Ladies and gentlemen, good day and welcome to the LIC's FY25 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 this conference, please signal an operator by pressing the star, then zero keys on your touch-tone phone. Please note that this conference is being recorded. We have senior management of LIC, led by Mr. Siddharth Mohanty, CEO and MD, on this call. I now hand the conference over to Mr. Siddharth Mohanty, CEO and MD, LIC. Thank you, and over to you, Mr. Mohanty.
Good evening, everyone. I am Siddharth Mohanty, Chief Executive Officer and Managing Director, LIC. I would like to welcome all of you to the results and performance update call of Life Insurance Corporation of India for the year ended March 31, 2025. Our results declared today have been uploaded along with press release and the investor presentation on our website, as well as on the websites of both the exchanges, BSE and NSE. Along with me on this call, I have four managing directors: Mr. M. Jagannath, Mr. Tablesh Pandey, Mr. Sat Pal Bhanoo, and Mr. R. Doraiswamy. Senior officials of the corporation present on this call are Mr. Dinesh Pant, Appointed Actuary and Executive Director; Mr. K. R. Ashok, Executive Director; and Mr. Hitesh Dilip Srivastava, Product Actuary and Executive Director from the Actuarial Team; Mr. Sunil Agrawal, CFO from the Finance Team; Mr.
Ratnakar Patnaik, Executive Director, Investment, Front Office and CIO, Mr. R. Chander, Executive Director, Investment, Front Office, and Mr. S. K. Srivastava, Executive Director, Investment, Back Office from the Investment Team. From the Marketing Team, we have Mr. R. Sudhakar, Executive Director, Marketing, Product Development and CMO, Mr. Hemant Buch, Executive Director, B&AC, Mr. K. S. Giridhar, Executive Director, Pension and Group Schemes, and Mr. J. P. Aggarwal, Additional Executive Director, Marketing and Product Development. Also, we have Ms. Vandana Sinha, Executive Director, CRM, Claims Annuities, Ms. Shobha Sulochana, Executive Director, CRM, Policy Servicing, and Mr. Sanjay Bajaj, Head, Investor Relations, on this call. I would like to begin by thanking you all for joining us on this investor call. We appreciate your interest in LIC's performance and value your ongoing support, especially for taking the time to be with us this evening.
Before I start, let me inform you that LIC has achieved Guinness World Records title for the most life insurance policies sold in 24 hours by selling 588,107 policies across India on 20th January 2025. Also, this feat was achieved by active participation of 452,839 agents on a single day on January 20, 2025. Let me now discuss the key business, operational, and financial highlights for the year ended March 31, 2025. Premium Income: For the year ended March 31, 2025, we have reported a total premium income of INR 488,148 crore as compared to total premium income of INR 475,070 crore for the year ended March 31, 2024. The individual new business premium income for the year ended March 31, 2025, was INR 62,495 crore, which was INR 57,716 crore for the corresponding year of last year, thereby registering a growth of 8.28% on year-on-year basis.
Before I proceed further, I would like to mention that the procurement of individual new business premium of INR 62,495 crore is the highest ever in the history of LIC. Further, renewal premium income individual business for the year ended March 31, 2025, was INR 256,541 crore as compared to INR 246,052 crore for the year ended March 31, 2024. Therefore, for the year ended March 31, 2025, our total individual premium income, including renewal, was INR 319,036 crore as compared to INR 303,768 crore for the year ended March 31, 2024, registering a growth of 5.03% on year-on-year basis. The group business total premium income for the year ended March 31, 2025, was INR 169,112 crore, comprising of new business premium of INR 164,262 crore.
In comparison, for year ended March 31, 2024, last year, the group business total premium income was INR 171,302 crore and comprised new business premium of INR 164,926 crore. Therefore, for this year ending March 31, 2025, the total group premium has decreased by 1.28% as compared to similar period of previous year. Market Share: Market share by first-year premium income for year ended March 31, 2025, was 57.05% as per IRDA, as compared to 58.87% for the similar period ended March 31, 2024. Now, if we bifurcate this overall market share of 57.05% into segment-wise share of individual and group business, we would have a market share of 37.46% in individual business and 71.19% in the group business for the year ended March 31, 2025.
On a comparable basis, for the year ended March 31, 2024, the respective market shares for individual and group business were 38.44% and 72.30% respectively. As you will observe, LIC continues to be the market leader in both individual and group business this year also. Breakup of business on APE basis: Total annualized premium equivalent APE for the year ended March 31, 2025, was INR 56,828 crore, which comprised individual APE of INR 38,218 crore and group APE of INR 18,610 crore. Therefore, on APE basis, the individual business accounts for 67.25% and group business accounts for 32.75%. Further, of the individual APE, the Par business accounts for INR 27,636 crore and Non-Par amounts to INR 10,581 crore. Therefore, our Non-Par share of individual APE is 27.69% and Par share of individual APE is 72.31% for year ended March 31, 2025.
As you may recall, for the year ended March 31, 2024, our Non-Par share of total individual business based on APE stood at 18.32%. Since then, our Non-Par APE has increased substantially from INR 7,041 crore to INR 10,581 crore. This marks a significant year-on-year growth of 50.28% in Non-Par APE within the individual business. As you will appreciate, we are growing our Non-Par share at a very fast pace. Profit After Tax: The PAT for the year ended March 31, 2025, was INR 48,151 crore as compared to INR 40,676 crore for the year ended March 31, 2024, registering a growth of 18.38% on year-on-year basis. VNB and VNB Margins: Net VNB was INR 10,011 crore for the year ended March 31, 2025, as compared to INR 9,583 crore for the year ended March 31, 2024, registering a growth of 4.47% on year-on-year basis.
Before I explain VNB margin, I must add here that for the first time, we have crossed VNB of INR 10,000 crore mark. Since we are the largest in the insurance market, it is assumed that we are the only insurance company who has achieved this feat so far. Further, the net VNB margin was 17.6% for the year ended March 31, 2025, as compared to 16.8% for the year ended March 31, 2024, showing improvement by 80 basis points on a year-on-year basis. Solvency Ratio: The solvency ratio as on March 31, 2025, improved to 2.11, as against 1.98 on March 31, 2024. Indian Embedded Value (IEV) as on March 31, 2025, has been determined as INR 776,876 crore, as compared to INR 727,344 crore as on March 31, 2024. Therefore, IEV has registered an increase of 6.81% on year-on-year basis.
At this point of time, let me also explain to you that IEV has grown over the last three years at a CAGR of 12.8% from March 2022 to March 2025. Assets Under Management: The AUM as on March 31, 2025, was INR 54,52,297 crore, as compared to INR 51,21,887 crore as on March 31, 2024. Therefore, our AUM has registered a growth of 6.45% on year-on-year basis. Product Mix and New Product Launches: Post the implementation of IRDA Insurance Product Regulation 2024, effective from October 1, 2024, we have launched a comprehensive suite of 51 products till March 31, 2025, which include 31 individual products, 12 group products, 5 individual riders, and 1 group rider. Number of Policies Sold: During the year ended March 31, 2025, we sold 1,077,082,975 new policies, as compared to 2,392,973 new policies in the year ended March 31, 2024.
Agency Workforce: As on March 31, 2025, the total number of agents was 1,486,851, as compared to 1,414,743 as on March 31, 2024. We have made a net addition of more than 72,000 agents in the last one year. The market share by number of agents as on March 31, 2025, stands at 47.61% as against 48.87% for March 31, 2024. On number of policies sold basis, the agency force sold 1,073,058,723 policies during the year ended March 31, 2025, as compared to 1,098,015,990 policies during the corresponding period of the previous year. Further, approximately 98% of our policies in the year ended March 31, 2025, were sold by our agency force. Even on premium basis, approximately 94% of new business premium came from our agency channel in the financial year ended March 31, 2025.
Contribution by Bancassurance and Alternate Channel: There is significant growth in new business premium income from our bancassurance and alternate channel. Bancassurance and Alternate Channel, including microinsurance, collected new business premium income of INR 3,496.10 crore for the year ended March 31, 2025, which was INR 2,213.22 crore for the year ended March 31, 2024, registering a growth of 57.96% on a year-on-year basis. The new business premium income collected by banks was INR 2,576.74 crore for the year ended March 31, 2025, and for the corresponding period of last year, it was INR 1,640.17 crore, thereby registering a growth of 57.10% on year-on-year basis. Further, the alternate channel collected new business premium of INR 919.36 crore for the year ended March 31, 2025, as compared to INR 573.05 crore for the year ended March 31, 2024, registering a growth of 60.43% on year-on-year basis.
Our bancassurance and alternate channel now account for 5.59% of individual new business premium for the year ended March 31, 2025, up from 3.84% for the year ended March 31, 2024. Our overall expense ratio for the year ended March 31, 2025, was 12.42% as compared to 15.57% for the same period last year. Therefore, there is a decrease of 315 basis points on year-on-year basis. Persistency: On premium basis, the persistency for 13th, 25th, 37th, 49th, and 61st months up to the quarter ended March 31, 2025, stands at 74.84%, 70.99%, 66.11%, 61.51%, and 63.12% respectively, as compared to 77.66%, 71%, 65.47%, 66.31%, 60.88% respectively up to the quarter ended March 31, 2024.
On number of policies basis, the persistency for 13th, 25th, 37th, 49th, and 61st months up to the quarter ended March 31, 2025, stands at 64.12%, 59.32%, 52.66%, 48.79%, and 50.31% respectively, as compared to 66.99%, 57.47%, 52.50%, 53.23%, and 48.59% respectively up to the quarter ended March 31, 2024. Operational Efficiency and Digital Progress: In our digital initiative through the Agent-Assisted Ananda app, we have completed 1,474,208 policies through this app during the year ended March 31, 2025, as compared to 1,158,805 policies for the period ended March 31, 2024, thereby registering a growth of 27.22% on year-on-year basis. There was a growth of 32.68% in number of active agents in Ananda app for the year ended March 31, 2025. DIVE: Digital Innovation and Value Enhancement and Jeevan Samarth Initiatives. Our DIVE and Jeevan Samarth Initiatives, led by BCG and Kearney respectively, are on track.
We are confident that our agents, customers, and our employees will start seeing benefits as these initiatives get implemented on the ground. Claims. On the individual claims front, during the year ended March 31, 2025, we have processed 2,251,810 number of claims, which includes 2,169,980 maturity and survival benefit claims. On an amount basis, during the year ended March 31, 2025, the total maturity claims were INR 237,313 crore, and the total death claims were INR 24,402 crore. On a comparable basis, for the last year ended March 31, 2024, the maturity claims were INR 208,136 crore, and the death claims were INR 22,625 crore. Therefore, the death claims are higher by 7.93%, and the maturity claims are higher by 14.02% on a year-on-year basis.
New Marketing Initiatives Empowering Women Through Bima Sakhi Yojana. During the last call on February 7, 2025, we had explained our path-breaking initiative called Bima Sakhi. This stipend scheme was launched by Hon. Prime Minister on 9 December 2024, and it aims to empower women and make them self-reliant. With great happiness, I would like to inform you that till March 31, 2025, 1.49 lakh women have been appointed as Bima Sakhis, who have sold around 4.71 lakh policies and procured new business premium of INR 604.57 crore. We believe through this initiative, in the days to come, we would have developed a strong pillar to achieve the goal of insurance for all by 2047. Before I close, I would like to list down significant achievements during the year. Achieved highest-ever individual new business premium of INR 62,495 crore in the history of LIC.
PAT has registered a growth of 18.38% on a year-on-year basis to INR 48,151 crore. Highest-ever bonus to policyholders at INR 56,190.24 crore. Our Non-Par share of individual APE business has further grown to 27.69% for the year ended March 31, 2025, as compared to 18.32% for the year ended March 31, 2024. Bancassurance and Alternate Channel registered a growth of 57.96% on a year-on-year basis to INR 3,496.10 crore. Crossed VNB of INR 10,000 crore for the first time. VNB has also increased by 4.47% on a year-on-year basis for the year ended March 31, 2025. VNB margin has shown a positive bias with an 80 basis points increase to 17.6% for the year ended March 31, 2025. AUM has increased by INR 330,410 crore as on March 31, 2025, registering a growth of 6.45% on a year-on-year basis.
IEV has increased by INR 49,532 crore as on March 31, 2025, registering a growth of 6.81% on a year-on-year basis. While maintaining growth in all parameters, we have kept focus on cost, and you can see the overall expense ratio is down by 315 basis points to 12.42% for the year ended March 31, 2025. Our agency is growing in numbers and now stands at 14.87 lakh as at March 31, 2025, increasing by approximately 5.10% year-on-year. I would like to share that the board has recommended a final dividend of INR 12 per share in its meeting held on 27 May 2025, subject to shareholders' approval. Now, I would like to end by stating that our performance this year reflects our ability to adapt and thrive in a dynamic market and regulatory environment.
As we look back on the past year, we are proud of our accomplishments and grateful for the trust you have placed in us. As we move forward, we remain committed to delivering value to our stakeholders and creating a better future for our customers. We are confident that our strategic initiatives, digital transformation, and focus on innovation will continue to drive growth and profitability. I now request the moderator of this call to open the floor for question and a nswer session. Thank you very much.
Thank you. 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 please use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.
Yeah, hi. Thanks for taking my questions. The first one was essentially on VNB or APE growth. We've seen some amount of weakness in the second half. I believe on a sequential basis, fourth quarter looks better than third. But if you could kind of just highlight a couple of measures or specific measures that you have taken because of which your growth is kind of slowly getting back on track.
Yeah, M. Jagannath, Managing Director. Yes, you said correctly, actually, because the biggest trend was in Q3 FY25 when we had a big APE growth, and then that tapered down to 8.87 towards the Q4.
Going forward, actually, it is some amount of APE growth, degrowth is coming from the Par segment where actually that regulations, product regulations necessitated some changes in the products, especially increase in ticket size, in fact, doubling the ticket size from some of our most popular products and all that. So going forward, definitely, I mean, we see that it will get tapered off while the negative in number of policy will take some time to taper off. Already, we are seeing green shoots as far as the APE growth is concerned. But you're seeing the same number of agents moving up their ticket sizes, or is it something that we just have to wait for this to kind of anniversarize? Yeah, actually, the power on the agent side is on two counts. One is the agency organization is growing.
At the same time, we had this excellent initiative of Bima Sakhi that is also coming into the picture now, almost INR 604 crores last FY25. They have contributed in quick time between 9 December and 31 March. So therefore, that also is seeing a very good traction. So on both the Bima Sakhi, the women Mahila career agents, and also the overall agents, definitely we see that they will be contributing. And more than anything, accepting that minimum ticket size culture amongst the marketing force is something I would say a significant one. In fact, in the opening remarks, our CEO, MD, has spoken about the Guinness World Record also on a single day, 588,000 policy. It was possible because of the good involvement of our agents. More than 4.5 lakh agents participated on that single day. And thereafter, we have seen very good involvement from the field force.
Sure, got it. The other one was on your VNB sensitivity. It seems to be slightly more sensitive to interest rate movements. Any specific reasoning or any specific reason why that would be the case?
Good evening. This is Ashok. Actually, if you look at the absolute amount to which the VNB is sensitized, it's 100 basis points, and particularly, when the RFR is low, it is a big proportion of the RFR, and therefore, the sensitivity is more. So this happens when the RFR is low, and when the RFR goes up, automatically, the sensitivity is expected to reduce, and Dinesh Pant, just to supplement this also, we need to appreciate one thing. The big driver for VNB business is Non-participating business. The VNB margins in Non-Par business are higher.
As we can appreciate that, Non-Par business is largely backed by fixed securities, and the component of equity is less there. So it is bound to be more sensitive to the interest rate movements. VNB is bound to be more sensitive to interest rate movements as compared to possibly Participating business or general business.
Sure. And just one on the segmental VNB margins, I'm not sure if you shared the margins this quarter, but if you could kind of highlight just some trends, how the segmental margins would have moved up or down.
In overall context, you see, we have tried to align our disclosures in line with what is being disclosed in the market. So that's the step that we have taken.
But what I can, just as an indicator, I can indicate to you that VNB margins in non-participating products are the highest, followed by participating and other types of businesses or business being there. But as an indicator, what we can indicate that in the individual business segment, the VNB margin, we are almost touching 21% or so. So just 20.9% or so, which is a very significant improvement and the trajectory at which we can feel very happy about it. So that's the level of the growth that we have seen, starting from somewhere 9.2% when we started this journey, then 15.2% was the level. Now, individual segment, we have gone to the level of almost touching 21%.
But we appreciate that VNB margins between the different segments can keep on changing depending on various factors, depending on the business strategy of the corporation, the interest rates that are available for investments in the market, profit margins being there. But largely, VNB margins are very critical and important to us, but more important to that is continuing the journey towards VNB growth. So that is one of the another heartbeat we just heard that as the Chairperson and MD just explained, crossing 10,000 benchmarks. And we would like to continue to move that towards, which can be achieved through a perfect mix of VNB margin growth and APE growth. That will be our focus area in the current year. And one just last one before I go is on the persistency side, there was a decline on the 13th and the 49th month.
So maybe if you could clarify that as well. Thank you.
What happens as far as persistency is concerned, out of the five model points that we talk about, like 13 months persistency, then we talk about 25th, 37th, like that, and 61st. Now, generally, in premiums, we can say our policies, three counts, we are doing better. But we have to note that persistency, when we talk about it, is for the particular cohorts that represented. For example, if when we are talking about 13 months persistency, the larger weightage is towards the policies which were done in the year 2023-24. Now, significant decisions have been taken, focused towards improvement in persistency.
For example, the ones that we just discussed about increasing ticket size, changing the premium, changing the commission structures aligned to persistency, all have been taken in the last year and last one and a half years or so. So these would start to show their impact. And we do expect significant improvement in persistency going forward as the outcomes of these decisions that we have taken in the last two-one year come into place. Got it. I'll come back in the queue.
Thank you very much and all the best.
Thank you.
Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, you are requested to please restrict yourselves to three questions only. Please rejoin the queue for follow-up questions. We have a next question from the line of Avinash Singh from Emkay Global Financial Services Limited.
Please go ahead.
Yeah. Good evening. Thanks for the opportunity. So two questions. The first one is, can you please explain what is driving this tough kind of a downtrend in employee wage expense in this quarter vis-à-vis last year, same quarter? I mean, what was the kind of a drag last year, this same quarter, and this year, what is bringing it down? Because the wage expenses are pretty much down in your P&L. And the second one is, if I look at the EVOP within operating variance, there is nearly 1,200-odd crore positive operating variance on account of others. So what is that others? Because this is beyond your mortality persistency and expenses. So what is that? And thirdly, if I can, just on persistency piece, what explains the 13-month kind of persistency? 49 months, I can understand that is a COVID-affected cohort, but this 13-month persistency.
So, I mean, why is that? I mean, the drop in policy is higher. What was it retained last year vis-à-vis last last year? Thanks.
Yeah, this is Sunil Agrawal. I'll answer the first question relating to the reduction in the wage salary cost. In the last year, there was a wage revision that happened, and accordingly, based on the wage revision, we had to make a provision for the pension and other retirement liabilities that happened in the last year, which is not repeated in the current year. Therefore, to that extent, the expenses in the current year are lesser.
Regarding the AUM movement, analysis of movement, it is true that the others show a variance of 1,111 crores.
Actually, one has to look at it because the items which are shown as persistency, mortality, etc., these are not directly additive in the sense that in the cash flows, they are not linear because they are non-linear. So what happens is there is always an element of a little bit of unexplained item in the total variance. And we like to look at the percentage of unexplained item, which is around 0.15% of the entire IEV. And the 99.85% of the entire movement of IEV has been explained. See, as far as persistency is concerned, we already explained that this persistency, typically what has happened, we have since IPO, we have, though it is a requirement on very regular basis, otherwise also, but since IPO, we've been very objective about modification design of products.
And we have taken a lot of steps, like even some of the most selling products which were there, we have done away with them or we have revisited their features. The outcomes start to play as I was explaining, 23-24 gets a 13-month persistency based on the quarter at that point of time. So all these significant changes that we have done have come in this last year, last and a half year. So the outcomes of that will be seen in the coming year as we start going to measure persistency for the decisions like increased ticket size and commission restructuring. All that will start to play. In fact, for example, in non-participating business, the persistency is slightly better than participating business. So those things will start to play as the business volumes, business mix starts to make an impact on the outcomes.
Okay. Thank you. Thank you.
Thank you. Our next question is from the line of Mohit Mangal from Centrum. Please go ahead.
Yeah. Thanks for the opportunity. So I was looking at your VNB margin box. So I just wanted to know what was the impact of economic assumptions, that 2.8% negative. So that's my first question. My second question is in terms of the number of agents. So I was looking at your number of agents added, which was pretty impressive at 494-odd thousand. But we also saw 422,000 agents being deleted during the year. And this number has been kind of increasing over the last two years. So what explains this kind of a deletion, that higher kind of a number in the financial year 25? Yeah, those are my two questions.
Regarding the economic assumptions in the VNB box, it's mainly due to the fall of RFR over the duration.
We have observed that the RFR has fallen between 30 and 35 basis points over the duration. And that is what has resulted in a negative 280 basis points in the market. All right. Agency, yes. I mean, agency, there is, while there is addition in agents, new agents are coming in. Of course, as you have rightly observed, agencies are also. So at the branch level, more closer monitoring is happening. In fact, a significant step that was taken was to reclassify our ABM sales as ABM agency so that there is higher, clearer, and very crisp oversight of the entire gamut of the agency journey. So therefore, we will start to see those better control over the termination of agency. Yes, some agency termination does happen, but an effective monitoring and control system is probably now in place.
Okay.
So, are these agents basically not able to do 12 policies per year? Or what is the criteria for deletion?
There's a difference. I mean, the criteria is six lives then or one policy with 1 lakh premium. Like that, it is there. So yes, they come in. I mean, it's not actually, it is not easy to get onboarded because they have to go through a very rigorous for the kind of background that they have. They have to go through a rigorous process of IRDA exam certification and all that. But somewhere, yes, it is always people are also looking at some other opportunities. So they move away for something different and all that. So different there are many reasons why agents one is, of course, they are not showing adequate interest in getting the required number of whatever minimum business guarantee is required for them to continue.
All right. Thanks. And wish you all the best.
Thank you. Our next question is from the line of Kushagra Goel from CLSA. Please go ahead.
Yeah. Thank you for taking my question. Am I audible?
You are audible, sir. You may proceed.
Yeah. Sure. So most of the questions have been answered. Just two questions from my side. So can you give us some more color as to where do you see the Non-Par mix going in the medium term and where do you see it stabilizing?
See, our Non-Par mix has significantly, as you have seen, grown from 18% to 27%. We want to continue to travel that journey. But we also appreciate that what are the drivers of Non-Par business is again a mix of business coming from different types of policies, including saving plans, term plans, health policies, and then units, Annuities.
So there's a different mix. We are looking to growth of Non-Par business from two perspectives. One perspective, as from the shareholder point of view can be seen, is the driver for the higher profitability. But as a company, with policyholders in mind, our focus on Non-Par business is also to ensure higher bandwidth of available options and product solutions which are there for the customers. So we'll continue to drive this strategy depending upon what the qualitative and solutions that we can provide. Because as we would appreciate, Non-Par is all about guarantees being given to the policyholders. And at a time or certain times when the interest rates possibly, for example, are falling or expected to fall, then this guarantee becomes very important. But on the other side, there also becomes an issue of management from the insurance companies.
So we have to take a very calibrated approach that even when we drive and we offer these products for the customers as a solution, the risk associated with Non-Par business are also to be managed well, possibly through hedging strategies or perfect pricing for them and customer satisfaction about what is being offered to them. All those will continue to. But yes, we see a lot of opportunity for growth in Non-Par segment. And we continue to move across this trend line for a long time to come.
Okay. And just the second question is regarding the operating assumption change. So if you could give more color to it, both in the EV and the VNB box, if you could just explain it.
Changes are a very continuous process.
Actually, the actual work is all about doing experience analysis and then determining whether these experience analyses, how they are further going to expect to pan out in future. So all these elements of assumption changes, whether they are related to interest rate, as my colleague Mr. Ashok was just explaining, impact coming from RFR changes, vis-à-vis, whatever best estimate or valuation rates you have considered, plus other parameters, for example, mortality, expenses. If you would have seen that in the current year, there is a significant drop around 315 basis points in the interest rate, sorry, in the expenses coming down to 12.42. And how do we see it going forward? We see it going forward that it is some sort of a regular or continuous phenomenon in context with the corporation because the number of employees continue to be reduced.
We are not in any way saying that that will trend for taking because we have to balance between optimal number of employees, the technological adoption, what's best. Because expense reduction is not the goal of the company. The goal of the corporation is to optimize the expenses. So it is not necessarily that we are trying to achieve better bottom lines through reduction of expenses only. What we are looking for, how best we can optimize our expenses. So all these assumptions get reflected at this point of time. We consider expenses are expected to be on the lower side only. So that has been factored. Similarly, persistency experience. You would have seen in the VNB box also or the EV box also, persistency has been negative, right? Because of this lesser persistency experience. So all these have been driver.
Expenses have been the driver for all these assumption changes and as well as withdrawals. For example, surrender value that somebody mentioned in this call a bit earlier. So how is the expected behavior of withdrawal going to pan out in the future? So we continuously keep on revising and settling them as and when we feel that we have got a settled expectation with regard to the past experience flowing in the future also.
Okay. Got it. So just to clarify one, so expenses have been the major driver, but there are other things also moving fast which are impacting the overall operating assumption change. Yes.
Yes. Withdrawal, mortality. Mortality has been a very stable experience for us. But largely, it has been about the expenses, expense reduction, and persistency which have been put in place.
Got it. Thank you.
Thank you so much.
Thank you.
The next question is from the line of Gaurav Jain from ICICI Prudential Mutual Fund. Please go ahead.
Sir, thank you for the opportunity. The first question is on hedging the Non-Par book. So if you can help us understand whether we have adequately entered into FRA agreements for the Non-Par book?
We have started last March. This March, we have just started. And the current year also, we are going ahead at a greater pace. And we continue to focus on this. And possibly as well when the opportunities are there, we will continue to focus for larger coverage through hedging our Non-Par portfolio.
Okay, sir. And second question is just a suggestion. It's on IEV disclosure, sir, if we can continue giving IEV and the IEV box on a quarterly basis, sir, going forward as an industry-based basis.
As of now, we are doing it on September and year basis. See, the point here is at times, too much of information. For example, like IEV dependence on market MTM. Now, we can give the picture in March. If I start looking at th is picture in April, it can have a significantly different thing. So we have to start because these things have to be considered from long-term perspective. IEV is not something which is going to change on quarter-to-quarter basis. So information can always be given. But how valuable that is going to be there, but we are open to the idea. So we'll examine. As of now, our policy admin, let us see how do we get it in a half-year basis. And if really creates value in giving quarterly basis also, we are open to that idea also.
Sure, sir. Congratulations and all the best.
Thank you .
The next question is from the line of Aditi Joshi from J.P. Morgan. Please go ahead.
Yes. Thanks for the opportunity. A couple of questions from my end. Firstly, if we look at the past two years or the last eight quarters, it seems like the new business margins have plateaued somewhere around 19%-20% level. So I just wanted to understand from you as in what are your thoughts as in can we do more further upside to this margin print going forward? And second question is related to the fourth quarter sales of non-participating savings products or the product mix in general. Seems like in the fourth quarter, unit-linked was quite high, but we saw some decline in the Non-Par savings products.
So just want to understand from your perspective as in for the next year, how shall we think about the mix in general? Yeah. This is it.
Thank you. VNB margin, as I mentioned earlier also, is something which cannot be looked at in isolation. In fact, one thing can be appreciated that the interest rate in the following interest rate scenario. Possibly out of all the listed companies, it's only LIC which has been showing continuously a poor trend in the VNB margin. I agree that we have a lot of road to travel there because there is still a significant proportion of participating business where the VNB margins are lower. So we'll continue to go that way. But VNB margins have not been falling. It actually has been improving from quarter to quarter, as I was mentioning earlier, for the individual.
In fact, in this quarter, we have improved VNB margins in our participating business also because that's a function of the ticket size, the persistency of the business, the interest rate scenario that exists. But let me clarify that VNB margin is important but not the only criteria because for an insurance company or for any entity for that matter, the growth in business is also important. And we are in a competitive scenario. We cannot remain focused or isolate only in VNB margins because we have to create business growth to ultimately give better VNB growth from the profitability point of view. And that continues requirement of continuously rebalancing the portfolio, looking into every product line as to whether it is delivering.
At times, taking decisions of reducing VNB margins, for example, let's say in saving a unit business in a competitive scenario or for the purpose of being able to provide affordable products to the customers. So looking into various aspects, that's the reason we felt that talking about specific lines every time may not necessarily be a great idea because as a dynamic organization, we would be required and we do take continuously evolving steps or we have to be nimble-footed. So we'll continue to reason between different options that we are presented with. Interest rate is something which is very uncertain. Nobody can easily predict that what is going to be interest rate next quarter or whether it will continue to be on southward, generally on northward. So all those aspects will have to be considered. So we continue to take holistic view on this line.
But as CMD said in the beginning, our focus is growth and not compromising on some benchmarks that we have decided for that. Thank you.
Thank you. Our next question is from the line of Manas Agrawal from Sanford C. Bernstein. Please go ahead.
Hi. Am I audible?
Yes. Yeah.
A couple of questions. First is on open architecture. Do we have any update? Second, if we don't have an update, if this goes through, how do we quantify or expect the impact to play out? Because you are the largest agency player. So that's one. Second is on the economic variance in the EV box, here where rates have gone down. Can you help us understand why there is this not trivial negative number?
And third is, I want to just understand the relevance of this Guinness record that we've talked twice about on the call in a period where growth has not been great. So I want to understand how we should think about future AP growth. Those are the three questions.
You see, open architecture, our stand is very clear. This is not a good idea, open architecture. Because to develop a captive distribution channel, not only for insurance but for any distribution channel, it takes a lot of time, energy, cost, everything. And suddenly you tell your distribution channel to sell for others. I think that is not good. However, we do not know this legislation what will come in the next amendment. And accordingly, we are ready. And we believe our agents will be with us because here agency is not only agency, it is a full-time career.
We provide gratuity. We provide other benefits. Social security schemes are there for agents. So everything is there. And anything comes, we believe our agents will be with us and we can face any challenge that comes on our way. Second, Guinness World Record relevance. Guinness World Record relevance may not be financial, but if you see our customer trust and our particular field force, on one day, they could contribute 452,000 agents, more than 452,000 agents. They contributed more than 5 lakh policies on a single day. That itself shows what LIC can do. And nearly INR 1,000 crore premium we collected on that day. So that relevance may not be typical to analyst call, but this is part of our message to public at large. And that will definitely help our business. So that's why that is the relevance. So far as EV work is concerned, you can also contribute. Yeah.
As regards to the negative investment variance, there are two parts to that. One is the RFR fall, which takes about 50% of the fall. And the second is the MTM changes which happened during the year. So these two totally contributed negative variance of INR 30,000 crores.
Okay. Thank you, sir.
Thank you.
Thank you. Our next question comes from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Hi. Just on the banking channel, on the bank channel, what is the kind of product mix and the profitability that we own on the banca channel? And secondly, any thoughts on the attachment rate of riders on your products which can enhance your product-level margins and basically bridge the gap between what you are earning versus the private players? And generally, private players talk a lot about high attachment rate of riders?
So where are we in that trend? Thank you.
In terms of this is right, sorry, Manas. In terms of bancassurance portfolio mix, each bank has got their own niche kind of a focus. They have their own customer need analysis being done by themselves and coordinating with us. We find that the growth has been extremely on Non-Par, particularly in the area of annuities as well as in the area of unit-linked. So linked business has been the flavor of some banking partners, whereas some banking partners have been exclusively focusing on annuities as well, both of which have got a very good contribution on the profitability margin being Non-Par.
See, as well as profitability, as long as profitability is concerned, the bancassurance business does not have any significantly different profitability as compared. It largely depends on the lines of businesses which are being sold there.
To your second part of the question, because in LIC, we are not giving any differential commission rates to the banca channel. Our reward system is almost aligned across different lines of businesses. As far as riders are concerned, some of the riders have got good VNB margins to do that. Attachment rates is not very high. It's reasonable. It has been continuously improving. In fact, we saw in some of the lines, for example, at some point of time, in fact, the riders were contributing higher. So that's a strategy, yes. We are working around it. But then we also have to take cognizance of the limit up to which the riders can be attached because, for example, some of the riders when coming under health are allowed 100% is allowed. For example, accident earlier was being considered health. Now it has been considered an outside health.
So all those things have to be considered. But yes, riders, for the purpose of not only the improvement in VNB margins, but in order to also facilitate larger options to that customer is always important. For some of the riders, for example, accident benefit riders, critical illness riders, they are very popular, premium benefits. So these riders are there. And we provide a lot of them. But we are trying to increase the take-up rate in our policies on the rider side.
Excuse me. One more question. The sensitivity of interest rate that you mentioned on VNB, would that be also due to the fact that you're not completely hedging your Non-Par book?
No. See, actually, it is the risk-free rates impact both the Par and Non-Par. There is no difference because both are savings products and relate heavily on the interest rate movements.
But the impact is higher on the Non-Par book because Non-Par, see, for the participating business, the equity backing ratio is higher. So where the interest rate sensitivity does not impact. But in the non-participating business, the equity backing ratio is less. And largest backing is coming in order to ensure better asset liability management in the guaranteed products which come under Non-Par. The higher exposure is on the fixed security side. So there, the interest rate sensitivity therefore becomes more pronounced.
`Thank you.
Thank you.
Thank you. Ladies and gentlemen, we will take two more questions. The first from the line of Dipanjan Ghosh from Citigroup. Please go ahead.
Hi, sir. Good evening. Just one data keeping question. If you can break the credit and debit Fair Value Change Account in your balance sheet between Par and Non-Par for the year?
What is that? What is the question?
If you can break the credit and debit Fair Value Change Account in the balance sheet between Par and Non-Par.
I didn't get debit and credit means. Fair value change is reflected as a consolidated entry in our balance sheet. Not for line of business.
No, sir. If you can break that number between your Par account and your Non-Par account.
Okay. Okay. Okay. So from my memory, I can recall almost around INR 277,000 crores or so is the fair value gain in our Par business and the balance belongs to Non-Par business. And yes, balance belongs to Non-Par business.
Got it. Thank you and all the best. Thank you.
Thank you.
Thank you. We will now take our last question from the line of Harshil Mehta from Asian Market Securities. Please go ahead.
Thanks, sir, for the opportunity. I just have one question.
Given that we are expected to have a calibrated approach in Non-Par income-yielding policies, so is it fair to assume that focus will be more on the unit rather than individual savings within the Non-Par segment?
No, no. See, again, you see, as an insurance company, we need to appreciate that we have to strike the right balance between top line, bottom line. So unit is typically, it's not necessary, depending on the ticket size, is a driver for top line, not necessarily the driver for the VNB margins. And whereas for our experience, the annuity portfolio and largely the saving portfolio has been the driver for VNB margins. So unit, we continue to provide. Again, for the sake of reputation, I would say our product offerings are not coming in context of how they will add, primarily how they will add to profitability.
The focus is that how they will add value to the customers and satisfy their needs. Then on top of that, then how that pans out in profitable terms for the corporation. So unit is something which in the current setup, many people easily relate to with the popularization of mutual fund and all those things and being actively interested in the market may not be an easy option for many of the people. So unit gives a lot of scope for that. So unit, we have grown significantly, almost from 2% percentage share to almost 6%. We have grown significantly in unit because it has been the demand from the side of the customers, and that has been the flavor of the market. But it's not that we are dependent upon unit only because unit will bring about challenge in terms of profitability and margins.
So we have to strike the right balance between different things, and we will continue to work towards ensuring a proper business mix, which business mix will also change as per the demand of the customers, demand of the market, and the market situations also.
Thank you, sir.
Thank you.
Thank you. We will conclude our question and answer session here. I now hand the conference over to Mr. Mohanty for closing comments.
So thank you, everyone, for your enthusiastic participation and insightful contributions to our discussion today. We are grateful for your continued support and look forward to our ongoing collaboration, driving growth, success, and value for all our stakeholders. Thank you once again. Thanks a lot.
Thank you.
Thank you.
Thank you. On behalf of LIC, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.