Ladies and gentlemen, good day, and welcome to the Q1 FY 2023 earnings conference call of SBI Life Insurance Company Limited. The conference will begin in the next three minutes. We would request all participants to stay connected. Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance Company Limited. The call will start shortly. We request you to continue to hold. Thank you. Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance. The call will start shortly. We would request all participants to stay connected. Thank you. Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance. Please stay connected. The call will start shortly. Thank you. Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance. Please stay connected. The call will start shortly.
Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance. Please stay connected. The call will start shortly. Ladies and gentlemen, you're connected to the earnings conference call of SBI Life Insurance. Please stay connected. The call will start shortly. We would request all participants to stay connected. The conference will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to Q1 FY23 earnings conference call of SBI Life Insurance Company Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Kumar Sharma, MD and CEO, SBI Life Insurance Company Limited. Thank you, and over to you, Mr. Sharma. Members of the management, you may go ahead with the call now.
Yeah, thank you very much. Good evening, everyone, and we heartily welcome you all to the results update call of SBI Life Insurance for the quarter ended June 30, 2022. An update on financial results can be accessed on our website as well, as well as on the websites of both the stock exchanges. Along with me, I have Sangramjit Sarangi, President and CFO, Ravi Krishnamurthy, President, Operations and IT, Abhijit Gulanikar, President, Business Strategy, Subhendu Kumar Bal, CRO, Prithesh Chaubey, Appointed Actuary, and Smita Verma, SVP, Finance and Investor Relations. Now let me give some key highlights for this quarter ended June 30, 2022. New business premium registered a growth of 67% year-on-year and stands at INR 55.9 billion, leading to a private market leadership.
Individual new business premium stands at INR 34.3 billion with a strong growth of 87% and private market share of 24.5%. Gross written premium stands at INR 113.5 billion, growth of 35%. Production new business premium grew by 63% to INR 7 billion. Profit after tax stands at INR 2.6 billion with an 18% growth over corresponding quarter last year. Value of new business is INR 8.8 billion, registering a strong growth of 130% over INR 3.8 billion in June 2021, and the VNB margin is at 30.4%, which is an improvement of 665 basis points over 23.7% in June 2021.
We have aligned the value of new business and VNB margin for quarter ended 30th June 2021 in line with the March 32st, 2022 disclosures. Assets under management grew by 13% to INR 2.623 trillion. Robust solvency ratio of 2.21 against regulatory requirement of 1.5. I would also like to highlight on a few key initiatives taken by the company. Considering and keeping the pace with customer needs, we have launched SBI Life - Smart Annuity Plus. It offers a comprehensive range of annuity with an option of deferred annuity payout. With a view to broaden our reach, SBI Life has tied up with Paschim Banga Gramin Bank, a leading RRB in West Bengal.
We have also signed an agreement with [Major Syntex] RenewBuy and PhonePe Insurance Broking Services Private Limited to be agile with changing customer behavior. With this, we have successfully delivered customer-centric profitable growth in this quarter as well. We will now update you on each of the key elements in detail. Let me start with the premium being one of the five focus areas of the company. Individual new business has grown to INR 34.3 billion with a growth of 87% year-on-year. Single premium contribution is 28% of the individual new business premium, which is mainly attributed to growth in individual annuity product.
The company gained in the private market share by 569 basis points to 24.5%. Individual rated new business premium stands at INR 25.8 billion, with a growth of 86% and private market leadership with a share of 24%, having improvement of 511 basis points over the corresponding quarter last year. Group new business premium stands at INR 21.6 billion with a growth of 43%. Having said that, we have collected total new business premium of INR 55.9 billion, registering private market share of 21.9%. The renewal premium grew by 14% to INR 57.6 billion, which accounts for 51% of the gross written premium. Gross written premium stands at INR 113.5 billion with a growth of 45%.
Total APE stands at INR 9 billion, registering a growth of 80%. Out of this individual APE stands at INR 26.1 billion with a growth of 87%. During the quarter ended June 30, 2022, total 4.14 lakh new policies were issued and registered a growth of 61% over the quarter ended June 30, 2021. Individual new business sum assured registered a growth of 62% over the corresponding quarter last year that compared to growth of 6% at private industry level. Considering the adverse impact of COVID-19 in Q1 FY 2022, followed by a strong performance in subsequent quarters of FY 2022, we expect a steady growth in our performance over the coming quarter and to end the financial year 2023 on a strong, healthy note.
Coming to the product mix, we are happy to report that the company has seen strong growth across all product segments. Our guarantee non-par savings products are contributing 23% of individual new business premium, and on a total APE basis, this contributes 28%. Non-par guarantee product new business has registered a growth of 6.1% year-over-year, mainly due to the new business contribution of Smart Platina Plus, a new product which we launched in March last year of INR 6.1 billion in the quarter ended June 30, 2022. This product was launched in March and has seen a strong traction in the new business premium, mainly due to the product features addressing high acceptance in the market. Unit has remained one of the flagship segments for the company.
Individual unit business is at INR 17.6 billion, which constitutes 51% of individual new business premium and has showed a growth of 42%. Individual protection is at INR 2 billion, registering a growth of 55%. Group protection stands at INR 4.9 billion with a growth of 66%. Current live new business premium has grown by 73% and stands at INR 4.1 billion. On APE basis, protection contributes 11% of new business and registered a growth of 46%. Annuity business is at INR 6.5 billion and contributes 12% of new business premium. Total annuity and pension underwritten by the company is INR 11.6 billion, registering a growth of 7% over quarter ended thirtieth June 2021. Group fund management business is at INR 15.2 billion with a growth of 93%.
On our distribution partners, we have a strength of more than 54,000 CIFs. SBI & RRB insurance business contributes a share of 65% and grew by 107% in individual new business premium and on individual APE basis, it stands at INR 17.4 billion with a growth of 100%. Agency, another strong channel, registered new business premium growth of 60% and contributes 17% in new business premium. Agency channels individual APE stands at INR 7.6 billion with a growth of 64%. As on June 30, 2022, the total number of agents stands at 161,923. There is improvement of 61% in the agents' productivity levels on individual NBP basis as compared to the corresponding quarter last year.
Greater use of technology is assisting in better engagement in the entire value chain from recruitment and training through to lead generation, sale, and customer service. During the quarter, other channels grew by 82%. This constitutes the direct corporate agents, brokers, online and web aggregators. This grew by 82% in terms of individual new business premium and 89% in individual APE. Production new business premium through other channels registered growth of 23%. Partnerships like Indian Bank, UCO Bank, South Indian Bank, Punjab & Sind Bank and Yes Bank registered a growth of 125% overall. These partnerships have started contributing 3% of the individual new business premium. On profitability, the company's profit after tax for the quarter ended 30th June 2022 stands at INR 2.6 billion with an 18% growth Y-o-Y.
Our solvency remains strong at 221% on June 20, 2022. Value of new business is INR 8.8 billion with a growth of 130% YOY as against INR 3.8 billion in the corresponding quarter last year. VNB margin is at 30.4% vis-a-vis 33.7 in core Q1 FY22 with an improvement of 665 basis points. Growth in VNB and VNB margin is fueled by significant new business premium growth and change in product mix with predominantly non-par guarantee savings segment growth. With our growth targets and product mix shift, we expect to maintain a healthy VNB growth rate. On operational efficiency, OpEx ratio reduced to 6.6% for the quarter ended June 30, 2022 from 7.2% for the quarter ended June 30, 2021.
Our total cost ratio stands at 11.2% for the quarter ended June 30, 2022, vis-à-vis 10.5% for the same quarter last year. With respect to persistency on individual regular premium and limited premium paying policy, 13-month persistency stands at 85.6%. The company has registered a significant improvement in front-end month persistency of 403 basis points. We have seen a fair growth in almost all the cohorts. As mentioned in my opening remarks, assets under management stand at INR 2.6 billion as of June 30, 2022, having growth of 13% compared to the same quarter last year. The company continues efficient use of technology for simplification of processes, with 99% of individual proposals being submitted digitally. 40% of individual proposals are processed through automated underwriting.
To conclude, we are focused on striding ahead against all odds by building a robust value system and foundation that are a amalgam of multiple forces, including our investors, customers, distributors, and our own people and other stakeholders. As we move forward, digitalization and automation will remain the core of ensuring customer satisfaction. We continue to aim towards sustainable and profitable growth in the long term. Thank you very much, and we are now happy to take any questions that you may have.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking your questions. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dhaval Gada from DSP Investment Managers. Please go ahead.
Yeah. Hi, sir. Congratulations on strong numbers. I just you know had a couple of questions. First is relating to the non-par you know segment. So we've seen very strong growth this quarter. I mean if you look at like FY 2022, we did about INR 1,700 crore of new business premium. Already in 9M we did about close to INR 800 crore. I just wanted to understand you know this product mix shift that we see. Do you see it sustaining throughout FY 2022? Like do you see far more traction of Smart Platina Plus for the rest of the year as well? Any thoughts, comments around that?
Yeah. You know, this is a product which we found was, you know, customer driven. It's a product which customers wanted. Our Smart Platina Assure, which we launched earlier, also was doing very well. This is a, you know, a variant where you have income, so you know, that income product we felt that we didn't have in our bouquet, and we introduced that. The customers have taken. I mean, it's got very good traction. I think going forward also there will be good traction for this. Therefore, I'm sure that there will be more non-par Platina being sold going forward.
Sir, what's the margin differential between, you know, company margin and, you know, this non-par segment margin? Like, you mentioned in the presentation that a large part of the margin shift that you've seen is driven by product mix.
Actually, you know, we don't want to go into exact numbers. We don't give out exact numbers. The idea is that this is definitely very margin accretive, so it is definitely there.
Understood. Sir, the second question is around the operating assumption change. You mentioned in the margin slide, the margin walk, that there have been some, you know, negative operating assumption change. If you could just specify what drove that would be useful.
See, just to verify, we have not made any change in our operating assumptions or methodologies. Assumptions remain unchanged as we have used in the 31 March 2022. Since we have given this walk from the last June to this June, this March changes are coming. This is part of the normal exercise that we always do while hearing other changes. This is mainly on account of mortality and insurance that we explained in the March call.
Got it. Understood. Sir, the last question is relating to the reserve that we have towards the COVID-19 pandemic. I mean, how do you see this evolving at the end of the year? Like, do we see write-backs in the fourth quarter, if any? Or, we'll use during the course of the year? I mean, how do you intend to utilize these reserves?
Frankly speaking, you know, I need a crystal ball for this because, you know, last two years also, we had made some provisions for COVID related thing. There was one wave, second wave, third wave. You know, we really don't know how the whole thing is going to pan out. As far as I can see, there is a very strong vaccination program in the country, which is very successful. The hospitalization and mortality rates have come down hugely because of this pandemic, I mean, which were attributed to the pandemic. Naturally speaking, you know, if the trend continues, yes, this whole thing could be actually superfluous, and we could actually write it back. But right now I can't predict, you know. With two years experience of the pandemic, we have actually kept this reserve.
I think it's a very prudent way of doing things, going forward. In any case, I think one of the things that every insurance company will do going forward, and I think every company in the world is going to do, is going to keep a slightly higher pandemic reserve than we were doing earlier. Earlier in 2020, when the pandemic struck, we had a reserve of INR 42 crores or something. I don't remember the exact number right now, but I think it was around INR 42 crores. Today, you know, we know from experience that we need, needed much higher amounts when actually a pandemic strikes. Even with that point of view, I think we need to keep a higher amount as a reserve. I think that is how I look at it.
Got it, sir, and wish you all the very best. Thank you.
Thank you very much.
Thank you. The next question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Yeah, thank you for the opportunity, sirs, and congrats on a great set of numbers. First question is again, sir, on the traditional savings products and particularly through the banker channel. I think banker has generally been heavily skewed towards the unit products and this quarter the mix has moved towards this traditional savings. Is this a strategy that we are going to see through the banker channel going ahead also? Or if the sentiment related to the, you know, unit comes back in general, you know, we are hearing that there is some amount of weakness in the unit product in the industry. If the sentiment comes back, then will the mix revert to the earlier kind of set of numbers? If you could throw some light on that.
Yeah. You know, I think my answer will be what I have been saying quarter after quarter for the last many quarters that we don't actually determine the customer behavior. This is a product which we have launched, which has got acceptance with the public. I think, you know, there are circumstances which are encouraging people to go for guaranteed return products. ULIP is also growing. You know, if you can see vis-a-vis last year same quarter, our ULIP has grown by 42%. And it's not a small this even though there was a base effect. Still, you know, even if you did have the base effect, you will still find that there was some growth over what would have been the ULIP numbers.
That way, you know, I don't think that we would like to fix the customer preference. Right now, you know, as we see there is a good demand and there is this product probably people were waiting for from our stable and that is why you see this very good demand. Not only in banker channel, I think you are reading it wrong. We have the same kind of demand in the agency channel also. The agency channel is very different from the banker channel. It's just like chalk and cheese, you know. I don't think there is anything to do with the bank customer or any other aspect. People are finding it a useful good product, good return, and that is what I think is helping the product.
Sure, sir. Helpful. Sir, in terms of PAR also will a similar comment apply? Because, PAR what we have been seeing is that it was slightly tepid in the past few quarters, and it has now come back very strongly this quarter. Has there been any new product introduction in PAR or, is there-
Par, you know, I think there was a shift from par to non-par. I think the last couple of years you would have seen that as our non-par Platina grew in popularity. I think we had some loss in the par because, you know, this, I think the whole market is probably related. Right now we have very good products. I think it's only a question of the customer exercising the choice, you know. Our training of our own agents and all, you know, it does help them to refresh some of the products that are already in the stable.
Sometimes what happens is that you have that aha kind of moment, you know, and the agent thinks that this is something which I, my customer would like very much and then it starts clicking. This is, I think that is all there is to it, but from what we see from the ground, and we have asked these questions very pointedly to our marketing people, and we find that there is more requirement for par. Going forward, I think this will also grow slightly more, at least. At least from this level it is going to grow.
Sure, sir. Sir, what is the share of the new product in non-par out of the total non-par APE sale?
30.
30%.
30%. Yeah, 30%.
Okay. Okay, sir. Couple of data points if you could, sir, share. Generally you have shared this in the past calls. The split of group protection under group retail life and group term life, as well as for individual protection under TROP and pure term, if you can give the numbers.
I request that, you know, you send me the figures because right now, you know, I'll have to at least look for it in the stock that I have. Can I send it across to you offline?
Yes. Yes. That will be fine.
Thank you, Praful.
Yeah. Thank you so much.
Thanks, Praful.
Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead. He's cut off his line, so we'll move to the next question, which is from the line of Sanket Godha. Please go ahead.
Yeah. Thanks for the opportunity. You said that the non-par business is 28 or 28.3% of the total APE. Out of the total non-par, 30% is contributed by new product launch that is income plan. Right, sir?
Yeah. Yeah.
What would be a margin profile of an income plan compared to a non-par product in the... I just wanted to understand. In the past, we have said that the non-par probably will not be more than fifteen percent of the total EPA because it spoils the distribution if you do a lot of non-par if the cycle is not in their favor. Now it is 28.3% of the total business. But it's from the full year point of view, do you expect this 28.3% to moderate to, you know, like 15%-20% for the full year, sir?
Yeah, I don't know. I mean, looking at the trends, I think that it should be, you know, around this level, say 25%-30%. I think that would be my own intuition on this. As far as the margins are concerned, I think it's almost, it's all comparable. It's not very different.
Got it, sir. Somewhere we have struggled in the current quarter with respect to the annuity business, because it's flat year on year, both in EP terms and in individual new business terms. Is it more a slowdown in the business or is it in the individual business?
The annuity, I think, you know, annuity has grown by what? Yeah. Annuity grew by 3%.
Got it.
Overall, I would say the focus is there, and overall pension and annuity business has grown by 18%. Yeah. Pension and annuity business has grown by 18%. There is definitely a focus out there. You know, like, I said, some of this will depend a lot on the customer demand also.
Got it, sir. Finally, sir, I just on when you said pension product, it is predominantly ULIP pension product that's what you're referring to or. Because when we look at the other peers, ULIP has struggled for everyone because the market's been a little choppy. Everyone has struggled to grow the ULIP business. In our case, it seems to be very decently very good. Just wanted to understand.
ULIP business depends a lot on the returns that you give to your customer, you know. It doesn't depend on whether you know, you're not trying to actually sell ULIP to people who don't want it. We sell ULIP to people who understand the product, and therefore, you know, they also understand how much they need to wait for. Also, you know, sometimes the market fluctuations will be there. There they have options to choose between various funds, including debt, equity, you know, balance.
There are so many kinds of funds that we have. Each of those, you know, so we see some shifts, you know, going from one to the other or something. I have to say that, right now our equity portion has grown rather than debt over the last couple of years or so. Going forward, I don't know how much, you know, that will sustain because market has not been very good. If people understand markets, then maybe this is a good time to invest also.
Sir, within this ULIP, how much portion would be ULIP pension product?
ULIP pension, one second. Let me check about pension. We'll come back to you, Sanket. Yeah. We'll like to come back to you with that figure.
Okay. Sir, last one. In the non-par, which is 30% is an income plan right now, given it's a new launch, whether it might become a higher contributor in the entire non-par pie, going ahead, in this particular product. We believe that income plans generally have a better margin profile than the non-par plans. 30%, how do you see it to move, improve going ahead or it will remain at this level from here?
Very difficult to predict, you know, if you see the demand, then maybe, you know, it'll actually grow a little more on that product than on some of the other products that we have. Having said that, all other products also are seeing good demand. You know, in spite of the very strong growth, if you look at the growth figures in the segment, then it is not only this product which has grown, but this is a new product and obviously the latent demand would, you know, get satisfied earlier than later. Then after that it'll probably settle into a pattern. I really cannot predict the pattern, I suppose there will be some more growth in this product going forward.
Got it. Sorry, last one, sir. How much of this non-par is backed by G-Secs and how much is backed by CD, sir?
We have both the products, partially paid bonds and FRAs. You know, we are doing a hedging depending on the kind of requirement that we have and our own policy of hedging. We are in line with our policy of hedging.
Got it, sir. Yeah, that is from my side. Thank you.
Thank you. Thank you very much.
Thank you. The next question from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good evening, and thank you for taking my question. Just first one on the protection business. I think retail protection we have seen 50%-60% growth. This continues to be a slight outlier to some of the peers who are seeing decline. If you could just walk us through some of the dynamics around what is driving our market share gains in TROP. Are we just harvesting our own customer pool? Or are we able to compete effectively with external customers as well? Some thoughts or color here will be helpful, sir.
Yeah. You know, if you look at our protection growth, we have had a decent protection growth in our agency channel also. You know, that is, you know, if you want to talk about competition, that is competition. You know, you have to go out in the market and get it. The demand is there and our growth, you know, if you look at the requirement in India for protection, there is a huge protection gap. Almost everybody needs protection. Now, our growth in protection is around 47%. You know?
Mm-hmm.
That growth comes out of selling good products. You know, we've been saying this earlier also. I think, you know, the earlier question used to be why are the others able to sell more? Why are you not selling as much as the others? And things like that. We always used to say that we have a steady growth because we are looking at the customer's need and we are fulfilling that need. Again, the same question used to be for that term with return of premium. You know, there was this halo around pure term insurance. You can see what has happened to, you know, pure term insurance. There are some things which are not sustainable and some things which are, you know, probably foisted on people.
This feature is something which is an ideal product for India, and I think we have hit a very sweet spot where people understand this product and people also understand that if they survive, they get something back. Okay. These are two things which help to spread insurance awareness also in the market. You know, we, I think we should say that rather than being outliers, we are the pioneers in doing this spreading of insurance in a sensible manner.
Got it, sir. That's helpful. Second question is on guaranteed. I think you called it out as 23% of total APE, right? It seems to be relative to your own past, that number has jumped up quite a bit quarter-on-quarter, even year-on-year, right? What is your comfort level in the sense that you talked about your hedging, you said that it's under as per policy, but we can't write unlimited number of such policies, right? Maybe there is unlimited demand. I don't know.
If I can hedge everything, I can write unlimited. Okay? That is the main thing. See, we are very comfortable as far as our position right now is. Okay? As far as we are able to do that and customer demand is there, I think we'll continue with this approach. Plus of course, the recalibration will come in terms of pricing. What happens is that, you know, when the interest rates grow in the market, the expectations grow. When you reprice the product, then it depends on how much you reprice it, whether you are in line with the market, whether you're more than the market, whether you're less than the market in repricing. That will also determine what kind of growth comes. These things will be determined by the demand, what the customer needs and what we can sustainably do going forward.
Sir, last question on this, just a technical. Average duration on this portfolio, if I look at your presentation, seems to suggest a very 20+ years kind of a duration. Is that right? Or you have a limited pay which actually makes the average duration on that portfolio lower.
See, this is a limited pay. Maximum premium paid term on the product is same pay for the income plan and saving pay for the endowment plan.
Mm-hmm.
Pure term is for a 20-year. It should be much lower than that.
Got it, sir. Thank you and all the best.
Yeah, thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants, we would request you to please limit your questions to two at a time. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead.
Hi, sir. Sir, I'll have a follow-up on the previous question. Is, you know, the constraint on what you can sell given that you're seeing demand will be on hedging?
Sorry to interrupt you, Adarsh. Your audio is not very clear. I would request you to come on the handset mode.
Okay. Yeah, I've just moved. Sir, the question was a follow-up on the previous one. Your you've had a spectacular result, a lot of it driven by the mix change. The only constraint always for every player is the hedging. Since you believe that a lot of these momentum that you're seeing can continue, it'll really help all of us if you could in a little bit more detail explain your hedging policy. You know, because for us it will make your margin outlook a lot more sustainable if you know, there is a very effective hedging policy on this.
Yeah. See, what happens is, what are you hedging against, you know? You are hedging against the change in the interest rates. Okay. What is the period that you need to hedge for? The period up to which you are uncertain about the inflows. Okay.
Yeah.
The inflow will come at a future point of time, and at that time you don't know what is the return you are going to get, and that is what you are hedging. Till there is visibility, let's say in the next year, two years or whatever, you know, at any given point of time, the kind of visibility that we have, we would be comfortably investing directly for that portfolio. Anything beyond that, what will happen is that we'll have to wait and watch what are the inflows and what is the rate at that point of time. Instead of, you know, waiting and watching, we hedge that. That is exactly what we are doing right now. I don't know if that gives you the clarity that you're looking for.
Sir, what we are saying is, as I said, apart from future outlook for years three onwards, whatever are the expected premium inflows, majority of the inflows are hedged. We will not be able to share percentage, but majority inflows are hedged, and that is as per board-approved policy.
Sir, if you could just throw some light on what's the premium paying terms in most of these policies. Like, what you've sold this INR 800 crore, approximately a ballpark number of what the premium paying term is. Are these like 5, 7 years only, or are these mostly longer product?
7-10 years.
7-10 years.
The product is 7, 8, 10.
Got it, sir. Sir, now coming to the second question. Obviously, if you believe you can deliver similar momentum or in the same vicinity, maybe about six months back you all guided to a 30% margin over a three-year period. We are like fifth quarter or just starting FY 2024 and your margins are north of 30%. If you sustain this product mix then obviously it you know the margins look sustainable. Just wanted to understand how you all are looking at it, how the board is looking at it, because this is a phenomenal jump in margins and just wanted to understand how sustainable it looks to you all.
Margin is not something which we are chasing per se. We are looking at the bigger picture. We need to have the value of new business go up. We need to have the EV grow. That is what will show that we are growing as a company and we are going in the right direction. Margin is one of those factors. Margin, I will not be stuck on a particular number for the margin because going forward, if I sell more of some of the other products, for example, unit, if I sell slightly more of unit, then the margins can slightly come down from this level also.
The value that I deliver will continue to grow because we are looking at good growth going forward upwards of 25% growth in premium. I think that is something which we think is sustainable as of as we see it now. We have done extremely well in the last couple of years given that there was a pandemic and we had virtually zero business in some of the months. At least for weeks we had some much lesser business.
We think that we will be able to sustain that. Nothing is unlimited, but if you look at the potential that you have in India, it's humongous. The potential that you have for insurance is huge. Almost 82% of the people are not covered to the extent that is required. The protection gap is 82%. If you look at the coverage of insurance to GDP, 3.2%. You know, the scope is vast, so it can literally actually the whole business can grow to anything from here.
Got it, sir. This is helpful. Thanks.
Yeah. Thank you.
Thank you. The next question from the line of Avinash Singh from Emkay Global. Please go ahead.
Yeah. Good evening. A couple of questions. Firstly on your, you know, accounting profit. I mean, coming from that last year's base when there was a kind of a huge COVID Delta wave also. The profit in accounting terms, of course, not a very key number, but looks a bit muted. I mean, so is that largely an impact of, you know, higher new business explained because of the change product mix?
Yeah, absolutely. You got it on the button.
Okay. And the second, in terms of your distribution, I mean, of course, you had typically, you know, a very gradual, you know, branch addition track record and kind of sustainable. Now you are close to 1,000 branches and of course your largest bank distributor is omnipresent almost across India. So now, I mean, in terms of branch addition, now are you done, are you going to stop or your own branch addition will also continue at the same pace you have been doing for the last couple of years?
We have been growing at a very, you know, sensible pace, I should say. We look at the potential that is available and any areas which we have not covered earlier where we think there is good potential or any area that has got very good potential and we, you know, we have inadequate staff or representation out there. Those are the places that we grow. I think we will continue to look at it in the same fashion. We have never had to open branches and then close them. You know, we do have a very good approach to this whole thing. We do a very scientific analysis of the kind of business that is available, and then we grow that.
The branch network also, I think at least as of now into the near term, or even the mid-term foreseeable future, I don't think we are going to actually stop expansion. Expansion will be there, but as you can see, the numbers are not huge. We probably add about 30-40 branches every year. That is, I think, very sustainable.
One data point. I mean, what sort of a run rate currently your individual term is seeing on YONO platform? I mean, is some momentum continuing or has sort of the momentum come to a halt?
Yeah, yeah. There is a good traction on the YONO platform. You know, this year we have taken good targets to form the YONO ILS also. That is something which we will continue to you know focus upon.
What's the current run rate on protection side? I mean, on retail protection on YONO platform.
You know, currently all our YONO we are only selling protection actually.
Yeah, right now we have only protection on YONO, no?
Yeah, yeah. What's the current run rate, sir?
YONO app we have one product that is a protection, pure protection.
Yes. What is the premium run rate? Any sort of a number?
Premium.
Premium.
Yeah.
Yeah.
At the moment it is very small, but we are eyeing for a big number along with other products which we introduced in this platform. In this year we are expecting to jump as far as the YONO platform itself.
Okay. Thank you, sir.
Thank you. I request participants to please limit your question to two at a time. The next question is from the line of Niraj Seshadri from UBS. Please go ahead.
Hello. Congrats on great adoption numbers, sir. Just wanted to know last year in August we did re-pricing of both non-par product and the term insurance plan, and we told that another year we won't be changing anything, especially for the non-par protection. Where are we in terms of re-pricing both the products now? We already have launched a new variant of the non-par saving. What are your thoughts? Are we looking to maintain our spreads there with the rising interest rates and with the LBDs going up, how we are thinking about it?
Like I said, you know, for the non-par savings product, our pricing will depend on the market condition, the interest rates. Going forward also we keep a look at the interest rate movement and we don't want to be very far away from the market.
Just to add that, I keep mentioning that we should follow very active pricing for all our non-par product particularly in view of the interest rate movement and our profit condition on which we're getting the forward segment on that side. Accordingly, we are actively repricing looking to the market scenario. Our objective is to optimize the value both for the customer and us. Intention is to maintain the spread that we are getting to today. As long as we're able to maintain this spread and able to hedge this interest rate, I think we'll continue to keep doing that. We cannot commit that when we do that, we are continuous pricing so one by one. As and when required we keep repricing.
Okay. More color on the protection would be helpful as in to understand, because now the whole industry is, you know, doing nearly similar to what we are doing. Has competition really increased or it doesn't affect us because our reach is much-
I don't think it affects us much because, you know, we are expanding the market. We are going and, you know, selling. These are products which people, you know, new people who are not covered by insurance are buying. If they see value in the product, they will continue to buy that. We will keep be looking at the pricing to make sure that, you know, it is sustainable for us and it is viable for the customer.
Got it. Last question on ULIP. Want to understand, though we have done well in terms of YOY growth when it comes from low base. Where do we think the ULIP kind of settling for the full year, given whole of industry is struggling. We have done relatively better, but still, it will be helpful because-
I think ULIP should be somewhere around 55% around, you know. This could be, say somewhere around 50-60%. I believe my own feeling is that it would settle somewhere around 55-60%.
Got it. That is helpful. Thank you so much.
Yeah, thanks.
Thank you. The next question is from the line of Madhusudan Lahoti from Elara Capital. Please go ahead.
Hi, good evening, everyone. Congratulations on an exceptional set of numbers. I have a few questions. Sorry, I joined in a little late on the call, so I may have missed this if it's already discussed. First, do you have some sort of limit for how much non-par you could write? I understand that there is a lot of demand, but internally, have you sort of kept a limit for yourself that of my entire product mix, this is the extent to which I'm okay writing non-par? Second, there is a change in assumptions, which has impacted margins by about 50 basis points. What is that? Third, on the individual annuity business, can you...
My calculation suggests that we've done about INR 60 crore over there. Can you just verify that? Finally, the next two quarters were very strong sort of last year. Now the base is very high for us, going into the balance part of the year. We're hearing some talk about a rural slowdown. Maybe you can give us some context, some commentary around the demand environment, and how confident you are of growing on this base, for the balance part of the year.
Yeah. First let me talk about your individual annuity. Yes, you have the correct figure. I think it's around.
INR 51 crore.
INR 51 crore on individual annuity. As far as the limits to the non-par is concerned, we don't have an internal limit. My own sense is that, you know, we would be around this kind of level, maybe 25%-30% of our portfolio, because I do see the other parts also growing. A lot of it is growing. When you come back to growth, yeah. As of now, we obviously there's a base effect to all these numbers, I don't think we'll continue to grow at 87% or something in some of the things. Our target is about 25%+, you know, after that, sky is the limit. 25% is what we will aim to have.
My sense is that we should get there. Yeah, coming to the assumptions, I'll ask Ritesh to repeat.
Yeah. There's no change in assumption in this quarter. In fact that you're seeing in the year-on-year walk is the assumption saying that we are done in the month of March for the year end. This is showing this walk from December to, sorry, June to this June, this impact is coming from. There is no change in assumption as such. The changes that we have done in the market, mainly on account of insurance IT, some of the things, and moderating, nothing else.
Got it. Understood. Thank you very much. 25% on last year's base.
That is what we are targeting, yeah.
For the full year.
For the full year.
Okay. All the best. Thanks.
Yeah. Thank you.
The next question is from the line of Deepika Mundra from JP Morgan. Please go ahead.
Good evening, sir, and congratulations on a great quarter. Just want to understand at the product level margin, is there any product where the margin is changing, particularly on non-par? Are you seeing, you know, significant benefit of higher spreads, which is helping the margin other than just the mix increasing?
Like we said, you know, we'll try to optimize the prices, so that we also have a sustainable product and the customer also gets value. I don't see sudden changes, you know, in that side of things.
Understood, sir. That was my only question. Thank you.
Thank you so much.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Mahesh Kumar Sharma for his closing comments.
Yeah. I'd like to say that, you know, thank you so much for supporting us. We hope to continue to deliver, you know, all those expectations that we have from all of you and from our customers. Going forward in this year, if we have a COVID-free year, and if there are no other major disruptions, which I sincerely hope there won't be, I think we'll be able to, you know, come up with a good performance by the end of the year. Once again, I thank all the stakeholders, all our friends here for on the conference for listening patiently to us. Have a great evening and wish you a very safe and healthy future. Thank you.
Thank you. On behalf of SBI Life Insurance Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.