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 India's HDFC Life Insurance Company reported a near 16% rise in third-quarter profit on Friday, aided by higher investment income as premium growth moderated.

The insurer's profit after tax rose to 3.65 billion rupees ($44.02 million) for the three months ended Dec. 31 from 3.15 billion rupees a year earlier.

Investment income is a crucial source of earnings for life insurance companies as the time gap between premiums paid and claims made by customers gives ample time to insurers to earn returns on investments.

HDFC Life's investment income more than doubled to 113.70 billion rupees, while its net premium income grew 6% year-on-year during the quarter. It had grown at 12.5% and 16.5% in the last two quarters.

Analysts said the demand for higher-ticket size policies has been subdued owing to taxation changes implemented on such policies earlier this year.

Its value of new business, which measures expected profit from new premiums, grew 5% during the nine months to December, while new business margins remained unchanged at 26.5% from a year earlier.

The insurer also reported a moderate 5% rise in its total annual premium equivalent (APE) sales for the April to December period.

Kotak Institutional Equities said a likely slowdown in earnings growth at its parent HDFC Bank may have impacted APE growth for the insurer.

Shares of the company ended 1% lower after the results.

($1 = 82.9133 Indian rupees)