Canara HSBC Life Insurance Company Limited — Q3 FY26 earnings call

Call held 21 Jan 2026

Management summary

Canara HSBC Life Insurance reported strong Q3 and 9-month FY26 results, driven by robust growth in individual WPI (20% YoY for 9 months) and VNB (37% YoY to ₹413 crores). The company achieved significant margin expansion, with NBM improving by ~200 bps to 19.7%, alongside better persistency and expense management. Despite the impact of GST and new labor code, strategic product mix adjustments and channel expansion initiatives are underway to sustain growth and profitability.

Highlights

  • Individual Weighted Premium Income (WPI) grew 20% year-on-year for the 9-month period and 29% year-on-year for Q3, outperforming private players (13%) and the industry (10%).

  • Value of New Business (VNB) grew 37% year-on-year to ₹413 crores for the 9-month period.

  • New Business Margin (NBM) improved by almost 200 basis points year-on-year to 19.7% for the 9-month period.

  • 13-month persistency rose to 85.6% from 82.5% in FY25, and 61st-month persistency improved to 59.5% from 57.7% in FY25.

  • Total expense ratio improved by 130 basis points year-on-year to 18.7% for the 9-month period.

  • Embedded Value (EV) grew 17% year-on-year to ₹6,868 crores with an operating ROEV of 18.2%.

Concerns

  • Profit After Tax (PAT) for the 9-month period grew 8% year-on-year to ₹92 crores, impacted by GST and a ₹9 crore provision for the new labor code.

  • The GST impact on VNB margin is estimated at 185 basis points for FY26, although management actions have reduced it from an initial estimate of 225 basis points.

Key financials

3 periods

Headline

  • Embedded Value
    ₹6,868 Cr
    YoY +17%
  • Solvency Ratio
    191%

Q3

  • Individual WPI Growth
    29%

9M

  • Individual WPI Growth
    20%
  • VNB
    ₹413 Cr
    YoY +37%
  • New Business Margin
    19.7%
  • Total Expense Ratio
    18.7%
  • PAT
    ₹92 Cr
    YoY +8%

What they filed

Q1 FY27: revenue up 19.8%, net profit up 21.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,323 1,516 2,783 3,632 2,348 −29%4,202 +177%1,374 −51%4,351 +20%
EBITDA6 -23 34 6 16 +167%-70 −204%116 +241%0 −100%
Net profit37 29 32 23 41 +11%28 −3%35 +9%28 +22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Product Mix (9M FY26)
    60% ULIP Share13% Saving Product Share5% Participating Product Share
  • Banca Channel Mix
    75% Canara Bank Share12% HSBC Share5% RRB Share

Capital allocation

high confidence
  • Debt Debt disclosed
    • New borrowing Approval received from board to raise subordinate debt to boost solvency. ₹250 Cr
    Our solvency ratio currently stands at 191% and we have also taken approval from our board to raise subordinate debt of INR 250 crores, which will help us to further boost our solvency.

Guidance & targets

Product Mix

  • ULIP Share Product Mix · by March 31, 2026 · High confidence 55%

    From 60% today

    So, we expect that by the end of the year, the UL mix should come down to about 55% and traditional should move up to 45%.

    — Anuj Mathur

  • Traditional Share Product Mix · by March 31, 2026 · High confidence 45%

    — Anuj Mathur

Profitability

  • Overall Protection Business Contribution Profitability · over a period of time · Medium confidence double-digit number

    From 7% today

    Just to give direction but we are targeting to touch overall double-digit number in terms of overall protection, which includes group also.

    — Anuj Mathur

  • GST Impact on VNB Margin Profitability · FY26 · High confidence 185 basis points

    Previously 225 basis points → 185 basis points

    After doing all these things, we expect that this year we could see an impact of 185 basis point vis-a-vis 225, which we mentioned earlier. So, the overall impact will be around 185 basis points on the VNB margin this year, FY '26.

    — Tarun Rustagi

Distribution

  • HSBC New Branch Openings Distribution · next 3 to 4 months · High confidence 3 to 4 branches
    They are also planning to open another 3 to 4 branches in the next 3 to 4 months.

    — Anuj Mathur

What to watch in Q4 FY26

ULIP/Traditional Product Mix

by March 31, 2026
Current ULIP ~60% (9 months FY26)
Target ULIP ~55%, Traditional ~45%

Why it matters

Indicates management's ability to balance product mix for margin optimization and strategic focus.

So, we expect that by the end of the year, the UL mix should come down to about 55% and traditional should move up to 45%.

Risks & concerns

  • GST impact on VNB margin

    medium

    Initial estimate of 225 bps impact reduced to 185 bps for FY26 due to management actions like renewal commission absorption and expense rationalization.

    Management acknowledged

  • Initial margin strain from agency channel expansion

    medium

    Scaling up the agency channel in a phased manner, with mitigation strategies including growth in protection and annuity business, and ULIP rider attachments, to absorb the initial strain.

    Management acknowledged

  • Impact of new labor code

    low

    A one-off impact of ₹9 crores has been provided for in the 9-month PAT.

    Management acknowledged

Q&A highlights

7 direct
VNB calculation and impact of labor code/GST Direct
Hi, so the math on the VNB is that, so effectively from labor code plus GST on VNB absolute is about an impact of INR 40 crores. And so that is what when you add it back to your current reported margin of 19.7%, it roughly adds up to about 2%. So, which is what the margin, so this margin of 19.7% would actually become somewhere around 21.7%.

Clarifies the actual VNB margin before one-off impacts and provides a baseline for future comparisons.

Asked by Swarnabh Mukherjee

ULIP mix and seasonality in Q3 Direct
Yes, so as I mentioned, we saw good demand coming in for ULIP, and we saw that in terms of the volume surge which we had in this quarter. But if you see our past also in terms of our mix, we actually within last year also we saw that in JFM period, January, February, and March, we had good traditional mix, which resulted in overall for the year number being at that number. So, this time again, following the same strategy, we expect our trad mix to improve from now onwards till 31st of March.

Explains the higher ULIP mix in Q3 as a strategic sales push and indicates a planned shift back to traditional products in Q4 to balance the mix.

Asked by Nischint Chawathe

GST impact calculation and full-year projection Direct
So, overall, since you have covered and just mentioned and touched upon the VNB, the annualized impact last time when we shared was 225 basis points, without management action... we expect that this year we could see an impact of 185 basis point vis-a-vis 225, which we mentioned earlier. So, the overall impact will be around 185 basis points on the VNB margin this year, FY '26.

Provides a revised and more optimistic full-year estimate for the GST impact on VNB margin, highlighting management actions to mitigate it.

Asked by Sanketh Godha

Protection business growth and future targets Direct
Q3 versus Q2, obviously the base was lower, so we will see that momentum is continuing. And we are targeting similar kind of sale. Just to give direction but we are targeting to touch overall double-digit number in terms of overall protection, which includes group also.

Indicates continued focus and ambitious targets for the high-margin protection segment.

Asked by Nischint Chawathe

Hedge coverage and interest rate sensitivity Direct
So, we have, as last time also we mentioned, so we are consciously working on the hedge ratio and we have increased the hedge ratio further from last time. And that is also helping us in our sensitivities, the interest rate sensitivity that we have been showing. So, that is moving in the right direction.

Shows proactive risk management to reduce interest rate sensitivity, which is crucial for an insurance company.

Asked by Nischint Chawathe

HSBC new branch expansion and other business opportunities Direct
So, they have already launched four new branches. They are operational. In fact, some businesses also started coming from these four new branches, which they have opened in the last month or so. They are also planning to open another 3 to 4 branches in the next 3 to 4 months. So, additional business will come from these places.

Details the expansion plans for the HSBC channel, which is a key distribution partner, and mentions new avenues like Gift City and HNI segments.

Asked by Prayesh Jain

Impact of agency channel scale-up on margins Direct
Yes. So, Prayesh, this agency business, like Anuj mentioned in the opening commentary, that we will be scaling up in a phased manner. And we are very, very carefully going to expand this channel. You are absolutely right. There will be some strain on the margin in the initial period. And that is being taken care of by a couple of things which we are working upon.

Acknowledges potential near-term margin strain from agency expansion but outlines strategies to mitigate it, including growth in protection and annuity, and ULIP rider attachments.

Asked by Prayesh Jain

2 min read 6 chapters

Detailed narrative

Strong Business Growth and Market Outperformance

Canara HSBC Life Insurance reported robust performance for the 9-month period ended December 31, 2025. Individual Weighted Premium Income (WPI) grew by a healthy 20% year-on-year, with Q3 alone seeing a 29% growth. This allowed the company to outperform both private players, who grew by 13%, and the overall industry, which grew by 10% during the same period. The growth was primarily driven by sustained demand in Unit Linked business, alongside a focused strategy on increasing protection and annuity products.

Robust VNB and Margin Expansion

The Value of New Business (VNB) for the 9 months stood at ₹413 crores, marking a significant 37% year-on-year increase. Despite the impact of GST and new labor code, the New Business Margin (NBM) improved by almost 200 basis points year-on-year to 19.7% for the 9-month period. Management anticipates a full-year GST impact of 185 basis points on VNB margin, a reduction from an initial estimate of 225 basis points due to proactive mitigation efforts.

Improved Persistency and Expense Management

The company demonstrated strong customer retention, with 13-month persistency rising to 85.6% from 82.5% in FY25, and 61st-month persistency improving to 59.5% from 57.7% in FY25. Concurrently, the total expense ratio for the 9-month period improved by 130 basis points year-on-year to 18.7%. These improvements underscore the strength of customer retention, sales quality, and the long-term sustainability of the growth trajectory.

Strategic Product Focus and Channel Diversification

Growth was observed across key segments, with retail protection business growing almost 3 times quarter-on-quarter and Credit Life business growing 50%. Annuity Annualized Premium (AP) also grew 34% year-on-year, with a focus on deferred annuity. The company launched its agency business in October 2025 and plans a phased scale-up, including opening another 3-4 HSBC branches in the next 3-4 months, to diversify distribution and leverage digital assets.

Embedded Value Growth and Capital Strength

The Indian Embedded Value (EV) grew 17% year-on-year, reaching ₹6,868 crores, with an operating Return on Embedded Value (ROEV) of 18.2% on a rolling 12-month basis. The solvency ratio stands at a healthy 191%, and the board has approved raising ₹250 crores in subordinate debt to further boost capital and support future growth. Profit After Tax (PAT) for the 9 months increased 8% YoY to ₹92 crores, or 19% YoY to ₹101 crores when excluding a one-off ₹9 crore impact from the new labor code.

Macroeconomic and Regulatory Tailwinds

India's GDP growth remains robust at 7.3%, supported by structural reforms and a resilient economy. Recent legislative changes, including the Sabka Bima Sabki Suraksha amendment and increased FDI limits to 100% in insurance, are expected to accelerate universal insurance coverage and attract long-term capital, creating a compelling growth story for the sector. These factors, combined with enhanced policyholder protection and a stronger regulatory framework, provide a very compelling growth story for the insurance sector.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls