Ladies and gentlemen, good day and welcome to the ICICI Prudential Life Insurance Company Limited Q1 FY 2026 earnings conference call. 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. Should you need assistance during the call, please signal an operator by pressing star then zero on a touch-tone phone. I now hand the conference over to Mr. Anup Bagchi, MD and CEO of ICICI Prudential Life Insurance Company Limited. Thank you, and over to you, sir.
Thank you, thank you. Good afternoon and welcome to the results call of ICICI Prudential Life Insurance Company for the quarter ended June 30, 2025. I have several of my senior colleagues with me on this call: Amit Palta, Chief Product and Distribution Officer; Dhiren Salian , CFO; Judhajit Das, Chief Human Resources and Operations; Deepak Kinger , Chief Risk and Governance Officer; Manish Kumar, Chief Investment Officer; Shobhik, Appointed Actuary; and Jitendra Juga, Chief Investor Relations Officer. Let me take you through the key developments during the year, during the quarter. We express our sincere gratitude to Mr. Dilip Karnik, who has retired from the position of Independent Director effective May 9, 2025, having completed the maximum age of 75 years as prescribed by the IRDAI regulations. We also held our 25th AGM through our video conference on June 27, 2025.
All the items specified in the AGM notice were approved by the shareholders of the company. Now, let me provide the business overview. The Indian economy has gone through uncertain times over the last couple of quarters with challenges in microfinance sectors, tariff wars, and geopolitical events. This has led to volatility in equity markets and has impacted the market sentiment in general, especially discretionary spending. The life insurance industry was also impacted and grew at a slower pace in Q1 2026, delivering 5% year-on-year growth in retail-weighted received premium as compared to 20% growth in the previous year, Q1. ICICI Prudential Life grew at a very high pace in Q1 last year, delivering a 47% RWRP growth, primarily led by strong ring business on account of buoyancy in the equity market and a unique product offering in the annuity segment.
Thus, this year's Q1 was impacted by both external factors in the form of uncertain market environment and internal factors being a very high base year of last year. On the other hand, we have witnessed a surge in the non-linked segment as customer preference started shifting towards guaranteed products, given the volatility in equity markets. Additionally, the retail protection segment continues to witness strong momentum as the product-based inherent nature is not much dependent on the market environment. Amit will talk about the market movements in detail. Now, the key performance highlights for Q1 2026: APE declined 5% year-on-year to INR 18.64 billion, and retail APE declined by 9.2% year-on-year to INR 15.12 billion. The two-year CAGR for both stood at approximately 13%. Retail NOP grew by 2.6%, and new business assured grew by 36.3% year-on-year, led by strong growth in protection businesses. Retail new business assured grew by 31.5% year-on-year.
Total premium grew by 8.1% year-on-year to INR 89.54 billion. Our 13-month persistency stood at 86%, and 49-month persistency stood at 69.8%. We continue to deliver on our claim promise with leading claim settlement ratio of 99.6%, with an average turnaround time of 1.1 days for non-investigated individual claims. We remain focused on improving customer experience. 54% of our policies were issued on the same day for the savings line of business. Cost-to-premium improved by 280 basis points to 21.2% in Q1 2026. VNB for the period was INR 4.57 billion. With an APE of INR 18.64 billion, the margin stood at 24.5%. That grew by 34.2% year-on-year to INR 3.02 billion. AUM grew by 5.1% year-on-year to INR 3.2 trillion as of June 30th, 2025. Risk management is an integral part of our ecosystem with focus on right selling, right sourcing, and right onboarding.
Our robust risk management architecture is exhibited in our strong and resilient balance sheet, and our solvency ratio stood strong at 212.3%. We have received recognition from various industry forums, affirming our customer-centric approach being embedded in every step of our business. The complete list of awards is provided on slide 49. With customer-centricity at the core of everything we do, we will continue to work on our strengths, that is, product leadership, extensive distribution network, and business excellence. Aided by building blocks of people, digitalization, and analytics. On the cost front, we continue to work towards aligning the cost structures, which is commensurate with the product mix. All these initiatives together will help us achieve our core objective of increasing the absolute VNB while delivering value to our customers. Thank you, and I will now hand it over to Amit to take you through the business update.
Yeah, thank you, Anup. Good afternoon, everyone. As mentioned by Anup, the uncertain external environment led to consumer preference moving towards guaranteed products from market-linked products as wealth preservation takes precedence over capital appreciation during such times. As a result, non-linked savings business grew by 20.8% year-on-year, while linked business declined by 13.6% year-on-year in quarter one FY 2026. Contributions from non-linked business increased to 21.5%, and linked business mix declined to 46.8% of APE. In spite of this market volatility, two-year CAGR for our linked business still stood at robust 24.1%. There continues to be a category of customers who still take a long-term view and demand linked products irrespective of short-term volatility. Therefore, to further enhance our linked portfolio, we have launched Smart Insurance Plan Plus, which offers affordable wealth creation with a minimum premium as low as INR 1,000 per month.
We have also been increasing the proportion of linked products, which are not only aimed at wealth creation but also offer goal protection, high sum assured, and comprehensive benefits for non-linked. Protection business grew by 15.2% year-on-year in quarter one FY 2026 and contributed 21.9% to APE. The strong momentum in the retail protection business continued with 24% YoY growth. To further capitalize on this momentum, we recently launched iProtect Smart Plus, a protection plan which offers flexibility to customers by providing them a choice to opt for premium rates and convert regular premium policies to a limited-pay policy. The product offers an immediate death benefit upon claim registration, thereby catering to the family's liquidity needs in the time of distress. In credit-life business, we continue to witness a slowdown in the MFI segment in line with the challenges in the MFI industry.
We expect recovery in MFI space gradually over the coming quarters. Overall, credit-life business, that is, MFI and non-MFI together, is at a similar level as the previous year. Group term business has grown year-on-year. As businesses continue to scale and the number of employees increase in the economy, this segment should also grow over the long term. Our strategy remains focused on selecting businesses which meet our defined risk-reward expectations. Annuity business declined 53.3% year-on-year in quarter one FY2026 on a very high base. Annuity does continue to be a focus area. Annuity CAGR for the last four years stood at 15%. Specifically, in this quarter, we are starting to witness an increasing shift towards single premium annuity, partly driven by the drop in fixed deposit rates. Group funds business grew by 53.7% year-on-year and contributed 4.4% to APE. This business is typically lumpy in nature.
Moving on to the channel-wise growth and contribution, proprietary channels, which include agency and direct, declined by 18.1% year-on-year in quarter one. They contributed 38.5% to total APE and 47.4% to retail APE. The decline was primarily due to the high annuity base of the previous year and the shift in consumer preference away from unit products, which contributed heavily to the channel business. Over the last few months, these channels have been agile enough to pick up non-linked products. Historically, they have demonstrated the ability to shift product mix from unit and non-linked savings business depending on the prevailing macro-environment factors. The five-year CAGR for our proprietary channel is 19% for quarter one. This demonstrates the channel's ability to deliver continuous growth across varied business cycles. Therefore, we believe the decline in quarter one is transitionary, and we will continue to invest in our proprietary channels to sustainably grow the business.
Bancassurance business declined by 2.1% year-on-year and contributed 29.7% to APE in quarter one. Two-year CAGR for bancassurance stood at 14.4%. Partnership distribution business grew by 6.6% year-on-year and contributed 12.9% to APE mix in quarter one. Group business grew by 18.9% and contributed the same 18.9% to APE mix in quarter one FY 2026. Our distribution mix is provided on slide 9. We strongly believe that a well-diversified distribution is one of our biggest strengths. Today, we have more than 240,000 agents spread across geographies, 49 bank partnerships with access to more than 23,500 bank branches, and 1,350 non-bank partnerships. As we continue to deepen our channel distribution and penetrate further into micro-markets to get more access to varied customer profiles, our ability to shift between product segments depending on the prevailing economic environment should become even more seamless.
We believe this will help us deliver sustainable growth irrespective of the market environment over the long term. I will now hand it over to Dhiren to talk to you through the financial update.
Thank you, Amit. Good afternoon, everyone. Now, let me take you through the financial metrics. The value of new business VNB for quarter one FY 2026 stood at INR 4.57 billion, and the VNB margin stood at 24.5%. The relevant comparison of Q1 FY2026 margin is with the full-year 2025 margins, which were at 22.8%, as that captures the impact of all assumption changes done on March 31st, 2025. The movement in margin is largely on account of the shift in product mix towards non-linked from the linked business, as customer preferences shifted towards guaranteed products. As also a higher mix of protection business.
Coming to costs, since last year, we have taken various cost optimization initiatives to have a leaner cost structure and, at the same time, align it to the emerging product mix. We have already started witnessing the benefits of some of these initiatives, as we have now seen improvement in our cost ratios. Our total premium grew by 8.1%, while our expenses declined by 4.4% in the current quarter. This led to an improvement in cost-to-premium ratios by 280 basis points year-on-year to 21.2%. The cost-to-premium for savings line of business improved by 270 basis points to 14.1%. We also continue to work on improving product-level profitability through increasing sum assured multiples, longer tenure policies, and increasing rider attachments. We believe that as we see improvement in our APE growth, both our cost optimization and profitability improvement initiatives should enable us to sustainably grow VNB over the long term.
Moving to other financial metrics, the company's profit after tax for the current quarter stood at INR 3.02 billion, an increase of 34.2% year-on-year, primarily due to lower new business claims coupled with higher investment income from shareholder investments. Our assets under management stood at INR 3.2 trillion, and our solvency ratio continued to be strong at 212.3% at June 30, 2025. Thank you, and we're now happy to take any questions that you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on a touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Nishant Chouate from Kotak. Please go ahead. Mr. Nishant Chouate, you may go ahead with the question.
Yeah, hi. Am I audible now?
Yes, we can hear you. Please go ahead.
Yes. So, you know, we're just trying to understand a little bit, you know, on the margins front. And, you know, if I just look at the increase in protection share between the last year and this year and apply the, you know, 50% odd margin for this business, which was, I guess, reported, you know, towards the end of last year, you know, even then, we should probably have had a, you know, much higher expansion in the overall margin. So I was just trying to see if there's a way to reconfigure these numbers.
Hi, Mr. Jitendra Ng. I think if we apply the full-year product margin, we'll get to what we are seeing at this point. By and large, there will be some minor movements that will be there, such as some unit of adjustment, etc., but we'll get to this number.
If I look at just the protection-level margin, I mean, there's almost like a 400 basis points rise in protection, right? And if I just look at the protection-level margin, we should have got the YoY expansion in margin. I was just wondering whether I'm missing anything.
Yeah, but it's beyond just the protection, right? You have linked, you have non-linked also. We'll have to take that into account, I mean.
I mean, again, and arguably, you know, the linked business margins would be lower than non-linked, right?
That's true. Yeah.
And.
We'll still get it. We have a group fund also that comes along the way. When you do the multi, you will find that it broadly comes to this level. There will be some minor differences, which roughly will be about the unit of movement.
Sure. What explains the sharp decline in the agency business?
See, agency business was really supported with market buoyancy last year, and they had grown in excess of 70% last year in the first quarter. That was supported, of course, through unit-linked product as well as a new annuity product that we had launched last year. Both these products did fairly well in agency channels. Those were the only two things because the underlying demand, while it saw a shift towards guaranteed products, the average ticket price, as you know, is relatively higher that you experience when it comes to unit-linked products. That is the change, which is the underlying demand environment. Otherwise, the core fundamentals of agency still remain the way it has been for the last so many years.
We are focusing mostly on, you know, licensing new advisors, adding on width, getting more advisors to participate, and ring-fencing our value contributors who have been part and parcel of our agency business for a very long time. You know, Nishan, fundamentally, you acquire new agents, you license them, you build them capability, you ring-fence, create programs, do a digitization, take the administrative work away from advisors, and power them with applications like iPro-Edge that we built exclusively for them, do a differentiated proposition. All that work has continued even in quarter one. Nothing has been, you know, has taken a back seat. It's just that the underlying demand environment was different in comparison to what it was last year. Nothing fundamentally wrong.
It is just that we have seen agency transitioning from one kind of environment, selling a category of products to a different category very well over the years. This is just one of the transitions we've been.
On the bank side, where the business is more or less stable, I think there's a minor decline. There, the product mix remains the same, or is there any change out there as well?
Yeah, so the bank also, as you know, that, you know, 50% of our bancassurance is ICICI, which is overall contributing to 15% of our overall business. And as you know, that ICICI Bank has made a choice of focusing on the protection and annuity range of products apart from unit-linked business, which is sold over the counter. So unit-linked business, because it has been generally impacted over the entire quarter one, was expected to impact ICICI Bank as well. That has contributed to a relatively flattish growth.
Yeah. And just one final question is, you know, if I look at the AUM growth, which is, I think, up around 5% year-on-year, you know, probably could have been flattish year-on-year, but for the MTM, you know, gains on the equity book.
What was that, Nishan?
AUM growth.
Yeah.
I'm just curious, you know, in your view, when do you see the AUM growth kind of accelerating, and do you see this as a concerning trend?
Not a concerning trend. See, market movement is obviously not within our control. What we have been working at is to ensure that we get new business and we continue the business that we have on our booking side. As long as that continues to, the renewals continue to grow, you will have a natural increase in the AUM, and then the MTM adds on top of that.
Yeah. Because there's a small decline in persistency as well for, I think, the first and the last bucket.
Yeah. So the minor decline in persistency in the first year's 13-month bucket, actually, if you look at it from the previous year, which is June 2023 numbers, it's broadly at the same level. There are some product channel combinations that we have to work at and work on these costs to improve the persistency.
That's the 50% level, yeah.
Yeah. 50% actually is a regulatory change. There is additional time that is now available for both linked and non-linked policies. There is no requirement to foreclose any of these policies. That is what has impacted the metric marginally. Specifically on the unit-linked, you know, customers can now continue to keep the policy with us, even as they do not pay premiums beyond the sixth year in cases where they have difficulties. They continue to enjoy the cover. From our perspective, when the policy stays with us, we do enjoy the SMC. It is still value-accretive to hold on to that.
Got it. Thank you very much for those questions. All the best.
Thank you. The next question is from Avinash Singh from Emkay Global. Please go ahead.
Yeah, hi. Good afternoon. Thanks for the opportunity. Two questions. The first one is on this persistency drop. Yes, I mean, if we look at June 2023, June 2025 are flat, but there is a kind of a decline versus last year. Is there kind of a, you know, that particular, that, you know, the full capital return pension product that you had launched, is that, I mean, surrender or higher surrender in that product particularly impacting this? And if that is the case, will there be kind of a visible negative operating variance impact this year from that, I mean, higher surrender in that? So that's question one. Second is on, you know, broadly on a mortality trend.
I mean, if you were to kind of exclude the COVID delta wave impact, do you see, I mean, in a similar customer profile, just geographic and demographic profile, do you see any sort of a change or deterioration in mortality trends in the last six, seven years? Of course, COVID delta wave quarter was a very, very exceptionally high sort of a, you know, mortality. In normal course of business, do you see for the similar economic and demographic strata any sort of a change in mortality profile over the years? Thanks.
I'm going to try again, you know. Let me pick up the mortality trend question. See, outside of COVID, I don't think there's been too much of a shift in mortality. I think fundamentally, one has to understand that mortality does not shift very, very quickly. It's a slow-moving trend. Yes, while there will be commentators who will talk about improved longevity, improved health conditions, these do come about and impact mortality over a much longer tenure. By and large, I think whatever we see onto our portfolio is obviously a function of our processes and the way that we bring customers on board. You may have noticed in some of our slides, we have spoken about a lot of our models in place, which help us manage the onboarding process, which identify potentially poorer profiles. In terms of mortality.
We have a process by which we are able to understand what the customer profile and feed that's relevant for the product that we have offered. This set of activities actually has resulted in, you know, some of our early claim numbers dropping to as much as 21% of overall claims. We've seen that steady drop across the years. This is the kind of work that we've been doing to ensure that at least when you look at claims, whatever could potentially be a fraudulent, very loosely put, a fraudulent kind of a claim, those are being controlled right up front. Of course, over the long term, the underlying profile extent will play out. That's on the question on mortality.
On terms of persistency, one other element that also does impact the 13 months is that, if you recall back in March 2023, which was the last month. When the tax regulations were changing. What we have seen is that particular month does actually have a heightened persistency. Now, that would have played some part as the numbers have gone up to June 2024 numbers that you see of 89%. And as that has washed off, you do have it reverting to a more normalized level from the past period. Outside of this, there are channel and product mixes that, like I said earlier, that we have seen some challenges on that we will work at improving. In these cohorts.
Yeah. So, I mean, you are not seeing kind of any unusual thing in this surrender that may have impact on operating variancy at this point?
No, from the end of last, end of 2025 till now, I think it's a little too early. We'll wait and watch this as it goes by.
Okay. Thank you.
Thank you. The next question is from Shreya Shivani from CLSA. Please go ahead.
Hi. Thank you for the opportunity. One thing I wanted to check, in the non-linked savings growth that you have delivered, can you give us some color on what was the growth between PAR, non-PAR, some indication of which segment has scaled up faster? That is my first question. My second question is on the cost ratios now that your annual report and all public disclosures are out. I just wanted to check that does your non-PAR segments' cost, absolute cost of FY 2025, was it in breach of the EOM guidelines? I know the EOM guidelines are not applicable in FY 2025, but just wanted to check. An adjacent question to that is, when you talk about cost optimization, can you help us understand what all initiatives are being taken on that front? Thank you.
Hi, Shreya. If the first question was in terms of the color on non-linked savings, then roughly at this point, we're looking at about 50-50 in terms of the PAR, non-PAR mix. Amit also pointed out that in this last couple of quarters, we've seen an improvement in growth for the non-PAR product, given obviously the environment that you have seen. That has actually done quite well in this particular quarter. Now the whole non-linked savings portfolio looks like a 50-50 between PAR and non-PAR, roughly. In terms of our cost ratios, and we focus the expense of management, I think we're well within the expense of management at an overall basis, both for non-PAR as well as the PAR lines of business. What are we doing around cost optimization? There's actually a variety of things that we have done. We continue to invest in manpower.
Right now, obviously, the idea is that. Where we need to have investments, we'll continue those investments in terms of people. But by and large, what we've also tried to do is to understand what are the additional work that we do within our operations and look at cutting that out. Overall, when you look at the cost, you will find that it's actually declining and actually has been steady and then declining as you look at this particular quarter.
Right. If you're continuing to invest in and add manpower, invest manpower, and also, I'm not sure I understood where are we realigning or where are we coming from.
There will be realignment of manpower along the way. If you have channels where you do need to invest, you will continue to invest in those. Where we do not need to invest, we would move out of those.
All right. Got it. Just one follow-up question. When you sell these products, like, you know, the unit-plus protection product, which has done quite well for you, how are the premiums reflected in our product mix table? Do you show that in unit or, I mean, I do not understand that. Whether it is shown with, a bit of it is shown in protection, a bit of it is shown in the unit line item, how do you show that premium?
Right assessments will be part of the base product. So it will show up in the second line of the list.
It will show up in unit product, right?
Yeah.
Because protection is the rider. Correct?
If a unit product has been sold with the rider, then the entire premium of unit and the rider would be shown under the unit component. What you see under protection and specifically retail protection are term plans, and if there are riders that are attached along with the term plan, they will show up over there.
All right. All right. Understood. Thank you so much. This is it.
The assessments on non-linked products as well. That shows under the non-linked savings product.
Got it. Got it. Understood. Thank you so much. Thank you.
Thank you. The next question is from Sanket Gowda from Avnish Kalra. Please go ahead.
Yeah. Thank you for the opportunity. Just, see, I want you to understand again this annuity piece a little better. If I add back the annuity premium, what you did last year, last quarter one through and through the current quarter number, assuming flat growth, your APE would have shown a marginal growth. Which means that somewhere there has been a significant cut in the annuity business, which is clear from the numbers. Is it largely because you incrementally have reduced the exposure to that regular phase zero surrender charges product? I just want to understand this INR 100 crore business, what you did in the current quarter is predominantly single premium, just to avoid maybe persistency risk with respect to the annuity business. That's my first question.
Sanket, year after year, the business, underlying business are slightly different between product lines. Even when you look at unit, the underlying business itself does change a bit. Specifically on the annuity, what we have seen in the environment right now, and we discussed this in the opening comments, there's been a drop in the FD rate that has made single premium a lot more attractive. The challenge last year, or most of last year, was that the sticker price when you walk into a bank for FDs was fairly high. Hence, there was no optic for any single premium product, whether it be an annuity or otherwise. What you've now started to see in this quarter is that an optic in terms of single premium, primarily because when you see the sticker price at the FDs come down.
These products are now starting to become a little more attractive. That is the kind of growth that we've started to see at this point.
Again, the regular pay and single pay, we can understand, but regular pay should grow on its own, right, irrespective of whether what the interest rate environment would be. Single pay demand coming back is an addition to the growth. But regular pay just is getting significantly declining. I just wanted to understand whether there is a product issue or not in that sense.
No, no product issue. All products are available and on the shelf, Sanket. See, what happens is that we also have a non-linked, rather non-PAR product, which was introduced earlier in the year. For a customer who's probably at the 50-55 bracket, there is ample choice between either locking money into a regular pay annuity, where you have an annuity payment later when you move into retirement phase, or you could look at a structured format that's there within the non-participating plan. For that kind of a customer who's in the 50-60 age bracket, these two products are available, and they are quite attractive in terms of IRRs for the customer. There can be a swing between these two, and that's the large question to answer.
Yeah, Sanket, actually, the underlying benefit that customers look for, we call it annuity or we call it whatever, is the regular income and consistency of income and guarantee of income. Now, that gets fulfilled with various categories of products like what Dhiren mentioned. Since we launched this new guaranteed product only towards the end of financial year last year, there was natural traction of a new product. There was a take-up there. Hence, we were very happy with the fact that we are addressing the benefit and the need of the customer. Sometimes it gets fulfilled through regular premium annuity, sometimes through GIFT Select, but broad underlying benefit is guaranteed income. Single premium, you rightly mentioned, is an opportunity. We saw it. Large portion of INR 100 crore that you saw was single premium because of the shifting interest rates in 50%.
Okay. Okay. So for roughly this, if this regular pay annuity will slow down for subsequent quarters because of the dynamic change within the products and also because of the single premium, is it fair to say that for the first nine months or rather till December, because the base will be there, you might report a similar kind of a growth, like 0-5% orR 0 to -5% kind of a growth for next two quarters, and then we can see uptick happening in the fourth quarter?
Sanket, a lot of it also depends on the way the single premium picks up. We have seen enough commentary in the market in terms of downward pressure on FD rates. When that happens, then suddenly you will find that the single premium annuity is far, far attractive. Let us see how the market would take this.
Got it. Can you give cost ratios on PWR of PPT, which you usually used to disclose? This time we do not have it in PPT. If you can tell the numbers, it will be good.
We can give you the numbers, Sanket. It's computable also. The point is, if the market is now working on cost to premium, we said we'd rather align to cost to premium. We've held the PWR, cost to PWR metrics for quite a while. Quite clearly, the market wants to work on cost to premium. We thought we'd better align and give you comparatives that are easier.
Okay. Perfect. That's fine. Thank you.
Even otherwise, on the cost RWRP, you will see a decline in the metric.
No, actually, I was more keen to understand the savings part. That's the reason, because that's a difficult number to calculate. That's why.
No, we can have a conversation after and how to compute that.
Okay. Sure. Thanks.
Thank you. The next question is from Swarnabha Mukherjee from B&K Securities. Please go ahead.
Yeah, hi, sir. Thank you for the opportunity. My first question is to understand the margin movement. Just if you could give some broad color on how it has been between, say, the product mix net sales, any impact of, say, cost absorption, and thirdly, any impact of any economic parameter movement that is there. If you could give a highlight of that.
Hi, Swarnabha. Largely, when you look at the product mix that's revealed at the end of full year 2025 and the margins that were prevalent at full year 2025, and look at how the mix has evolved into the current quarter, you should be able to broadly explain the margin movement. There will be, of course, minor round-off issues that will come about from economic assumptions of income, etc. That's the smaller component of it. The larger component will anyway be explained by the product mix itself.
Right, sir. Wanted to understand that since this is, this quarter, we saw a degree of, in terms of the APE numbers. What is the role of expense absorption in terms of the VNB role forward? The product mix, we definitely understand that the mix has improved significantly in terms of high-margin products. In terms of the expense absorption, are we anticipating this kind of outcome in premium, and hence, we had, in our initial estimate, kind of taken a lower number? If that is so, then for the remaining part of the year, would we also continue to see such a trend? That is what I wanted to understand. Secondly, I think we see that in the presentation, the yield curve estimates have been, I think, changed for the reference rate as you see this year.
Just wanted to understand what is the impact on that, because I think the sensitivity is there to the yield curve movement. If you have some indication of broader color in that, it would be helpful.
Yeah. From a cost perspective, there will be a marginal impact within the margin. By and large, what you've also seen is a variety of cost control measures that have actually resulted in the cost being broadly in line with how the APE is moving. Again, this is early part of the year. We are not. We of course did not plan for a negative side. We planned for growth. Our endeavor is to move back into getting to growth. At this point, I'm not building any downfall assessment, any material downfall assessment for the cost ratios. In terms of the yield curve, yes, you've seen the shift. I think there is a twist that when you look at sensitivity, they are based on parallel shifts of the yield curve. You will have some perspective of how the sensitivity would be.
Because it's a twist, it's a little difficult to compute it from that.
Okay. Just a follow-up on this. When we calculate the eventual blended reference rate, what I see is that with the twist also, I mean, the delta between, say, Indian government bond yield curve and our numbers, the delta at different points between at the shorter end is smaller and at the longer end is fairly higher. Just wanted to understand if you could give some contours on how we arrive at the reference rate at a broad level.
I think the reference rate is of the yield curve at 30th June 2025. Then bootstrap.
Okay. Does the reference rate in any way also bake in any impact of equity expectations based depending on the asset list?
No, no.
This is only on the fixed income side, right?
Yeah.
Okay. Understood. Understood, sir. Just the last one on the direct channel, that degrowth is mainly because of ULIP?
Yeah. The direct channel has a large component of ULIP. That is available in our NH shares for the full year. A large component of the business actually is from the ULIP side. You have seen the slowdown on the ULIP over this quarter given the market volatility. That has impacted the direct business.
Okay. Understood, sir. Very helpful. Thank you so much and all the best.
Thank you. The next question is from Subrateen from Ambit. Please go ahead.
Thanks for the opportunity. My first question is on the guidance or the target that you have previously had of delivering an alpha over the private life insurance growth. Now, is that a target that you hold for FY 2026 as well? Another part to that question is, if that's true, then going forward over the next nine months, how do you see growth playing out, considering that ULIP demand may remain soft and regular annuity premiums are unlikely to go back to the similar levels of FY 2025? Just wanted to understand what would result in the growth inflection here, and when potentially we could see that growth inflection happening. Two, from the cost point, Hiren, you mentioned that you do not expect any significant, you are realigning costs, but you do not see a significant decline in the cost investments that are happening. In that case.
Are you building in the cost assumptions that you have made for FY 2026, building in APE growth for the next nine months, or is that not the case? If you could give us some color so that we understand how the costs will play out for the next nine months, that would be very helpful. Lastly, given all the noise around your annuity product and the persistency in that product, would it be possible for you to give us some comparison about how the persistency, a 13-month persistency in the annuity product, has played out this year versus last year? Those are my three questions. Thank you.
Prudhwin, the endeavor on growth obviously is to keep building on it and try and deliver an alpha over this. Specifically, when you look at it from a very short-term perspective, let's say of quarter, there will be base effects that come into play. As Amit also articulated, we've seen a very high growth in quarter one last year, upwards of 35%. Now, as you look at this year, when you look at the previous year's year, there's a broadly enhanced where the market has been. Having said that, the idea, of course, is to build on the top line, and that will help deliver VNB in a sustainable fashion. No, I am not looking at a decline for the next nine months. Having said that, I'm also not looking at it from a cost ratio that will work with the decline.
We are looking at building on growth, and that's the endeavor that we continue to do along the way. I think what's also important for you to also note that, as we've been speaking about this over the past few quarters, we have been adjusting our costs in line and coming closer to where the growth numbers actually are standing out. We are building a lot more control over where the costs have been, and we'll continue on this endeavor into the coming future also. We have not called out any product-specific numbers, so Prudhwin.
Not a problem. Not a problem. Just one follow-up there. I do understand then that for the next nine months, you are expecting growth to recover. What would result in that growth recovering given the ULIP demand remains flat and potentially the regular premium annuity demand also remains slightly down? If you could help me understand that, that would be very helpful.
Yeah. Hi, Amit this side. First of all, on the unit link products. What we have witnessed over the last six months or so is a bit of a volatility. Markets eventually, after this volatility also, did recover to a very reasonable level to the extent of being higher than where it was, say, in December, January. Typically, what we have witnessed in the past is that when the markets recover, a lot of affluent customers do not rush back to unit link products immediately because they virtually go through a relief phase where just the state of happiness of having recovered from the market itself pushes them to take a pause and take a conservative view on their investments for a short period of time. With core fundamentals of the.
Market being where it is for the country and India demographics still remaining young, I don't think this volatility and uncertainty on unit link products and these events are going to stay for very long. At some point in time, unit link products will become meaningful once again, and you will see that demand coming back. At the same time, guaranteed products continue to remain very attractive at this point in time, say, near to medium term. While the ticket size, typically the wealth conservation from the same customer, you may not get to the extent of unit link products. Through width of our strategy, by getting more people to contribute, more advisors to contribute, we'll try to compensate. Average premiums be lower in comparison from non-based savings business. We want to compensate from there. Our growth will come from a channel perspective.
It will come from width. From product perspective, it will be quite balanced. I do believe that our outlook on unit link is not very conservative going forward. I think it is, at some point in time, towards the second half, you will see buy and sell coming back.
Got it. Understood. No, that's very helpful. Thank you.
Thank you. Before we take the next question, a request to participants to please limit your questions to one per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah. Hi. Just a couple of questions. Firstly, does the cost in any way get influenced by the channel mix that we had in this quarter? That, as the agency kind of picks up, do you think that the cost could be kind of on an increasing trajectory in the remainder of the quarter? Second question would be, again, on margin trajectory. Now that you've just mentioned that ULIPs could kind of pick up in the second half, do you think that we are at the peak of the VNB margins for this year, or do you think that the margins can further expand from here in the remainder of the fiscal year?
On that margin thing, let me just talk about it since I mentioned about unit link. Coming back at some point in time. See, Dhiren spoke about the fact that entire cost initiative as an answer to a separate question. The cost initiatives have been aligned to the kind of product mix that we anticipate getting delivered through our channels. If the demand is towards the category of products, we try to flex our cost in alignment with what that product category can afford. If that is the approach, we really do not want to artificially tinker with the demand and impose our own requirements. We will follow the demand. We will see where it goes and allow ourselves to look at our current initiatives, flexing our costs to adjust to the demand that we witness from the customers. From that perspective.
We continue to focus on absolute VNB, and margin expand or shrink, actually, we have no comments to make because it will all be driven by demand and the demand leading to a category of products, and then our ability to flex our cost in adjustment to the product, which is demanded in that scenario.
Prayesh, we do not have a margin guidance. Our endeavor is to grow VNB in absolutes. That is what we will endeavor to get done. In terms of your first question of whether agency can create an additional cost, I do not think so. That is not how we have structured the channel.
Got it. Thank you.
Thank you. The next question is from Aditi Joshi from J.P. Morgan. Please go ahead.
This is Aditi Joshi. Just one question for me. You have stated in your initial comment that some weakness was seen in the MFI channel. Just if you can help us understand how to quantify that impact, so you're able to highlight the share of the MFI channel in the distribution mix and what is the product mix, which typically comes through that channel. If this channel picks up in, let's say, one or two quarters, then what improvement in the sales numbers should we be expecting? That's all. Thank you.
Aditi, the MFI business is a credit-life business. We have attachments onto loans that are disbursed by MFI. You're well aware of the stress that the MFI loan disbursements have been facing over the last nine months to one year now. Since this is an add-on product from our perspective, whenever the market recovers on the MFI business, we should be able to take advantage of this. The only product that we sell in MFI is a credit-life product.
Yes. Is this pure credit-life, right? Nothing else in there?
Yeah.
Okay. Got it. Yeah, yeah. Okay. Understood. Yeah. Thank you.
Thank you. Next question is from Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Hi. Hi, everyone. Would it be fair to say, obviously, product mix has improved a little bit towards protection. Cost ratios have come down. Is a good part of the margin expansion because of cost ratios coming down across product lines, because both for protection and savings lines and business-facing cost ratios come down. If yes, then do we see this to be sustainable even at a larger scale? Give me some sense of how stable and sticky this margin is. Some comments around that, that would be helpful. Thanks.
Two points on the margin, Madhukar. One, we do not have a margin guidance. Our focus is on growing absolute VNB. That is one. We have already said it before also. The second part of that is, in answer to another question earlier, where how has the margin come about? Largely due to product mix. There are some elements of the margin, of the margin competition, which will be attributed towards unit cost and some degree of how the expense ratios are. Very clearly, the cost effort that we have been doing over the past many quarters is what has resulted into this kind of outcome that you see. Fundamentally, we believe this is sustainable, and we will continue to work on this.
The idea very clearly is that cost optimization is fairly important because a large portion of our business is still the savings business, and that's what will continue to give us an advantage into delivering on a higher profitability within that segment. That is the way we'd like to work at that. The focus clearly is on absolute VNB.
Got it.
Got it. Okay. Perfect. Thanks.
Thank you. The next question is from Muskan Agarwal from Svan Investments. Please go ahead.
Yeah. Hi, everyone. My question was, as we can see, the agency and the direct channel, year on year on growth has decreased. Is there any guidance? How do the management see that going forward? Will the trend continue, or will it improve? Are there any efforts that will be taken from your side to revive the same?
As you mentioned in the answer to an earlier question as well, that the large base of last year, which was like 70% or so for agency, has made the current number look what it's looking right now. We expect this base effect to start getting normalized as we go deep into the year. Otherwise, we are quite happy with all the investments that we have done in these channels. Nothing has come in the way of us investing in these channels. They continue to be our priority channels. We are focusing on width of our distribution, which is spreading ourselves across geographies, across advisors, across more and more employees to contribute to our business. While we are tidying through this buy and market environment, which has led to an adverse impact of unit business.
Unit was relatively a higher proportion of our business in these two channels last year, which has been impacting the overall growth this year because of relative.
Okay. Got it. Thank you.
Thank you. Next question is from Dipanjan Ghosh from Citi. Please go ahead.
Hi. Good evening, sir. Just two questions from my side. One, in terms of the unit trajectory, if you can, for the quarter or maybe incrementally for the initial half of July, how has been the direction? I mean, let's say June versus May or May versus April, in terms of the unit trajectory, how things are shaping up? I mean, in terms of incremental unit queries, do you see kind of any sort of pickup out there? Second, in terms of the non-linked savings business to non-ICICI Bank banker channels, any sort of current, I mean, at those non-ICICI Bank partners, sorry, non-ICICI Bank banker partners, is your counter share or wallet share of non-linked savings higher than your overall business? And how has been the growth in terms of channel partnerships?
Unit trajectory looks like it is very similar to what we have witnessed in the first quarter. Let's see how it goes from here. It's very difficult to anticipate that. Though the general outlook is that it should improve sometime. At this point in time, we have not seen demand picking up like the way it was last year. On the second question on non-linked savings business through bank partners other than ICICI, yes, the products are being made available, and they are there at the counter. We don't publish any information pertaining to share of the shop. It's all about a product being made available at the partner shop on the terms which are win-win for both us as well as the partner. At times, you win. At times, you lose. At times, you get more.
At times, you get less, but it all gets leveled out. We are fairly well placed with our partnerships. Now, all the partnerships are very long ones. Barring a few ups and downs in between, I think our job as a manufacturer is to make the product available. There is no category of savings business which is not available now with us. We have the ability to compete across category of products. Depending upon the time and the environment and the call taken, the share may go up and down.
Sorry. Can I just follow up on this? I mean, how is the product pipeline stacking up for the next nine months?
Product pipeline to savings protection annuity key part, which is nothing that is beyond this. Within this, we have been continuously innovating, talking to our customers, understanding their needs, seeing needs evolving. It is something which evolves. Otherwise, the rest of the details are something that's very difficult for me to divulge in the open call. That is something which is always a work in progress. We keep working on it. There is quite a bit of innovation we have done across three categories of products. Hopefully, we will keep coming out with newer propositions over a period of next nine months. Difficult to really analyze as to what is there in the pipeline.
Sure. Sure. Thank you and all the best.
Thank you. The next question is from Mohit Mangal from Central. Please go ahead.
Yeah. Yeah. Thanks for the opportunity. I have got two questions. The first is in terms of the retail protection. We saw a good amount of growth. Assuming that the pricing has not changed, I was just trying to understand, have we sold more policies with similar sum assured or a similar number of policies with higher sum assured? The former, more policies, sum assured, have we sum assured for broadly the same? Okay. Okay. Understood. Secondly, in terms of, I mean, we have done partnership with 49 banks. I just wanted to understand, is it more concentrated or is it well diversified across all? If you can just throw some color on that.
Yeah, it is quite diversified. Actually, we have a very deep presence in semi-urban, rural locations also through some of our partners who have a very strong presence in these markets.
By virtue of these 49 partnerships, we've been able to reach out to virtually every corner of the country. It's quite diverse. It's not concentrated at all when it comes to concentration of our business. We have to balance out both the growth as well as the quality of business. Because as you go deep into markets, smaller markets, and get into mass customer segments, lower affluence customer segments, you tend to come across challenges on persistency kind of metric, which has more to do about the affordability that customers may have in these smaller markets. The challenges are different, but that's largely because the customers that you acquire and the geographies that you sell have a profile of customers which is very different. That's the other side of having these 49 partnerships. Otherwise, we are not concentrated.
We welcome scale from these. This scale comes with micromanagement or over-management of quality of business, quality of profiles that we onboard with us.
Understood. Thank you. Wish you all the best.
Thank you. Next question is from Faruk from Millennium. Please go ahead.
Hi. Yeah. I think most of my questions were answered. One clarity on the 13-month persistency issue. You mentioned that due to the tax changes, the customers who entered then are showing some leaving trends. Can you consider this a strong feature, and can we see improvement in this trend in the coming quarters? Thank you.
Yeah. You are right that we spoke about the March 2023 book. That does have elevated persistency. Outside of that, things have reverted back to what they were two years back. Yeah. We will have to watch out how this pans out. Specifically, as I said, there are some product channel cohorts that we have seen some step on, which we will look at correcting along the way.
Okay. Thank you. Yes.
Thank you. Next question is from Nidhesh Jain from Investec . Please go ahead.
Hi there. Thanks for the opportunity. Just two data-keeping questions. Can you share the data on ICICI Bank APE shares for the quarter and Credit Life APE shares and overall APE for the quarter?
ICICI Bank is roughly about INR 100 crore. There's no per month. There's no material change to that. Credit-life, we normally do at the end of the year, Nidesh.
Okay. Sure. Thank you.
We still want a rough thumb rule. It's broadly split one-third between retail protection, one-third in credit, and one-third in GT, simply speaking.
Okay. For the quarter, in terms of APE terms, right?
Yeah.
Okay.
10%. That's what.
Thank you. Thank you. That's from my side.
The next question is from Shobhit Sharma from HDFC Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, my first question is on the regrouping which has happened on the new business side for the Q1 FY 2025. Can you help us understand what has led to that revision? Because I can see overall new business is revised downward by 5%. There is a downward revision in the single premium by 12-odd %. The first-year premium has been revised upward by 7%. That is my first question. Secondly, on the rider protection side, you mentioned that that premium is currently classified in the respective product category. Can you help us understand what would be the retail protection number if instead of that 7.5% which you reported, what would be that number if that rider protection would have been classified in that segment?
Lastly, on the growth side, on the 12-month rolling basis, your R&D growth has been very suboptimal. It has been 3-odd % versus the private life insurers' growth of 11%. How should we think about it going forward?
Shobhi, twhen you look at growth, specifically when you look at two-year CAGR, I think that 13% odd is well in line with most of where competition is. Obviously, our endeavor is to be able to grow ahead of competition. This has been one quarter where we had a sufficiently large base impact coming through from the past quarter. Coming to your second question in terms of rider fees, the rider premium actually is a smaller component of the base share of the base premium. We do not call it out specifically what is the rider component out of it. What we have done very clearly is put the rider premium as part of the base product itself. When you look at each line of business, you will see it as based on rider within that.
Dhiren, just to follow up on this, can you help us understand how much is the attachment ratio of this rider in terms of the?
We've not followed that number, Shobhit. No, we've not followed that number. Because in a lot of cases, when we also do sell a product, the product is also sold with that particular rider to be able to meet that specific need of the customer. It is not just an addition of the rider. It is a packaging of the overall proposition. Therefore, the rider forms an integral part of the proposition to the customer.
Okay. Okay. On the regrouping side, sir?
Yeah. This was on the group OYRT business. The requirement was to split it into first-year and renewal. That's what happened in the group business. From last year, everything was packaged under the single premium. This time we split it as new business and renewal, which is what's required. That's what you see as the change in the financials.
Okay. Thank you. Thanks for this.
Thank you. The next question is from Gaurav Jain from ICICI Prudential Mutual Fund. Please go ahead.
Hi, just one question from my side. Group protection has seen some growth this quarter year on year. Can you help us understand, is it group credit back or group term back? And where are we seeing this recovery? How sustainable do you think group protection growth can be for the entire year?
Gaurav, yes, this is both GT has grown as well as Credit Life has grown. Credit Life. And some more color has Credit Life. Sorry. Just to clarify, Credit Life is flat-ish. MFI is down. Non-MFI is up. GT, of course, is up. I thought that clarifies one of them.
Yeah. GT tends to be what? Quarterly phenomena, deal-based or?
No, it's not a quarterly phenomenon, Gaurav. See, they are present in the group term space all through the year. If you compare year to year, you might see some lumpiness. It depends upon how competition is behaving at that point. In case they get to a decision about pricing, we're fairly clear because we wouldn't want to write it as a negative margin. We're fairly clear that knowing the underlying mentality of the group and the resulting industry, we take a call whether they want to contribute money or not. In such instances, we would walk out of that deal. Gaurav, it is the group fund business which is lumpy and may see a bit of volatility quarter to quarter. Group term is fairly granular. The only thing is group term is a one-year optionable product.
In between few quarters, you may experience some shift in growth patterns because of some partner or some insurer being aggressive on pricing. Broadly, if you have distribution, if you are reaching out to the clients that you have done over a period of last so many years, and if you are present in every deal that is happening, it is fairly granular. The number of deals involved in this top line has been quite a few. We do not report number of deals, but number of deals are quite many. You can virtually see them as retail deals in the corporate setup.
Got it. Thank you.
Thank you. The next question is from Samant Singh from Philip Capital. Please go ahead.
Can you hear me? Hello.
Yes, Saman. Go ahead.
Yeah. Just on return on premium products, there is a sharp fall, around more than 30%. Do you see this quarter, do you see this as consumer preferences shifting away from return on premium products, or is it a temporary thing and you plan to launch new products going ahead and sort of bring it in line with the previous quarterly numbers that you did? Any color on that, the return on premium products?
On this return on premium protection product, I guess you are talking about, see, this is also part of an evolution journey in protection. At the time when all the insurance companies were investing in creating awareness, one of the insights picked was that protection products do not give anything in return. To address this insight and to reach newer customer segments, return on premium product made a lot of sense.
I think there is nothing specific that we had done. The product was very much available on our shelf. I think customers are learning about payer protection more and more, and they are seeing value. From an affordability perspective, since payer protection fits in well and customers can opt for a much higher cover for the same premium, we have seen a shift in demand towards payer protection. However, the product still remains on the shelf. It is not that the product is not on the shelf.
I mean, you are saying that the consumer preference is shifting away from return on premium? That is too small? Yeah. Okay. Yeah.
We have seen, because the options are available to virtually every customer. You can choose to go for return on premium. I can choose to go for payer protection.
As you know, the premiums required are much higher for the same commercials. Hence, from an affordability perspective, payer protection is understood well, and customers are willing to buy protection as a good expense than to worry about not getting anything in return. I think that is something that is our sense, that eventually it is good news that payer protection is evolving.
Yeah. Yeah. Thanks. All the best.
Thank you very much. That was the last question in queue. I would now like to hand the conference back to Mr. Anup Bagchi for closing comments.
Thank you very much for joining the call. Have a good day.
Thank you very much. On behalf of ICICI Prudential Life Insurance Company Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen, given how this connected our lives.