insurance: gdp is more like Africa and not like Asia, financial inclusion, financial literacy, greater penetration, bank is an important agent. Nascent insurance market, Now arrange these words and make the IPO look like a great one.

One thing for certain. Their 50000 agents and about 100,000 RMs of their sister concern bank will ensure that many, many policies are sold, and enough of them lapse. I am sure you did not know that lapsation is profitable right? well this is a phunny industry is it not?

All good things are expensive, right? why should Hdfc Insurance come free? So it is a premium issue. Hdfc and Hdfc bank came at par and hence the outsized gains. The IPO (initial public offering) of HDFC Life, obviously comes at a premium. Go and check the peers – Icici and Sbi. They have priced the issue at a premium that leaves little on the table for the stags.

Most of the people in Mumbai will offer this IPO, with an advice – go take it. I mean the advice. OK, take the IPO also. It is now called FOMO – fear of missing out. Miss out what? After all you did not apply in 1979, or in 1994 or in the mutual fund’s schemes. So the best way to approach a Hdfc issue is to subscribe. Brilliant logic.

Background (cut paste from the brochure that was sent to me)

HDFC Life was established as a joint venture between HDFC and Standard Life Aberdeen plc (one of the world’s largest investment companies) in 2000. Prior to the offer, HDFC holds 61.21 percent while Standard Life Aberdeen holds 34.75 percent in the company. In Fiscal 2012, a wholly-owned subsidiary, HDFC Pension, was set up to operate the pension fund business and in 2016, the company established its first international subsidiary in the UAE, HDFC International, to operate the reinsurance business.

The offer

The issue is an offer for sale of 29.9 crore shares valued at Rs 8,695 crore  – Rs 5,546 crore from HDFC and Rs 3,149 crore from Standard Life. Offered in a price band of Rs 275 to Rs 290 per share, the issue remains open for subscription from November 7-9.

Cut paste ends.

SBI and Icici Pru Life have a higher market share than Hdfc Life, but the profitability and persistence of Hdfc is better than that of LIC. Many of SBI’s numbers look better than Hdfc and Icici, but then Sbi figures cannot be taken at face value. I do not understand the ‘agency’ figures of SBI and I have no clue where the ‘commission’ paid to SBI employees is hidden. Sbi in the long run will not be much of a threat – right now they are pushing insurance down the throat of the borrowers.

To me all the life insurance companies have an element of mis-selling in their sales, but that does not seem to bother the market.

Personally I am biased against all insurance companies, and would not consider them to be a great business at this point in time. Expect term insurance rates to fall, and thus margins to go down. We are at the best right now.

However, all funds, all insurance companies, FII, etc… the Hdfc brand….and this could also quote at a premium.

As I said earlier, this will be a great insurance company in the near future. Sad that I will not be a shareholder unless I can get the share at say Rs. 225 or thereabouts. Happy to wait for 225 or will buy it at Rs. 300 in 2022. No hurry either way.

Like I said you need to decide for yourself. Even assuming that the client will pay or has paid for this article.



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  1. I may be an exception, but to me HDFC is no longer a trusted name. It probably was for my father, but not for me. I was born in early 70s and have seen HDFC since inception.

    Upto early 2000s, HDFC, the Home Lending institution and HDFC Bank, still had some standing, but since then customer service and focus has clearly taken a total downhill turn. HDFC totally shattered the trust we placed in it regarding floating rate home loans. Fixed rates were always half to 1 percent higher for supposedly high quality service, which was nowhere available.

    And about HDFC Bank? The less said the better. Every communication I get from them, I see it with suspicion. Every convenience they supposedly provide me, comes with a price that makes it a paid service rather than any customer benefit. The list of sneaky, unexpected charges, customer/account category reassignments is bewildering. One day I’m regular savings, then I’m in Classic savings, then Classic savings suddenly have charges, then it changes to Imperia! And when I complain to RBI/banking ombudsman, I’m back to regular (and that too after multiple haggling calls by so-called RM!). Same story with my in-laws regarding HDFC bank. I have NEVER had such problems with ANY other bank in over 20 years since I’ve held bank accounts. My in-laws closed all accounts and totally severed their relationship with HDFC bank, I’m still having it because of switching costs, but always on the edge.

    Given all this, will I buy any Insurance policy from HDFC Life over someone else’s? I think not. They may have great sales agents and be able to push a number of policies, but I don’t see that as any better than industry average.

  2. @LuckyOye
    Even I closed around 4 bank accounts with HDFC because of lack of trust in them. Final nail was when they moved regular SB account to Classic then to imperial and then started deducting charges from account.

    This if not outright loot, is cheating at the least. They should have taken customers explicit written/verbal confirmation before charging for any unasked “convenience”.

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