Canara HSBC Life Insurance: Navigating Growth and Digital Transformation in H1 FY26

Canara HSBC Life Insurance Limited has reported a robust performance for the first half of fiscal year 2026 (H1 FY26), demonstrating significant growth and strategic resilience. The company's recent listing on Indian stock exchanges marks a pivotal moment, signaling a transition towards enhanced transparency, governance, and a renewed focus on long-term value creation. This period has been characterized by strong financial metrics, strategic initiatives, and proactive measures to address market dynamics.

During H1 FY26, the company's individual weighted premium income (WPI) grew by an impressive 14% year-on-year, significantly outpacing the overall private player's growth of 8% and the broader industry's 2%. This outperformance is a continuation of their consistent growth trajectory over the past three, five, and ten-year periods. Total Annualized Premium Equivalent (APE) saw an 11% year-on-year increase, reaching ₹1,092.3 crore. Renewal premium also showed healthy growth, climbing 29% year-on-year to ₹2,333.5 crore, driven by improved persistency across various cohorts. The 13-month persistency improved to 84.4%, and the 61-month persistency reached 58.4% as of September 30, 2025, reflecting a strong focus on quality business.

The Value of New Business (VNB) for H1 FY26 stood at ₹214.3 crore, marking a 21% year-on-year growth. The VNB margin improved to 19.6%, a 150 basis points increase year-on-year, reflecting a combination of rising volumes and increased rider attachments. However, the company acknowledged a 50 basis points impact on VNB margins due to GST, with an estimated annualized impact of 2.25% without management intervention. Despite this, management is confident in maintaining VNB margins similar to FY25 levels through strategic measures. The expense ratio also improved significantly, dropping to 19% for H1 FY26 from 20.5% in the prior year, highlighting enhanced operational efficiency. The Embedded Value (EV) grew by 17% year-on-year, reaching ₹6,543.5 crore, with an operating Return on Embedded Value (RoEV) of 17.4% on a rolling 12-month basis.

Strategic Priorities and Digital Leadership

The company's strategic priorities revolve around customer centricity, distribution leverage and expansion, profitability growth, and technology and analytics enablers. The product mix is trending towards a more traditional mix, with non-linked business growing at a healthy pace. The share of traditional business stood at 50%, a 3% improvement from FY25. The annuity segment now constitutes roughly 16% of the overall business, driven by increased demand and profitability. Protection business also saw growth, now contributing 8% of APE, up from 4% in FY25, with significant growth in the group credit life segment.

Canara Bank remains a robust distribution channel, supported by increased branch activation and penetration into Tier-3 and Tier-4 markets. The partnership with HSBC provides access to niche customer segments with better persistency. The company has also launched an agency business, planning a gradual ramp-up to diversify distribution avenues without compromising VNB margins. The management aims to hedge 70% of its non-PAR book, with an aspiration to reach 85-90%, to manage interest rate sensitivity effectively.

Digital Transformation and Customer Experience

Digitalization is a cornerstone of the company's strategy. Approximately 99% of new business is acquired digitally, ensuring a seamless onboarding experience regardless of location. For servicing, about 85% of customer service requests are handled through DIY (Do It Yourself) journeys, reflecting a high level of digitization. The company is leveraging fintech and central agencies for comprehensive underwriting decisions and utilizing AI/ML for early claims prediction models and smart underwriting, mitigating risks at the onboarding stage. The customer app has seen over 468,000 downloads with a 4.6 rating, offering extensive features for personal details management, renewals, fund management, and policy management.

Outlook and Conclusion

Canara HSBC Life Insurance is well-positioned for sustained growth, driven by its strong bancassurance network, expanding digital capabilities, and a clear focus on profitability and risk management. The company's ability to consistently outperform industry averages, coupled with its proactive approach to regulatory changes like GST, reinforces its commitment to long-term value creation. The management's disciplined execution and strategic investments in technology and distribution channels are expected to continue driving growth and enhancing customer trust in the evolving Indian life insurance landscape.