ALM Strategy and Insurance Market Opportunities

Financial risk management framework Natural hedges Protection and longevity businesses Unit linked and non par savings products Broad-basing of counter-parties for FRAS Product design & mix monitoring Prudent assumptions and pricing approach Return of premium annuity products (>95% of annuity); Average age at entry ~58 years Deferred as % of total annuity business < 30% with average deferment period <4 yrs Regular monitoring of interest rates and business mix ALM approach Target cash flow matching for non par savings plus group protection portfolio to manage non parallel shifts and convexity ■ Immunise overall portfolio to manage parallel shifts in yield curve (duration matching) Managing Risk Residual strategy External hedging instruments such as FRAS, IRFs, swaps amongst others Reinsurance H1 FY24 Overall Non par 1 EV EV Sensitivity remains range-bound on the back of calibrated risk management VNB VNB VNB VNB Margin Margin Margin Margin (1.5%) (2.2%) (2.2%) (2.8%) (1.5%) (2.8%) (2.8%) 0.7% 0.9% 2.7% 0.7% 2.4% 1.2% Over 99% of debt investments in Government bonds and AAA rated securities as on Sep 30, 2023 FY23 Sensitivity Scenario Overall Non par 1 EV EV Interest Rate +1% Interest Rate -1% (2.4%) 2.1% 1.4% 19 1. Comprises Non par savings (incl annuity) plus protection Profitable distribution Diversified Customer growth first management Risk Technology, digital & mix & governance Analytics HDFC Life

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