Q2 25/26

Oct 27, 2025

Summary

H1 FY26 premium income grew 14% YoY, with VNB up 21% and margin at 19.6%. GST poses margin pressure, but cost, product-mix and commission measures underpin guidance to preserve margins and expand distribution.

Ladies and gentlemen, good day and welcome to the Canara HSBC Life Insurance Limited Q2 FY26 earnings conference call hosted by Motilal Oswal. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Paresh Jain from Motilal Oswal. Thank you, and over to you, sir. Thank you, Sagar. Good evening, everyone, and welcome to the Q2 FY26 earnings call of Canara HSBC Life Insurance. Today from the company, we have with us Mr. Anuj Mathur, MD and CEO; Mr. Tarun Rustagi, CFO; Mr. Nitin Agrawal, the Appointed Actuary; and Mr. Amit Jain with Head IR. I will now hand over the call to Anuj for his opening remarks, which will be followed up by a Q&A session. Thank you, and over to you, Anuj. Yeah. Thanks, Paresh, and good evening, everyone. A very warm welcome to the first earning call of Canara HSBC Life Insurance for the half year ended 30th of September, 2025. My apologies for the delay in starting the conversation, which was because of technical issues. But sincerely, thanks to all of you for your time and thoughtful analysis of our results. Your continued engagement and insights are deeply valued. The financial result update is available on our website as well as on the websites of both the stock exchanges. We have also circulated decks containing key business highlights and happy to share some of them in this call. As Paresh mentioned, I have got my colleagues from the top management team. They are here with me. In fact, I also have Soly Thomas, who is the Chief Distribution Officer, Bancassurance, in addition to Tarun, Nitin, and Amit. Let me begin by extending my best wishes for this festival season and a prosperous new year ahead. This half year marks a significant milestone in our journey. Our listing on the Indian stock exchanges represents a pivotal moment, signaling our transition into the next phase of growth, more transparency and governance, and long-term value creation. This listing is not the culmination of our journey, but rather the foundation upon which we will build scale, diversification, and deeper customer penetration. First, I will give you a brief overview of the sector, which will be followed by key highlights about the results. The GST exemption on life insurance premium is a landmark reform that has arrived at a very crucial juncture for the industry. It addresses not only affordability but also long-term customer behavior by improving persistency, increasing adoption, and expanding the base of first-time buyers. In principle, it reinforces life insurance as a core savings and protection need rather than just a discretionary purchase. We believe this reform will significantly extend the industry's growth trajectory over the coming years. It also aligns well with the government's vision of insurance for all by 2047. Also, given our strong bancassurance network, we are well-positioned to capitalize on opportunities arising from GST rationalization and increased demand, which we are going to witness from Tier 2 and Tier 3 cities. On the macroeconomic front, the global environment remains volatile due to ongoing tariff and trade uncertainties and prolonged geopolitical tensions, which pose some downward risk to global growth. However, the Indian economy continues to demonstrate structural resilience, reflected in stable GDP growth and a benign inflationary environment. High-frequency indicators suggest that domestic economic activity should remain robust. Now I would like to discuss the highlights of the business performance for H1 FY 2026. Our individual weighted premium income, WPI, which is regular first year premium plus 10% of single premium, grew at a steady pace of 14% year-on-year growth, driven by disciplined execution and a balanced product mix. We continue to outperform both the overall private peer growth of 8% and industry growth of 2% during this period. This performance is a continuation of our outperformance on a three-year, five-year, and ten-year basis, CAGR. Our market share in private life insurance space has also improved by 20 basis points over previous years. If I talk about private sector industry growth, our growth vis-à-vis private sector, our market share is 2.6%, and at overall industry level, our market share is 1.8% for the financial year 2025. Total APE grew by 11% year-on-year, remaining range-bound. However, renewal premium grew by a healthy 29% year-on-year as a result of improved persistency across most cohorts. Our 13-month and 61st-month persistency has been improving consistently and stands at 84.4% and 58.4% as of 30th September 2025, respectively. We have seen a jump of 1.9% in 13-month persistency over financial year 2025. We continue to see strong growth in our credit life business, which has grown by over 40% year-on-year. Now, I'd like to touch upon the product mix. Our product mix is trending towards more of traditional mix compared to last year. The non-linked business grew at a healthy pace, reflecting a gradual shift in customer preference towards non-par products in a benign interest rate environment. As a result, the share of traditional business stood at 50%, improved by 3% from FY 2025 mix. Within traditional products, we continue to focus on the annuity segment, which now constitutes roughly 15% of our overall business. Despite volatility in equity markets, customer preference toward linked products continues, which is reflected in our share of linked business remaining steady at 50%, though it has declined by 4% versus FY 2025. Our unit-linked products are not only incurring wealth creation, but as we have started offering riders along with the unit-linked products, also providing policyholders to have enhanced protection covers through various options. This is also helping us in enhancing our margins on unit-linked products. Share of protection is now at 8% versus 4% in FY 2025, with growth visible in both individual as well as group protection segments. I will now move to channel wise performance. Canara Bank channel continues to outscore, supported by increased branch activation and strategic efforts to penetrate deeper into tier 3 and tier 4 markets, driven through customer segmentation and data analytics into high propensity customers. Our partnership with HSBC gives us access to rich customer segments where persistency is better than the overall persistency rate. We have also launched agency business in this month, and we have planned for gradual ramp-up of agency channel. I will now cover the financial and operating performance. Our Value of New Business, VNB, for H1 stood at, this is absolute VNB at INR 214 crores, which is a growth of 21% year-on-year. The new business margin or the VNB margin stood at 19.6%, reflecting 150 basis point improvement year-on-year, 1.5% improvement year-on-year. The margin expansion was combination of rising volumes with increased rider attachments. However, this was partly offset by a 50 basis point impact on account of GST. Of this, only 10 basis points impact pertains to policies written after September 25. Based on this, we expect an annualized impact of approximately 2.25% on our margin. This is without management action, and our endeavor will be to keep our margins similar to FY 2025 levels. With the withdrawal of input tax credit under this new GST regime, we may see some short-term implications, but as a company, we are well prepared to navigate this transition. We are actively implementing a series of measures to mitigate the impact. As part of our targeted review, we are optimizing our product mix with a clear focus on enhancing product level profitability. This will be driven by targeted initiatives aimed at improving margins across key offerings. Structurally, we believe this reform will strengthen the industry over the long term and there are going to be real benefits for the industry from long-term perspective. Talking of operational efficiency, the expense ratio improved to 19% for the half year ended September 2025 versus 20.5% for similar period last year. So there is a reduction of 1.5%. Our embedded value, EV, grew by 17% year-on-year, reaching INR 6,543 crores with an operating ROEV of 17.4% on a rolling 12-month basis. There is going to be approximately 30 basis point impact on EV due to GST. I will also touch upon some other financial metrics. Our profit after tax for H1 stood at INR 64 crores, which is an increase of 16% year-on-year. Our assets under management stood at roughly INR 44,000 crores, growing 11% year-on-year. Just to conclude, we remain very confident in the long-term growth potential of the Indian life insurance sector and particularly our growth trajectory and sound and improving financials. The recent GST reform is a step in the right direction and reflects the government's commitment to expand insurance for all by 2047 across the country, and we are well-positioned to take full advantage of the same because of access to customers in tier 2, tier 3, tier 4 cities as well. We will continue to capitalize on our strong banca distribution to deepen penetration driven by a team of seasoned professionals. In parallel, we continue to invest in advanced digital and generative AI capabilities to enhance customer experience, expand our value proposition, and drive operational efficiency. Thanks a lot for your time, and happy to take questions. Over to you, guys. Thank you. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then One on their touch-tone phone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press Star and then One. Our first question comes from the line of Mohit Mangal from Centrum. Please go ahead. Yeah. Thanks for the opportunity and congratulations on successful listing. Thanks. My first question is basically the impact of GST, you said that it's 0.5%. So essentially, bifurcate between what was the new business premium impact that is basically the business procured after 22nd September and the renewal premium, and how do you see the impact on annual basis? Will it be 0.5% or how do you kind of foresee this? Right. So thanks, Mohit, for asking that question. I think I partially covered this in my earlier discussion, where I mentioned that for the full year, and this is without taking any management action, it will be about 2.25%. But we have taken couple of measures, and through that, we are confident that we will be able to kind of retain our current new business margins going forward. There will be short-term impact, but because of various initiatives which we have taken. We will be able to go back to the numbers which we had earlier advised. That's helpful. My second question is on the product mix. Unit is still 50 odd percent. Do you think that will go to around 37%, which was there in FY 2024, or should we see Unit at elevated levels? See, I think it's basically the customer demand, which is quite evident in the market. It was evident last year also. Currently also we are seeing that customer preference is actually, particularly in metro cities, is moving towards Unit Linked. As such, there's no problem with the Unit Linked business as long as we can protect your margins. We have taken a number of measures to protect our VNB margins. First of all, our cost base is very low. We are quite efficient that way. In terms of our total cost ratio, you will see that we are in top quartile. Which helps us to optimize VNB margin. Number two, through new product launches, which we are going to do, and various other measures, including further sustainable savings, further OPEX savings, we will be able to protect. Also, I would like to mention that along with the unit-linked products, now we are also attaching riders. That's something which we have started about three months back, and we are already seeing a good amount of premium coming from riders attachment. That also helps in improving the VNB margins. Plus, our focus on protection business. There also, now we are looking at both retail protection as well as the group credit life. As I already mentioned, we are seeing growth of more than 40% in our credit life portfolio. All these measures will help us to recoup whatever loss is there on account of input credit. We are fairly confident that we will be able to maintain our VNB margin to the levels which I've already spoken about. Right. Just one clarification, sir. Looking at your PPT, which is the product mix on the basis of APE, non-par is basically the savings component, which is 17%. Is that understanding right? Yes. 17% is non-par savings. Very sure. Okay. I'll join back in the queue. Thanks, and wish you all the best. Thank you very much. Thank you. Our next question comes from the line of Swarnab Mukherjee from DMJ Securities. Please go ahead. Yeah. Hi, sir. Am I audible? Yeah, you are audible. Good evening. Yeah. Good evening. Thank you for the opportunity. Sir, I think my first question was in terms of your cost ratio. You have highlighted that there is 100 basis points kind of improvement in the cost ratio. I wanted to understand, sir, that as we set up our agency business, what will be the impact on the cost ratios and subsequently on the margins because of that? If you could give us some guidance related to the margins going forward, because I think these are the two key events. One is basically your investment in the business primarily on the agency side, as well as the GST impact, which you are saying that you are trying to mitigate. But if you could give some guide path on how do you see factoring in these two events, it would be very useful. That is the first one. Yeah, I will ask the other questions later. Right. First of all, actually, what we have seen in our expense ratio is improvement of 1.5%. It was 20.5% last year. It has improved to 19% as of now. As far as agency is concerned, I mentioned that earlier also, that we will go for phased- Hello. Ladies and gentlemen, we have lost the line for the management. Please stay connected while we reconnect the line to the management. Ladies and gentlemen, we have the line for the management reconnected. Please go ahead, sir. Yeah. First of all, apologies for this problem, for the disconnection. I do not know till what stage people were able to hear us. Sir, it was Mr. Swarnab Mukherjee who was asking the question. Swarnab, sir, may I request you repeat your question once again so that we can continue? Yeah, sure. Yes, sir, I think you were responding to the question on agency setup. Yeah. You know that in the course you will get some of that. Right. As I mentioned that agency we are ramping up in a phased manner and that will actually help us to maintain our margin. Maybe I will request Mr. Tarun Rustagi, our CFO, to give exact numbers. Yeah. As we are ramping up agency this year in a phased manner, we do not expect any significant impact on the various parameters. One is the cost, second one is your VNB margin and other financial parameters. In the first generally what we have seen also, the agency is expected to sell mostly shares. That will also maintain the margin. As we will generate more and more cushion from the profitability over next few months, we will start ramping up the agency accordingly. We do not expect significant impact coming from agency channel. In fact, just to add, I think the agency model also over a period of time has got evolved. Of late, we are also seeing that the distributor payouts are also getting rationalized to some extent. I think this new environment will help us to continue with our agency business, but as I mentioned, in a phased manner. Understood, sir. In terms of, sir, basically mitigating the impact of GST on our margins. Just wanted to understand what all steps we are taking and if there is any negotiation going on with our distributors, what stages are we, basically, if you could highlight the levers that you have at hand, which gives you confidence that you will be able to mitigate most of the impact. Yeah. That's a really good question. There are three things which we are doing with respect to minimizing the impact. The first one is rationalization of our operating expenses. We have been doing this and that's why we are able to maintain our cost ratios at such a low percentage. We have identified various levers and areas where we can further rationalize the cost, which is operating cost. This has already been actioned and we are confident that we will be able to complete those actions. The second part is basically the product mix shift. Basically, as Amit mentioned, the group credit life is already doing very well. That is helping us in terms of increasing the margin and therefore, some of these product mix shift is helping us to improve the margin and taking care of some of the impact of GST. The third parameter basically is the commission rationalization. Now the commission rationalization is depending upon the various distribution tie-up we are having. We are assessing each and every one as per the kind of scale and the kind of commission rates which we pay. In terms of these actions, we have already discussed and negotiated. I will not use negotiated, but we have already agreed to the agreement with most of the distributors that the impact will be neutralized on the commission side. Yeah. I would just like to add that in our case, particularly with our bank partners, our commission rates were already lower than the industry. We do not want to further cut in terms of the new business. But in terms of renewable business, we are assessing if there is a need for adjustment. But because our costs are low, including commission rates which are low, the impact is going to be much lesser compared to the competition. Right, sir. Understood. Would it be fair to assume that as we move to the second half of the year, we will not see any major impact of this coming through? Or if you could quantify, if you assess that some impact might come through in Q3 and then normalize. Yeah. So, like we mentioned that we are targeting to maintain the VNB margin at the current level after taking the impact in this second half. Second half is going to be, in terms of the business volume also is going to be higher than the first month, only the month impact which you have seen. But we are confident that we will be able to maintain this level of margin and show the growth over previous year and next year onward, which is FY 2026, 2027, the impact will be almost minimized. There are many steps which we have already initiated. Some of them have already been actioned and agreed, like I mentioned. So it will continue to help us in terms of maintaining the VNB margin. Sure, sir. Very helpful. Just couple of quick data keeping kind of questions. One is on your protection mix. If you could split that up between individual products and credit life. I think right now it is showing 8% on the basis of APE. What would be the mix between individual and group in that? That is the first one. Secondly, if I look at your persistency disclosure, I mean, on a half year to half year basis, there is an improvement, but if I look at the numbers basis, say 3 months ended June and 3 months ended September, there seems to be a drop in the numbers. I just wanted to understand how to read this. Out of 8%, the protection, majority of the business is a contribution is done by the group credit life which is also very profitable. Individual protection business is now picking up because we have, like we mentioned, there is a demand which is coming up now for basically asking for more and more protection business. There is a direct 18% trading which is happening there. As of now, this is mainly coming from almost 75% is coming from group protection within group credit life. Very good. On the persistency query. Persistency. Sorry, what is the question? Can you repeat that? Q2 versus Q1. Overall H2, H1, there is decent increase in premium persistency, but quarter-on-quarter, there is I think some decrease which we are talking about. Okay. Right. Just let us come back on this particular point. Yeah. We will, but just one thing I would like to mention, that this change which happened in GST, many customers actually decided to kind of take clarification also came that there was deferment of premium payment by customers. If you look at very short-term, quarter-on-quarter, partly it could be on account of this clarity which came around GST for existing customers, which came actually on the last year of the quarter. Okay, sir. Understood, sir. Okay. Thank you so much, sir. Thank you and all the best. Thank you. Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. Our next question comes from the line of Nitish from Investec. Please go ahead. Thanks for the opportunity. The first question is on product mix. The share of annuity is pretty high for a purchase on listed peers. What is driving it? If you can share some details about the product structure within annuity, how much is regular pay annuity and how much is single premium annuity? Which specific channel is driving that? That is a quite commendable share of annuity that you have achieved. Right. I am requesting our appointed actuary, Mr. Nitin Agrawal, to provide these details. Right. So far on the annuity side, we have seen the potential of annuity in terms of the market and there is good margin. I think annuity, again, from a margin, GMV margin perspective, it provides margin similar to our large non-par savings business which is the reason we increased focus on annuity. In terms of the split, most of our above 80%-90% of the annuity portfolio comes from actually the regular pay deferred annuity. Just adding, there is a clear segmentation which we have and that is why you see an increase in the annuity business both in Canara in terms of customer segmentation and that is the work of our outcome or a result of our deeper analytics along with these distributors that we are able to identify the need of customers who are actually looking for annuity products both in Canara and HSBC. Especially in HSBC, you can see that there is a clear customer segment which is looking for it. Therefore, you see that this annuity proportion is actually increasing over a period of time. As Nitin mentioned, mostly it is deferred annuity which is profitable for us. Just to add, my long-term view is that this particular segment, which is retirement financial pension product, I think there is an increased demand coming in. That is because of the longevity of customers and all that and we see this as a segment where I think there is good revenue opportunity which is there and we are going to capitalize on it. Sure. Sir, on annuity, what is the average deferment period and how are we hedging it? The average deferment period on annuity is about 4 to 5 years. That is the maximum on which we sell, but it goes up to 10 to 11 years as well. The maximum proportion that we are selling is up to 4 to 5 years and what was your second question, sorry? How you are hedging. We are hedging so we are also investing in derivatives for our annuity book as well. We are hedging, as we sell, we are hedging most of this book through forward rate agreements. Sure. Secondly, on distribution mix, if you can share data on the distribution mix for H1, how much is Canara Bank, how much is HSBC and how much is other channels on an overall APE basis? Right. I think this we covered in our RHP also. Broadly, 70% of the business comes from Canara and another 14%-15% comes from HSBC, and remaining is alternate channels. As we grow agency, we expect that in percentage terms, the contribution from the banks may come down and overall alternate channels will grow. That's a broad composition. It may vary month to month, quarter to quarter, but broadly, this is how the current mix is. Channel mix. Understood. Sure. Lastly, on VNB margin, are you guiding for around 20% VNB margin for the full year? Is that the guidance despite GST impact? Increasing towards that, you can say that. Okay. Thank you, sir. That's it from my side. Thank you. Thank you. Participants, you may press star and then one to ask a question. Our next question comes from the line of Vinod Rajamani from Nirmal Bang. Please go ahead. Thank you for taking my question. Just wanted some more details on this agency rollout, if you can provide some kind of color on that. That would be question number one. Question number two would be on how many riders and what is the attachment ratio in terms of the policies that you have and the riders that are attached, how many policies currently have a rider attached and what is the aspiration in terms of the rider attachment ratio? These are two questions that I have. Agency. Yeah. I'll go first on the agency. As I had mentioned, we are going to ramp up in a phased manner and we are going to use our current infrastructure. We have 104 branches which are there throughout India. We are increasing our agency presence in these locations first and there's a ramp-up plan as part of our long-term strategy which has been agreed by the board and we will be gradually increasing. But at the same time, I would like to mention that we would not like to see any VNB compression on account of agency. The agency ramp-up will be gradual and diversification over a period of time. We are in no rush actually to scale up agency to levels which can impact our margins. I hope that answers the question. Yes, sir. That is very clear. Yeah. On the rider attachments, I just want to highlight that we have only introduced rider last year, so it is gradually picking up. In the recent business that we are selling this year, it is about 65%-70% already, and we are only looking to increase this further. Okay. Noted. Thanks so much. All the best. Thank you. Yeah. Thank you. Thank you. Our next question comes from the line of Sukrit D. Patel from ICICI Securities Private Limited. Please go ahead. Good evening to the team and congratulations on a successful quarter. I have a specific question for Mr. Anuj Mathur, a forward-looking question. You have briefly explained about the margins and all the books and everything. Yes. My question is, as customer expectations shift and digital adoption deepens, what long-term changes do you foresee in how Canara HSBC Life Insurance builds trust and relevance across different customer segments? Yes, thank you. A very good question, and ask about the long-term strategy also as to how we are going to grow the business. As I mentioned earlier also, the space we are in, wherein we have very good bancassurance presence, our penetration in current customer bases we have, the captive customers we have, is less than 2%. Our focus will continue to be on the bancassurance business along with ramping up the agency. We are fully committed to agency business, and you will see ramp-up happening over a period of time. But banca will continue to lead in terms of growth. As I mentioned, less than 2% penetration. What we are also seeing, and you touched upon the digitalization, which is a very important aspect, we are seeing that demand is coming from tier 3, tier 4 cities also. We are fully equipped. Just to mention two numbers, because as a company, we have always invested in technology and we have achieved very high level of digitalization. Roughly 99% of our business, we acquire digitally. When I say we acquire digitally, even with banks, we have got digital assets through which the customer is onboarded, making sure that onboarding can happen very smoothly and location is not a constraint. I think that's something very positive about us, that 99% of our business is digitally onboarded. Number two, on servicing also, roughly 85% of customer service requests are on DIY journey. That way we have achieved very high level of digitalization and these channels will grow. They are under-penetrated right now. We are also focusing in terms of growing our digital business. That's also on the card. We are already having decent, I'll say, reasonable business which is coming from digital-only also. Yes, overall digitalization, we have a clear strategy to use that to our advantage, both for banca business, agency business, as well as alternate channels. Overall, we continue to outgrow the industry performance. If you see our growth rate in the past has been much superior compared to the industry. You take any time frame, three years, five years, 10 years, we have always overachieved the industry growth. We are very confident that in years to come also, because of our superior business model which we have and a strong support, we will continue to deliver good numbers. Thank you. My final question is to Mr. Rustagi. Yes. Looking ahead, what kind of internal levers or any strategic choices do you see as most important for balancing growth with disciplined risk and capital efficiency? One is, the product mix play a very important role in terms of the capital requirement and also risk. If you actually see, we have been able to manage the balance product mix. Obviously, we are trying to shift the product mix and expect that product mix will move as per the customer demand towards more traditional business. For that, we have a very robust hedging strategy, which is able to help us in terms of protecting the interest rate risk. Apart from that, the cost management is another lever which we are constantly working and able to rationalize or maintain our cost ratios. Not only operating expenses, but also basis the arrangement or agreement which we are having with our distribution partners, we are able to maintain the cost ratios very well. Also, another thing which you can clearly see in terms of outcome is our persistency, which is basically a right sale, need-based sale. Need-based sale is resulting into higher persistent customers and a satisfied customer, which is helping us to improve the persistency renewal book, which is further helping us improving the VNB margin and value. These three things are very critical. Keeping all these three, we will continue to outperform industry basis the distribution model which we are having, the reach which we are having. All these things are helping us in terms of outperforming industry on all the financial parameters, including top line. Cost efficiency is a USP. We are at a competitive edge there with our cost ratios, both OPEX as well as commission ratio being very reasonable. I think that is a very detailed item on your part, and I wish the entire team best of luck for the Q3. Thank you. Thank you. Our next question comes from the line of Mr. Paresh Jain. Please go ahead. Hi We are not able to hear. Pesh, your line is muted. Yeah. Sorry. Yeah. I'm just looking at the interest rate sensitivity, what we had disclosed in the RHP and the presentation that we have disclosed. The sensitivity has gone down. What's driven that, and do we see further improvement there, or how should we think about this? That would be my first question. Hi, thanks for this question. We have been constantly working on this. I think two of the main reasons how we managed to get our interest rate sensitivity down is, obviously, to increase hedging. We've been constantly increasing our hedging, more and more visibility, right on position as well as annuity. We have been hedging that business. Secondly, we've also been constantly working on the duration of our assets. Improving the duration of our assets. These were the two reasons how we managed to reduce and we've been seeing this constant. Yes, we should expect to see further reduction in this in the coming months. What percentage of our non-par book will be hedged? What percentage of non-par? It is about 70%. 70%. Okay. Do you expect this to go to about 85%, 90%? Yes, that is the intention. Got that. To go further to 80%. Okay. If you also look at the chart, we also have a dynamic repricing framework. We are also looking to keep repricing as per the interest rate movements to ensure that the lending margins are maintained, so we are not adversely impacted by the interest rate movements. Got that. Second question is on the efficiency in the Canara Bank channel. What are the medium-term plans to increase the efficiency there in order to drive more growth there? In terms of efficiency, what I am understanding is you are talking about the productivity, right? In the Canara Bank. Yeah. Productivity. Can I request Saurabh Thomas, our CDO, to just provide a response? Sure. If we look at, we have almost 6,000 touchpoints in Tier 2 and Tier 3, and that's one of the strategies which is distribution, leveraging our distribution expansion. Currently we are having just less than 2% penetration. We will keep on focusing on these Tier 2 and Tier 3 cities where we have more than 6,000 touchpoints to increase our productivity. Yeah. This is in addition to the tech usage. You all are covering the bank which we are talking about, and the kind of enhancement and advancement they're doing on the technology side, which is analytics, plus also the segmentation is another thing. We are also working very hard and very positively and very effectively on the digitization of their, one is process and also the touchpoint from the customer like app is there, website is there. All these things are going to help us in terms of reaching to the last customer, each and every customer of the Canara Bank, which is going to help us in terms of improving the productivity in each of the branches and also enhance the sales in this channel. Got that. The third question was on the commission discussion that you are having. You mentioned that you are looking to cut commissions. Is it also in the discussions are on with both Canara and HSBC as partners, or is this about the remaining 15% is where you would look to cut down commissions? I think we covered that in case of Canara and HSBC, we are already having a very reasonable commission rate, first year commission rate. What we are discussing is mainly on the renewals, which is having basically a longer impact in terms of the other financial parameters. So that discussion is going in a positive direction. For balance, 15% is definitely on the both front. That discussion is also going in a positive direction. Got that. Copy. That's all from my side. Thanks. Thank you. Our next question comes from the line of Harshal Mehta from Ambit. Please go ahead. Thank you for the opportunity and congratulations for the listing. Just two questions. First, in terms of agency channel, like you and Delhi are now expecting a phased ramp-up of the channel. If you can give some current numbers, like what type of number of agents, agency fee, their productivity, and how do you see agency APE share moving over the next few years? The new initiatives which you are taking in this channel, that will be helpful. Secondly, in terms of our product-wise lapse and surrender rates, what you assume. How to read those in lines with the persistency for each product? If you can give some comfort on assumed lapse and surrender rates, that will be my second question. Right. I will answer your first question, which is on the agency, and then I will request our appointed actuary to talk about the lapse and surrender rates. See, in terms of agency, as I mentioned, we are going to ramp up in a phased manner. I will not like to give any forward-looking kind of in terms of numbers. I will not like to give any statements. But yes, over a period of time, you will see the growth there. In agency also, see, at times there are benefits of starting late. Now when we are starting agency, we are also evaluating various models within agency. Which will help us in terms of cost optimization and also generating more business with maybe not very high number of agents. So that is what we are looking at, that we will look for hybrid kind of model, different models which are existing, which is variable agency model, tied agency model, and we will try to achieve a balanced mix between the two, and we are going to grow this channel over a period of time. I will not like to make any statement in terms of number of agents and all that, but as long as we are protecting the VNB margin and diversifying, I think we will be all okay. Yeah. On the lapse and surrender rates, are you aware that the lapse and surrender rates vary by product? There is not a single product depending on the channel, depending on the features, it does vary. So there is not one single rate which will apply to all products. As yet, we are seeing a continuous improvement in our lapse and surrender rates and typically we are, especially on the Unit Linked side, it is slightly better, which is even better from the overall profitability perspective. But we are seeing a further improvement both on Unit Linked as well as the traditional business side on lapse and surrender rates. Thank you, sir, and all the best. Thank you. Thank you. Thank you. Are we done or are there more questions? Sir, there are no questions at the moment. Participants, you may press star and one to ask a question. As there are no further questions, I now hand the conference over to the management for closing comments. Yeah. First of all, thanks a lot to all the participants for joining for this late evening discussion, but very insightful and very interesting one. Now since we are listed, I am looking forward to this engagement on regular basis. Every quarter we will be publishing our results and look forward to input coming from all of you, and please feel free to ask questions as we move forward in this journey. Thanks once again. Thanks a lot. Thank you. On behalf of Motilal Oswal, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.