Q2 20/21

Oct 19, 2020

Ladies and gentlemen, good day, and welcome to the HDFC Life Insurance Company Limited H1 FY twenty twenty one Earnings Conference Call. Joining us on this call today are Ms. Viva Badalkar, Managing Director and Chief Executive Officer Mr. Suresh Badami, Executive Director Mr. Neeraj Shah, Chief Financial Officer and Mr. Srinivasan Patrasatti, Chief Actuary and Appointed Actuary. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to MD and CEO, Ms. Vibha Padalkar. Thank you, and over to you, ma'am. Thank you. Good evening, everyone. Thank you for joining us for the discussion on our results for the half year ended 09/30/2020. Our 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, Executive Director Neeraj Cha, CFO Sririvas and Pat Sarti are appointed actually and Kunal Jain from Investor Relations. I will run through the key highlights of our H1 FY 'twenty one results and would be happy to take questions post that. Starting with an update on business performance. While we remain sensitive about the health impact and loss of life due to the pandemic and continue to focus on employee, customer and partner safety norms, opening up of the economy has led to a pickup in activity levels on the ground. This has also resulted in a marginal uplift in household income and spend. Insurance as a category has emerged stronger as a vehicle to protect one family and realize their long term financial goals. Customers are more active in decision making, resulting in traction in individual business. Our market share in terms of individual WRP has increased by two thirty five basis points from 15.2% in H1 FY 'twenty to 17.5% in H1 FY 'twenty one. We have neutralized the quarter one de growth and have recorded a growth of 2% during H1 FY 'twenty one. This is on a base of 35% growth last year. Our performance compares well against the private industry, which de grew by 11% on a base of 16% growth in H1 last year. Our market share for the group and overall new business segments amongst the private sector players was at 27.423.3%, respectively. We sold over 4.4 lakh policies, registering a Y o Y growth of 6%. Inflows into conservative long term savings products has picked up this quarter with customers willing to commit to higher ticket sizes compared to Q1. Our innovative and wide bouquet of products continues to address needs of our customers. Our product mix remains balanced with ULIPs at 23%, non pass savings at 30% and power at 33%. We continue to see growth momentum in individual protection APE. The growth for H1 FY 'twenty one stands at 38% with the share of protection increasing from 6% last H1 to 9% for H1 FY 'twenty one. Our individual and group annuity business saw strong growth in H1 of 38% with annuities contributing over 5% of our individual APE. Renewal growth has remained strong at 22% with normalization being witnessed in our premium collection rates. However, we continue to monitor collections closely and remain watchful about emerging persistency trends. This quarter, new business margins have seen an improvement on sequential as well as year on year basis on the back of our return to growth, favorable product mix and costs being kept under control. The NBM for H1 FY 'twenty one stands at 25.1% with the value of new business at INR838 crores in H1 FY 'twenty one. Our operating return on EV is 17.6%. While the number of COVID claims is increasing month on month, the total number of claims is within our estimates. Non COVID claims have been lower, and we continue to monitor any delays in claims reporting. As of 09/30/2020, we have received four eighteen COVID related claims on the individual business and 50 claims in group business. The COVID reserve of INR41 crores created by us in April 2020 remains adequate. We are monitoring overall claims trends closely and will review adequacy of this reserve in H2. Our profit after tax grew by 6% to INR $7.77 crores. New business strain was offset by sustained profit emergence from our back book, which grew by 10%. Our solvency position remains healthy at 203% compared to 190% as on 06/30/2020. As indicated last quarter, we successfully raised a sub debt of INR600 crores, which has augmented our solvency position by 14%. Next on channel performance. We continue to see strong growth in the bank assurance and online channels, which have grown at 1114%, respectively, during H1 FY 'twenty one. Within bank assurance, growth at HCFC Bank continues to trend well. Agency channels saw a pickup this quarter, recording a growth of 6% for quarter two. Our agency live program has seen higher engagement in the last six months with appreciable growth in attendance for the daily sessions, increase in number of qualifiers for the program as well as productivity of the qualifying agents. We continue to strengthen our distribution and expand the breadth of our relationships by adding newer partners. We are delighted to have entered into a bank assurance partnership with Yes Bank in quarter two. Moving on to product performance. We remain focused on driving a balanced product mix and our suite of innovative products is enabling us to effectively meet customer needs. Term protection grew by 38% over previous year to INR $2.41 crore. While credit protect business has de grown by 53% for H1 FY 'twenty one, quarter '2 has seen a sharp movement over quarter one with a de growth of 36% in quarter two as compared to 74% in quarter one. Some of our larger partners are approaching FY 'twenty disbursement volumes. Next on technology. Being cognizant of the current environment and the increasing comfort of our customers to connect with virtually, we had launched Wise, our video based sales enablement tool in June. This tool, which creates the closest impression of a face to face interaction at new business stage, has seen good traction in Tier two and three towns as well. Given the higher adoption of Wise, we have extended the hybrid model of digital plus human interaction to servicing via our tool called Vserve. Vserve is an industry's first video based digital model of servicing. It allows our branch staff to service customers remotely and solve their queries and requests via a virtual interaction. We serve also ties in with our branch virtualization journey. We have seen increasing trends in online payments by customers whereby about 95% of the policies are being renewed digitally, accounting for 88% of renewal premium being done via digital modes. To conclude, our focus remains on our long term strategy of building a sustainable and profitable business and adding value to all key stakeholders. On the back of the improved economic momentum, we are optimistic about being able to sustain our performance across key metrics for the year. 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. The first question is from the line of Suresh Ganpati from Macquarie. At the start of the year, when you went to present to the Board, you said that I don't want to give any targets because it's obviously quite an uncertain year. And the best case outcome could be a flat growth. And you guys have already delivered a 2% growth in the first half. So I mean, you really think you can deliver a double digit growth or any guidance that you can give? And how much of this is all pent up demand? Because it is still not very clear whether all these things are sustainable heading into the second half, right? So that's my first question. Maybe I'll ask the second question later. I did say that we really don't know what the outlook is going to be like. And we are very happy that end of H1, we have wiped out all the degrowth. Yes, we feel a lot more positive now. But having said that, when you see what's happening in Europe especially and the rebound, we still want to maintain a cautious outlook. Yes, we will beat the industry growth quite comfortably like we have been doing, and our market share should continue to inch upwards. But don't want to remove this caution element. And so would still hesitate in terms of really saying, is it going to be double digits or is it going to be high single digits because of this unknown unknown. To your second point on the pent up demand, not really anymore, Suresh. We are seeing new conversations. So it's not even that conversation that started pre COVID that we are concluding now. These are completely new conversations that we are having with new customers, first time customers as well as repeat customers. So it's a mix, mix bag of all sorts of customers and also younger customers, older customers in terms of annuity. I think what really does help is to have various conversations because we are really complex in various products and that's really our key focus on having a balanced product mix. And that's really come in very, very handy during a lot of volatility that we are seeing. Okay. The second question is what is the need to raise sub debt and raise your solvency margin when you're already at 190% plus? I mean, what was the need to do that? Because if you remember, we went down to 183%. And so we did not want and that was largely driven by the market fall end of FY 'twenty. And we didn't want to distract any kind of growth at that time, Suresh. So we ended January end of not 183%. And so we said at that time that you know what, we don't want to be distracted because growth is going to come back. And that time, we don't want to say, okay, struggling a little bit on capital. So we thought let's get it out of the way. Fortunately, markets have done better since then. And so we are in a very comfortable position, but that was really the rationale rather than can we write more business and it was just a volatility that we were seeing. Sure. Just two quick more questions. Your view on the standard term product which the IRDA is proposing, do you think it's really an addressable gap market that you can address? Point number one. And the second question is, now how should I look at this INR41 crore reserving? You have had some 500 odd claims. Does that mean that the per ticket claim is going to be less than INR10 lakh crores that this INR41 crores reserving is sufficient? Yes. So on the first one on standard term products, the way we see it is that anything new, it's not that regulators saying only have standard term and don't sell others. We can continue to have other products. The standard term is very similar to our standard term product, except that it's slightly better that there is a forty five day waiting window period. So it allows us because this ticket size segment of below 25 lakhs, we have to be cautious. It's not that we haven't tried in this segment before, but the claims experience was not very favorable. Now with this exclusion, forty five day exclusion period, we might be able to price it sensibly and also be able to cover lives in that category. So it will be kind of an add on. Srini, you want to add anything on the standard term? Yes. So Suresh, this new product from IRDA also allows for a forty five day VN. So there is a waiting period, which doesn't which is not allowed in any of the standard life products. And since most of the earlier adverse claim experience that we saw when we were open to less than 10 lakhs or 25 lakhs, there are a lot of anti selection, a lot of fraudulent claims. So with this forty five day, Lian, most of this anti selective nature can be eliminated. So we are a little bit more positive about this product. And also, this will create a lot of visibility is what we personally feel that under the standard sort of being there, like how CMJJ DUI when it was introduced a few years ago, that created visibility for the term space. Again, there will be this product being out in the market now, will create added visibility for the comps. On your second question about INR41 crores reserving, actually all the regular claims, whether COVID or otherwise, we have a reserving in the normal course of business and it is within our actuarial assumptions, Suresh. So from time immemorial, we have been having a positive operating variance on mortality. So that is anyway covered. This INR41 crores is over and above, which we have not yet dipped into. Just in case the COVID claims start galloping, but right now at least up to end of H1, what we have seen is that while COVID claims have gone up versus quarter one, other claims are lower than what we would have expected. And that very well could have been because people are largely sitting at home and other deaths that would have happened in the normal course are lower than what we have factored in. So there is a nullifying impact. We want to keep the INR41 crores because just from an abundant caution point of view, and we'll see we really don't know how it's going to emerge down the line. But we are reasonably sure that it will be inadequate for us in case some spike starts happening. Okay. Thank you so much, Vipa. Thank you. Thank you. Before we take the next question, we'd like to inform participants that in order that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. We take the next question from the line of Prajesh Jain from YES Securities. Congratulations on a very good set of numbers. Firstly, on the economic variance, if I look at the EV walkthrough, in Q1, we had an economic variance of $11,500,000,000 while for this call for H1, it's reduced by around $2,000,000,000 Why would that happen? Shini, you want to start off? Sorry, I couldn't hear the question properly. Economic variance, quarter one, '11 point '5 billion, H1 reduced. Right. So that's mainly because of the change in the slope of the curve. So the from compared to March position, the yield curve actually fell as of June 30, but it rose slightly at different durations of the yield curve at different by different extent. So that is the main reason for the slight fall in the investment variance compared to June. Okay. Got it. And the second question was on the rising share of the single premium writing. Do you think that how would that play out with regards to the future renewals in the next year next year onwards? UNIDENTIFIED So that is on the back largely in the individual space because of annuities. And this has been a stated objective of our belief that there's a huge potential for growth in the entire retirement space and very much in line with what we have been working on. And that's why you see the 38% growth in our annuities business, both individual and group. In terms of renewals, so we see it in two parts that our individual business regular premium should anyway be doing well, which thankfully it has grown by 21%. But if you were to look at annuities, accretive to business and the very right product to be selling to senior citizens. So it's really both rather than one cannibalizing or having an impact on the other one. Just taking one more question here. What would be your persistency on the unit book in particular as compared to what you would have assumed at the beginning of the year? And do you see any major assumption changes that could come across? That would be my last question. So I'll start off and maybe Srini can add. So we look at persistency, recalibrating persistency assumptions once a year, and we will do it sometime in March. We did it March of last year, and we did tighten a lot of our assumptions, especially specifically unit linked assumptions. There was some strain in the month of April due to COVID, which we said we are watching that space very closely. But a fair amount of recovery has happened to near pre COVID levels as we exit in September. The next question is from the line of Adashparasampuria from CLSA. Please go ahead. You. Nubar, the question was on the mix. Like the first quarter, you've continued to see strong momentum in parts and share. So if you can explain what's keeping there in the product and the struggle between, say, a non par product versus a par product in terms of B and B margin profile? Adesh, our Sanjay Power advantage has done very well. And one of the reasons is some of the features in there such as your cash back, so people start seeing their money faster than waiting much longer after five, ten years. And given COVID, that cash flow has also been one of the prime considerations. So it has done well. Also, there is an equity upside in par. There usually is as against with a product under the non par construct. So there are people who also like that part of non par part of par products. And that's why you'll see even for example, our bank assurance partners have done reasonably well with this particular segment. So we've been lucky that just after this particular product was launched, SanchePAR Advantage, with this volatility, it was absolutely correct in terms of a risk on approach that customers have been taking as against some of the other savings products like unit linked products. Dibao, how does this toggle, right, between like while you don't intend it, but from a numbers perspective, nonpar would be down and par would have gone up, it would have normalized, I would say. So how does that toggle in terms of VNB margin profile behave? Because eventually, at the end of the day, par will still be 90% sharing. Just wanted to get a perspective there. Still significantly better than unit linked. So it's not so much just that non par is being reduced and par is going up. Yes, some of that is happening, but also unit linked is being reduced and replaced by par. So there is a trade off. And that's why what is important is that we take a overall holistic portfolio based approach as against just one segment that is doing well on the margins. And so for at HCP Life, it is not just protection that is a high margin product, but even a par can do well, even annuity can do well and be very accretive to overall market. Got it. And my last question is on protection pricing. If you can just talk about what's happening. I believe the last one or two months, there's been no change. And most players, barring ones, still have to take a hike. And our V and D margin in the context of not the really high protection prices fairly very, very strong outlook, right, 25.1%. So if you can talk about what's happening on the pricing side? Yes. That's more or less settled down now, Adesh, because right at the beginning, we said that we will take a nuance and calibrated approach to not one extreme wherein like we saw some players who said, I will pass on whatever I suffer from reinsurers and the other extreme who said, I will do nothing. I will just be status quo. We were somewhere in between and we looked at a risk based approach. And so without repeating all of that, suffice to say that, that approach worked well because people who took the view that I won't change prices have now changed and so have others who passed everything on, now have launched protection, say, a 1 crore cover level, which is cheaper. And so it's kind of converging towards the middle. So yes, it's no longer an issue. I think we need to stay true to what is the claims experience that we're getting and how do we balance both top line and bottom line as well as the fact that we have to stay competitive in a multi tier environment. So it can't just be in isolation. So we in our own mind, we have moved on now. There are other products also which we have filed. And as we get them approved, that should give us even more flexibility on pricing. So just to close the loop here, are we saying that we've done all the hikes or there is product approvals to come through and the full hike will come in the next few months? As of now, we are not hampered by the fact that our product approval is expected. We're not hampered by it. What I'm saying is that with the new product, it will give us even more flexibility to take a hike if we find that certain parts of our claims experience are worse off than what has been factored in by actuaries. So it just gives more flexibility. But as of today, we are fine. The next question is from the line of Sanket Koda from Spark Capital. Just so maybe in FY we had a muted growth in annuity business, but it has revised very strongly. Just wanted to understand what's the strategy there. Again, we are trying to push a little more deferred annuity and or the focus is on immediate annuity. And if you can give a breakup into immediate deferred and group annuity, that would be useful. And the second question which I have is if I look at the growth in the quarter two, largely, the growth was driven by Bangkok, that is Bangkok family grew individually, grew by 38%, while others like Agency and Direct have been muted low single digits. So just wanted to understand that have we gained the significant market share in HDFC Bank, which has led to this kind of a growth? Yes. Maybe Neeraj, you can take the first part on annuities, Suresh, you can follow. Sure. So Sanket, the annuity portfolio has been as you know, the sources of this business are fairly diverse. And the mix is very similar to what it has been in the previous quarter in terms of immediate and deferred. Our deferral average deferral period is still sub-four years, which has been in the range previously as well. So the average age is about 59, 60. And more than 95% of the business continues to be in return of premium annuities. So nothing structurally that has changed in this. It's just that sources of business are now kind of expanding. The NPS asset management that we have through a subsidiary, that is something which has now started to become a reasonable source. Also, what people are doing in terms of deploying their discretionary savings, not necessarily coming from the pension policies that are vesting. Just discretionary funds, they are thinking about how they can use that to actually lock into an interest rate when they are actually seeing interest rates only going down from here. So that's what has actually resulted in this demand. And like we mentioned previous quarter also when there were questions around why is the growth not there, we're honestly not thinking about this, whether it's sanity or protection from a quarter to quarter basis. We believe both of these are multi decade opportunities. So one quarter, year on quarter, won't really make a difference. People do see value in these kind of solutions. So we do see structural demand for both of them. Got you. On the banker channel, yes. Yes. So look, I think we have been looking at growth across the channels. It's not that we've been focused on one particular channel, whether it's bank or agency, broking or online direct. The fact is that, look, we are supported by partners like HDFC Bank, which have shown tremendous growth. I think they've leveraged multi time. There has been channel events in terms of how the growth was in Q1 and Q2. So for instance, key banks remain open being most of their branches were back up and running being part of essential services. Asset business was probably a little lower, so their focus on life insurance as one of these teams was good. They have been doing a lot of work in terms of looking at customer level across all our partners and especially SCC Bank. The agency business did take a little bit of a hit in Q1 because many of our agents are of the older profile. We had kind of communicated to our employees as well as partners that, look, we need to stay safe. We don't want to going out, move to virtual. So while in Q1, the agency business was probably a little lower, they came back in Q2 because of business as usual started to happen. But in the overall context of things, the banca partner with the branches open, with the kind of focus that they brought, a lot of analytics related work which happened. And most importantly, the amount of digital that had got integrated with a lot of our banca partners, that came into play. So while some of the channels like Booking maybe are picking up now, a lot of tech integration, a lot of preapproved, that kind of work, which we had been working on for quite some time, gave us the continued momentum. There was, of course, this customer interest and protection, which gave us huge growth in Q1 and continued in Q2. Yes. But just if you can put the market share number in HDC Bank, it would be great. Yes. So the overall you're talking about our market HJC Ment? Yes, we continue to remain in the 65% to 70% kind of a range. So that has been consistent for us, right? And we have been actually focusing on increasing our Protection business also at HJC Ment. So that continues to be stable with a very, very good product mix. Got it. Got it. And just if I can squeeze one more. On Protection business, just wanted to understand that the 38% growth for individual protection, 38% growth what we have reported in the first half, If we can break down the Roperfol 38% into the price hike, increasing the contribution of LP over RP and NOP, number of policies sold? Over here, Sanket, it is actually it is not such a simple math. It gets more evolved and each month is a different and through different channels is a different kind of a pattern that we see. Suffice to say that, our LP continues to grow. Our return of purchase prices remain more or less similar. And somewhere in between is RP. Okay, perfect. Thanks. That's it from my side. Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead. Yes. Good evening, ma'am, and thanks for the opportunity. Just on the protection, please wanted to follow-up. You mentioned about the calibrated approach to different pricing changes. But does that imply that you have to adjust year, based on Protection, your margins may be slightly lower? And if you could just while we understand the growth aspect on the margin front for the Protection business, could you talk about the pricing in a longer term point of view or how do you see the margin spanning out there? Yes. So Deepika, our margins actually is more than only the Protection margins because for example, our credit protect margins have are now better than what they were last year despite perhaps MVC being smaller because of the growth overall in the level of disbursements and hence the coverage. So when you look at just the margins, there are many things that are going on in here. We also talked about some of our other strategies like our power replacing unit linked and so on. Our annuities are growing very well. All of that is contributing to our margins as against only what's happened on protection and pricing. Okay. And just one more question from my side. On the back book surplus profit, I mean, firstly, thanks for providing the disclosure consistently. On that front, I mean, we've seen a slowdown in the first half now. What would you think to return back to the earlier trajectory of the growth in back book surplus? UNIDENTIFIED Well, back book surplus has grown by 10%. And under this circumstance, I think we think that it is reasonably robust level of growth. What we are seeing is that the signature of our products has been slowly changing. So for example, last year, did sell fair amount of Sanjay Plus. Instead of Sanjay Plus, if we had sold some other segment, say, like unit linked, maybe the unwind would have happened faster as against the non par savings at unwind. So while that unwind, all things being equal, like persistency, etcetera, will happen, but the unwind will happen over a slightly longer number of years. And that's why you're seeing the 10% as against, like I said, had we sold something else, that would have been a higher number. But given where if you calibrate this with where persistency is and we are right up there and improving our thirteen month persistency, no real reason in terms of apart from the change in underlying product construct of delayed unwind to P and L. The next question is from Harshita Toshneval from PreamG Invest. Please go ahead. Two questions. So one is on the participating products. So when we look at the tenure of the participating products, we are now it's around forty, forty five years versus around ten to fifteen year product, which we used to do earlier. Now typically, we would understand that with that longer duration and that longer float subsequently, we should these products should command much higher margins than a typical part. So again, quantification is difficult, but I just want to understand that does elongation of the tenure from fifteen to forty five years, does that give a big kicker to the margins? That's the first question. And the second one is on the protection part. Now this for the industry, in general, we are the limited pay product mix is increasing overall. Now what impact does this have on interest rate sensitivity for protection products? Because since the lap station at the later parts of the limited way product will be much lower intuitively compared to a regular plant. In that case, does interest rate component keeps on increasing in limited trade versions? Thank you. On the first one, yes, you're right. We do get a margin kick on that. And that's clearly what I was the point I was making with the earlier question that there are lots of these levers that help us and some small, some big that help us get to the kind of margin ambition that we have. On the second part on interest rate sensitivity, Shri, you want to take that? Yes. So Harshita, yes, in limited pay, there is a little bit more interest rate sensitivity than regular pay. But having said that, since the limited pay is usually, I mean, what gets sold is only five years, it is a little bit easier to manage. It's not like you are selling a twenty year of limited pay. So after five years, you whatever money you had to collect from the customer who already collected, it's in your bag. So it's beyond that, it becomes like a single premium. And yes, with appropriate hedging and various other strategies that we follow, it is manageable. So yes, but technically, you're right that LP has the higher interest rate sensitivity than RP. Got it. But it is not so since it's five years, then it's not a material interest rate risk at the later end of the curve? Absolutely. It's only five years, yes. Okay. Got it. And just one more thing on the Shini, maybe on the first question on the participating product. So with the increased float, the margins definitely improved. But is there any specific risk also which gets added on when we because in part, it's a pass through. So is that margin improvement comes without any interest rate risk going up or any other complementary risk going up? No. Actually, if anything, since this is a cash bonus product, where bonus is being paid out every year, unlike a reversion rate, where the thing can be made much later, the approval to the shareholders has been a little bit faster also here. So it's actually relatively, in my view, slightly less risky. And since, like you rightly mentioned, in a participating structure, the both upside and downside is shared with the policyholders, there is not so much of a risk to the company. Got it. Okay. Thank you. Thanks. Thank you. Thank you. The next question is from the line of Arav Sungai from VT Capital. Please go ahead. Hello. Hello, am I audible? Yes, please go ahead. Yes. Hi, ma'am. Firstly, hope all is good at your end. Secondly, I have few questions. So ma'am, the first of them being that at the start of the year, again, we were very, very worried about the persistency ratio in the coming time. But now when we look at the persistency, it like it is holding up or even there's some kind of improvement. So I remember, if I'm not wrong, that around 40% of our industry's premium come from self employed people. And the areas where we are concentrated, it is very much affected by the pandemic. So what is driving this sustenance and persistency? If you could throw some light on that. Yes. So this has been because you flagged it off internally as something to closely watch, we've been reaching out to our customers and explaining to them well in advance before the premium payment that they should be paying their premium and not lapping it. So I think that has helped big time. Also reaching out in advance and ensuring that there is an SI standing instruction or ECS mandate so that collection becomes easier. Also, the combination is that in terms of having different channels and different, like you mentioned, self employed, that kind of diversification helps us because sometimes there is not all your eggs in one basket of it's not just a homogenous set of customers. And different customers having different compulsions also helps cushion some of these potential surrenders that could happen. So all of that means we have management call that is looking at this, and perhaps that's the only metric that we look at every week. And senior management looks at this number. So that kind of a focus means that we are going after every customer, every rupee to also counsel them not to surrender. So all of that has helped, I think. So really, the April month that we struggled to collect, that we are still struggling to collect it. And I don't see how we will make up for that loss. But after that, like when we ended quarter two, it is almost close to pre COVID levels of collection. Right. Ma'am, just one like two more questions on firstly, the business chain. So if I look at the disclosure that you have provided on your slide where you showed up the back book surplus and new business chain, If I calculate the new business strain as a percentage of back book surplus, it has gone up for this particular half yearly. Whereas my understanding was that, like, if we are selling more of part compared to the non part that we sold last year, my strain should have been lesser. So am I understanding something wrong here? Yes. Just some nuances there. First of all, the strain and what the back book, there is no correlation there because you could be selling very different products. What you have is back book generation is what you sold last year and before that. So seeing the two in tandem as a percentage is just that it is a percentage and not really a that's point one. Second point is that we also sold a lot of protection, and that also has a fair amount of strain. So while you're right about power not having the strain, but the protection part does have a strain, and that has had the offset on that. Srini or Neeraj, do want to add anything on that? So in addition to what Var has mentioned, while power might be low strain or no strain, all other product categories have some sort of strain or the other, either expense or reserving. So what you should actually compare is for period to period new business strain. And that has obviously, if you see, is because of the change in product mix. So it's not really in terms of how much existing business is growing and how much your new business strain is growing. You should see it in light of the strain in the corresponding periods or in terms of the product mix of the new business that's being sold. Right. Ma'am, just one last question, if I can squeeze in, is that protection now the whole industry has been focusing a lot on protection. And in the coming years, protection might become a very important component of the whole business. So are we seeing any change in the risk underwriting parameters as well? Because like whatever channel check I did, my understanding is that there's a lot of demand for protection, but we have tightened our standards, underwriting standards because of the heightened risk. So are there any changing risk parameters which you would like to throw upon like which will be important in the coming years when protection becomes a very significant portion of our book? UNIDENTIFIED Yes. We always have dynamic underwriting parameters. And they keep changing depending on where and what kind of risk we are our risk monitoring team is observing. So today, it could be in a particular geography, it could be particular age group, it could be what kind of self employed or a combination of a lot of these factors. And we might either put extra filters or we might actually have to stop doing business for some time and so on. So this is par for the course. And nothing unusual that we are seeing now just because there is more focus because HCP Life has always been focused on protection. Others might have started focusing on it now. But and that's why perhaps it's not anything new that we have been doing in these six months that's different philosophically than what we were doing previously. The next question is from the line of Mayank Bhukrivalla from Franklin Templeton. Please go ahead. Hi, Vibha. Thanks for taking my question. Yes, sure, Mayank. I have two big questions. I'll just put them. First is on persistency on the non bar business. Can you give some sense how it is stacking up versus what our expectations were? Second is on the OpEx growth. So compared to last quarter, this quarter OpEx growth seems to be flat. What is our view for the full year OpEx growth? Are we like given that we are beginning to see growth, are we likely to start investing back into the channels? And the last is just a data question. Is the overall growth level on our non HDFC bank channels similar or higher than the HDFC bank channel? Okay. On the first one on online, while as of now it has been in the range of about 14%, but quarter two has been a little bit more muted than quarter one. And some reasons there, one is that whoever in online and large days unassisted wanted to buy insurance policy when COVID was just rolling out bought the policy. And also younger population who clearly the Google searches showed this that there was an uptick in search for both term as well as HFC Life. Again, that culminated in two policies being bought. So that happened in quarter one. In quarter two, there were a couple of things. One is that those who did not buy it in quarter one and wanted to buy it but still could not cover the hurdle of medicals perhaps still remain in that bucket. And given that our tele medicals are now have been sub about 45%, so that's again, there was a large chunk that was stuck where in medicals were not done and clearly, they're not going to go to in person to get their medicals done. So that got stuck as far as derm is concerned. Another aspect that happened was savings started coming back, which was not so much the case in first quarter. So people started focusing on buying some assured through proxy of savings. So even the ticket sizes are going up and savings products saw an uptick. So all of that meant that there was some level of muted behavior in the online space. But we would expect that to pick up. See, it's not going to be a raring success story of when you're seeing, say, 40%, fifty % growth. It is going to be robust growth. And that's how we would see it because wherever in any channel that we see growth that is unexplained, usually, the quality of business does suffer in hindsight. So there is underwriting to be looked at. We need to be calibrated to the earlier question that I answered on underwriting in terms. All of those new and emerging risks, we have to be cognizant of. And right now, we are reasonably happy with the 40 odd percent growth on as far as online is concerned. As far as the OpEx growth is concerned, yes, percentage has eased off quite significantly. But I think that by about 400 basis points. But I think that will change as growth comes back. Yes, we will continue to trend downwards, but you will see that some investments that we have held back, not so much in technology, but in some other people related investments and so on, training, some of that we'll have to start once again. So you will see that trending upwards in line with growth, very much within cost of acquisition, very much within our margin trajectory, but nevertheless as a percentage of premium, you'll see that going upwards. And the final one on non HKFC Bank growth. Yes, in the first half of this year, HKFC Bank has grown well. But if you were to look at some of the bean shoots even in our proprietary channel like our agency channel, agency channel has grown 6% as against the degrowth in quarter one. And also, the base impact that agency channel had, that also will start being nullified. So for example, agency channel almost grew by about 80 odd percent in H1 of last year. So it was a very, very tall ask even otherwise. And in terms of base effect, while I'm speaking on it, agency channel grew 8% in first half last year, while HFC Bank grew about 8%. So nullifying the base impact, the differential does start coming off. But we are proud of what we have done through HFC Bank, and we are continuing to do also through the online channel that I just talked about as well as some of our other proprietary channels. So Divat, I can add on the last part. I think, look, somewhere, we're not too worried if one particular distribution channel grows higher or more because over a period of time, we have found that there are nuances in each channel. So there are times when the bank has a focus and they grow. And there are times when, for instance, in quarter one, we had ourselves sent out advisory to our agents not to move out and stay at home, take care of it, so do everything on remote, right? So we do understand we are fairly large in all the channels, whether it is broking, whether it's agency, whether it's online indirect, whether it's bank line, whether it's alternate. We are happy to look at each of these channels in isolation and grow them. There will be a product strategy in some case. There will be a distribution growth strategy in some case, and then there will be a productivity strategy in some case. And quarter to quarter, it may vary. But over a period of time, we do find that all channels are growing at a certain rate. Yes, we got impacted in Q1 on nonbank. But I do believe, like Ogivira was saying, in Q2, the green shoots are showing for some of the other channels to come back, and we will hopefully get the overall mix again. Thanks, Suresh. And Suresh, Rufi, would you just give one comment on how our Bangkad channel ex of HDFC Bank has been doing? Has that been launched Yes, look, of course, HDFC Bank is a very, very large partner for us. So in some sense, out of the overall Bangkad business that we do, HDFC Bank contributes. So a lot of our growth depends on how the bank does. But the rest of the channels have also shown good growth. They may not be as large. In your number, Mayank, about 6% is ex HKFC Bank, but growth. Yes. But then it's growth. And we do find that over a period of time, some of these channels will also go through a multi die. Some of them will come through overall incremental growth. So for now, for instance, we've got Yes Bank as a partner. We do believe that next year, that will be incremental growth for us coming in from an absolutely new banker partner. So somewhere we see growth Bandhan is another one that's Bandhan is another partner, which is doing very well for us. Some of our other partners like CSB and other partners are also opening up in terms of all branches for HDFC Life distribution. So we do see opportunity for growth across a lot of non HDFC bank partnerships. Understood. And just one question that I asked in the beginning, the thirteenth month persistency on the non power savings business, how is that stacking up versus what you would have expected a year back? UNIDENTIFIED It is doing well. So persistency remains strong. In fact, we've given those disclosures in our investor presentation segment wise. Yes. I can see a slight increase in that persistency. So it's in line with what we've expected. Mike, what's happened is that we I guess, we've discussed this earlier as well in terms of we knew the product that we were launching will attract good persistency because it's something that customers will really value. So the way the product was priced was expecting good persistency, and the actual experience is in line with that. You. Before we take the next question, you request participants to please limit your questions to one per participant. The next question is from Nishin Chawate from Quota. Please go ahead. Yes. Just remaining on the sorry, continuing on the agency side, what seems to be the case is that this quarter, agency seems to have pushed more of non par as compared to par, which is pushed at the Baimka side. So is this something which kind of builds as a trend? Or is it something could be just an aberration for the quarter? Actually, when you look at Slide 15, I think that's where you picked up from, right? Yes. So if you look, even our term and annuity continue to do well. So it's a combination of all three of them as against only non cost savings is slightly higher, but still lower than where we were last year. So when you look at it So do you think is growing on the agency side as much as what it has grown on the banker side? Sorry, I didn't catch that. What is you're comparing that with banker? Yes. The kind of growth that PAR has seen on the banker side, do you think? Agency has been on PAR. The friction towards PAR towards the end of last year was very high. So in terms of growth, it will come some time before but they've been managing a balanced mix. And if you really look at it, agency has defocused from unit linked and moved away to power and non power. So that is where a lot of the growth has. And on the bank side, there has been a balance sheet across UL also included. The next question is from Geetika Gupta from First Voice Advisors. Hi, thanks for the opportunity. I just have one question on credit protect. So I think the business for the quarter was down about 36%, but when I look at some of the larger players like HDFC Limited that are that back to 95% of last year. So in that context, just wanted to check what is the kind of traction we are seeing in credit protect and when do we expect the business to start growing? Thanks. UNIDENTIFIED Well, already when you see, and I mentioned this in my opening remarks, when you look at our credit protect business, quarter two so quarter one was over 70%, quarter two, we grew by 36, ending at 53%. So sequentially speaking, we are doing much better. When you drill down into this number of our Q2 performance, some of our you mentioned HKFC, some of our partners are close to pre COVID levels. Some of them are not, some of them are struggling. So it's a mixed bag. But think towards the end of Q3, more or less, at least the big partnership should be close to normal. Okay. So really, Q4 is when we expect positive growth in the segment? Yes. So like Viva mentioned, some of our partners are coming back to the same levels of disbursement, which were pre COVID, and they will hopefully catch up. We do monitor the disbursements, which are happening at the large partner level. So some of the partners of the HSBC Bank Group as well as the large Banca and LBSC partners are doing okay. We also monitor it by verticals. We look at how housing is growing. We look at how tractor and vehicle loans are growing as compared to some of the enterprise are growing. And because we have such a wide distributed partner base, which is across segments and across large and small partners, it's somewhere again we are seeing some trends of growth coming in, which is how we focus and put our energies behind the disbursement in terms of increasing attachments. So one of the reasons why the growth came down from 74% in Q1 to 36% in Q2, We are hoping that when Triwali comes in and a lot of these disbursements start happening, the towards Q3 and in Q4, hopefully, the loan disbursements will pick up again. The next question is from the line of Abhishek Khanna from Jefferies. Please go ahead. Abhishek Khanna from Jefferies. You may go ahead with your question. It's Raj here. Am I audible? Abhishek, could you speak up a little bit, please? Yes. Ma'am, am I audible now? Yes. Go ahead. Just one observation, let me know if my observation is right or not. So I noticed that for our operating variance in our EV walk, so for the first quarter, it was like around INR 60 crores. And in this quarter, we and in the first half, it was around INR 70 crores. So for incrementally, it has just come at around INR 10 crores. So if you wanted to understand, despite the pandemic persistency has risen and seemingly operating weaknesses are improving, why are we not seeing greater operating variance this time? And also, if I tie this up with the sensitivity tables that we have provided, so it appears that the sensitivity has actually come down on the operating parameter versus what it was there for FY 'twenty. So if it would be able to just help me understand this, why is it changing why the sensitivities are changing now? Shini, you want to take that? Yes. Two things. One is, see, as you would know, in the first quarter of this year, IRD gave some moratorium kind of a thing, when they extended the grace period and all. So we still don't know how much of those premiums we will get or not get. So we have continued our practice of setting up what we call as a revival reserve for those policies, which may or may not pay us. In normal circumstances, that would have gone through as a surplus. But since we wanted to be a little bit more cautious, we have we are kind of waiting out for us some more time to see whether those premiums will indeed come up or not come up. So we are a little bit conservative on that side. Also, like we have alluded to in the past and also today earlier in the call, the mortality also we have sort of we don't know whether we've seen the end of COVID or how the death claims are going to pan out. So in normal circumstances, some of those mortality surpluses would have been have flown through as operating variance. And since, like you said, we are a little bit more conservative on the mortality. So we're just holding it up for another quarter and see whether the claims will indeed come out or not. So we're just a little bit more conservative on that front. So therefore, the operating variance is slightly lower than what you saw in the first quarter. The next question is from the line of Prakash Kapadia from Anivate Portfolio Managers. On the EULIP side, we already have a low base. So risk conversion still seems continuing. So in the second half, assuming things come back, do we see some growth coming back? And VNB margin should normalize by FY 'twenty assuming equity markets remain positive? I didn't actually understand your question, Prakash. So are you saying that are we going to sell more of unit linked or what was the question? The base is lower and surprising that risk aversion seems to be continuing by investors despite markets doing pretty okay and pretty bad. Yes. But there is a lot of volatility. And market doing okay, I think, is a little bit relative. Insurance typically has almost a nine month lag. Every time there is market reasonably significant market volatility, there is almost a nine month lag. We saw this time and again in February. We saw it again in 2013. People don't flock to products unless there is a fair amount of stability for at least six months. And we're seeing that behavior once more. Okay. And similarly, on the downside also, the persistency and the surrenders also come with a lag? Persistency and surrenders rather, the surrender behavior comes in as a herd mentality. What we do see is that when markets tank sharply, surrenders don't happen immediately. But when volatility continues after that tanking, that's when people start exiting. Unfortunately, they exit at the lowest and enter at the highest. And that's what our job is to keep explaining to them why they should stay persistent. But yes, we time and again, we do see this behavior of people exiting with not with some lag, but lesser lag than what is required for them to enter again. The next question is from the line of Asmug Gala from Finvest Advisors. Congratulations for really great set of numbers. Just broadly wanted to understand, now when you move around your account more of digital products, etcetera, what type of customer expectations do you see in this COVID situation? And how are you going to develop the products to address that particular requirement? Can we have some star product like SunCheers Plus which we had last year in any category? So what your question, Ghanshamuk, if I were to understand it right, My question is that under the current situation, which is not a normal situation, what are the customers looking for in our insurance product? So of things, yes, sorry. Yes. So what we're looking for are two, three things. One is that immediate here and now, they want to cover their health. Second, they want to cover their life, which is why the inflection point protection that we saw and the 38% growth. They also are beginning to realize the need for annuities. Again, that is doing well. And then for them to have conservatively managed savings products, and that's been par or non par, there is almost a pull of the market. I think what people are saying is that there is so much uncertainty in their lives that they want to at least do away with one uncertainty in terms of their savings, and they want a reasonable certainty in terms of their returns as against putting money into unit linked products or some sort of hybrid unit linked products. And that's where all our products being flagship products in every category comes in very handy, whatever the customer wants. And it is also a combination of what we sell and how we sell it. So the digital that you mentioned and the platform that I mentioned in my opening comments about us being able to sell through Wise, and it's as good as sitting next to a prospective customer. You can do everything, whatever you do sitting face to face. And that has enabled us to give this kind of 21% growth that you see. So Bhuva, if I can add, I think, look, we have a fairly comprehensive product suite on ticket side as well as features across UL, PAR, non PAR and term. But having said that, we do see that there is a customer expectation on more innovative products. There is a customer expectation on more flexibility in terms of benefits. There is also the whole work that we are doing on the digital to make it more transparent as well as ease of buying purchase journeys for the customer, which is what is going to make a difference for them to actually say, okay, I want to make sure I cover maternal health. So something like a preapproved sum assured. So things like that is what we need to keep looking at with minimum documentation as and with the risks that we can take in terms of minimum medical. So a lot of these expectations are coming in. But at the other end, the customer is also getting more aware, and the category as such is growing. So we don't really need to come out with a new product. But given that how we've been looking at it every year, there must be something which will continue to come out. Thank you. The next question is from the line of Ajax Fredrik from BNK Securities. Please go ahead. Thanks for the opportunity. My question is with respect to the ad grade spend and marketing spend that has come back to normal. So where are you focusing on? What products are you pushing? So we've done campaigns on term. We've done campaigns on annuity and so on. So and also we've done branding activities in terms of visibility. Given that we are at in multi tier situation, we have to when a person walks into, say, a bank branch, Suresh had given some examples of some of our partners, it could be an IDFC bank, it could be a Bandhan, it could be. So there unless we have this visibility, it's not going be top of the mind recall. So it's a combination of both media spend and our branding. Thank you. The next question is from Swarnabh Mukherjee from Edelweiss. Please go ahead. Hi, good evening. Thanks for the opportunity. Ma'am, my question is more on the part portfolio. So just wanted to understand your strategy. So the numbers this quarter are fabulous, and I think you reached a level where your PART portfolio was there in at Q4. So I'm just wondering what would be your strategy regarding this? Would you continue to grow let this portfolio grow as the customer demand remains? Or is there any lever that you'd like to press to maybe maintain the balanced product mix that you generally have like you had done for Sunset Plus last time, although there was, of course, some amount of interest rate risk also involved in that. So wanted to know your thoughts on how do we see going forward the sales of this power portfolio panning out? So we'll be very supportive. We do look at right sale and right fitment for the prospective customer because the last thing that we want is for us to have persistency issues and for the customer to lose money so that he never buys an insurance product again. So the fitment is important. And as long as the fitment is there and there is a pull from the customer, we are very happy to sell Sanjay Power advantage to the customer. And if you look at our numbers back in time, say, eight years ago or a little bit before that, power used to be a very significant portion of what we sold. About onethree of our business or thereabout, between onethree percent to 40%, we are quite comfortable selling products such as Sanchay Par Advantage. The next question is from the line of Yash Sultana from Genesis Investment Management. Please go ahead. Hi, Viva. Thank you so much for all the details and a fantastic set of results. I have a slightly macro question. So despite incomes as an aggregate going down a bit for the country, we've seen savings shot up largely because people are not spending right now. Possibly, the longer term trend could be that people are now saving a bit more given the kind of a deep crisis that we have seen as an economy, possibly one of the only deep crisis in the last one last ten years or so. So in with that construct, do you see savings product growth increasing a lot over a longer term period, like, let's say, a five, seven year horizon? Because while this is happening, there is also a fair bit of advertisement sometimes by our community only that there is that if you want to invest in insurance, invest in term or invest in annuity, there's no point investing your traditional eulips and parts of the world. So where do you see this going? And of course, there's no science to it. What's your gut saying given you've been there for so long? No. I think it's not eitheror. I see it as having little bit of various things. It's like asset allocation. And I see it actually helping an individual take care of varying needs. And that's why in terms of annuity serves a very different purpose to protection to some of the fixed benefit health care products, riders and also keep for an individual who has bought a policy to keep topping it up as his economic situation improves or his liabilities his or her liabilities increase and so on. So this is a dynamic risk management of his own set of assets and liabilities. That's how I see it. Rather than I think it's very erroneous to say, should I invest in unit linked or should I invest in something else? They are actually apples and oranges. It really depends on what the purpose of buying insurance rather than just randomly buying something. So and that's what our people are trained and we keep reemphasizing that the need based analysis bottoms up becomes very important. And each one of our products has been manufactured with a purpose. And if that fitment is there, then why would anyone really surrender unless a person has a cash crunch, why would anyone surrender their policy? And that's kind of the ultimate goal. So looking down to your question, looking ahead, I would say really all of the above. Thank you. The next question is from Bharat Shah from ESK Investment Managers. Please go ahead. Hi, Deepa. One, when we think of our investment portfolio overall, for the entire industry, what it strikes somewhat not very clear to me? While I understand that in near term, equity return uncertainty would appear daunting compared to relative uncertainty of certainty of fixed income yield. But over the longer term period, the roles reverse completely. For our insurance and life insurance is ideally tailor made for that kind of a long term investing. Yet we see the hesitation and reluctance to get into greater long term quality equity investing. Any reason why, especially for the longer term portfolio of insurance products? Yes. So clearly, here, we had just discussed this a while back as well as in terms of Rajan products, it's more about asset allocation. So yes, you're right that over a longer period, you would expect equity to outperform the fixed income instruments. Though in the past, the volatility has also put off some people because if you look at five year returns, seven year returns, three year returns, they have been fairly not very clear in terms of equity as an outperformer in that time frame. So one thing which also has happened is that the definition of long term has changed. So people might buy a twenty year, thirty year product, but they want to commit for a period of maybe, say, five years, seven years, ten years. So that's why across product categories, you see an increase in limited pay products. And if I have 100 to invest, I might invest, let's say, plus INR X in equity depending on my risk appetite and INR Y in fixed income. And every customer has a different kind of a risk appetite. So if you look at our product structures, even in unit linked, the percentage of debt has increased over the last few years, exactly for this reason. And that can change over the next couple of years when the environment changes, people will be able to reallocate their funds between these asset classes. Participating has, in some sense, the best of both worlds. It has a good capital guarantee because of the debt investment, And it also has potential for upside through equity investments. And then some part of your money you allocate like you would put in a fixed deposit, you basically have a tax efficient, long term income generating product with an upfront guarantee. So across different ages, across different risk appetites, this can evolve. So our job is to ensure that we manage whatever funds that we get through whatever customer decides and their customer risk appetite. We manage it in a manner which is appropriate from a long term horizon. So that's what we try and do. The next question is from Nidesh Jain from Investec Capital. On the fixed cost absorption, we had a negative impact this first half. But if I look at our operating costs, they have declined in absolute amount on a Y o Y basis. So what is the reason for fixed and the off line has grown on a Y o Y basis for H1. So what is the reason for fixed absorption negative impact? And how do we see that impact for the full year? You're talking about operating expenses as a percentage I'm talking about operating expenses in absolute amount that there has been a decline. You're talking about Q2 versus Q1? H1 versus H1, Y o H1 versus H1. Yes. See, that is all a mix in terms of while optically it looks like your APE the composition of APE also matters because the cost of acquisition varies from channel to channel. And so for example, agency channel has much higher levels of fixed costs. Some other channel might have intrinsically higher fixed higher costs, but because the product mix is able to give you the kind of margins. So it is not like a one is to one equation in terms of rupee value will be the same. And also second thing is that you have to see along with commission. So if you were to look at total expenses along with commission that the gap narrows. So the combination of these factors as against credit life also is lower. So it's a combination of all these factors rather than and also the factors, like I mentioned earlier, one of the earlier questions, wherein we have held back a lot of austerity measures that we've had, including things like salaries being increments and promotions, etcetera, have completely been held back. So all of that is reflected here. Thank you. The next question is from the line of Ashjit Singh, who is an Individual Investor. Please go ahead. Yes. Thank you. I have two questions. One is the operating return on EV has fallen from 21.5% in 2018 to 17.6% in H1 twenty twenty one. So how is this going to impact our profitability now and going forward? Sheena, do want to take that? See, operating variance, a key component is the interest rates of which I think you're mentioning operating return on EV, right? Yes, EVO percentage. Okay. So EVO percentage has come down. So an important component of this operating return on EV is the unwind. And unwind is a function of the prevailing interest rates. And I think you were comparing 2018 numbers or some think of an old number, I think, when it was 21%. And that's because interest rates at the time was a little bit higher. So and that's why with interest rates falling in the last one or two years, EVOP percentage has also accordingly come down. Thank you. The next question is from the line of Kishore Khosor, who is an individual investor. Please go ahead. Good evening, ma'am. Thanks for taking my question. My first question is, as GHC Life delivered robust agency growth in September, what were the special initiatives that the company took? Suresh, you want to take that? So while Suresh joins Hello? Yes, sorry. Maybe you're on mute. Yes, go ahead on agency. So look, on the overall agency growth over the last two, three years, there has been fair amount of structural interventions that we have made, right from how we have invested and actually looking at the distribution increase, looking at the quality of distribution in terms of who are the financial consultants of partnering. We initiated a very large training and capability program called Agency Life, which was spread across all our agency partners with us. In the time of COVID, we migrated that from an off line branch training to an online where more than 6,000 financial consultant partners come online and get trained. There's been a fair amount of work in terms of digitization of resi. So when you are looking at the entire agency channel, there is a product level intervention, there is a training intervention, there is technology intervention that we have done. We have invested in even our own team, there have been some design changes which have been made in terms of how our employees are closely linked to the kind of quality of business and the top line that our agents deliver. So the interests are very closely aligned. And we've been working on this over the last three, four years, which has kind of resulted in a fairly good quality distribution with a very high level of quality in terms of persistency also coming in. So we do believe that we'll continue to stay invested. There are enough customers out there who like a financial consultant who they can depend upon their financial investments, especially life insurance. So even if you go back and survey, now there are a lot of customers who treat financial consultants or agents as their primary source of working life insurance. So if we continue to invest in this, there are a large segment of customers who we will reach to our financial consultants. A lot of these financial consultants have been with HDFC Life for even twenty years. So even as we complete twenty years, there have been a lot of agents who have been with us. And all of this is slowly coming back into growth quarter on quarter. There was a little bit of a hiccup in quarter one, but that was more from our side where we advised all our partner agents to actually go slow and not step out more for consideration for their The next question is from the line of Vinayak Ponta from Augmenta Research. Good evening. I just had one small question. So it was mainly directed towards the change in actuarial liability. If you could please like elaborate a little upon what drives this number? Because as far as I remember, there are a lot of factors that come into play in driving like what kind of liability is going to be created. So just some light on like what are the elements that drive this number? Neeraj, do want to take that? Actually, if you see the largest movement that you will see in the actual reserves is on account of market movement on the unit linked side. So if you look at a typical insurance balance sheet, you will basically find two kinds of liabilities. You will find linked liabilities, you will find nonlinked liabilities and of course, you'll have the share capital. So if you were to just look at linked liabilities, the reserves will move almost in tandem, very much in tandem with what's happening in the markets. So if the equity markets are doing well, for example, you'll see an increase in reserves if you see and the other way around. On the nonlinked side, it's a function of what kind of products you're writing, what kind of how much of your product mix is coming from nonlinked. So if you have a balanced product mix like we do, you'll find an increase in liability on both the sites. It's just that the change in reserves on unit linked is going to be completely driven by what's happening in the market. Interest rates going down, you'll have greater liability because you'd have greater asset value. So that will get reflected in the reserve. And same inverse will hold true for equity. The nonlink liabilities will depend on the kind of products you're writing, the nature the long term nature or the short term nature depending on the kind of products you're writing and the persistency that you expect. So that will be a lot more stable. On the linked side, you'll find a lot of volatility in the results. The next question is from the line of Bharat Shah from ASK Investment Managers. Yes. Earlier question when I was asking about taking a long term view of the investment portfolio, where I was saying that insurance firms are ideally designed life insurance firms to create a long term equity portfolio where near term uncertainty of equity returns may look daunting and is complete with relative certainty of fixed income yield in the near term, but rolls the reverse completely over long run. And therefore, why are insurance firms reluctant to increase their equity book? I was not speaking from the perspective why customers are choosing what they are choosing. But as far as the portfolio of insurance products, long term protection We seem to have lost the line for the Mr. Shah. Is he on the line? No, he has dropped So we'll wait for him to come back. We can take the next question. Sure. The next question is from the line of Kishore Khorsas, an Individual Investor. Please go ahead. Yes. Once again, thank you for taking my question. My question is how has been the uptake of Grupo and Surabhatra that was launched in the last quarter? I mean, how are the product acceptance among customers? How much Approx business has done? And what are the challenges, if any? So we've just had the foundations of in terms of rollout. But given the number of group relationships that we have across corporate clients and others, we so a lot of serious discussions have begun. You will see traction more towards Q3, Q4. Okay. So till now, how much business we have done for particular this product? So we're not really giving product wise kind of numbers out. But it has not been hugely material right now. Right now, it's been more in terms of sign ups. So before we start selling, we need to have the sign up for Group Suraksha, Group Purna Suraksha. And so right now, we are focusing on signing up more and more of the corporate clients. Thank you. We have Mr. Varad Shah from ESK Investment Management back on the line. Sorry, my question is why insurance firms are reluctant to extend their equity books? That was basically the question. Right. So if you again break up our book into three buckets. The first bucket is unit linked. Now unit linked is where the asset allocation is completely dictated by the customer. We just discussed that. So I guess we don't really have any role to play there except for managing the funds appropriately for the risk appetite and for the duration for which they are giving us the funds for. The nonlinked portfolio, the customers are actually interesting the assets to us with a particular objective in mind. That objective is, at the very least, capital guarantee and at the most, interest rate guarantees. So typically, these products do not lend themselves to very high level of equity exposure because then we will not be in control of the risk management for these products. So participating, we do have significant equity, anywhere between 20% to 25% depending on the years to maturity, depending on the term and so on and so forth. So that's where we do take equity exposure and manage it the way we need to. The third part of the assets we manage is, again, shareholder funds. Now shareholder funds, again, as you're aware, basically does two things. One, it supports our solvency, and our solvency needs to be reasonably within a band of the volatility that we can be comfortable with. So again, there's asset allocation is predominantly debt. There will be equities there, again, about 20% to 25% depending on the calls that we would take. But again, there, given that a large part of the capital supports solvency, it needs to be fairly steady. For that, we need to kind of have that asset allocation. So equity clearly is dictated by the kind of funds that we manage, whether it is for the policyholders or for the shareholders and for the purpose for which these funds are being entrusted to us. So that's our submission on this. No hesitation, really. No hesitation. It's just that it's completely driven by the nature of the funds that we manage. We'll take that as the last question. I would now like to hand the conference back to Ms. Vibha Badarkar for closing comments. Thank you. As mentioned, the detailed disclosure on our results is available in our investor presentation. I would like to thank all of you for participating in the results call. Stay safe. Thank you, and good night. Thank you very much. On behalf of HDFC Life Insurance Company Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.