Ladies and gentlemen, good day and welcome to SBI Life Insurance Q3 FY 2022 results conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Kumar Sharma, Managing Director and CEO. Thank you, and over to you, sir.
Thank you very much. Good evening, everyone, and we heartily welcome you all to the results update call of SBI Life Insurance for the period ended December 31, 2021. We hope you and your families are safe and well. Update on our nine months financial results can be accessed on our website as well and on the websites of both the stock exchanges. Along with me, I have Sangramjit Sarangi, President and CFO, Ravi Krishnamurthy, President, Operations, IT and IB, Abhijit Gulanikar, President, Business Strategy, Subhendu Bal, Chief Actuary and CRO, Pritesh Chaubey, Appointed Actuary, and Smita Verma, SVP, Finance and Investor Relations. We are pleased to inform you that we have successfully maintained the new business trust and have again delivered enduring performance in this quarter as well.
This would not have been possible without the efforts of all our employees, distribution partners and business associates for their uninterrupted support, which helped us to satisfactorily service our customers during this challenging environment. Now, let me give you some key highlights for this period ended 31 December 2021. New business premium is at INR 187.9 billion, with a growth of 30% over the corresponding period last year. Individual new business premium stands at INR 116.1 billion, with a strong growth of 43%. Gross written premium stands at INR 412.5 billion, a growth of 19%. Protection new business premium grew by 26% to INR 20.4 billion. Individual protection new business premium grew by 27% over the period ended December 31, 2020 to INR 6.2 billion.
Annuity business stands at INR 26.4 billion, registering a growth of 20% over the corresponding period last year. Profit after tax stands at INR 8.3 billion. On effective tax basis, value of new business is INR 25.9 billion, registering a strong growth of 66% over the period ending December 31, 2020. New business margin is at 25.5% with an improvement of 470 basis points. Assets under management grew by 23% to INR 2,569 billion, that is INR 2.569 trillion. Let me update you on each of these elements in detail. I start with the premium. Individual business has always been a focus area of the company. Individual new business premium has grown to INR 116.1 billion with a growth of 43%.
Single premium contribution is 24% of individual new business premium, which is maintained and mainly attributed to growth in individual annuity products. Individual retail new business premium stands at INR 90.7 billion with a strong growth of 38%, which is leading to private market leadership with a share of 24.8%, an improvement of 143 basis points over the same period last year. Achieving private market leadership position in new business premium, we collected INR 187.9 billion and marked a private market share of 23.7%. Group new business premium stands at INR 71.8 billion with a growth of 14%. Renewal premium grew by 11% to INR 224.6 billion, which accounts for 54% of the gross written premium.
Our gross written premium stands at INR 412.5 billion, a growth of 19%. Total APE stands at INR 101.7 billion, registering a growth of 36%. Out of this, individual APE stands at INR 91.4 billion, growth of 38%. During the period ended 31 December 2021, total 13.1 lakh new policies were issued and which registered a growth of 20%. Sum assured under individual products registered growth of 22% over the corresponding period last year, as compared to growth of 3% at private industry level. Let us go to the product mix. Individual protection is at INR 6.2 billion, registering a growth of 27%. Group protection stands at INR 14.2 billion with a growth of 26%.
On APE basis, protection contributes 10% of new business and has registered a growth of 27%. Credit Life new business premium has grown by 31% and stands at INR 11.4 billion. The company is well positioned to handle the current supply side constraints and have developed a protection portfolio of pure term protection through Group Credit Life and return of premium book in individual business. We are confident that over a period, we will be able to comfortably maneuver the individual protection basket towards pure protection. Annuity business is at INR 26.4 billion and contributes 14% of the new business premium.
Total annuity and pension underwritten by the company is INR 55 billion, registering a growth of 28% over the corresponding period ended 31 December 2020, that is last year. On account of buoyant capital market, individual unit business is at INR 81.7 billion, which constitutes 70% of individual new business premium and has showed a growth of 50%. Guaranteed non-par savings product is contributing 9% of individual new business and on total APE basis, this contributes 11%. Non-par guaranteed product new business has registered a growth of 30% in Q3 FY 2022 over Q2 FY 2022. We believe that by year-end this product will contribute around 12%-13% of the total APE. Fund management business is at INR 43.2 billion with growth of 13%.
The company offers comprehensive suite of participating, non-participating, guaranteed annuity, pension, and unit-linked solutions which are designed to enable our customers to live their life to the fullest across a wide demographic range and income levels. During the quarter, we launched Arogya Shield in collaboration with SBI General Insurance to combine best of the two individual plans, SBI Life Saral Jeevan Bima and SBI General Arogya Plus to provide customers with Arogya Shield, a solution that serves the dual purpose of providing both health and life cover, which simplifies the entire journey of the consumer by eliminating the process of searching for two separate policies, purchasing, and maintaining them. We also offered a deferred option in group annuity product, and soon we will be offering deferred option in individual annuity too. A look at the distribution partners.
With a strength of more than 50,000 CIFs, that is specified persons, bank insurance business marks a share of 66% and grew by 40% in the individual new business premium. Bank insurance channel individual APE stands at INR 62.4 billion with a growth of 36%. Instant protection policy issuance through YONO app of SBI has covered more than 1.7 lakh lives. Agency, another very strong channel, registered new business premium growth of 46% and contributes 17% in new business premium. Agency channel individual APE stands at INR 25.6 billion with a growth of 42%. As on 31st December 2021, the total number of agents stands at 1,35,902.
There is a significant improvement in agents' productivity levels as compared to previous period and greater use of technology is assisting in better engagement in the entire value chain from recruitment and training through to lead generation, sales, and customer service. During the period, other channels, direct corporate, agents, brokers, online, and web aggregators grew by 69% in terms of individual new business premium and 50% in individual APE. Protection new business premium through other channel registered a growth of 61%. New partnerships like Indian Bank, UCO Bank, South Indian Bank, Yes Bank, Punjab & Sind Bank registered growth of 48%. These relationships contribute almost 3% of the individual APE as on December 2021. We are confident that all these partnerships will start contributing significantly in the coming periods. Updates on profitability.
During the period, COVID claims, net of reinsurance paid as well as outstanding, stands at INR 15.3 billion, covering various lines of business. The company has kept additional reserve amounting to INR 2.7 billion for COVID-19 pandemic over and above the policy liabilities. Our mortality assumptions are well within our estimates. The company's profit after tax for the period December 31, 2021 stands at INR 8.3 billion. Our solvency remains strong at 209% as on December 31, 2021. As mentioned in my opening remarks, the value of new business is at INR 25.9 billion on effective tax rate basis with a growth of 66%. On actual tax rate basis, it is INR 22.3 billion with a growth of 54%.
The margin, VONB margin is at 21.9% on actual tax rate basis, an improvement of 260 basis points. On effective tax rate basis, which compares with what is announced by our peers, stands at 25.5%, an improvement of 470 basis points. Cost efficiencies continue to be maintained with total cost ratio at 8.7%, OPEX ratio at 5.1% for the period ended 31 December 2021. 13-month persistency ratio of all policies that is regular as well as single and limited pay premium stands at 87.2% as compared to 86.2% of the corresponding period of last year.
In accordance with recent regulatory requirement with respect to persistency of individual regular premium and limited premium paying policies, 13-month persistency stands at 83.9% vis-à-vis 83.4% in the corresponding period last year. Assets under management has crossed INR 2.5 trillion as on 31 December 2021, having a growth of 23% as compared to the last year. The company continues efficient use of technology for simplification of processes, with 99% of the individual proposals being submitted digitally. 55% of individual proposals are processed through our automated underwriting. Customer satisfaction is a key focus area. Our grievances with respect to unfair trade practice stands at 0.07%, one of the lowest in the industry.
In the Q3, we reimagined our brand identity as a unique expression of our core belief, independence in thinking. The new brand line, Apne Liye, Apno Ke Liye, reflects the conviction that SBI Life enables individuals to explore their own wants while securing the needs of their loved ones. Our new brand identity is anchored to our core values of transparency, humility, integrity, innovation and sustainability, and which are being adopted across the ecosystem. Recently, we also unveiled yet another comprehensive consumer study, the Financial Immunity Survey 2.0, providing deep insights into consumer's evolving behavior towards financial preparedness in the post-COVID world. The pandemic has had a profound impact on consumer behavior. The attitude of Indians towards financial immunity has seen a considerable positive shift.
The primal concern after having witnessed the second wave of the pandemic is to be financially prepared and immune, and a majority of the Indians believe that insurance plays a key role in helping them tackle this concern. Also, the macro drivers for the life insurance sector remain well in place. These include an expanding and prospering middle class, significantly higher under-penetration of life insurance in India, a favorable regulatory environment, rapid digitalization, among others. To conclude, we will continue to maintain sustainable and consistent product mix with increased focus on automation and digitalization for enhancing customer satisfaction. Protection business has been a key focus area along with other lines of profitable business. We are confident in our ability to keep providing great value to all our stakeholders. Thank you, and we are now happy to take any questions that you may have.
Ladies and gentlemen, we will now begin the question and answer session. We have the first question from the line of Sanketh Godha from Spark Capital. Kindly proceed.
Yeah. Thank you for the opportunity. Sir, my first question is on the protection reinsurance strategy. Probably we are largely RP heavy. Anything got changed significantly? The new term insurance plan which we launched in previous quarter, there also are we, I mean, I think in the previous quarter you said that the reinsurance rates will not change for us for that particular product. Just wanted to understand it is the status quo for us, nothing changes from pricing or reinsurance strategy as such for the protection business. That's my first question.
Yeah. To answer you, the status quo, as you say, remains on that product and we don't have anything to say on that.
Okay. Perfect. Sir, if you can break down the annuity business into individual annuity and group annuity, that would be useful, sir. Second, again, similar, on similar lines, if you can break down group protection business into credit life and the GTI business, that would be useful.
Annuity, individual annuity is 1,201 crores. That is INR 12.01 billion. Group annuity is INR 14.43 billion.
INR 14.33 billion, right? INR 14.33 billion.
Yeah.
Okay.
Yeah. This is for the YTD December 2021.
Yeah. Got it, sir. If you can give it for the credit, group protection business-
Group credit life is INR 11.4 billion, and GTI is INR 2.8 billion.
INR 2.8 billion. Okay, sir. Finally, just on the margin thing. So if I compare with the nine months of FY 2021 and nine months of FY 2022, actually the products which are margin drivers like non-par, annuity, individual protection and group protection, contribution has come down from 24-odd% to 23.5%, and unit-linked contribution has gone up. Still we see an expansion in the margin. So just wanted to understand what is leading to this expansion. Is it largely explained by the improvement in the cost ratios or within the products you are now experiencing superior margins than what you have experienced in the last year.
Yeah. You have answered your question. You know, we within the products basically we are having better margins in some of the products, and that is why it can't be exactly laid out and quantified in that kind of way. You have hit the nail on the head when you say that the overall basket is now going towards the side where higher margin products within the groups are selling little more than the lower margin products in the same groups.
Okay. No. Sir, my question is that the mix, the higher margin products like non-par, annuity, protection are almost same.
No. I am telling you within the products themselves. In fact, if you look at the ULIP products, the products with higher margins are selling more than the products with lower margin within the ULIP space. Similarly, for others also.
Okay, sir. Sir, last one. The non-par business which is now almost 11% contribution in the APE terms, any limit we have there to grow? Second thing, we are still hedging this particular product using partially paid debentures or how we are doing something more than partially paid debentures. Finally, is this entire growth driven by Platina or you have any other new product launched in this non-par business?
Yeah. You know, our hedging, basically, we have been talking about this since last year, so we have been using FRAs also, IRS also for hedging, now apart from our favorite, partially paid bonds. Those remain to be an instrument of choice for hedging for us, but we are using FRAs also to hedge this. As far as the products are there, yeah, we are focusing on Platina mainly. Of course, we have the non-par protection and the annuity. That is also there. Most important driver for us right now will be Platina. We don't have any limits for that.
We would be looking at it in a way that we look at all our business, what the customer wants, and then we will decide whether we want to sell more of it, less of it. Of course, it will depend a lot on whether we are able to do it to the customer satisfaction and profitably. That will be one of the major things that we look at. Right now, we are not looking at the limits.
Got it, sir. Sir, in protection, ROP still remains 80% of the total business?
Yeah.
Okay.
Maybe even slightly more.
Okay. Perfect, sir. This is largely from my side. Yeah. Thank you.
Yeah. Thank you very much.
Thank you. We have the next question from the line of Abhishek Saraf from Jefferies. Kindly proceed.
Yeah. Hi. Thanks for the opportunity. Sir, I just had a few questions pertaining to protection. It appears, correct me if I'm wrong, that our protection growth, while it has remained positive, but it has now been tapering out on a YoY basis. Even on an absolute number, if I see on a QoQ also, the growth has not been that high, and that on top of launching a new pure term product in the last quarter. Could you just take me through why that is happening in this quarter? Are we seeing that other players have now also started to focus a bit on protection and they also kind of reported some growth? Are we seeing some bit of higher intensity of competition there?
See, it's not a question of competition at all. We are looking at our basket, our customers, our prospects. You know, basically, if you look at Q3 over Q2, we find 14% growth. If you look at the 9-month period last year, then we have grown at 27% and which is a very, very decent rate of growth. I hope I have answered your question.
Yeah, sir. That I understand. I mean, sir, on a nine-month basis, definitely we have grown pretty well. Because it appears that on an absolute number also, it is kind of now stabilizing. Is it fair to kind of assume that probably this could be the run rate going forward of around INR 240 crore-INR 250 crore per quarter kind of retail protect APE?
No, I don't think we look at that kind of thing. You know, we are not looking at any kind of absolute number which we will be pursuing or anything. Internally, we may have some targets and all, but then largely the ecosystem will be driving the business and we find that there is very good uptake for this protection. You know, both pure protection and term with return of premium, which I don't know how many people understand these terms, but TROP is as much protection as without return of premium. The sum assured that you get for the premium that you pay is a very decent multiple.
You know, it's a very good product for people to choose to get protected. TROP is in no way less than what is called pure protection. There is no class difference out here. It's only that some people choose this, some people choose that.
Sure. After the launch of this pure term, what has been the trajectory of the mix of pure term or ROP versus non-ROP in this quarter versus what it was last quarter? Is it in the source?
Yeah. We always had the pure term product. We have many other pure term products also. Right now we have not seen a dramatic shift out there. Going forward, I definitely see lot of more traction for our pure term product.
Thanks. That's helpful, yeah.
It's only recently launched. Yeah. Thank you very much, Abhishek.
Yeah.
Thank you. We have the next question from the line of Nischint Chawathe from Kotak Securities Limited. Thank you, Prateek.
Yeah, hi. Am I audible?
Yes, sir.
Mr. Go ahead, sir.
Sure. You reported very impressive expansion in margins this year. Your top line growth has also been premium growth has also been fairly strong. If you could, kind of give us maybe a medium-term, 2-3-year kind of a guidance or where you really see going ahead in terms of market shares or where do you really see margin settling as well.
See, margins, we can only say that in the last 3-4 years we have been growing the margins continuously. It's an effort in the sense that we are giving, delivering better products, better services, lowering the cost. So many things go into that. so basically it's a mix of all that. You know, some efficiencies have increased a lot because of digitalization. A lot of other changes have also happened which have made us sell more efficiently. So that kind of improvement we will keep aiming at. plus the overall, so there is a limit to which your margins can keep increasing.
You know, you can't have a situation where you keep going up to 100% margin. There is always going to be the value that you're going to create for the customers and deliver and the value that you create for the business and you know, for the company and stakeholders, other stakeholders. There we find that we are growing at a very good pace. I think that if we keep on with the improvements that we are doing and more and more technology use and more analytics, et cetera, which we are already doing, adoption of robotics, and then also you know, the operational efficiencies that we already have, which we are fine-tuning and ensuring that they remain so.
Finally, I think we will keep improving our margins, but I can't put a definite number to it because as I said, I have to look at all the stakeholders, including the customer.
To your point on new business, our endeavor is to grow faster than the market. We do think we will be able to gain market share in next 2-3 years.
Yeah. Good.
Perfect. Thank you very much. Those are my questions.
Thanks, Nischint.
Thank you. Participants, if you wish to ask a question, kindly press star one. We have the next question from the line of Ajox Frederick from Unifi Capital. Kindly proceed.
Thanks for the opportunity, sir. Just a follow-up to the discussed points. One is, what gives us the confidence in claiming that pure term will eventually form a bigger portion of the protection mix going forward?
You know, we have a very good product, and I think this is a unique product that we have brought out. We have the product actually addresses the life stages of a person. You know, if somebody buys a policy and when he gets married, when he buys a house, when he has children or adopts a child, at all those points of time, he can increase the cover and with the same rate and without a new underwriting being done. This is something which is, I think, revolutionary. It has not been. I don't think I've seen this product in the market. That is something which a very unique product. I'm sure people will realize the value of this product going forward.
As I said, we are not making a splash about it, but then our word of mouth way of selling and our large reach, huge reach of SBI branches, of non-SBI branches, of banks and all the partners that we have and also the very good agents that we have. I am sure that this product will be shown to more and more people, and it will definitely command a very good market, because I think it is one of the best products that is available today in the protection space.
Understood, sir. Sir, again, just to harp on the outlook of growth, because this year has been very good, obviously. Next year, where are the growth drivers gonna come from? If you can give some color product-wise or channel-wise, that will be helpful.
Yeah. You know, I would like to take you to the general statistics being bandied around. You know, India is hugely under-penetrated in terms of insurance. One of the things is there is huge potential. It is only a question of reaching all the people, explaining to the people that these are the products that are available and selling a suitable product to them. This is a part of nation building also. Apart from that, it is very profitable business, and that is exactly what we have started tapping into this year. Next year also we will continue to do more of that. We are identifying so we have all the bank partners that we have huge number of customers who have these needs and whose needs can be catered to.
The agency channel that we have, very strong agency channel. We have 947 offices across the country, in every place in the country. All these people, we are increasing the number of agents also. Our one of our strategies is to double the number of agents in the coming couple of years. As far as possible. This would be one of our one of the ways in which we increase the reach out to the people who don't have insurance. I'm sure that all this will you know open up the true potential that we have.
I think we have enough potential to grow at this or similar or even higher rate for another 2-3 years at least in as of now when compared to peers in around the world, you know. India has got a huge scope, and I think we will tap into that. If you ask me segment, like I said, protection is going to be a very good flavor going forward. Obviously all the other products that we are selling, we offer some kind of protection or the other. You know, like for example, even if you look at ULIP products, which generally are mis-termed as investment products, they are also insurance products.
Because you buy, you pay a premium, you start getting a life cover on that, and it is a multiple of the premium that you have paid. It is as good effective insurance as anything else. Insurance is a need, and we will cater to this need. Similarly, our annuity products, they give protection towards the old people from being destitute after having spent their life savings. Anybody who puts money in annuities and in the pension scheme, he keeps getting a monthly income or an annual income so that he can continue to live in peace. Whatever it is, it is all a question of insurance and protection. I don't think that scope we will be able to satisfy very shortly with this kind of growth.
Maybe a higher growth can also be predicted.
No, sir, I understand the macro story. I was more referring to your thought process. For example, you mentioned about non-PAR mix going up, and that did happen. You said that it'll go up to 11, 12% and quarter-on-quarter you did well on that portion. I was thinking from a more internal discussion point which you had or strategic goalpost which you have, which can give us a better clarity. Because right now, yes, we are doing very well. Right now, it's all favorable. Like, the other participant was also asking, the protection run rate seems to be tapering, and we need slightly better color, quantifiable color is lacking.
I would like to correct you here. I do not think the protection run rate is dipping or anything. We are growing at 27% if you see over last year, and even quarter-over-quarter we have grown at 14%.
Right. I was stepping into the absolute number. Any which way. If you can give me some direction on the mix side or the-
I have very clearly said that we have got more than 50,000 bank branches where we are selling these products, and we have got adequate number of customers who are not covered. Similarly, our agency channel we are expanding. We will have more agents selling all our products. I mean, I am not going to state a particular number that saying that we will be selling to 10,000 Platina or 20,000 protection or something. You know, the product mix we have seen, I'm telling you that going forward, we would like to have something like, say, 12%-15% protection, maybe go to 15%-18% or even 20% in non-par Platinas or similar products.
Then the annuities would be something like 10% or something of the business that we do. You know, ULIPs will form the remaining part of it. You can never say which of these businesses is going to grow more next year. Once we do all these things address all these constituencies who can be catered to in terms of insurance, that is where my confidence of growing comes. I think that, instead of giving a particular segment or a product that we are going to be selling, I am sure that we will be selling all the products but to more people.
Understood, sir. Just a final question from my end is on the margin. Currently we are doing even within ULIPs, you said that you are doing higher margin products, and I'm assuming that we are doing the same thing for other categories as well. Eventually we'll have to move up the ladder in the income stream. Currently probably we're catering to customers where the competitive intensity is lower, and eventually we'll have to cater to slightly higher up the ladder where competitive intensity is going to be pretty high. If that scenario plays out, our strategy of selling high margin products even within each category, how does that shape up in the future?
I don't get it, you know. Ajox Frederick?
Yes, sir.
I don't get the question because we are going to be selling more and more, and I am not aiming at any particular number on the margin front, like I said, you know. What will happen is that finally the margins can be slightly higher or lower. There are products which have lower margins, which are higher margins. If I'm selling more of everything, then you know, my overall earnings and my overall business is going to grow. If you look at our value of new business, you will see what I mean to say.
We have grown that 66%. Whatever be the margins that anybody else may have, there may be a company which has got very high margins like 70% margin in a product and sells only that product, but they will be selling a minuscule amount. We are looking at expanding the market. We are creating new markets, and we are selling to more and more people. I'm sure that business model is working for us. Our valuation has gone up. Our EVs are constantly rising. We have the highest EV. We have the highest value of new business. I think we are going in the right direction.
Got it, sir. That's very helpful. Thank you, and all the best.
Yeah, thank you very much.
Thank you. We request the participants to kindly restrict your questions to one per participant. We have the next question from the line of Adarsh Parasrampuria from CLSA. Kindly proceed.
Yeah. Hi. Congrats on good numbers. This question of margins, right? One of the things which strikes me is, because majority of the OPEX is usually for new business. Our OPEX growth has been materially lower than APE growth this year, which should by itself imply that each product, everything else equal should be more profitable vis-a-vis last year or what you've done in FY 2021. Is that one of the reasons apart from changes in product, if you could have made some, that makes your overall profitability a lot better? I think, your OPEX to individual APE is down by about 200-300 basis points. Yeah, if you can clarify on that, it will help a little bit.
Yeah, yeah. My cost ratios are always going to be a strength and will contribute to my profits. That there is no question about it. We have brought in a lot of operational efficiencies. That definitely improves that. Having said that, part of it comes from the product mix as well. A substantial part in fact, I should say. Because, whatever you say, the reduction in the opex overall OpEx will increase because of the huge increase in business. Overall OpEx will increase, but percentages will remain somewhere around the same. This year, in fact, compared to last year, there was more travel, there were more conferences, there were more meetings and physical stuff like that.
There would be a little more expenditure than we saw in the last year on those items. Adarsh, I think Prithesh would explain. We have not changed our 31st month assumption as of now. We will change only in the last quarter.
No. What I'm trying to ask, sir, is that, so given the improvement in the life business, ideally, your experience now will be way better than assumptions, right? There is a possibility that you have some improvement in your assumptions, right? Is that a fair-
You know, that is very hypothetical. Yes, you are right. Our expectations and assumptions and experience have been like, positive for us and going toward March, and if everything improves, then obviously you know that we'll take a look at that.
Sir, the second question I had was to do with agency. Apart from the bank channel, the agency also has had very strong growth across products but also in group. Can you talk about it a little bit because you know, it's been a strength and it looks like it's just not the bank, right? Even across channels things have been very strong. If you can just talk about what you all are driving in agency visibility?
Yeah. You know, like I said very clearly, our idea is to increase the number of agents and also to increase the productivity of the agents. We have one of the most best productive agencies in the private sector. Our agent productivity is INR 2.67 lakhs per agent. Similarly our agent activation, it is at 16%. Ideally, we should aim at around 20%-25%. That is one of the things that we are aiming at. Already we have increased productivity, agent productivity by 41%. Part of it of course comes from the number of agents, non-performing agents that we have removed.
Even after that if you look at all the other parameters, like ticket size has increased 24%, and then, protection has increased by 41%. In agency each and everything, the number of policies shows 16% growth. We have worked on each and every element in each and every line of business, you know. Not only agency but also in the other banks business, if you see, Indian Bank has grown by 13%, UCO Bank by 105%, South Indian Bank by 81%, Punjab & Sind Bank 54%. We are instead of looking at targeted or budgeted numbers or something like, we would think of some growth of 10%, 20% or something.
We are looking at the potential that is available in the ecosystem and trying to tap that and trying to build on our strengths, there.
Perfect, sir. This is useful. Thanks a lot and all the best. Thank you.
Thanks. Thank you.
Thank you. We have the next question from the line of Shyam Srinivasan from Goldman Sachs. Kindly proceed.
Yeah. Thank you for taking my question and good afternoon. Just the first one on, again, on distribution. You were a little late to this online game, but your presentation now talks about good growth in the online NBP 50%, even web aggregators. So, sir, what has been the experience what is the kind of contribution either on AP or NBP? What are the products that you're selling online?
See, online lends itself to selling pure protection products best and then very simple products. It doesn't, it is not a medium where you can sell complex products or products which need a lot of explanation. Basically it's protection. If you look at the numbers, even though there is a huge growth, some of the numbers are the base is very small, so that is there. Having said that, we have improved our, you know. What we are doing is we are improving the website that we have. The experience, user experience on the website, on the app that we have. We have a customer app for customer service. We have easy access we call it.
We have got the customer service portal. then on SBI channel we have got the YONO. On YONO you can buy a protection policy on 3 clicks. All these things we are doing and not only that, internally also we are now working a lot on a lot of technologies that will all come together in the coming period, let's say 1 year, 1.5 years. Then we will be able to actually get a handle on selling more products online. That is how we are looking at this business. But as you said rightly, it is already started showing traction.
Sir, one follow-up here. If you look at Policybazaar, which is the largest web aggregator. We are not, if you look at some of the numbers, obviously private peers are much higher, other private peers. Just, is there a conscious strategy or you think this is just one of the channels? Because we have the product suite, like you said, why shouldn't we be getting similar share even online from some of these aggregators?
We are already on Policybazaar on the web aggregator. There are certain challenges there. Sometimes costing doesn't work out for us. You know, it's a very cost-intensive kind of business. We have developed a parallel channel on our website. We will shortly be having an even better user experience. Like I said we are working on the user experience. And that once you have a better UI, UX, then obviously you are going to have more business coming in, you know. If you look at today, my website traffic has gone up by 5 times, you know.
That is the number of policies that have sold has gone up five times. similarly so in terms of amount also, it has gone up 89%. It's almost doubled. These things are very, what do you call it? I'm very optimistic that we'll be able to take this route and still be able to be effective. We will definitely look at all possible partners, including the web aggregators and we are trying to work out something there also. hopefully you'll see more of SBI Life being sold across. But our focus will be on our proprietary channels.
Got it, sir. Last question, just in terms of your renewal premium, it's kind of lagged wherever NBP growth has been. Anything to keep in mind? It was 11% for the nine months, 14% for this quarter. Shouldn't this be higher?
Yeah, it will be higher. You know, like, typically we see in most of the years, except probably last, we saw steady growth throughout the year in renewal premium. This year we will see in the Q4 a jump in the renewal premiums. You know, we have targeted for better growth in renewal premiums. As you can see, our persistencies have gone up over the similar period last year. If you continue to extrapolate that, by March, we should be having better persistencies than last year. If we do that, then we would be having huge renewal premium growth also.
Got it, sir. Thank you and all the best.
Yeah, thank you very much.
Thank you. As a reminder to the participants, kindly restrict your questions to one per participant. The next question is from the line of Nidhesh Jain from Investec. Kindly proceed.
Thanks for the opportunity, sir. Just two data points. The first is, what is the ULIP AUM mix in terms of debt to equity on incremental basis as well as on the book that we have? Second is, what is the movement of COVID provisions, COVID mortality provisions as of March 2021 versus December 2021?
ULIP, I think it's debt to equity will be 46%-54%. What were you asking about the next one?
The COVID provision is we have kept the same amount.
Yeah, INR 266 crores, which we kept last year quarter. We have carried that forward.
Sure. On an incremental basis also debt to equity is same, sir, 46-54 on in the policies that we have sold.
No, it will change.
Okay.
Incrementally, it is 60-40. Yeah. So, the incremental whatever, renewal. Yeah, more equity and less debt.
Sure. Thank you, sir. Thank you. That's it from my side.
Yeah. Okay.
Thank you. We have the next question from the line of Supratim Datta from Jefferies India Pvt. Ltd . Kindly proceed.
Yeah, thank you for the opportunity, sir, and congrats on a good set of numbers. Two quick questions, sir. So if I look at your growth on the basis of the product side, I think it has been a fairly broad-based growth. Most of the category is growing, only with the exception of PAR. While of late in the industry, we have seen that this product has kind of again started to pick up. So wanted to know what is the experience you are seeing in your case, why this category is not growing, and also any kind of new product development plans on this category or in other categories, if you could throw some light on. That would be the first question.
par we have some very good products and it's PAR is something which we think that going forward we will, like I said we would like to have around at least 5%-7% in PAR. You know, today we have 3%. We would like to have more of PAR, and we have very good products there. I'm sure that with the markets being more volatile, there will be a tendency to shift towards PAR and non-PAR. PAR, we have some very good products.
We launched a new product this year only, the Smart Future Choices, which has got again a very good element of cash bonus, et cetera, which can be encashed every year. Those products are there. There is a children's protection plan, which is very suited for you know people who have very small children, and you know to have an endowment at the age when they would like to go for higher education or something like that. I think going forward that will also be in focus in our plans.
Okay. Just to understand, this a little bit better, I would like to follow up with a question. That is by any chance your success in the, say, the Platina side, cannibalizing, any kind of sales of the PAR product?
Yeah, it is possible actually because both are traditional products.
Mm-hmm.
It is quite possible that when these products are pitched if a guaranteed product which actually shows a particular rate of interest like the PAR product would be having bonuses, but then that you have to rely on the past performance and then there is always a disclaimer that future performance may not be the same as past. There could be a tendency to do that. I think with the good products that we have and by training our sales force to pitch for those products with the correct kind of target group, I think we will be able to succeed there.
Sure. That's very helpful, sir. If I may squeeze in one quick question. Is there any difference in the retention levels for your previous protection product and the new eShield Next product that you have launched after taking input from the reinsurers?
No, no. It's the same.
Could you please share how much you retain on a maybe a per policy basis or on the percentage of books?
No, I don't think we would like to comment on that, but I can say that it is the same proportion that we have kept earlier also.
Okay, sir. Yeah, very helpful. Thank you so much and all the best, sir.
Thank you. Bye-bye.
Thank you. We have the next question from the line of Avinash Singh from Emkay Global. Kindly proceed.
Yeah, hi. Good evening. A couple of questions. First on that if we see the reinsurance premium ceded had gone down materially YOY, so is it that something in terms of reinsurance has changed on the particularly on the GTI or pure life side? And related to this, also if we see this year, I mean, the credit offtake has been YOY far better and the GTI prices have gone up materially. In that context, kind of a 25%-27% growth in group protection APE is a bit, looks muted. Yes, these are two questions.
See, group term insurance it's a question of the kind of marketing that we do and a lot of work goes into that. sometimes something crystallizes and there is a lot of
Rate.
-rate, competition out there and we may not be, really seriously interested in doing business which, brings us a loss. That it would be like that, but I think 26%-27% is a very good, growth rate to have in that kind of a product. I don't think there is any change there. I forgot the first question, the first part of the question.
Credit Life. Avinash, Credit Life has grown 32% on 9-month basis.
Yeah.
This is in line with the growth in the credit. There is no Credit Life here and not having any
Okay.
That it will be probably growing faster going forward.
I know. Yeah. On the reinsurance premium, because the premium ceded this year is materially lower. That means have you sort of taken more risk on your own book in terms of GTI and group Credit Life?
Avinash,
No. We are continuing the same. Sorry. Prithesh, go ahead.
Avinash, there is no change. Like our MD sir had mentioned that there is no change in our reinsurance strategy, as far as retention is concerned, we are retaining the similar proportion that we need to do that. If you look at the GTI reinsurance and pricing done on the scheme-to-scheme basis, there's a possibility that some of the bigger schemes where your sum assured is much higher might make some
Yeah, I think we booked a lot of business last year in the Q1. I think that would be the reason why there is a de-growth.
That's the reason where we get some of the schemes that may not be renewed is having supported by more reinsurance. Whereas we get more business where the reinsurance proportion is lower. It's a combination of the mix of the scheme and nothing specific to our reinsurance strategy, Avinash.
Okay. Just a quick one here. Again, in terms of great improvement in margins. If we look at the sort of margin improvement on the standard tax rate and effective tax rate, the divergence is quite wide. What sorts of a product this year you have sold where sort of effective tax rate is leading to even a higher margin? I mean, because I mean, on a standard tax rate basis, sort of a margin improvement is kind of close to 2.90 or something, and other basis is like closer to 5% impact on effective tax rate.
I would request prithesh to finish this thing off and only announce him on effective tax rate basis.
That would be great. That will be best. I mean, that will bring that clarity and make our life easier.
I think really speaking, it is very clearly you will have to probably sit with our people and look at the calculations or something. It doesn't make any kind of sense. Whatever we are doing the effective tax rate basis that we have told you, it is basically to bring ourselves at par with what the peer group of companies is showing.
Yes.
Because it is materially different and the numbers look much lower, we had to we were sort of forced to start showing this figure.
Yes. Sir, I wanted to sort of understand that the the gaps are even widened this year. I'm just understanding that which are the sort of a product that you have sold more, where sort of more tax breaks. Because this year the gap
I think if you compare with the previous quarter, YTD September till the YTD December, the gap between the effective actual tax basis and effective tax basis is not much. It's a 10 basis point difference. We don't see that is a very greater divergence happening on this. It's more or less, some particular LOB might have some of the composition keep changing from the quarter to quarter. That's the impact of that. Otherwise, there is no change in methodology and no other change on that part.
Okay. Thank you.
Thank you. We have the next question from the line of Jayant Kharote from Credit Suisse. Can we proceed?
Thank you. Sir, first of all, just a data keeping question. On YONO, what would be the number now? Last till last quarter we had done 10 crores.
Just a second.
Also the number of lives.
Number of lives is.
Number of lives is 1.74 lakhs and about is INR 13 crores.
Okay. Sir, what is the average sum assured that we are doing otherwise on protection and on YONO? I mean, are the two different significantly?
YONO, right now we are doing up to INR 20 lakhs.
What is our overall book average sum assured?
For protection it will be around INR 45 lakh-INR 50 lakh.
Okay. Sir, lastly, I'm sorry I'm bringing this up again, and correct me if I'm taking the numbers wrong, but this quarter we did individual protection of INR 250 crores, and if I compare that on a quarterly number to Q3 2021, which was INR 220 crores, the growth is 14%, 14.
Yeah. Correct.
There is some moderation, right? From 18 to 20 to 14.
Yes. See, what happens is it is not a question of percentages at all. It is a question of what are the numbers that were sold as protection last year, you know. Last year during the pandemic, there was a sudden surge. If you look at what the growth was last year over the previous year, same quarter, it would be much higher. Okay?
Yes.
On an increased base, we have still grown by 14%. If you look at, like, I would like to see a longer term not a quarter. If you look at the nine months period, we have grown at 26%. I think that is a very fair measure of how we are growing. 27%, 26% is what we are growing at. There will be spurts in certain times.
In fact, during the Q1 when almost no interaction was happening last year in 2020, April to June, at that time a lot of protection and a lot of other group products and all, group term insurance and all got sold to the exclusion of everything else because nothing else was possible at that point of time immediately after the announcement of the lockdown. That sort of skews the whole thing, you know.
Sure. If I may put it this way, you feel last year was a slightly abnormal base and now this year numbers should be the correct base number for us on which you are comfortable growing in this 25% plus minus range.
Yeah. Not really like that, but it'll depend a lot on the circumstances. Having said that, 25%-27% growth in any business line is very good.
Great. That helps a lot. Thank you, sir.
Thank you. We have the next question from the line of Neeraj Toshniwal from UBS. Kindly proceed.
Hi. Wanted to check on the pricing on the credit product portfolio. Have you taken any revision over there with the insurer because that is probably left to be done and,
I cannot hear you clearly. Can you kindly repeat?
The revision of credits in credit product portfolio, that was due. Has that happened already? Hello?
There is-
Sir, could we actually come to the next.
There is no repricing. There is no repricing in credit product.
We were under discussion I think, for revision of rates.
No, I'm not aware of any discussions.
Okay. The attachment rate, has it remained similar or has it degraded because the growth looks, I mean-
Similar to last year. We are at around 47 or 48% and we would like to take this higher and, probably this quarter we can, we'll see some improvement.
There has been no rate change. Last year and this year credit protect rates are same.
Sorry?
Last year and current year credit protect rates are same. I mean, premium rates.
Sure. With that I got it. Yeah. Other than that, on the pure term we were expensive, but now the competition is raising the pricing. How do you think the growth trajectory we can achieve over the next few quarters now given it's more competitive? We are sitting on similar prices while competition has inched up. Any strategy over there will be helpful.
I couldn't follow. You are asking about the competition?
Competition has increased pricing and while we are having similar price and we were expensive earlier, so how do you think about the growth trajectory going forward?
See, we like we also say the same things. Our pricing does not depend on the competition or on anything else. It is clearly a question of we look at sustainable pricing of our products depending on the factors like the reinsurance, the mortality, so many things that we see for every product. Our pricing is also on that. We have been doing that and we've been following that. Obviously, when the competition reprices higher, there could be some follow effect, but I strongly believe that we have a very, very strong market, so we have not seen any reduction in our market even when competition has reduced the rates. I don't think that works, so quickly. It's more like notional I think.
If all will happen, if the competitor will increase in the premium, our premium rate will be more competitive and then we may expect some uplift coming in our pure protection. That will really help, in fact will help with the consumer to get a better product and then we see some uplift on the protection side.
Yeah. In many of the cases I don't see people actually comparing, sitting and comparing all the prices, you know. There are people who will do it on web aggregator sites, et cetera. Really speaking it is not as transparent as that, the market.
Got it. Thank you. That is from my side.
Thank you.
Thank you. We have the next question from the line of Jignesh Shial from InCred Capital. Kindly proceed.
Yeah. Hi, thanks for the opportunity. Most of my questions has been answered. Just one thing that our solvency ratio is somewhere around 200+, right? We are not planning to raise any bond or any capital or something. Just wanted to reconfirm.
No. We are adequately capitalized.
Yeah.
I think, going forward also our revenues and our income stream will be sufficient to keep us capitalized for some time to come.
Got it. That's it from my side. Thank you so much, sir. Thank you.
Thank you. We have the next question from the line of Madhukar Ladha from Elara Capital. Kindly proceed.
Hi. Congratulations on a great quarter. You know, just a couple of questions from my side. First, I know that you change assumptions only at the end of the year. Looking at the higher mortality and the creation of extra COVID reserve and whatever that has gone down in this year, do you think you need to tighten your mortality assumptions and that would lead to some sort of downward revision in your margins? That's my first question. Second is on growth. You've done really very well in Q3 and the way this quarter has shaped up and this year has shaped up.
What do you expect for the Q4 and probably a couple of years, what sort of growth numbers do you think we should be looking at?
To answer your first question we saw last time also when the claims were very high. At that time also we found that the changes in assumption that we made in last year were serving us very well and we were very close to the our expected values. This thing we will again look at in March after March thirty-first and we will see where it goes because we really don't know what's going to happen to the mortalities in the next quarter. It's all a guess. We are hoping that it will taper off because the new wave also is milder and probably brings with it less mortalities.
We are also we don't expect too many of the earlier claims to come in all of a sudden. Having said that, I think we will revisit them in March. If as you say things are like this going forward, we will we will probably be able to slightly reduce the the expectation, I mean the.
The mortality assumptions.
Mortality assumptions, yeah. There is no need for us to tighten it because we are very close to the in the worst period also we were very close to our assumptions.
Understood. On the growth?
Yeah, on the growth I think I already said that we would like to continue. We see a good scope in the you know around the country in all the business lines that we do. We see a robust demand going forward. It's only that you need to tap into it. You need to reach out to the people. With our distribution, I think we are able to do that now. We have started to successfully tap into the existing demand and we will continue to do that. I think we can expect similar rates of growth for some time to come.
Understood. Just one thing quickly. Any thinking on sort of increasing or reducing the dependence on ULIP and increasing traditional in the mix? Is there any thought process? Because your competitors have been able to do that and it would probably be better if we have a sort of wider range of products or the spread is or our concentration is a little lower than that then. If-
See, I would only like to say one thing. We have the highest EV, we have the highest VONB. We have very good margins. We have a very good product model. I don't know why I would want to actually commit to doing something which somebody else is doing. Having said that, because there is a very good demand coming in for guaranteed products and some other traditional products, I think we will eventually end up with a higher percentage in those products and as a result the ULIP percentage will definitely come down slightly. ULIP, even in the worst of years, our ULIP fund performances over three years and five years have been excellent.
That is because the customer can switch from debt to equity, I mean, within the product. We have got very good performance in both debt and equity funds. As a result of that, our ULIP products are very, very beneficial to our customers. Like I said earlier also, a person who pays a premium for one year or two years in ULIP and gets five times or whatever as sum assured, he is also getting insured as well as a person who's buying a protection product or anything. It is also fulfilling his desire for a market-related return on his investment. I don't think we want to do away with ULIP or to consciously reduce it too much.
Yes, looking at the demand that is coming in for more protection products, more guaranteed products. I'm sure that these products will increase in volume and therefore unit percentages may go down slightly.
Got it, sir. Thank you, and all the best.
Yeah, thank you. Bye-bye.
Thank you. We have the next question from the line of Sanketh Godha from Spark Capital. Kindly proceed.
Thank you for the opportunity again. Sir, you said that average sum assured for our term insurance policies is INR 45-50 lakhs. Just wanted to know if this 45-50, if I compare it with the ROP and pure term life, what is the difference? Just wanted to understand. Even with respect to the credit life, what is the difference in three products, average sum assured numbers?
We have products which start from our Saral Jeevan Bima, which would be up to INR 5 lakhs-20 lakhs sum assured. Something like that.
No, we will not want to share the product level or ROP, sorry, sum assured detail. Having said that, PIOP has-
I'm not talking about the average sum assured. I'm talking about the level the protection.
Range.
The range of the product. It's what I'm trying to say is that starting from INR 5 lakh to let's say going up to more than INR 1 crore we have products in all the ranges. Okay. The average would come to somewhere you know maybe INR 45-50 lakhs or something.
Yes.
Because the numbers at the higher end will be lesser, and the numbers at the lower end will be more. Therefore, you know that INR 1 crore, INR 2 crore cover which we have given, those get averaged out to this kind of a number. That is how we have. I don't think we will be able to actually generalize the thing because this average is actually very like this.
Sir, is it safe to assume that ROP sum assureds are, even if you're not disclosing the numbers, substantially lower compared to pure term and therefore, for most of the policy, only small portion gets reinsurance triggered. That's why our dependence on reinsurance is relatively lower. Actually that's the reason I was asking that question, sir.
Yeah. We see low impact of reinsurance on this.
ROP sum assureds are substantially lower than pure term, sir?
Yeah. Definitely.
Okay. Okay, sir. Finally, just based on SBI branch activation level, if you can give a bit of color there.
Yeah, sure.
That will be useful, sir.
The branch activation level as of now is 61%. 61% as of December 2021. 61%
This is on revised definition, on 25,000 which we have been-
This is a revised higher, and on INR 25,000 earlier what we used to declare, it would be more than 85%.
Okay. What is the revised definition, sir?
Yeah, we have so basically it is much higher. Let me tell you one second. We have got already. Yeah, it depends on the scale of the branch. It's up to INR 3 lakhs. INR 50,000-INR 3 lakhs, depending on the size of the branch.
The branch which are doing at least minimum 50,000, the activation level is 61%. That's the way I need to take it, right, sir?
No. Each level of branch, so there are certain branches. You know, it depends on the size of the branch. For smaller branches, INR 50,000, and for larger branches, INR 3 lakhs, the largest ones. It's that is the definition.
Just based on INR 50,000-INR 3 lakh definition, you are saying activation level is 61%. Based on the old definition, it is 85%, right, sir?
Yeah, more than 85 probably. I don't know. We stopped tracking that because this is more relevant to us because we think that if there are more customers, then there should be more business in that branch.
Got it, sir. Got it. Perfect. This answers my question. Thank you very much.
Yeah. Okay.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Mahesh Kumar Sharma for closing comments.
Thank you. Thank you very much for patiently hearing and for all your questions. It keeps us alert to the kind of business that we do and it forces us to analyze the way we do our business much better and improve quarter after quarter. Thank you very much. I wish you all a very, very safe and healthy future. We hope that the pandemic goes off soon and we will all be back to doing business as usual like before. Thank you. Thank you once again for joining us and giving us this opportunity to present our figures to you. Thanks and have a nice evening.
Thank you. Ladies and gentlemen, on behalf of SBI Life Insurance, that concludes this conference. Thank you for joining us. You may now disconnect your lines.