Ladies and gentlemen, good day and welcome to the ICICI Prudential Life Insurance Company Limited 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 conference call, please signal an operator by pressing star then zero on your 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. Good afternoon, and welcome to the results call of ICICI Prudential Life Insurance Company for the year ended March 31st, 2026. I have several of my senior colleagues with me on this call, Amit Palta, Chief Product & Distribution Officer, Dhiren Salian, CFO, Judhajit, Chief Service Delivery, Manish, Chief Investment Officer, Souvik, Appointed Actuary, and Dhiraj, Chief Investor Relations Officer. We are also joined today by Amish Bankar. Amish started his career in branch operations and has a deep understanding of the customer life cycle and organization processes and systems. He's currently the Chief Operations Officer and will be taking over as Chief Distribution Officer from Amit Palta. Amit, as you would have noted in the exchange update, is moving on from the company having spent more than two decades in the ICICI Group. We wish him all the very best for his future endeavors.
Let me start with some key updates. On the regulatory front, we welcome the IFRS transition to Ind AS, which will align our financial reporting with global standards. This shift enhances transparency and market comparability, ensuring that our financial statements reflect an improved picture of value accretion. On the economic front, in FY 2026, the Indian economy displays resilience while navigating external turbulence due to trade tariffs and geopolitical conflicts. This stability was anchored by direct tax relief, GST reforms, and RBI's supportive monetary policy stance aimed at stimulating the domestic consumption. As a company, we also exhibited agility and resilience, achieving a VNB of INR 26.29 billion, with VNB growth of 10.9% in FY 2026 and work to deliver long-term value to our shareholders. Our VNB margin stood at 24.7% as compared to 22.8% in FY 2025.
PAT grew strongly by 34.6% year-on-year to INR 16 billion. Life insurance products, particularly the retail protection segment, received a significant boost, partly aided by the GST reform effective September 2025. The retail sum assured growth for the industry was higher by 2.5 x in the post-reform period as compared to the pre-reform period. In the current year, our retail new business sum assured reached INR 4.5 trillion, led by 50.9% year-on-year growth in retail protection in H2 2026, demonstrating our dominant position in this segment. In the savings category, despite the external volatility of FY 2026, our AP remains steady and similar to the previous year. New business premium registered a year-on-year growth of approximately 10% to INR 248.10 billion in FY 2026.
Our business growth has also been delivered on a foundation of risk and prudence and is exhibited in our resilient balance sheet. In FY 2026, we maintained an industry-leading claim settlement ratio of 99.3% with an average turnaround time of 1.1 days. Our early claims ratio stood at 22%, best in class in the industry, highlighting our focus on quality business over the years. Our 13-month persistency stood at 84.5%. Our solvency ratio stood at 227.3%, well capitalized and much ahead of the regulatory requirement of 150%. We continue to maintain our track record of not having a single non-performing asset in our investment portfolio since inception of our company. We remain committed to delivering superior value to our customers by leveraging economies of scale and aligning our cost structure closely with our evolving product mix.
Notably, technology and digital solutions have enabled us to increase efficiency, resulting in a reduction of 40 basis points to 12.1% in our savings cost-to-premium ratio during FY 2026. Our AUM stood at INR 3.14 trillion, and our total in-force sum assured grew by 16.9% year-on-year to INR 46.11 trillion at March 31st, 2026. In the same year, our embedded value grew by 10.5% year-on-year to reach INR 529.89 billion. To summarize this year, as we celebrate 25 years of service to our customers, we would like to reaffirm our commitment to deliver sustainable VNB growth by balancing business growth, profitability, and risk and prudence. Towards this, we believe all the necessary levers continue to be available with us.
Thank you. I'll now hand it over to Amit to take you through the business updates.
Thank you, Anup. Good afternoon, everyone. As Anup mentioned, the past year was defined by changing macroeconomic landscape, shaped by both global and domestic shifts. Additionally, we also had a relatively high base of last year, particularly in H1. Quarter three onwards, the growth momentum returned with retail APE growth of 10% year-on-year. This positive trajectory sustained throughout quarter four until renewed geopolitical disruptions emerged in March 2026. Despite these disruptions, we managed to deliver growth in quarter four.
With APE registering 9.54% year-on-year growth, on a full year basis, APE grew by 2.2% year-on-year to INR 106.41 billion. Coming to product-wise performance, our core focus area, retail protection, grew by 60.5% year-on-year in quarter four, resulting in a full year growth of 32.3%, with an estimated 13% of the addressable population currently being covered through retail protection. We believe this segment offers a multi-decadal growth opportunity. Group protection, which includes credit life and group term business, grew by 7.1% year-on-year in FY 2026. Within that, group term business grew by 14.6% year-on-year, and credit life business grew by 1.8% year-on-year. MFI segment, which witnessed challenges at start of the year, has seen recovery from quarter three onwards. Link business APE grew by 1.6% year-on-year in FY 2026, impacted by volatile equity markets. Two-year CAGR for link business APE stood at 14.2%.
We continue to focus on increasing the contribution from high sum assured ULIP segment. Such products are less impacted by market volatility, thereby providing stability to link category to a large extent. The non-link savings APE grew at 15.4% year-on-year for the first nine months. Last year in quarter four, we launched a new product in this segment, which had a very good response. This year, quarter four, as business from that product normalized, non-link business has declined year-on-year in quarter four. On full-year basis, the business and contribution from non-link savings business is at similar level to last year. Annuity business four-year CAGR stood at approximately 20%. This business has stabilized at around 7% of our retail mix. Group funds business grew by 26% year-on-year. Now let me talk about channelized performance.
Agency channel APE stood at INR 26.86 billion, and direct channel APE stood at INR 14.30 billion in FY 2026. Together, these channels contributed 47.4% to overall retail APE. These channels have declined this year, primarily due to the high base of link and annuity businesses in the previous year. In the agency channel, growth trajectory has shown consistent sequential improvement throughout this year. As a strategic priority, we have been investing in the channel from a long-term perspective. Our roadmap centers on micro-market-led branch strategy and using technology and analytics as a productivity lever. By equipping agents with tools and analytics to automate administrative tasks, they can pivot their focus towards high-value revenue-generating activities. In the direct channel, focus will be to deepen NRI segment through GIFT City and scale up online channel through differentiated offerings. Bank insurance channel grew by 3.6% year-on-year and contributed 29.8% to total APE.
Partnership distribution channel grew by 23.4% year-on-year and contributed 13.2% to APE mix in FY 2026. In bank and partnership distribution channel, our focus continues to be on adding new partnerships and improving the share of shop in each partnership. Group business grew by 14.5% year-on-year and contributed 18.3% to the overall APE mix in FY 2026. Today, we have the strength of 2.42 lakhs advisors, 53 bank partnerships with access to more than 26,400 bank branches, and 1,500+ non-bank partnerships. To summarize, our primary focus will be to drive business growth through our micro-market strategy in proprietary channels. By deepening our distribution, we shall gain access to a wider range of customer profiles, which enhances our ability to seamlessly shift between product segments as per macro environment.
We believe this will help us keep our product and channel mix balanced and deliver sustainable growth irrespective of the market environment over the long term. I will now hand it over to Dhiren to talk you through the financial update.
Thank you, Amit. Good afternoon, everyone. Let me start with some efficiency-related aspects. As you're aware, we have undertaken various cost optimization initiatives in the past two years to make our cost structure aligned to our prevailing product mix, one of them being the use of AI/ML, which is being embedded across the entire customer journey. That is driving targeted demand generation, automated underwriting, improved renewal retention, enhanced customer service, and effective claims investigation. Upsell programs and digital lead conversion, both supported by machine learning models, continue to contribute to growth, while advanced fraud detection and early claims identification help mitigate risk and improve profitability. We have also deployed AI-led face matching between KYC documents and customer images to reduce fraud risk. GenAI-based categorization of incoming customer email has significantly improved turnaround times, and AI-driven medical summarization is enabling faster and more efficient underwriting decisions.
Further details on usage of AI/ML across our processes is shown on slide number 36 of the presentation. As can be seen on slide 12, the various productivity enhancements have helped in reducing cost to premium ratios for our savings sign-up business by 40 basis points to 12.1% in FY 2026. This cost reduction is after accounting for unavailability of input tax credit, which is effective September 22nd, 2025. Our total cost to premium ratios for FY 2026 stood at 18.2% and remained stable at previous year's levels. The company's profit after tax grew by 34.6% year-on-year to INR 16 billion in FY 2026, primarily driven by higher investment income from shareholder funds. This includes a gain of INR 1.14 billion realized from sale of 100% equity shareholding in ICICI Pension Fund Management Company, which was erstwhile called ICICI Prudential Pension Funds Management Company Limited.
Excluding the sale transactions, PAT grew by 25% year-on-year in FY 2026. Our solvency ratio continues to be strong at 227.3%. The improvement in solvency is primarily due to increase in profit after tax and realization from sale of subsidiary. Our assets under management stood at INR 3.13 trillion as of March 31st, 2026. Value of new business, VNB, grew by 10.9% year-on-year to INR 26.29 billion. As you're aware, our focus is on growing the absolute VNB, which we have been able to achieve through improvement in product mix and operational efficiencies, even after accounting for the unavailability of input tax credit. VNB margin expanded by 190 basis points year-on-year to 24.7% in the current year.
Margin expansion has been led by improvements in new business profile and economic assumption changes. Protection mix for the year has increased by 2.2% year-on-year to 17.9%. Additionally, we have also been working towards improving the profitability of each line of business through longer tenure policies, higher sum assured multiples, and increasing rider attachment. The policy term on the savings line of business has increased from 26 years in FY 2025 to 29 years in FY 2026. Retail sum assured has grown by 35% year-on-year in the current year. The expansion was offset by operating assumption changes, which is primarily due to unavailability of input tax credit on individual businesses and some updates to persistency.
As shown in slide 16, our embedded value grew by 10.5% year-on-year to INR 529.89 billion at March 31st, 2026. Our embedded value operating profit stood at INR 57.02 billion in FY 2026. The breakup of the EVOP is as follows. Unwind contribution for FY 2026 is 7.4% of the opening EV. VNB of INR 26.29 billion is 5.5% of the opening EV. Unwind and VNB together constitutes 12.9% of the opening EV. Operating assumption change is 0.5% of the opening EV negative and primarily on account of unavailability of input tax credit and some updates to persistency, as I've mentioned earlier. Both mortality and expense variance are positive for the year and broadly in line with our expectations.
Persistency variance is INR -2.64 billion, which is largely on account of the 100% premium-backed annuity product, where the persistency experience fell short of long-term assumptions. As you're aware, it was an industry-first product and coincided with regulatory discussions aimed at increasing surrender values for traditional savings products. During the year, given the market volatility and tight liquidity scenarios where market returns were negative, we believe that customers used the amount for withdrawals in times of need. While we ensure that the economic benefit was safeguarded from our company's perspective, the future earnings, which is part of EV, was impacted due to these withdrawals. Consequently, the RoEV for financial year 2026 stands at 11.9%. The total economic and investment variance is INR -7.78 billion due to a shift in the yield curve and equity market movements.
Our VNB and EV have been reviewed independently by Milliman Advisors LLP, and their opinion is available in the results pack submitted to the exchanges. Further sensitivity details are available on slide 17. This concludes the financial performance. I will now hand it over to Judhajit to talk you through the ESG updates.
Thank you, Dhiren. I will be sharing the salient aspects of our ESG journey. We continue to retain the highest ranking in the Indian life insurance industry as per leading global and Indian ESG rating agencies. We're also delighted to share that during Q4 2026, we received the Platinum Award for our ESG report for 2025 at the Vision Awards organized by the League of American Communications Professionals. We were also recognized among India's top 60 most sustainable companies by Businessworld. I will now share the key highlights under each of the ESG focus areas. Environment. We continue to look at ways and means of reducing our carbon footprint by adopting green energy across various branches across India.
Apart from the LEED Platinum certificate, which is a green building rating for our headquarters here, we have also got the IGBC Platinum Green Building certification for four other branches. On responsible investing, we are signatory to the UN Principles for Responsible Investment. We have completed our third annual reporting on responsible investing activities, and we shall continue to remain committed to promote ESG factors in our investment decisions. On the diversity front, our gender diversity is now at 30%, and we shall continue to strive to improve it from here. As far as communities are concerned, our goal has been to increase financial inclusion through specially designed micro-insurance products targeting socially and economically weaker sections, and we have covered 53.8 million lives as on March 31st, 2026.
This year we settled more than INR 3 lakh retail and group claims with an overall claim settlement ratio at 99.8%. On the CSR front, through ICICI Foundation, we have established skilling labs at four locations to facilitate advanced industry-aligned skill training, while in the area of healthcare, we supported the Indian Cancer Society to conduct surgeries for almost more than 90 patients. Governance.
Our Board has a majority of Independent Directors, enabling the separation of the Board's supervisory role from Executive Management. I would like to reaffirm our commitment again to create a culture that embraces sustainability and goes beyond goals and targets. Thank you very much. We are 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 their 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take a first question from the line of Swarnabh Mukherjee from B&K Securities. Please go ahead.
Hi, Sir. Good afternoon and congrats on a good set of numbers. I have three questions. First of all, I just wanted to understand in terms of growth, how should we think about in the upcoming year, given that this particular year, how the growth has trended, gives us a very favorable base to grow. If you could outline your strategy of how you are thinking about FY 2027 and given that last year there was this launch of par product and you highlighted that which would have led to a slower growth in the non-linked channel. What are your thoughts on the non-par category? How do you see it? Parallel also, if you could provide us the mix for par, non-par for the quarter. That's one.
Sir, on the VNB margin side, if you could highlight all the persistency-led changes that you are seeing, you are experiencing. Has that been taken into the assumptions or can something incremental come? If you are observing anything due to the surrender value regulation that you might want to highlight, in that case then, how should we think about the VNB margin numbers? Should we take the current year numbers more a baseline if the product mix sustains? I think, Sir, this is broadly my queries if you could answer. Thanks.
Hi, Swarnabh. This is Dhiren here. Let me pick up some of your questions. In terms of growth for the next financial year, I think this is quite a volatile time at this stage. I'm sure you would have seen the way the markets had behaved over the last month of the financial year. I think this is still going to be a bit of a wait and watch. You're right, specifically for us, we do have a base that is good for us. Again, it will depend upon how things shape up in the environment. It's a little early for us to commit as to what the numbers should look like for the rest of the year.
Rest assured, I think the way that we're approaching the problem is that we would continue to go granular, continue to understand who are these customer segments that we should be looking at, what are the product fits that we would need, work with our distribution channels to be able to deliver the right proposition for customers as well as shareholders. That objective and that process continues. There's no unwavering on that front. Coming to your second question in terms of what is the split between par and non-par. For the year, it's roughly a two is to one ratio. It's been broadly in that range. Some quarters a little higher, some quarters a little lower, but broadly in the two is to one range for the year. Coming to your third question, which is on the persistency experience.
See our process around looking at assumptions and experiences is to look at what is temporary and what is permanent. We do this every year towards the end of the year in terms of how these assumptions are shaping up. Whatever is known at this point we will incorporate as part of our assumption setting. If there are experiences that we see are temporary in nature or they pertain to quarantined portfolios, we allow them to go through the variance. At this point, we have factored what we know in terms of persistency, in terms of mortality, and in terms of expenses as part of our margin. This essentially becomes the baseline for us going forward.
Right. Very helpful. Dhiren, just a couple of follow-ups on two aspects. One is on the growth, as you mentioned, I understand that this is a volatile year, but if I were to look at from the channel side also, this year's growth has been primarily heavy lifted by your partnerships. How shall we think about, say, the other channels? For example, agency this year has been tepid, so how do you plan to activate or go about driving that channel? I understand that banca, given the base of ICICI Bank there might be a steadiness in that number, but particularly on the agency, I wanted to query. On the persistency part, in surrender value-related regulations, are you seeing any delta apart from the annuity product? That's what I wanted to understand. Thanks.
Yeah. On the early experience of surrender value products, we're not seeing anything too different, but it's a little too early to call because we only got about five to six months of experience, and we would love the whole year to pan out for that. In terms of growth, you're right, agency has not had a great year in the sense the growth has not been great. To that extent, it does form a fairly good base for us into the coming year. Like I mentioned, we'll continue to work at it granularly, understand what are these microsegments that we need to go after, and work with that.
All right. Thank you. Thanks, Dhiren. All the best for FY 2027.
Thank you. We'll take our next question from the line of Supratim Datta from Jefferies. Please go ahead.
Thanks a lot for the opportunity. I have three questions, starting with the growth aspect. Could you help us understand how customer behavior has changed with respect to products post the start of this Middle East war? Are you seeing any increase in demand for non-par policies in this current environment? How are you seeing the demand of ULIPs in late March and early April? If you could give us some color around the trends, that would be helpful. Because what I see is in March, despite the lower base, the agency channel has declined. This channel should ideally have lower ULIP exposure. Trying to understand what's happening there. On the margin bit, what I wanted to understand is despite the rise in group funds in fourth quarter, ICICI has witnessed a sequential rise in margins.
Is this a function of higher yields in some of the non-par products and potential protection as well, or is there some other driver here that we should look at? Lastly, coming to the Ind AS transition. Now that Ind AS is rolling out from 1st of April, wanted to understand, would you be sharing the Ind AS accounts from next quarter, and how would this compare with the CSM in force? If you could give us some color and how does this change your capital position as well? If you could give us some color on that also would be very helpful. Thank you.
Hi, Supratim. Let me cover Ind AS first. So yes, technically we should be live with Ind AS. But as approved by the board, we will be seeking forbearance for a year. One of the more fundamental points are that some of the decisions around how the inputs could be provided for computing the CSM, I think we still await some clarity from the joint expert group. The other thing also is that this is too short a time for us to transition into Ind AS, given the fact that we are typically live with our results by the first fifteen days of the quarter. So we would need some time to be able to gear our systems up to be able to manage the transition there. In terms of the capital position, I believe the regulator still wants us to use the Ostwald solvency formulas.
Until we wait to see how the RBC gets implemented, we would continue with our current solvency basis on which we're quite strong at 220%. Coming to your second question that you had asked, which is on margin. The margin support has largely come in by the growth in protection that you can see for the current quarter, which has been quite strong. In addition to, of course, all the improvements to profitability that we've been doing across all other savings lines of business, as I'd mentioned earlier. Your first question was on what are the upcoming trends. Little too early to call, Supratim. I think let it settle. I do believe that the war in West Asia has, to some extent, impacted new business sales in the month of March.
difficult to guess how much it would be, but clearly there has been some impact.
Thanks a lot, Dhiren, for this color. I just wanted to understand, has the impact been more on ULIP or has it been across-the-board slowdown in demand since late March?
It's been across the board except for protection.
Okay. Got it. Understood. Thank you.
Thank you. Next question is from the line of Shreya Shivani from Nomura. Please go ahead.
Yeah. Hi. Good afternoon. Thank you for the opportunity and congratulations on a good set of numbers. I have two questions, both on the EV walk. First is the operating assumption changes that you've taken. Is it only the persistency operating assumption or there are certain changes you've done with assumptions in mortality or expense, et cetera? Second is, it's the RoEVs. It's at 11.9%. Now, even if I had assumed a zero value for operating assumption changes and a zero for persistency variance instead of negative number, I would still be at 12.9% or so. What is genuinely our steady state RoEVs that we should assume? Because we are already under the cost of equity in FY 2026, and how should I think about it for that matter? Yeah.
Hi, Shreya. Coming to your question on operating assumption changes in EV, as I mentioned on my opening remarks, it's primarily on account of unavailability of input tax credit and then some updates to persistency. Now, if you recall, this conversation had started in September as to the impact of the unavailability of input tax credit due to GST reforms. That has been the bigger component out of this operating assumption change.
Got it.
Right. Now coming to RoEV, yes, without the assumption changes and variance, we're at the 13% range. Now, technically, on a longer-term basis, we should still be at the 13%-14% range, depending, of course, on how the yield curve shapes up, depending, of course, on how we're able to grow VNB. That becomes the two primary drivers of how you determine RoEV. From that sense that Ind AS should be live, actually is live this year, and if we get the forbearance, then we will go live on that next year. Looking at returns on earnings will become much easier when you look at the Ind AS numbers. The RoEV will have less significance going forward.
Got it. With Ind AS, it does not impact the RoEV whatsoever, but probably we'll not be looking at the RoEVs going ahead is what your point of view is, right?
Yeah, my sense is most commentators and analysts would end up looking at ROEs because then that would be at least comparable to how the rest of the market is outside of insurance. Comparison becomes much easier then. For want of any other metric, we are in this RoEV world at this point.
Right. There is no impact whatsoever of IFRS on the EV walk, right? Even if, say, a risk-based solvency comes through, nothing gets changed in this metric, right?
No. Risk-based solvency only determine your capital position.
Correct. Okay. Nothing happens here.
Okay.
Yeah, all right. Okay. That's all my questions. Thank you.
Thank you. We'll take our next question from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah, hi. A couple of questions. First on, if I look at the protection business, premium growth exceeds the sum assured growth. How should we read that? Whether it's more return of premium products that has come in or how should we read that? That's one. Second is more of a structural question on the embedded value front, where in FY 2024 we had a mortality variance, then in FY 2025 we had a assumption change, and now we have a persistency impact, both on variance as well as assumption change. That has been constantly negative for us over the past three fiscals. How should we think about this going ahead and whether you all have stress tested the EV now to an extent that the assumptions are more moderate or more conservative and we could start looking at more positive variance or assumption changes going ahead?
Just some color on that, so that would be helpful. Thanks.
Prayesh, when you look at the protection sum assured growth, that's been at about 48%. The growth on retail protection has been higher at about 60%. The retail new business sum assured actually consists of both protection and savings. You will have to offset the two together. The retail sum assured is not purely protection because, see, by the fundamental construct of products in India, savings products in India, you end up providing 10x cover for most of our products.
Right.
So that itself forms a sum assured that comes on board, right? Coming to your question on embedded value and how we look at how our assumptions are being set, see, frankly, we run a very diversified portfolio. And our approach to setting assumptions is to understand whether these potential differences between an assumption that we have set and the resulting experience that we see at this point, is that temporary or permanent? Now, the way you always look at the businesses that come in is you group them into cohorts. And as you look at each cohort, you are trying to identify whether cohorts look alike or do you need to separate these cohorts. And again, given the underlying diversity of our business, you have to start looking at each of these cohorts as they gain meaningful size. As they separation, you start to see assumption changes.
If I had a homogeneous portfolio, then ideally you should not see any assumption changes at all or even variances. Given the diversity of the underlying business that we bring, you have to look at cohorts and you have to then start segregating cohorts as they start to gain size and significance. In any case, as you look at the overall experience and assumption changes, these are marginal. There have been points in time when we had positive assumption changes as well. Overall, you see that the business is being ensured that the underlying assumptions that go in are reflective of what we see today.
Got that. Our economic assumption changes, could you split that between equity and debt?
It's largely debt.
Largely debt.
Almost all of it.
Got it. Thank you so much.
Thank you. We'll take our next question from the line of Madhukar Ladha from JP Morgan. Please go ahead.
Hi, good afternoon. Thank you for taking my question. First, see, in the beginning of last year, we were sort of targeting above or at least at par with private life insurance retail AP growth. We've significantly underperformed that level. Now, going into FY 2027 and onwards, what do you think should be your target, and how do you think you will achieve that target? If you can quantify any sort of meaningful changes that you are doing that will lead us to believe that we will be able to achieve higher retail AP growth, right? That's my first question. Second, also if I look at persistency, we are seeing a decline for the 61st month, 13th month, and also I think 25th month. What's happening over there? Third, interest rates have gone up, bond yields have gone up. That should help our margins.
What will enable us to sell more non-par? As a Management, how can you sell more non-par would be my question. Yeah, these would be my three questions. Also if you can split your economic variance between debt and equity. Yeah. Thanks.
Hi, Madhukar. I just answered the question on Prayesh. The economic variance is largely debt.
Okay.
In your first question that you mentioned about growth, actually, when you look at the two-year CAGR, we're still in the range of 7%-8%. Yes, it is not in line with the market, but then we continue to work at a granular level to see what are those customer segments that are available to us through our distribution and where can we generate growth from. We are not divorced from the market. Very clearly we're looking at working at least at the market, and then look to work beyond that. Largely, when you look at the market, the two-year growth seems to be in the range of 10%-11%. We are in the range of about 7%-8%. Some work left, but we're not too far off. You asked another question on.
Sorry to sort of interrupt on that. If you look at two-year CAGR, then that may be the case. If you come to more recent time than last year's number or FY 2026 would suggest that we are losing some more ground. Right. In that sense there'd be more to catch up moving into FY 2027, 2028.
Yeah. Madhukar, we've discussed this earlier also. I think the focus for our company is to be able to grow VNB in a sustainable fashion, right? The large component of VNB does absolutely come from APE. As you rightly pointed out, yes, two years slightly lower than market, but when I look at this year's numbers in terms of APE at 2% growth, VNB is at 11% growth, and you can see this consistency in the margin that has held up all through the year. I think we're working at it sustainably to work at it granularly to see how we can deliver growth in a sustainable format. Your second question was on persistency. 61st month, we've discussed this earlier. This has been due to a regulatory definition change. 25th month is a new phenomena.
Yes, I think some of the spillover from the 13th month is coming through to the 25th month at this point. You had another question in terms of how can we sustainably grow non-par. I think one of the challenges that we run up as an industry is that our product does get compared to what bank FD rates are. In the current environment when bank FD rates continue to be fairly steep, the product that we offer does not look as attractive because very clearly the way that we set up our products is to price off the G-Sec. The return over the longer term has to be built off the G-Sec.
There may be other considerations that banks may be using to set up their deposit rates, but whenever there is a dichotomy between the deposit rates and the non-par IRRs, then you will see customers swing from one to another. I hope that answers your question.
Yeah. That's helpful. Thanks a lot and all the best.
Thank you. Next question is from the line of Umang Shah from Banyan Tree Advisors PMS. Please go ahead. Mr. Umang Shah, your line is unmuted. Please go ahead with your question.
Hello. Am I audible?
Yes, please go ahead.
Yeah. Am I audible?
Yes, you are audible.
Yeah. Thank you for the opportunity. Sir, one question was, till FY 2024 we were giving VNB breakup among the various segments. If you can give that number for FY 2026 and FY 2025, that would be great.
We align with the market on this front, Umang.
Okay. Sure. That is very good. That is required input. Sure, I understand. Sir, second question was the persistency decline in 13th month cohort. Does it have a large part of annuity product or it's across segments?
A large part driven by annuity, there are, of course, some segments that we have seen, some product channel cohorts that have not performed on par.
Okay. Sir, when we have a persistency which is worse than what you were expecting, does it benefit the VNB or does it not benefit the VNB?
Umang, it doesn't benefit. The way we look at our assumption setting is that we evaluate it at the end of the year. We take a view as to which of these are permanent impairments in that sense. For those, we take an assumption change. Those that we believe are temporary, we allow that to run through the variance.
Okay. Sure, sir. No, I think that's all. I think I'm covered. I'll get back in the queue. Thank you.
Thanks, Umang.
Thank you. We'll take our next question from the line of Vinod Rajamani from Nirmal Bang. Please go ahead.
Yeah, thank you for taking my question. Most of my questions were answered. I just had one question. What happens to the negotiations that were going on with the distributors on commission and so on? Should we expect that they are mostly done and if so, then could we see Agency doing all channels but especially Agency doing better in FY 2027? That was the only question I had. Thank you.
Vinod, the negotiations and conversations with distribution, be it agency or otherwise, is always on. We look to offer the remuneration that is appropriate in line with the product and the pricing that we have built that is accretive to both shareholders as well. At all points in time, this is a continuous conversation. There is never a start or a stop to this. It will continue. It has continued, it will continue and it will keep going forward as well. It is a continuous exercise. As we bring out new products and new propositions, we will continue to work with our distribution to see how we could deliver these products to the relevant customer bases in a efficient format.
Okay. No conclusion so far? I mean, this was ongoing for some time. What do you say? There's been no agreement or something reached. How should we look at it?
No. Agreements have been reached with all our distribution. We are where we are and you are seeing the 24.7% of the VNB margin.
Understood. Thanks so much. Yeah.
Thank you. We'll take our next question from the line of Sanket Godha from Avendus Spark. Please go ahead.
Thank you. I have a few questions. Just to start with, the uptick in the margin in the fourth quarter, around 25.2%, can we attribute predominantly to the favorable yield curve, at least in the month of March? Related to that, in the VNB walk, what we see as 250 basis point addition to the VNB margin due to economic variance, is it largely because of the yield curve benefit which played in the current year to bump up the margins?
Sanket, when you look at the yield curve and especially in the perspective of non-par products and which also includes protection, one has to look at what the pricing is and what the yield curve is and what is the expected margin that one wants out of it. As yield curves move, depending upon your underlying costs, and of course you know this year there has been an impact of GST, pricing has swung in that direction. If we have got a benefit of the yield curve, we didn't change the pricing. The yield curve has not moved in that fashion. Yeah.
Dhiren, what you are trying to say that you did not change the IRR of the end consumer or to the end consumer despite the benefit and probably because of that thing, the GST impact to some extent got negated?
Yeah. If you look at the VNB walk, what we have called out is the movement across from 20.8%-24.7%. Now here the product repricing, whatever that we have done, is all sitting as part of the new business profile, right? All the yield curve changes are now part of the economic assumption change. If I'm making any pricing changes, they sit as new products that have come on board.
Understood. Dhiren, my point was that you got double benefit, right? Your product mix also changed and on top of it you got a positive economic variance number. Naturally GST impact of -3.9% would be there in the VNB. I just wanted to assume that the product mix moved favorably and also you took the benefit of economic variance to largely negate the impact of assumption changes which might be largely related to GST pay.
You take everything together, Sanket. One, we have been working very hard at cost efficiencies across the years, which I spoke of earlier. The benefit of the cost efficiency is something that we have taken on board as we have gone down our pricing. Because I'm getting cost efficiencies, I can continue to hold the price as it is. Now, this is ceteris paribus. Some of my cost efficiency was negated due to the GST impact. Technically I should have changed my pricing. I also had the improving yield curve, which allowed me to hold on to prices at that point. Actually, if you look at the entire period, there have been very marginal price changes, that too in certain cohorts, not across the board. I believe we had answered this question earlier as well.
One did not expect en masse price changes to happen and that has not happened.
Okay. Dhiren, the reason I was asking this question is that given growth is becoming soft a bit now and probably if yield curve becomes much more steeper, which was very visible in the month of March, is it fair to say that to flip the growth you will pass on some benefit to the consumers and maybe that could play a role for the growth? Related to that point only is that given we largely did only single premium annuity in the current year, given FRA lock-ins will be better or bond forward lock-ins will be better, will you go back to deferred annuity in a different format to flip back the growth given the economics are in your favor or in your industry favor right now?
Let me give you a hypothetical. If the yield curve moves downward, I will reprice. Right? Your second point was around regular pay annuity. We do have regular pay annuities and we continue to sell those as well. Yes, it's swung a little more toward single pay but we've built our regular pay annuity business as well and we'll continue to sell that.
Understood. Two more questions. One question is that given it's closer to six months that GST impact was taken on the protection, have we started repricing or industry has started repricing the individual protection business to the extent of input not available or we still are on the nature only? Related to that is that given we had a very strong third quarter, now fourth quarter growth is still there but it is toning down a bit. The impact of GST which was there in third quarter, is it fair to say that now it is coming back to normal demand?
Sanket, you saw the 60% growth in retail protection in the quarter, right? I think what we have been doing is working at this granular to make sure that protection growth continues. In terms of your question on how we would look at pricing and have people taken step changes, I believe by and large, the industry has not taken step changes. You might have one or two players who have taken some minor increases in prices, en masse price changes. That too, again, to a degree of 1%-3% across the board. We have stayed away from doing en masse price changes. We have taken cohorts and worked at those cohorts where we need to make updates to pricing. That has been our perspective, how we could manage this entire transition of GST. You're seeing the numbers come through in terms of the 60% growth.
Sorry, maybe I saw a wrong number. My bad. Actually, I saw only total protection growth numbers also. My bad. 60% is a very solid number.
Yeah.
Lastly, Dhiren, if you are okay to give the mix of ULIP which has higher sum assured and largely just to confirm my math again, in your PPT you gave persistency, 13-month persistency product-wide that is linked, non-linked and naturally the non-linked part fell from 86.8%-73.2%. I'm assuming this is predominantly due to the zero-surrender deferred annuity plan.
Yeah. The non-linked persistency drop is due to the annuity plan there. No, we've not called out the split of the high sum assured ULIP.
Okay. Thanks. That's it. Thank you, Sir. Thank you.
Thanks.
Thank you. We'll take our next question from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity. First question is on EV split. If I look at March 2025 EV split between VIF and NW in this presentation is different from the last year presentation. Is there any change in VIF and NW methodology?
Yeah. Nidhesh, you can refer to slide 63. We've called that out and given you a walk from 2022 till 2026. The key change is that the shareholder share of the MTM that's on the assets and derivatives in the policyholder fund, that's been reclassified to VIF from the NW. That has absolutely no impact on the EV. It's just a reclassification between VIF and NW. This is consistent with how the market is looking at it.
In VIF.
Yes, the MTM on derivatives and assets and derivatives of the policyholders has been classified in the VIF.
Okay. Sure. Second is-
That's the reason for the change. Yeah.
Sure. Second question is that if I look at agency business, last year Q4 had declined 20%. This year again, it has declined on a lower base. What is exactly happening in this channel? Why we are lagging in terms of growth in the agency channel specifically?
In a large part due to the higher base that we had of annuity in the previous year, that has held a base that we have to work against. Again, if you look at from a longer timeframe, we still have a fairly decent growth on agency. Yes, at the shorter term it has been a bit of a challenge. Like as I mentioned earlier, we are looking at working granularly at agency, looking at these micro segments building efficiency within the agency distribution itself.
Similarly, Direct channel has also lagged in terms of growth this year. Last year also, I think Q4 it was weak.
Yes, that's right. There was a base effect with direct as well.
In terms of expansion of these channels, are we planning to add more agents, open more offices? I'm just trying to understand how are we trying to, let's say, deliver growth in these channels in FY 2027 and how are we planning today for that growth?
As I mentioned earlier, we are looking at these growth centers on a data-driven platform, especially with the micro-market led branch strategy that we have. Again, using technology analytics as productivity levers. We will continue to work at it granularly, Nidhesh, and I'm not arguing with the fact that the growth numbers have not been strong. We'll work at improving these as we go down granularly into each of these segments.
Sure. Third question is on non-par business. Since the yield curve has been quite favorable, why don't we offer better IRRs to the customers versus fixed deposits? Have some cut on margins, but deliver better AP growth. Why we are not doing that?
See, one of the things, Nidhesh, you should understand is that we get priced off the G-Sec. I think by and large, insurers in India have been quite disciplined in their approach to actually work off the G-Sec which may not have been the case in geographies outside of India. The pricing of deposits does not really follow the G-Sec threshold. To that extent, at certain points in time when deposit gets priced extremely well relative to non-par products, which are anyway built from a longer-term perspective, customers can swing from one to another. If you were to actually start to cut margins to be able to deliver on growth on non-par, it may not be accretive to shareholders. The whole perspective that we carry, Nidhesh, is that again, look at absolute VNB. It's not a question of trying to push one particular product versus another.
It's to identify what are these opportunities that exist at this point. You're right in the sense that the non-par offers you a great opportunity in sense that the yield curve is great, is steep, and is able to give you a good IRR. The competition that also comes about, at least from a sticker price comparison, is FDs, which are still running a fairly steep rate. To that extent, non-par does get subdued.
Sure. Lastly, you can share the breakup of Group Protection between Group Term and Credit Life.
Yeah, that's in part of our annexures of this pack.
Sure.
That's on slide 56. Yeah.
56. Okay. I will take it from there. Thank you, Dhiren. Thank you.
Thank you. Next question is from the line of Yi Swan Ga from Schonfeld Strategic Advisors. Go ahead.
Hi, am I audible?
Yes. Please go ahead.
Yes. Yeah. Thanks so much for the opportunity. I just want to have a couple of clarifications.
I'm sorry to interrupt. Sir, can you use your handset mode, please?
Yeah. Am I audible now?
Yes. There's slight disturbance.
Am I audible?
Yeah. Go ahead, please.
Yeah. On slide 64, the EV work, I just want to understand, under the persistency and the other variance, the INR 2.64 billion. How much is pertinent to VNB written in FY 2026?
Sorry, can you repeat the question again?
Yeah. We have INR 2.64 billion persistency and other variances in the EV work. Right. I just want to understand how much of that is attributed to VNB or AP policies written in FY 2026.
Almost none, Ga. This is for the past book.
This is all back book.
Yeah.
Got it. Got the answer. Thank you so much.
Thank you. Next question is from the line of Manas Agrawal from Bernstein. Please go ahead.
Hi. My question relates to potential regulations on commissions. A, do we have any understanding of what is happening and when is it expected to happen? B, if there are various levels of cuts to commissions, how would your margins and your growth assumptions change?
Manas, we are not aware of discussions. We do acknowledge that the regulator has asked for data, which we have provided, but we have not heard anything beyond that.
Okay. Second question, let's say the regulator does something. What would be the sensitivity to growth and margins on that front?
I don't know what the regulator is thinking on that at this front, so it'll be little difficult to comment.
Understood. Thank you.
Thank you. We'll take our next question from the line of Shobhit Sharma from HDFC Securities. Please go ahead.
Yeah. Hi, Sir. Thank you for the opportunity. I have a question for Anup, Sir. Anup, Sir, if I look at our retail business growth over last two to three years, had not been that strong. If you can help us understand what are the key challenges which is impacting our growth? Does our cost optimization initiative, which we have taken over the last two to three years, are impacting our growth trajectory? Given market remains like this for the entire year, and as we remain newly focused, how do you internally plan growth, and do you think we can grow in line with the private players? Secondly, we have a very granular distribution, and Agency plays a very important role. The share of Agency channel has been coming down over the last two years, if you look at.
Is it because we have seen larger agents moving to the competition or there are any other challenges which are impacting the growth of this channel?
Look, I think from a growth perspective, I think it might be useful to look a slightly longer period and do a CAGR of growth and take volatility and base effects into consideration. I don't think that cost optimization comes in the way of growth at all. In fact, in our industry, I would say that since we run largely two kinds of businesses, one is protection-led businesses, which are risk-based businesses completely, and second is savings-oriented business, which essentially either get priced off the equity returns or get priced off G-Sec. In both cases, what you can give to the customer is less the margin and less the commission cost.
With that in context, I think like in all asset management businesses, one has to keep working on cost structures both on your fixed cost as well as optimizing on the commission cost and distribution cost, at least in areas where it is not adding value, but it is giving top line. There are always pockets in large distributions where you'll see that there are larger payouts and it is not giving commensurate margins or commensurate profits or profit pools. That is a constant area of optimization that one has to do. On the protection side, one has to be focused on the risk, which is early claims and make sure that your underwriting is proper and your pricing is better.
I don't think there is anything coming in the way of growth that we have to go more granular and we have to get that growth. There are base effects and which is, I think, and like Dhiren had earlier said, if you look at two years, three years CAGR, even if you look at two years CAGR, we are slightly behind, but we do have to catch up. I understand the sentiment in the group that we have to do more growth, but our focus, like we have always said, is absolute VNB. In absolute VNB, there are other levers in addition to the APE. APE is a very important lever, not to say that it is not. There are other levers also which needs to be flexed.
To get the VNB and make the whole business model more robust, at this point of time, we don't think cost optimization or things like that comes in the way of growth at all.
Secondly, sir, on the agency channel, how we plan to revive that channel?
The agency channel, we have had some large base effects two years back. If you look at CAGR a few years, it is running at 12%-13%. As the base effect goes, I think it will come back. We are also certainly looking at micro market-led agency, so hopefully it will come back sooner than we think.
Okay, sir. Thank you and all the best.
Thank you. Next question is from the line of Ritika Dua from Bandhan AMC. Please go ahead.
Yeah, sure. Thank you. Two questions, one on the—
Sorry, Ritika. Your voice is sounding muffled. Can you use your handset mode, please?
Ma'am?
Can you repeat the question?
Yeah, I'm just saying that there are two questions. One is that on the thing on the reclassification on the EV side. While, Dhiren, you clarified that it doesn't have an impact on the EV, but could you just explain what we have done and the objective of the same to do it today? That's one question. The second question is that, while I know we are very early days of IFRS, but just maybe on, hear your initial thoughts as to how the KPIs would be maybe in an IFRS world. Those are the two questions. Thank you.
Right, Ritika. IFRS, let's wait until it gets implemented. As we see forbearance, the current year will be on the existing IGAAP. Ind AS will form financial information, which will be alternate financials. Let's wait until that settles because we'll have to recreate the OBS and then look at the quarterly financials as they're being generated. Coming to your first question on this reclassification, this is just alignment with what we see in the market. Nothing more than that. Total EV does not change. It's just alignment. There is no specific guidance on where this particular MTM is to sit. We realize that it's better to align with the way the market is presenting it so that you have comparability.
If you don't mind, Dhiren, could you just explain the change again? I'll obviously go through the presentation, but if you don't mind, could you just explain the change again?
This is the mark-to-market on the assets and derivatives of the policyholder funds. That is the component that has been reclassified. It's just the mark-to-market on the assets and derivatives.
Sure. Thanks a lot. Thank you. I'm done. Thank you.
Thank you. Next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.
Hi. Good evening, everyone. A few questions from my side. First, Dhiren, you mentioned on how you really go about looking at assumption changes and variances on the persistency and back book. Now, specifically you mentioned that once a select cohort kind of becomes meaningful from a size and scale, that's when the variability can come out to be a meaningful number from a EV perspective in case there are some differences between assumptions and realities of life. Now, on that backdrop, you also mentioned that barring the annuity product also, there are certain other products and cohorts where you have witnessed some challenges. I want to get some color on what this products or cohorts would be, and is it any particular mass market strategy or any particular product which is really driving this?
Just wanted to get some sense of how all these things can shape up, let's say from the next two to three years also, if your product or customer strategy is kind of were to remain the same. The second question was on the banking channel. In your opening remarks, you mentioned that you want to focus on increasing your counter share. Ex of ICICI Bank, now that some of the bank partnerships, ex ICICI Bank have kind of increased in vintage, could you give some quantitative color on your counter share or at least the movement in counter share over the last few years or maybe this year? Finally, third question is on the ULIP side.
It seems that your ULIP margins have been moving up over the last two years due to the efforts that you have undertaken, be it in terms of riders or high-end sum assured. How much headroom would you believe that you have in this category to kind of further scale up the margin profile? Just one small data keeping question. If you used to break up the unwinding into reference rate and available returns, if you can kind of quantify that number.
Yeah, again, that's alignment with how the market is presenting it. We're not breaking the unwind up at this point. In terms of persistency, see, there are always going to be some products that are doing better than the expected persistency and some that are doing worse. The way that we've seen this evolve is that there are certain product and channel cohorts where we need to do some work, where the persistency has not been in line. That is the reason why we said we will keep continuing to watch these and see how we could improve these persistencies in the years going forward. As Anup also pointed out, we continuously look at our distribution and seeing what adds value.
Now, very clearly, if there are cohorts that are not adding value, then we look to step away from those cohorts if we're not able to fix them. To that extent, there is a continuous rejig of our distribution of what customer segments that we'd want to onboard through specific distribution, and corrective actions get taken along with our distribution teams on the ground. I don't want to call out any specific channel or any product, but there are some small cohorts here and there that we need to fix and that we'll continue to work at in the years as well. Within the non-ICICI Bank, we did mention that we've had an increase in market share by and large. Again, a lot of the work has gone in across all of these partnerships to be able to drive our share.
Again, it depends upon each particular shop what our share is in that particular shop. By and large, we've been seeing a positive trend in terms of increasing share in most places. Coming to a question on unit-linked and its margin, yes, you're right. Over the years, we've been able to improve the margin of our unit-linked by addition of higher sum assured by elongating terms. I think the way to look at the unit-linked product is, it is a very transparent product. If you're able to add sufficient protection to it makes it far more meaningful. It is not a mutual fund product, and that has to be very well understood. By making sure that you're adding protection and propositions very specifically, you're able to cater to various needs of customers and fulfill whatever needs that they set out.
That's been our approach to product development and proposition set up for our customers. We'll continue to keep working at this, and uncovering newer segments that we'd want to expand this into.
Got it. Thank you. Just one small clarification. In the persistency question you mentioned that you'll be working through these products and customer cohorts incrementally throughout the year and going ahead also, right? I mean, is that the right understanding?
That's right. It's a continuous exercise, right. As Anup also pointed out, there are always going to be some segments that are not up to par. The point is, you try to fix it, because you start with the underlying proposition that is being provided to customers, and the sales process. If it doesn't work, then you stop selling.
Got it. Thank you, and all the best.
Thanks.
Thank you. Next question is from the line of Nischint Chawathe from Kotak. Please go ahead. Nischint, your line is unmuted. Please go ahead with your question.
Yeah, thanks for taking my question. Just on the protection side, on the retail term side, we have seen a lot of tailwinds because of GST and, hopefully, we can see this continuing as well. Is this because there is a natural uptick or has the industry or again, specifically you kind of tailored certain products or looked at certain segments or probably made investments to grow this segment? In that sense, probably if you could give some sense of how long can this continue?
Nischint , if the question is, have we created new products and innovative products? The answer is yes. We have done that through the year by providing newer propositions along the way. I think one of the biggest tailwinds that we have got as an industry has been the GST reform, and that is felt most in protection, in retail protection, because that's where you see the 18% go off. To the customer, you're seeing this improved benefit come through immediately. In fact, this is not just for new customers, it's also available for existing customers because as they pay the renewal, the renewals are that much cheaper. The way I'm looking at it is that it has actually helped create positive word of mouth on retail protection because very clearly, I think this is one of the essences of our industry.
Selling protection has to become one of the cores of what this industry does. In fact, we called it out also in the earlier part of our commentary. The retail sum assured growth for the industry actually was two and a half times post the reform than what it was pre-reform through this financial year. Very clearly, I think everyone, it's not just us, everyone has latched on to this particular move and it's up to the industry to make this a success.
Got it.
Which it has for the half year that we've seen.
Got it. Just now on, I believe Prudential is setting up a health business. Is there a partnership or any synergies between you and Prudential, or does it run completely separately?
No, I believe that's a separate company.
Sure. If, hypothetically, Prudential wants to move from health to life, do they need an NOC from you?
Again, these are shareholder matters. I think we could restrict the conversation to financial results.
Sure. Those were my questions. Thank you very much.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Anup Bagchi, MD and CEO, for closing comments. Over to you, sir.
Thank you very much, everyone. Have a good day.
Thank you. On behalf of ICICI Prudential Life Insurance Company Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.