Canara HSBC Life Q1 FY27: Growth, mix shift, and improving VNB margin

Canara HSBC Life Insurance opened FY27 with a strong operating print across growth and value metrics. For the quarter ended 30 June 2026 (Q1 FY27), individual weighted premium income (WPI) rose 18% year on year to INR 469.8 crore, and annualised premium equivalent (APE) increased 19% to INR 585.3 crore. Gross premium grew 24% to INR 2,161.1 crore, supported by healthy new business momentum and a 22% rise in renewal premium to INR 1,117.4 crore.

Profit after tax increased 20% year on year to INR 28.1 crore. The company also reported a year-on-year improvement in value metrics, with Value of New Business (VNB) rising 29% to INR 123.6 crore and VNB margin expanding to 21.1% from 19.5% in the prior-year quarter. Embedded Value (EV) stood at INR 7,382.8 crore, up 16% year on year, with Operating RoEV reported at 19.7% on a rolling 12-month basis.

Mix shift: traditional and protection gain share as ULIPs moderate

The quarter was marked by a visible product mix rotation. On an APE basis, the company’s ULIP share reduced to 36.2% in Q1 FY27 from 49.2% in Q1 FY26, while traditional products rose to 63.8% from 50.8%. Management attributed this to a combination of choppy equity markets affecting ULIP sentiment and a deliberate push to grow the traditional franchise, particularly given the company’s customer profile in Tier 2, Tier 3 and Tier 4 locations.

Protection was a clear bright spot. Protection APE increased to INR 74.2 crore from INR 52.4 crore, reflecting 42% year-on-year growth. On the earnings call, management linked the acceleration to the positive headwind from GST waiver for protection products and a sharper focus on protection-led penetration in smaller branches. Management also noted that the first quarter typically shows a higher protection mix due to PMJJBY collections.

Annuity APE grew 14% year on year to INR 83.8 crore. The company reiterated its interest in growing deferred annuity given its long-term value characteristics and earnings visibility.

Financial summary and operating levers

The company’s growth translated into higher new business value. VNB increased 29% year on year to INR 123.6 crore, supported by better volumes and a favourable business mix. The VNB margin moved up by 160 basis points to 21.1%. The VNB walk presented in the deck attributed margin improvement largely to business mix and assumption changes, with expenses acting as a drag.

Management explained that the total expense ratio increased to 20.7% from 19.6% in the prior-year quarter, primarily due to GST impact. Management indicated that, excluding GST impact, the expense ratio would have been broadly flat year on year. It also suggested the year-on-year GST comparison should become less adverse in later quarters since the prior year had GST impact starting September.

Persistency trends remained stable to improving. 13-month persistency improved to 85.9% from 84.0%, and 61-month persistency was stable at 55.3%. Claims settlement ratio improved to 98.85% from 95.90%, which management described as best in class.

Distribution: bancassurance remains core, agency scaled in phases

Distribution continues to be anchored by bancassurance. The presentation disclosed a Q1 FY27 channel mix based on individual WPI of Canara at 59%, HSBC at 21%, other banks at 6%, and others at 15. Management added that Canara and HSBC together contribute about 80% of business.

The quarter saw a strong performance in the HSBC channel, which management linked to branch additions and a larger base of relationship managers selling insurance. Canara was described as flat in the quarter, which management attributed to mix changes towards traditional products and lower ticket sizes in certain markets.

A key strategic theme remains channel diversification, with agency rollout progressing as planned. The company has onboarded over 1,000 agents and collected about INR 15 crore of APE in the quarter. Management was explicit that agency has an initial business strain and guided that agency could be a 1% to 2% margin drag for the next 2 to 3 years, turning VNB positive from the fourth year as scale and productivity improve.

Technology and customer experience: AI and digital rails as enablers

The company positioned technology as a core enabler across customer, revenue, controls and people productivity. It highlighted initiatives such as propensity models for cross-sell, predictive models to identify lapse and surrender risks, automated quality checks with expanded call sampling, and early-claim risk detection at policy login.

A significant initiative described was a GenAI underwriting copilot designed to automate decision-making in line with board-approved policies, recommend additional due diligence, and correlate underwriting decisions with early claims experience to identify risk patterns. The company also highlighted scale in digital servicing, including 5.5 lakh plus unique mobile app users and about 99% of claim submissions routed via digital mode.

What to watch from here

Management refrained from issuing fresh full-year numeric guidance given market volatility and geopolitical uncertainty. It reiterated that growth is expected to remain in line with the previously stated trajectory and highlighted that ULIP mix should normalise towards a 45% to 50% range over time.

The quarter’s message is clear. The company delivered strong growth and improved new business profitability while leaning into traditional and protection products, and it is investing in distribution diversification and technology capabilities. Near-term margin optics are influenced by GST impact and the planned agency build-out, but management expects GST comparatives to soften in later quarters and agency strain to reduce with scale.