Q3 20/21

Jan 22, 2021

I now hand the conference over to MD and CEO, Ms. Vipakaradhar. Thank you, and over to you, ma'am. On our results for the nine months ended 12/31/2020. The results, including the investor presentation, press release and regulatory disclosures are already available on our website as well as that of the stock exchanges. I have with me Suresh Badami, who is our Executive Director Biraj Shah, CFO Srinivasan Patsarasi, our appointed actuary and Kunal Jain from Investor Relations. I will run through the key highlights of our nine months FY 'twenty one results and would be happy to take questions post that. Starting with an update on business performance. We are witnessing a lift in customer confidence, which is also reflected in the new business premium trends for both the individual as well as the group credit product business. We continue to see a pickup in savings business on a sequential basis on account of an increase in both the average ticket size as well as number of policies. We have recorded a growth of 8% in terms of individual WRP during nine months FY 'twenty one. This is on a base of 31% growth last year. Our performance compares well against the private industry, which degrew by 6% on a base of 16% growth in nine months last year. We sold about 6.8 new policies, registering a Y o Y growth of 6%. Our market share in terms of individual WRP has increased by two fourteen basis points from 14.3% in nine months FY 'twenty to 16.4% in nine months FY 'twenty one. Our market share for the group and overall new business segments amongst the private sector players is at 27.322.3% respectively. Our product mix remains balanced with ULIPS at 23%, non pass savings at 30% and par at 35%. Our individual and group annuity business saw strong growth in nine month FY 'twenty one of 42% with annuities contributing over 5% of our individual APE. Our constant endeavor is to identify sources and means to grow our annuity business, including empaneling corporates and introducing new product variants while ensuring appropriate pricing and risk management. We see signs of demand for individual protection reverting to normal levels after the strong surge in quarter one on the back of the pandemic and expected price increase. We remain confident about the medium to long term prospects of protection in the country on the back of under penetration as well as increased awareness around the need for protection. We remain focused on maintaining pricing and underwriting discipline whilst addressing this opportunity. Growth in protection business for nine months FY 2021 stands at 17% with the share of protection at 7% for nine months FY 2021. Renewal growth continues to trend well at twenty two percent with 87% being done via digital modes. While we continue to monitor collections closely and remain watchful about emerging persistency trends, we are seeing good renewal traction on our new products that have now come up for their first renewal premium collection in the last few months. New business margins continue to show an improvement on sequential as well as Y o Y basis on the back of growth and a favorable product mix. The NPM for nine months FY 'twenty one stands at 25.6% with the value of new business in the nine month period at INR $14.00 8 crores having surpassed nine months FY 'twenty value of new business. Our operating return on embedded value stands at 18.3%. We settled twelve seventy one individual and five forty two group COVID related claims as of December 2020. The frequency of claims information has been higher in quarter three. While our actual overall experience remains within our estimates, we continue to monitor the claims trends closely and we'll keep reevaluating the adequacy of the COVID reserve through the course of the next quarter. Our profit after tax grew by 6% to INR $10.42 crore and our solvency position remains healthy at 202%. Next, on channel performance. We continue to see strong growth in the bank assurance channel, which has grown at 20% during nine months FY 'twenty one. Within bank assurance, growth at HCFC Bank continues to trend well, thus retaining our market share. Agency channel continues to gain gradual traction in quarter three with a focus on a profitable product mix and maintaining quality of business. We are actively collaborating with the new bank assurance partners including Yes Bank and SBI Capital Markets on system integration and commencing new business. We remain focused on tapping a new generation of customers through our online channel, while expanding our geographical presence across the country, especially in non metro. Moving on to product performance. Our focus on driving a balanced product mix, backed by our suite of innovative products is enabling us to effectively meet customer demand. I'm happy to share that we have launched a new term plan, HDFC like Fit to Protect Life yesterday. This plan has innovative features such as auto balancing life cover and critical illness cover, an option to get a fixed survival payout from the age of 60 years amongst other features. There has been a concerted effort to smoothen customer journey, refine pricing appropriately while continuing to be stringent on underwriting. We believe that these are some of the critical building initiatives taken to address the long term protection opportunity. Our credit protect business for quarter three stood at 95% of previous year's volumes as compared to 64% for quarter two. This has resulted in CC premiums improving to 63% of previous year's volumes for nine months FY 'twenty one. Our balanced product mix continues to provide a natural hedge across mortality and interest rate risks. We continue to closely match our asset liability cash flows for the guaranteed savings book. While sensitivity only tests small and linear movement in interest rates, it continues to be range bound. Our risk management approach has been stress tested and validated by an external reputable actuarial firm. Based on technology, we continue to invest in digital assets with a view of simplifying and buying and servicing experience for the customer. These include LifeEasy, an end to end term plan buying platform, POSP, a simplified lean journey for sale of point of sale products, Instrasip, a simplified buying journey akin to the Safeway, LifeMex is a comprehensive three sixty degree platform for group business providing capabilities from issuance to claims. These assets also give us an edge in a competitive multi tie environment enabling us to integrate with partners quicker and issue policies and service faster. To conclude, given that the vaccination drive has been initiated and the economic momentum on the ground seems sustained, we will strive for continued new business growth and an upward trajectory on new business margins whilst adhering to a conservative risk management approach. Our focus remains on ensuring a balanced product mix, diversified distribution with innovation on both new product offerings as well as technology led solutioning being core to what we do. The detailed disclosure on our results is available in our investor presentation. In the end, I would like to thank all of you for your continued support of our company. We are happy to take questions now. Thank you very much. We will now begin the question and answer session. Questions. The first question is from the line of Suresh Ganapaji from Macquarie. Please go ahead. Yes. Thanks. Hi, Vivek. Just two quick questions. One is on the new labor force. It's of course, seeks to increase the basic pay, right? I you you are seeking to have 60% of your overall salary in basic pay and thereby increasing the overall CPC leverage. Do you think that there is the potential to actually increase the amount automatically thereby clubbing the 1 lakh 50,000 and therefore reducing the limit available for insurance? And therefore, do you think that can have an impact on your business? Point number one. The second thing is that the non par guaranteed now that you have for cost more than a year, would you be in a position to share what is the thirteen month persistency ratio there, Veeva? Yeah. Hi, Suresh. So non power guarantee actually we already have put out the details on our in our investor presentation. I'll tell you the slide in a minute. And while we do that, yes, it is Slide 29. So we have picked up in terms of traditional. If you want to further break up, we can maybe give that to you offline. But right now we have traditional unit chain protection and then overall company, wherein it is 92% it's completely above 90% inflation with the thirteen month persistency on non cash. So very low surrenders. And anyway, as you know, we have stress tested it even if there were zero surrenders or lapses rather, even then there would be no stress on the guarantee that has been given. But as we stand today, it is about 90%. On your point on tax, even there we have a slide actually in our investor presentation, wherein tax is now no longer becoming really a big reason for us to for people to buy life insurance. It used to be as high as in quarter four as much as 40% contribution of quarter four towards buying insurance. But now it is like number seventh or eighth reason. This is on Slide 27. So even when there was an entire change in all the allowances, even at that time, our financial consultants were not up in arms to say that this is going to impact us a lot. And really, there was no murmur at all. Maybe it might be amongst certain customer base, but it's not that relevant for us. So coming back to your question, any kind of labor law changes or changes, we don't really expect that to be a big driver. Okay. And finally, your distribution, there have been some of your peers there, obviously some of the land partners have taken a stance not to sell the same kind of products and stuff. It's not something that you're seeing across your distribution channel. Right? I mean, every every distribution process that you add is quite open to selling the entire product to each of the share. Right? Absolutely. So this is on slide 15 of our presentation wherein we have broken down channel wise, segment wise cuts. And there you'll see that, yes, it is pretty much balanced. If I were to take Bancassurance, it's like a third, a third between unit linked, par, nonpar and so on. So absolutely and that's where different products are suitable for different types of customers rather than just taking a simplistic view that customers don't understand yet. The customers are getting reasonably nuanced at least amongst the mass affluent salaried and non salaried. So they do understand as to what they're buying. So yes, I'm happy to say that it's more driven by what the suitability rather than the distribution partner not wanting to sell it. So I can only add, Sai Gubam, on this that we do work very closely with all our partners to understand what is their strategy in terms of their customer segment, their customer profile and their comfort of products. So like we look at it from a customer perspective, is the suitable product, right mix and we also look at what is the partner strategy in terms of what kind of products we look at. And that's why we have the ability to work with partners who are, let's say, 18%, twenty UL and the other way around also where people are higher on UL. But the idea is to sit and work this whole thing together until we get good quality business and the right customer. So we don't have any partner which is saying, look, we don't want to sell this or this is not something there. We work together and work on. And overall, because of our diversified distribution there, we're able to manage the mix, which reflects in our Sorry, one last quick question and squeeze in. At the margin, we are hearing that some of the pent up demand, which is there for protection as just the gaining of in December or so. So have you seen something like that happening in your portfolio? Yes. So in terms of just Google searches, it went through a peak and then had tapered off. However, within whatever was happening in terms of Google searches, we have been right up there in terms of whatever people were searching. Although overall, it might have gone down. Now in December, we are again seeing an uptick. And frankly, Suresh, we like it when it is a more sustainable than something that is just flavor of the season because that's usually not sustainable. So we like it when people realize that they need protection, maybe there's a lag. But we are beginning to see that lag coming through and now and upwards. Let's see whether that is sustained. But I would also like to believe that it does take time and usually we have seen even in some of the other pandemics, a six to nine month lag between a pandemic and really people realizing the need for buying freshly termed insurance. Thank you. Thank you so much. Thank you. Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead. Shreya, this is Rajesh. Just continue with us. Sir, we are sorry, but we are unable to hear you clearly, sir. Can you take the phone off speaker, please? Yes. I hope this is better. Yes. So my question was on continuation to the production trend. Whatever we implied from IRDA numbers, even December, some assured looked like a 20% kind of contraction and probably reflecting in our protection AP also. Now now now what I find really, you know, a little underwhelming, if I can use that word, is now even for nine months after this spike, we had a 17% protection growth, and that obviously has some pricing impact as well. So the summer short growth is actually a little underwhelming in a pandemic year, which could have actually been quite a you know, the impact would have been larger. So just want to have your little more detailed view on how you see this. Yes. So, Adesh, savings has come back quite meaningfully in quarter three. And that's why you see as a percentage, summer short, just given the savings does have a lower amount of summer short, optically looking like it has tapered off. But that's not the case, like I explained. Also, have been used to in India getting protected through savings products. I don't think that is a wrong strategy necessarily. Today, IRRs are as competitive as some of the other products that people can invest in. And so to some extent, that has gone back to savings. People are also post pandemic or towards the end of the pandemic also allocating higher ticket prices towards savings product. And that is really what you're seeing. Now within that, HDFC Life will tend to overall grow while you mentioned 17%. Our NOPs have grown as well as our ticket size. So all the indicators are in the right direction. It appears subject to this reason. Basically, if you sell a large sensor or non car sensor product, the protection bundle with that itself is meaningful. That's why you are seeing protection being a little the summer short growth in protection being less. Is that what you're trying to do? And they might have had they might have bought our customers might have bought a clear term also earlier. So they are looking as a bundled product. They might buy a Sanjay Par Advantage, Sanjay Plus or even a UniSync product. And so there you will see typically a 10x cover and versus say 100x cover or 40x cover. And so optically it looks versus the quarter one. Quarter '1, our term grew by 50%. H1, it grew by 38%. So versus that, it looks subdued. So I'm a believer and that it's not only going to be a protection story like it is made. Protection will increase gradually, but it has to be done in a calibrated manner with underwriting in mind at least for us. So it will be for the foreseeable future both co existing and slowly it will be wherein the younger people buy more of protection. While people above 45 for example will continue to buy savings debt protection. Okay. And ma'am second question direct again to protection is from a reinsurer side, do you get to confirm that the reinsurers may not ask for another time anytime soon? Are we there or that's still uncertain for next year? No, I think that will remain uncertain into the foreseeable future. And that's why if you overall look at our term growth, it has been somewhat muted because especially in this quarter, we don't want we want to partner with our reinsurers. We don't want to just throw caution to the wind and ride business and take on business whatever is coming our way because in fact, I think people will want to buy protection. So that's not necessarily what fits into our risk appetite and certainly not what fits into reinsurers' appetite. But if companies continue to write a lot of term business, which they haven't done fairly robust underwriting, then at some point in time, reinsurers are going to reprice. So it really depends on the collective underwriting behavior of the industry more than any one insurer or the other. But the story is by no means over and that's why it's important that as a sector we are we treat the extension of reinsurer arrangements as if it's our own risk management part of our company as against just passing on the risk to somebody else to hold that hot potato. And all of that is part of the growth, orderly growth of selling derm in a young country. Perfect. That's a follow-up from my side. And I should have started off with, Kamraj, your traditional business volumes have been surprising very, very strong. Congrats on that. Thank you, Atush. Thank you. The next question is from the line of Sankip Khuda from Spark Capital. Please go ahead. Right. Hi, Sanjay. Three questions that you have. I'll answer the first one and then second one, Srini can take on the new product and third one, Dheeraj can answer. On Unit Linked, yes, you're right that the persistency does show split and we have flagged this off even as far back as right as the start of this quarter towards the end of last year. And that's when, if you recall, we had strengthened our persistency assumptions on Unit Linked portfolio. I'm happy and relieved to say that there is nothing further that we need to do and that strengthening has helped us stay within the revised assumptions of how unit linked book persistency is going to pan out. So I hope that answers your question. But more broadly speaking, it's just the construct of the product is going to be especially at the sixty first month, it is somewhat difficult to retain large flock because there is some reference to some of the other geographies wherein maybe sixty first month is much higher. But without really barriers of exit, it does become a challenge plus there is as you know the discontinued policy fund guarantee. So that's what I'm alluding to as the construct of the product. But nevertheless within the current construct whatever we had done in terms of showing up our assumptions, we have done that in March and that suffices. So right now we are we have a positive operating variance on persistency. Srini, you want to take the second point on Sure. Sanket, whether it's classified as a collection or a savings, the new term product we launched yesterday. See, if you look at the plain vanilla term, says there is thousand ROP at the end. See, first, say, a profile is also somewhat short. With the ROP, the premium will be 60,000 rupees. This is just an example of one profile. Now if a person wants to take an ROP, the premium will be, say, 30,000 or 30,000 rupees. So the if you divide this from my chart by the premium one the person is paying, it's still, you know, about 250, 3 hundred times the premium he's paying. So in my view, such a the last summer should relate it to the premium one pays, it should still be categorized on protection. So so that is my view. And also in there sort of approved in that product. So this is this whole product, which category, that's. So so that's the so that's my view on the same solution. So So the margins, we don't give product level margins. The production typically tends to have a higher margin than company average. That's all I can tell you also. And the last one on the protection growth. So, Saket, no, no, protection growth, like we just Vogar mentioned in the opening comments as well, for us, honestly, nothing's changed how we can come out to some extent. Of course, we are very watchful in terms of what's happening in the near term closer to ground in terms of what's happening due to the pandemic. So we've been tracking very closely in terms of what's happening with claims. Overall basis, we are still within our estimates, so there's mobility, which is also positive. But we are seeing COVID claims increase, especially in towards the end of quarter two and beginning of quarter three, we started seeing that. And we saw a peak coming through sometime in October, since then November, December have been on a lower trajectory. So this is something that we need to watch. And in this environment, do we want to completely go out there and, you know, put ourselves as well as the the reinsurance capital on risk? We do not want to. So we will be calibrated in the short term. Quarter four, with the launch of the new product and the environment improving, we are absolutely looking forward to getting back to the growth there. This is also coinciding with some of the some trends that we would have seen. It did absolutely peak in the first quarter given all this apprehension around the pandemic, people are getting extremely uncomfortable with every level going out. Every passing month, people are getting a little more, let's just say, more normalized in terms of the way they're thinking about it. And they will, with a cool head, think about protection as they should rather than as a need of reaction. So the searches have also indicated that. And again, since December and January, we started seeing an increase in searches. And within the searches, HTC brand has a search, we've seen a fairly consistent top of mind. So that's something that we are very bullish about. But in terms of the demand coming back, it will it will take a lot of things coming together for that, and we we have to be confident that from medium to long term perspective, there is no issues that we see. But yes, in the short term, we will be regurgitated in our approach. Okay. Great. Great. That's it from my side. Thank you. From the line of Ashish Jeewal from KMG Investment. Please go ahead. Hi, Deep. Thanks for the opportunity. I think the reduction with the volumes, I guess that given your company looks like more a conscious shift, do not be very aggressive in that segment in the last two, three months. But can you throw some color on what is happening on the distribution piece for us? So is this something that we want to be more selective when it comes to this channel for this segment given the risk to vary across different segments? Some product color, whether online is better than offline or a bunch of them, and then any of the other partners. And secondly, ma'am, when we look at the overall growth of one time, 3Q has been an excellent growth driver, more than 40%. But when we look at the agency channel, that has been flattening out. Now is it that the past, Sanjay, which we are having to do, like, Sanjay, not did the bridge of the agency channel. You think that there could be more cuts or differentiated combination projects or something that can be done to to to bulk up the sales of the agency fees? Harshil, very good questions. I'll take the second one first. On Bank of Agency, you're right that Bank of has, in the first nine months, grown pretty well. Agency has been, to some extent muted, but I'll give you on agency why I'm not worried at all, a couple of data points. Our quarter one degrowth was 39%, quarter two was 6% and quarter three was almost flat. So a breakeven has happened. And I have no doubt in my mind that we'll end the year with growth. And second point is that last year, agency grew over 60%. And on a nine month basis, about 32 odd percent. So it was so there is a fairly significant base effect as well. Also online, for example, grew about 56%, while Bangla last year grew only 6%. So the base effect for the different channels is very different. So optically, it looks like Bangka has grown disproportionately. With agency channel, another aspect is that quarter one was a bit of a struggle because just adopting digital and also accepting that this is going to COVID is here to stay for a pretty long time as against it being a one quarter problem. When that started becoming evident around June, I think that's when a lot of credit to our financial consultants and our frontline people in agency channel to embrace and I won't talk about it again because I've been mentioning this last couple of quarters our platform wise and also other modes of selling digital. And that's why you see the quarter on quarter very significant improvement. Quality of business also has been reaching. Again, it could have been either dilution in terms of selling a lot of unit linked or somewhat not as desirable quality of business that the channel hasn't slipped on either of that. So very much adhered from the product mix that is optimal for agency channel, continuing to be a very profitable channel in terms of NBN. So very much right in terms of fixing blocks. Also we are right up there with a second company in terms of ranking to add, I think if I remember about 18,500 agents in nine months. So again, all of that is important because of the building block for the future, so for the rest of the year. So that's really the backdrop of my fair amount of confidence that this will start evening out. And this is more a COVID related aberration than anything else. And quite frankly, even with Bank Assurance, given all what they were going through in core banking in the first quarter, there was a fair amount of focus on earning other things and insurance was also one of them. So it is a combination of factors. On your first point about protection and how distribution Ashish, you want to sorry, Ashish, what were you on the agency part, how is the center part being working? So you think that that product specifically has placed more than the client channels than agency channels? Because for us now, the change in the balance mix requires that both client and agency that can be maintained. Yes. But if you look at Slide 15, Sanjay Kumar is 36 in the first nine months, slightly higher than bank assurance channel or really higher than other channels. So very balanced in terms of non car savings of 36% which is largely plus, car is 38% which is Sanchi of our advantage. And term is very noticeable what Suresh is mentioning, 13% term. So actually better than where we ended last year. And this is reasonably predictable because if you look at some of our peer groups, you will not find agency channel having this high level of term. It's somewhat easier in a bank insurance channel, especially if one is able to align with your distributor that you have to sell protection. But agency is a lot more dispersed and engagement is with in our case over one lakh agents and counting. So really moving the needle on this one is quite creditable. So and that is something that we haven't diluted upon. Growth will come back. Satish, do want to add anything? No, think broadly, Viva, you covered it. I think look we are monitoring each of the channels based on right from the claims experience to the quality of business and consistency as well as growth in top line. And we do kind of balance the product mix that we are looking at each of these. So in agency like Bhuva mentioned, look there's a certain retail equation which works. But the new agent division as well as the productivity builds up post COVID, we will see the growth coming back. And production also we are fairly calibrated in terms of which channel will contribute to how much. Broadly, bank card agency and online have contributed significantly to our indirect contributed significantly to the protection business. I think that will continue as long as we ensure that we maintain all three aspects of the business. Sure. Got it. Thanks. Thank you. Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead. Hi, Thanks for the opportunity, and many congrats on a great set of numbers. My first question is, like, if if if rates were hypothetically hardened from here, like you have done in the reducing rate cycle, how would you, you know, alter your product mix in that environment? You're referring to a non par product presumably. Yeah. Yeah. Yeah. Because it's yeah. If you see the sensitivity, I mean, right now on a with hardening of it, it shows negative sensitivity and ease, but I'm sure that that's probably because of all the hedging that you put in place. But, generally, how would you think about the hardening rate sizes? So the way we look at this, Deepika is that it is all relative to what else is available in the market. And we will reprice, we have a dynamic repricing governance and in line with what is the prevailing rates that are available on the business which you're referring to. So that happens, that is number one. Second is we will take it to what else in terms of financial products that are available. And as long as we are competitive, there is a place under the sun for products like this. And also what is the outlook? Is this a temporary fall? Is it a more permanent or into the foreseeable future? If it's in the foreseeable future and we reduce rates, for example, usually the customer is also having a similar outlook and things that they could drop further. So even at a reduced rate, so for example, from the high of 6%, today they are closer to 5%. Even then it is an attractive product to lock in some of your savings. And I think customers are beginning to realize that it's not all equity versus debt versus ULEP. So they realize that some portion they wanted to be to completely eliminate risk in post retirement or if they're older. And that's where this product comes in as an attractive product regardless of what it might have been a year ago or one point five years ago. So Realmview looking I think happens lesser. Rarely encountered that with customers. It's usually forward looking as to what is the outlook. Anurag, just to add to that, Deepika, in terms of the hardening of interest rates, basically the sensitivities you're referring to. I mean, rates go up obviously from a product perspective, it becomes more attractive for both for us to price as well as some of the consumer to buy. The implication in terms of sensitivity is really more in terms of the implication of the cash flow hedging that we have, which is the excess assets which get come through which do not have a corresponding liability, this is what is causing the state sensitivity that you are seeing. And that is something that we are comfortable with, given that we always have the option to hold that in cash. But the problem is with that is that you end up losing a lot of yields necessarily. For us, the key is that assets are matched very well with the liabilities as long as that is done in the long term and the real risk is protected. Any sensitive items happening on the shoulder end is more a trade off between yield and holding the assets. So one is a trade off, which is something that we continue to monitor. And the sensitivities, as you see across periods, has been fairly strong. Thank you both. That's really clear. Just one follow-up from my side. Vijay, you mentioned earlier that the industry should, you know, be slightly more disciplined on the mortality risk as a pool, which would potentially protect from further reinsurance rate hardening. In the current context, how I mean, we've seen some competitive activity in the past year. This year, how do you how would you think you are positioned in terms of term pricing amongst your peers? And do you see overall term pricing hardening further? Srini, you wanna take that? Yeah. Sure. So, Deepika, the the underwriting practices have actually largely strengthened the industry, thanks to the intervention from the reinsurers' uncertainty over the last eight, nine months. So I would expect the quality of the work going forward as a result of all these stringent processes, housing adopted should actually help a stronger production going forward. And as far as the price hardening is concerned, already different companies have sort of awaiting approvals from security on on increasing the prices. I have here approved a few products in the industry already, and one of my products has been launched yesterday. And I mean, this is like any other products. So there will be experience that will emerge from the book that has already been written. And based on the experience, the insurers will keep you know, the prices. So if the experience are adverse, they will jack up the prices. And if the experience is favorable, they will reduce the prices. So this is a continuous process. What we are now currently seeing is it's a little bit on the the reinsurers are hardening the prices now. And if they harden the prices, the countries like us also need to sort of keep pace with them and increase the prices. But so far, whatever has happened last time, there's only one rate increase that has happened. But there is also, I think you alluded to, there could be a further increase also along the line. But we just need to wait and watch as to what happens. As of now, there are a number of companies that have already increased the prices over the last few months. Okay. Thank you so much. Thank you. Next question is from the line of Raj Jain from SE Securities. Please go ahead. Yes. Congratulations, you've done a good set of numbers. Firstly, on the term insurance, continuing on that point, is there underwriting tightening that has gone on and the reduction to application ratio has gone up? Is that is there some kind of trend that's emerging there? Because what we are hearing is that the reinsurers are I can't hear you very well. Sorry. Okay. Just one sec. Yeah. Is this better? Yeah. It's better. Yeah. So I'm asking on the term insurance base. The whether the underwriting rating has happened and that has resolved the reduction to application ratio move higher. And what you're hearing is that the reinsurer was asking for a much higher number of pickup, and the customer's willingness to go through to make the interest still very low. And that is one of the reasons why the, you know, the production slowdown has happened. But let's see. Just one of the reasons. And other part of the question the other question was on the nonbank side. So is there remember, we hear that on the ground, the demand is pretty strong. So is there a conscious effort that there's a slowdown? And what is your outlook going ahead to the non cash profitability? Yes. On the first part, I think it is inevitable when you we are in the business of writing insurance and we have to evaluate risks that we take on from our balance sheet as well as the insurance balance sheet in order for it to be a long term sustainable value proposition. And that's where I think one can write short term business if one has been used to being somewhat aggressive on underwriting practices and there is an entire spectrum. What I can say about our practices is that it is what we've been following at least for the last five, six years when we have been very active in this space before protection really became very topical. We continue to see emerging risks. There is a fair bit of analytics that we look at every second day really to see what is emerging and what is the dynamic underwriting that we need to do without it being a one size fits all that if it's ex salaried individual of this age, that's a very simplistic way of underwriting. We've long moved away from that kind of underwriting. That might form an input, but that it doesn't stop with that. And so yes, it is inevitable that whether we reject, whether we rate up and various such combinations or whether we go back with a proposal of lower sum assured, that has to be because a short term buildup of protection number isn't that difficult to show. But really over a period of time and we're talking over the next five, ten years, what is the variance on mortality experience versus assumptions, that's the only moment of truth. And that's what we don't want to leave a legacy to another team at HDFC life down the line who has to be settled with us. And so we are cautious whether that results in higher rejection ratio or higher checks, yes, it will. And more than higher, I think different checks and those checks keep evolving and changing. So that even distribution and channels don't often know what is going to be asked because of dynamic feature. And also to have an open book with the reinsurer to say come and see whatever you want to see because we are aligned with the risks that you're seeing. Otherwise, we will push it back with you conceptually. But once we agree, then we will follow whatever it is that you're saying. There are different market practices of perhaps simple things like not asking for COVID questionnaire. Lot of pushback with our sales teams also because market practice was not to ask for that. But I think in a pandemic, how does one price against a pandemic? It is virtually impossible. We are in the law of probability. Probability. So there is a reason why we have to ask because if you don't ask, you can't reject. If, for example, he or she was COVID positive at the time of taking a policy, so here we would counsel the individual to state and so on. These are just simple examples. But that's why my earlier point is, this is nascent, if all of us just start just something on one number which is my protection percentage is X, that's not that difficult in the sense that some of these nuances we could start unraveling down. So at least we operate in the zone that we understand risks that we reasonably have a sense as to what are we underwriting and build this business big fabric. On your second point on non power, not at all about diminishing demand. It's really we believe in a balanced product mix. While we are fully hedged and we are both cash flow and duration matched and we have been engaging with all of you on the modes of how we have done it. Nevertheless, just in the underlying philosophy that we don't want all our eggs in one basket, any basket, so that's why we have brought it down very meaningfully. So nine months, you saw non pass savings at 30%. In the first quarter of last year, for example, we've gone upwards of 60%. And so our ability to really steer the vehicle to in a particular direction that we want to get to is something that we have demonstrated time and again. And that's where you'll see us almost a third give or take in terms of exposure to any segment. And that is what really has enabled us to withstand and survive a lot of volatility that we see impacting our sector time and again. And just lastly on January from Proto Kenya and Research are about to be launched anytime now. So, yes, I mean, one or two years that we launched at at most of them would be launching them in the near term. Any more any sort of? Shini, you wanna take? Yeah. So, yeah, we should that's the product fairly soon. So my hope is that from, say, February 1 or so, we should have the product from ourselves. So my question was more on, you know, how do you planning out in the sense that, you know, it's more of a segment where you will be writing more smaller and more and some category segment. So how do you see whether you would be able to maintain the profitability of what you're earning on the short term plans of of the right now? Vis a vis something on that part to get there? Yes. It's certainly a new segment for us since collection industry never really sold individual terms or long term production products. So that's kind of the segment. So it will be a new experience for the entire industry. But, you know, we can still do underwriting. So you can always place on different, you know, parameters that one would have from the past experience and also with the reinsurers as well. We will learn collectively as an industry to assess the risks that we take on board. So I would expect the underwriting to get a little bit more specific since I think the price at which the product will be launched in the industry may be slightly lower since it's quite a mass. It's a product is going to get to a lower middle class segment. So I think the way to ensure the focus financially viable is through stringent underwriting norms. So I think people will adopt different pricing styles, which should play over the period of time. And with that, I think there'll be a learning place for next six months or so. And then post that, some people will people will actually, this segment. All right. Thank you so much. Thank you. The next question is from the line of Prajeet Bhatti from Haitong Securities. Ma'am, my question is on the working committee report on indemnity sale by life insurance company that came in November. So from what I understand, the committee did not allow life insurance to sell indemnity again independently, but they said that you could sell products of nonhealth insurers. Is that understanding correct? And is this practically doable? So Hitesh, it is certainly doable. And frankly, when you look at if there's a single regulator, then those products are approved by the same regulator. So if a bank can sell insurance products then perhaps the life insurer can be a distributor sell health indemnity and even maybe vice versa. Why not sweat our distribution channels that we have built painstakingly over the last two decades to really maximize and also if we were to look at customers, keeping the customer in the center, the reason is how do you get to the customer. Today, if a customer wants to buy health insurance, doesn't really know who to go to for health and there's general, there is Sahi, there is fixed benefit that life insurers like us sell and so on. We ourselves used to sell health indemnity in the past. So it is quite confusing for overseas medical, go to a general insurer and so on. So if, for example, hypothetically, if a life insurer is allowed to sell indemnity, then in a one conversation, you are taking the product to the customer rather than making the customer run around to various insurance company and do homework for the nth time. So that is the reason for behind this logic that we are yet to hear back from the regulator. My understanding is correct, this will be like a commission fee income product for you and not a you will not be a product manufacturer. Is that understanding right? So we would like to be a product manufacturer, but it looks unlikely just given the current construct between the way there are three arms of insurers in India. And in that construct, it just looks there's no in our view, it makes a lot of sense because health penetration is vocally inadequate and life insurers, a, have done it before and we have the distribution muscle power, but it looks somewhat doubtful for that happening. We are saying that as a second best option, if we want to and the intention is to keep customer in the center, why not allow us to distribute like we are allowing other financial institutions to distribute. Thank you. That's it too much. Thank you, Hitesh. Thank you. The next question is from the line of Ashish Jeevanwala from IIFL Capital. Please go ahead. Yes. Thanks for the opportunity. A couple of questions from my side. One is just on a balance between car and non car. It's over the last twelve months or so, a car that used to be almost half of non car in terms of size has actually now crossing it. Just wanted to understand, you know, what what how are we deciding to maintain that balance between car and non car given that, you know, it would be customer's requirement versus, you know, our push strategy to the customer, especially when, you know, we really look at the difference between the two. For I'm assuming 90% of the people, it is more about looking into rather than, you know, what they exactly know what they require. So, you know, any reason why far would actually grow faster for the past nine months versus non power or going forward how it can potentially turn out? Shuresh, you want to take this? Yes. So frankly, look the customers out there we believe there is a large opportunity whether you were to look at UL, non par, par, pure term. And our strategy has actually been to drive a balanced product mix based on channel level profitability and channel level capability. So the way we look at it is it's not that we are trying to pick a power product to somebody who's got a non power requirement. Yes, there are product value propositions which are there. A power product has a certain value proposition and non power has a certain value proposition. There are customers who we want to make sure are right fit for whichever product we are selling. So there's a lot of effort that we do in terms of balancing the product mix through each channel, one by building capability, two by ensuring that look our people are trained, the reach out happens. And we do believe that over a period of time, the market is large enough for us to be able to drive a certain product mix, right? So and internally also we keep looking at what does the power product proposition compare as compared to what is available in the rest of the industry and as well as how does it compare to the non power proposition internally as compared to the rest of the industry. So frankly the product has to be good enough for us to be able to sell it to the customer and ideally a lot of us should be buying it ourselves. So some of us may want a non par, some of us may want a par where there is probably a higher bonus that comes in and you find a return reasonable. So we do benchmark it. I do think that look there is space for both. But given that as a strategy we want to have a balanced product mix, we do definitely make sure that the channel strategy, the drive, the capability building is all aligned to make sure that at the end of every quarter we kind of remain within certain volume. And just to add, Suresh, to that what Suresh has mentioned is that, see, ultimately, whatever product is sold and bought by the customer, as long as the persistency is good, it is a proof of the fact that the customer wants to understand and they and needs a product and is going benefit from it over the long term. We track very closely across each of the categories that we have. So Rishi, just to add, we launched a product called the Sanjay Maximizer. It's actually a combo of both the par and the non par. It's a great value proposition because from the end solution point of view, the customer can see a huge value in terms of how the product features of both actually combine and he gets a certain guaranteed component and he gets a certain power upside. So, you know, we we have looked at how do we take it across the people who are looking only at power, who are looking at non power, who may probably want a combination of both. Understood. And on you know, just on ULEF. Right? So if I really look at, you know, your ULEPs with the product, which is available online, seems to be the most efficient product on the street when it comes to the consumer in terms of pretty much zero charges except FMC and a little bit of mortality. Just wanted to understand our strategy around it. Are we not pushing it enough because of the low profitability? Because otherwise, I don't see a reason why that product should not be a superior. Thank you, Rishi for that because that's something that we have been trying to also evangelize. It's exactly that it's a very low, slimly priced product And so we haven't really gone to town in terms of allocating an ad budget for that. But yes, through word-of-mouth, the fact that that product is so slimly priced, it is very, very accretive to the policyholder. And over a five year term, it's definitely better than say an equity mutual fund. And exactly like you said, with the gap of 1.35% versus say two odd percent and fund switches that are not taxable, There's a life and I'm not even mentioning life cover that is over and above the IRR that I'm talking about. It means it's a very good wealth accumulation and especially when you if you take in the life of a on the life of a relatively young person, even more so as the mortality charges are very minimal. Yes, I think it is just that it is like I just explained. So we are hoping that over a period of time, people come searching for products like this because they're used to buying digital products from HKP Life and they will start having this following in terms of people who exactly like the evolution that we saw that happened in the asset management sector. So we expect that to continue to happen. And even our Click to Protect series, you mentioned Click to Invest, even other Click to Pension or Click to Retire rather and Click to Protect of course. That all of that is now gathering a brand unto itself and we'll see. It will be steady growth. It's not going to be phenomenal increase in some of these products with low visibility. But yes, they are very good products. Actually, Viva, just to add, look, some of these products are meant to look at a segment which is new to us. In some sense, it is targeting the mutual fund market because these are equally comparable in terms of returns or better over a long period of time. So we do believe that looks like there is a protection space, is an annuity space, there is clearly an online unit linked space like products like Click2Event and Click2Invest, which by itself evolved customer will be able to come and take digitally. SRINIVASAN And frankly, the very reason we solved for this product was that we just wanted to put to rest the time and again repeated lines that one should unbundle and buy protection separately and equity investment separately. We demonstrated that this product in the current uplaar of unit linked product can deliver superior returns while giving protection. All right. Thank you. You. The next question is from the line of Prabhupadrik from GMP Securities. Please go ahead. Thanks for the opportunity. My question is with respect to ROPs, an updated growth of short term. From your perspective, how do you see that planning out going forward towards the industry from where we are for a country like India? Which of those products you think will be going? Jenny, you wanna take this? Yeah. So I think from a customer perspective, I think I just gave this example a while ago on the call. So for a one course, how much was the the non auto fee version would be 6 or even for 500,000 rupees. Whereas the auto fee portion will be $3,540,000 rupees. Right? So that's the kind of a so if someone wants to get the money back at the the end of the term and the Indian state, it generally prefers a return of the premium. I think for our market, people would prefer the payment because the payment option, if you survive the term, there's nothing to be paid. So I think it's a good value proposition. Also, it also gives some market itself places a legacy planning tool, especially if you sort of stress the term, let's say, three or ninety years old. You can actually make it some legacy planning tool as well. So with that, both aspects in mind where Indian psyche prefers the difference premium within the term and also it serves as a legacy planning tool. I think the market will probably more tend towards an ROP than a non ROPs, my view. Okay. Great. Questions. The last time, I think, we discussed about share from. So look, we have always been pricing our products competitively and we do understand that look there are two other players who will offer their product at a certain price. I think it's not just the price, it's also a question of the brand, the service levels, the claim settlement ratios. So we have been constantly benchmarking our overall market share as well as our top market share at the bank. I think the idea is to stay comfortable in a certain segment based on the pricing as well as on the margins as well as on the overall claims which is supposed to come in. We've actually gained. We have kind of recalibrated our pricing somewhere in the beginning of the year, and we did a few tweaks to our overall proposition and we found that our market share at HJP Bank in protection has actually gone up as what we were last year. With the launch of a new product, which is to protect life, we have again relooked at the features. It's a fantastic product if you were to go back and have a look at it, especially given the current context in terms of being able to balance between your protection as well as your critical illness requirements. We do believe we have a winner. The pricing has been also again looked at. Like I said, the pricing has to make sure of multiple aspects. It has to make sure that the customer pricing is right. It has to make sure that the overall margins are right. And second, in today's context, the insurer is also looking at it favorably. I think our product team has done a good job of balancing all three along with the features. So yes, the market share in firstly, the overall protection in HCFT Bank has been going up. They have done a very, very good job in terms of focusing on the stand alone term. Within that our share is going up. And we do believe the kind of products that we are looking at and the way we want to position ourselves, we will probably achieve better in the future. Got it. So that was the question. Thank you. This is a reminder to the participants. Please limit your questions to one per participant should you have any follow-up, request to reach on queue, please. Next question is from the line of Adi Shukla from Citigroup. Go ahead. Good evening and thank you for the opportunity. We have a point that you mentioned earlier about propensity of Indians to look at insurance more as savings rather than protection and also the ticket size differential. Is this realistic to expect in terms of mix more than a percentage point kind of increase per year on individualization on an ongoing basis? There are two aspects to this, Manish. One is that if one is not as tight on underwriting, then certainly these are the comments I made earlier overall on how protection can grow in the short term versus medium term. So yes, one can make a sprint and because all of you are tracking this number and I think 50% of the call today has been to fiscal protection. So it is not as difficult to show each year increasing by 300 basis 400 basis points. So that is one. Second, it is also easier if EBITDA is not the case and you have one distributor with whom there's alignment, even if the pricing is significantly higher or reasonably higher than what could be out there. So there is perhaps not equal amounts of information or just a way of selling is that the customer does not want to compare for it. And so one can drive protection through that. In the medium term and longer term, in a completely open architecture and open market and decisions that are made, informed decisions that are made, I think that growing 100, two hundred basis points will be more sustainable than growing 500, six hundred basis points only. So that is really it's also a graph between growth and risk appetite and what it does to operating variance on embedded value. And also most companies don't disclose what their operating variances are. They don't even disclose embedded value. Clearly on one side, we are so nascent as a sector. On the other side, we are talking about developing on protection. And that's why where I would just want to balance it out. And I think what reinsurers are doing are just an early warning indicator of that. And so it needs to be tempered growth as well as risk. There's a tempering problem between the two. And so from HFC Life's point of view, it will be a big to big growth in protection and savings will continue to also grow and be an important aspect of even coverage, even in terms of FarmersSure for us in the near term. So specifically for you, the way annuity and individual production businesses are growing, is it fair to assume that two to three years out, annuity might be bigger than individual protection? Undoubtedly. And that's something I've always said. I think that retirement is an even bigger opportunity than production. And the numbers the sheer numbers just show and also whole host of demographics of people living longer and so on and inflation where it is. If you look at Slide 14, are very, very aspirational of growing our retirement corpus 3x by the time we reach 2025. And that really we put out a number in terms of our aspirations. And this is there is a lot of interconnectedness between various aspects of retirement, whether it's superannuation and whether it is NPS, whether it is our own pension policies and so on. And it is also a stickier business. It's also a little bit takes a little bit longer to engage especially on government business. And that's something that enthuses us. So it's a I mean we are equally enthused by both. Protection is seeing a different year and now play. Retirement is a slightly longer play. Understood. Thank you. Those were my questions. Sure. Thank you. The next question is from the line of Prateek from Macquarie India. Please go ahead. Ma'am, I just wanted to check, you talked about in savings, we have reached the balanced product mix and prediction, there are some headwinds, which are basically that we've been cautious about that segment. In terms of V and margins, how should I think about levers going ahead now? So we've always had several levers for us to work on our V and D margins. That's where I think the balanced product mix comes in very handy. So it's not just always in the protection basket, but really it's a nuance approach of which what is the cost of acquisition of a channel, what does the customer want as well as what is the underlying product construct. And it has to be a three way win win value proposition. And calibrating that on a daily basis, so we track our product mix at a channel, sub channel level on a daily basis. And that is really the devil is in details. And even with the Sanchay Car Advantage, which is a participating product, they're substituting if the customer is not really looking for a marketing product, substituting it with the Sanjay Power advantage, we'll see an uplift in terms of margins. Likewise, some of the other product features on firm could be could see an uplift and so on. So that is so the product mix and the nuances on product mix is one. Costs are another feature. Persistency plays a very important aspect on margins and paying attention to persistency and saying either saying no to business that you think is not going to be persistent or is going to be fraudulent as well as doing dynamic underwriting that I talked about earlier which is risk based underwriting than one size fits all. All of that adds bits and pieces to margins. So it's not just one lever of protection that goes into that. If protection goes down, margins go down. You won't see that one on one equation because of this multi pronged approach to profitability. Got it. Got it. And ma'am, lastly, wanted to check what should we look for so as to get some comfort that what are you looking for from the end markets to go aggressive on the protection side or to cancel growth again? And what changed really, ma'am, in the last three quarters and in the last two months or three months, which made you cautious? So I'm just trying to look at both of these things. Well, Prateek, we are in the midst of a pandemic. We really can't get adequately cautious. And in some of the geographies, especially in the Western world, they're just not able to sell term because how does one price against the pandemic? And also with the gestation period easily of two weeks, even if the individual doesn't know that he or she has there is no waiting period. Of course, there will be a waiting period once we have the new term several products. But right now, there is no waiting period and so on. So that's why the cautiousness and also when we juxtapose that with a trend in COVID claims, it was not it was no rocket plan for us to go slow. So your question as to what would we like, I think we would if for example there was a way wherein we could access hospital records or people could voluntarily say that okay, I will share my hospital records and there is a single number, for example, either it's a number or something. But it's a unique number. Similar to, say, The U. K, you can't get NHS availment unless you sorry, availment in NHS hospital unless you give your social security number. It's mandated. So there is one record of each individual of all health related treatment that has been done. Now me as an individual, I might be able to share a score with a life insurer so that I can show get a keeper. So that kind of a nuanced approach is really what we're looking for, where we can help connect the dots rather than clearly be reasonably blind in terms of not having adequate information to be able to price risk. And ma'am, wouldn't medical inspections make you in this state? Did it for speaking to you in a conference and you said we are keeping a lot of policies on hold because customers are really worried to go to diagnostic centers to get their medical reports. And isn't that can can that be done or, you know, that could be one of the ways to get over this, right, where you said to know the customer profiles. I mean, the customer's medical history basis, which you can sell protection, right? In terms of having tele medicals or No. I'm saying he can go to a diagnostic center. He is not going to be happy going to a diagnostic center, right? So he was not even happy until quarter two for a home visit from one of our paneled medical professionals. So that's the challenge that you face in a against a pandemic. People were not even okay for to come in downstairs into common area below the building to get something done or so, telephonic was the only thing that was maybe that we could be disconnect with the customer. But that tele medical in terms of bedroom is not endless either. So these are the challenges wherein do we just go ahead and sign up somebody because he's a salaried customer, he's mass affluent. It really makes no sense because just because with that profile, that doesn't tell us a lot about his vehicle profile. Sorry, Suresh, were Just to add, look, frankly, it is always good to recalibrate. We have looked at the little bit of reinsurance, the back of tightening, the COVID claims or whatever. But we do believe in the long term, protection is a large opportunity. And the idea is to build a whole ecosystem from what we're seeing. There's a fair amount of analytics going in. We have a lot of learning in terms of which geography, which profile. We do understand what kind of products and pricing, what distribution. You are right in the sense that we need to look at how should be medicals be taken care of, whether it should be preapproved, whether it should be nonmedical, whether it should be tele underwriting. And over a period of time, how it will all evolve is to build up further. Until sometime, we are getting the customer on board, we are a little careful. Over a period of time, what we will see is once the customer is on board, if we are able to drive health related, if we are able to drive other ecosystems where we are able to work with the customer to lead a healthy life, the production opportunity will increase all over again. So even the new product that we have launched right now, the Fit to Fit to Life is very well targeted to make sure to say that look, you need to come and protect yourself, but as you grow older and you have more health related concerns, you can actually shift and the product automatically shifts from some illness, right? So these are the kind of innovations which we have constantly been bringing across. And I do believe that the production opportunity will grow. And we need to be right in terms of what kind of scale up we want to do at this period. Ladies and gentlemen, in the interest of time, we take the last question from the line of Vinod Srinivasan from HSBC. Please go ahead. Yes. Thanks for taking my question. I just want to know this IRDA move towards stabilization of products on this things like SARAL, VMA and so on. Is that a I'm sure the volume it will definitely help in terms of volumes, but is there a risk of some bit of stabilization of your existing product portfolio? And also, the somatostatin is lower than the products you currently sell. But is there a risk there? And do think it's a bit of some overreach of the regulators? How are you currently viewing this privatization move by IRDA? And could it sort of could we have a separate power policy, standard one power product and so on going forward? Chen, you want to take this? Yes. So, yeah, it's a good initiative in my view with the latest to come up with the standardized products because the it will help sort of the help customers understand what they're buying. So standard products will also get that eyeballs for especially in the industry, I I believe. So largely, I think it's a step in the right direction. Specifically on this standard term product, that is gonna cannibalize our product, I doubt, since you rightly mentioned, we some assured that the industry currently cases to average some issues roughly around 70 to 80 lakhs of industry. Whereas this one is kind of quite capped, but it is going to be less than 23 lakhs segment. So it's not going to really cannibalize, I don't think. But in terms of the whether the market is going to be different, yes, it's certainly a different market market. And there are some prices when you compensate with the risk only time will do. And but there is a important aspect there in my view is the underwriting norms that come the need the to continue follows. So the important that industry doesn't get very aggressive in taking a protection, especially in the standardized term product. Since it's an unknown market, it's basically tried to caution at least in the initial days. And once there is some, like, experience we develop in, say, next one or two years, based on the experience, then we can probably go a little bit more aggressive. So my my my preferred kind of strategy would be to I said with caution, do stringent underwriting in the initial days. And once the experience does, then we can see based on the experience, we can help staff, you know, take the. So there will be non passing standard product. So just to talk about annuity standard product, pricing annuity is already fairly standard, like, in my view. So it will not be very different from the current annuity product that the company's. Let's see how the new standard annuity product are. One, I think, based on the fact that these initial standard product, I think, IRG might come with more such standard products as what I think. I would now like to hand it over to Mr. Prakash Padukar for closing comments. Thank you, everyone, for being there on today's call. The detailed disclosure on our results is available in our investor presentation. I would like to thank all of you. Stay safe and take care. Thank you.