Ladies and gentlemen, good day and w elcome to the Q3 FY 2023 earnings conferences call of SBI Life Insurance Company. As a reminder, all participant lines will be in the listen-only mode. 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. Thank you. 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 ending December 31, 2022. Update on our financial results can be accessed on our website as well as on the websites of both the stock exchanges. Along with me, I have Mr. S. Veeraraghavan, Deputy CEO; Sangramjit Sarangi, President and CFO; Ravi Krishnamurthy. Sorry, Ravi is not there. Abhijit Gulanikar, President, Business Strategy; Subhendu Bal, Chief Actuary and Chief Risk Officer; Prithesh Chaubey, Appointed Actuary, and Smita Verma, SVP, Finance and Investor Relations. Now, let me give some key highlights for this period ended 31st December 2022. New business premium registered a YOY growth of 14% and stands at INR 215.1 billion, leading to private market leadership.
Individual new business premium stands at INR 152.4 billion with a strong growth of 31% and private market share of 27.2%. Gross written premium stands at INR 473 billion, a growth of 15%. Production new business premium grew by 25% to INR 25.5 billion. Profit after tax stands at INR 9.4 billion with 13% growth over corresponding period last year. Value of new business is INR 36.3 billion, registering a strong growth of 44% over INR 25.3 billion in December 2021. VNB margin is at 29.6% with an improvement of 478 basis over 24.8% in December 2021. Assets under management grew by 17% to INR 2.9999 trillion.
Robust solvency ratio of 2.25 as against the regulatory requirement of 1.5. I would also like to highlight on a few key initiatives taken by the company. With a view to offer whole life savings product and keeping in mind the evolving needs of customers, we have launched SBI Life - Smart Lifetime Saver, an individual non-linked participating whole life insurance savings product, especially designed for customers who are looking for a product with income for whole of life. The product offers annual guaranteed as well as non-guaranteed survival income. We will now update you on each of the key elements in detail. Let me start with the premium. Individual new business has grown to INR 152.4 billion with a year-over-year growth of 31%.
Single premium contribution is 30% of individual new business premium, which is mainly attributed to our growth in our individual annuity product. The company gained the private market share by 262 basis points to 27.2%. On individual retail new business premium, we stand at INR 111.4 billion with YOY growth of 23% and maintaining our leadership position with private market share of 25.7%. Also, group new business premium stands at INR 62.7 billion with a share of 29% in new business premium. We have collected total new business premium of INR 215.1 billion, registering private market share of 23.1%. The renewal premium grew by 15% to INR 257.9 billion, which accounts for 55% of GWP.
To sum up, the gross written premium stands at INR 473 billion with a YOY growth of 15%. In terms of APE, premium stands at INR 122.6 billion, registering a growth of 20%. Out of this individual APE stands at INR 112.4 billion with a growth of 23%. During the period ended December 31, 2022, a total of INR 15.67 lakh new policies were issued. It registered a growth of 20%. Individual new business sum assured registered a growth of 14% over corresponding period last year as compared to growth of 5% at private industry level. Considering our robust performance for the period ending December 2022, we continue to expect strong growth in our performance for Q4 in FY 2023. Something about the product mix.
As on December 2022, our guaranteed non-par savings products are contributing 17% of individual new business. On individual APE basis, this contributes 24%. Non-par guaranteed product new business has registered a YOY growth of 147%, mainly due to the new business contribution of SBI Life - Smart Platina Plus of INR 19.4 billion in the period ending December 31, 2022. This product was launched in March 2022 and has seen a strong traction in the new business premium, mainly due to the product features witnessing high acceptance in the market. Individual unit new business premium is at INR 83.7 billion, which now constitutes 55% of the individual new business premium. Individual protection new business premium is at INR 7 billion, registering a YOY growth of 12%. Group protection stands at INR 18.5 billion with a growth of 30%.
Credit line new business premium has grown by 27% and stands at INR 14.5 billion. On APE basis, protection contributes 10% of the new business and registered growth of 18%. Annuity business is at INR 33.6 billion, contributes 16% of new business premium. Under annuity, the company is offering immediate as well as deferred annuity option. Individual annuity business is growing at 139% over last year. This is mainly due to new business contribution of Smart Annuity Plus of INR 25.3 billion. Total annuity and pension new business underwritten by the company is at INR 60.4 billion, registering growth of 10% over the same period last year.
With strength of more than 54,000 CIS, SBI and RRB Bancassurance contributes a share of 69% and grew by 37% in individual new business premium and on individual APE basis stands at INR 78.2 billion with a growth of 25.3%. Agency, one of our other strong channels, registered new business premium growth of 22% and contributes 18% in new business premium. Agency channel individual APE stands at INR 29.5 billion, a growth of 15.1%. As on December 31, 2022, the total number of agents stands at INR 1.93635 lakh. During the period, the company added 47,578 agents net.
During the period ended December 31, 2022, other channels, including direct corporate agents, brokers, online and web aggregators grew by 48% in terms of individual new business premium and 42% in individual APE. Protection new business premium through other channel registered a growth of 26%. Partnerships like Indian Bank, UCO Bank, South Indian Bank, Punjab National Bank and Yes Bank registered growth of 49% in individual new business premium. These partnerships have contributed 3% of the individual new business premium. To come to profitability. The company's profit after tax for the period ended December 31, 2022, stands at INR 9.4 billion with 13% growth YOY. Our solvency remains strong at 225% as on December 31, 2022.
Value of new business is at INR 26.3 billion, with a growth of 44% YOY as against INR 25.3 billion in the corresponding period last year. VNB margin is at 29.6% vis-a-vis 24.8% for the period ended December 31, 2022, with an improvement of 478 basis points. Growth in VNB and VNB margin is driven by change in product mix, predominantly in non-par segment and business volume. With our growth targets and the product mix shift, we expect to maintain a healthy VNB growth rate. Operational efficiency parameters are robust. Our OpEx ratio stands at 5.2% for the period ended December 31, 2022. Our total cost ratio stands at 9.7% for the period ended December 31, 2022.
With respect to persistency of individual regular premium and limited premium paying term, 13-month persistency stands at 84.6%. Company has registered a significant improvement in 49 and 61st month persistency by 178 basis points and 491 basis points respectively. We have witnessed improvement in persistency ratios across major cohort. As mentioned in my opening remarks, assets under management stands at around INR 3 trillion as on December 31, 2022, having growth of 17% as compared to December 2021. The company continues efficient use of technology for simplification of processes, with 99% of individual proposals being submitted digitally. 45% of individual proposals are processed through automated underwriting. To conclude, we continuously endeavor to maintain our leadership position and continue to further increase our market share by offering products that meet the evolving needs of our customers.
With our widespread robust distribution network complemented by digital technology, our innovation strength and above all, our people power, we are pleased to make the most of abundant growth opportunities offered in India's under-penetrated insurance sector. We are committed to enhancing digital experiences for our customers, distributors and employees. Further, we shall continue to explore new partners, leverage interesting partnerships, and launch new products that meet customer needs and provide seamless customer experience. Thank you very much for your patient hearing, and now we are happy to take any questions that you may have.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead. Avinash Singh. Please go ahead with your question. Yes.
Hi. Yeah. Good evening. A couple of questions. First one on this FFA buildup. This, I mean, of course, till Q3 you generally have FFA build up, in Q4 you release something. The kind of quantum of FFA build-up, this, in the Q3, it seems to be on the higher side. Can you just please explain why this sort of, a bit of, extra FFA you are building is something to do with your product mix or something else that I'm not getting. That's one. Second, if I am understanding it correctly, the VNB sensitivity to reference rate is negative. If I see the VNB margin walk YOY, there I see a positive, you know, impact of risk-free rate going up. What am I missing here? That's the second.
Thirdly, if I look on the commission side, I mean, of course, you are much lower versus peers. I mean, overall, if I see, even now kind of a factoring in the new business growth being higher, a bit higher, growth on the commission side, is it something to do with the product mix changes, or have you sort of, increased some bit of commission in existing product in existing channels? Three questions. Thank you.
Yeah, thank you very much. I'll take the last question first. The product mix has changed, and, therefore, the commission mix has changed. This is purely on the basis of product mix. We have not changed largely. We have not changed but anything significant in the commission rates at all. Coming to the other points, Prithesh, kindly go ahead with the effective build-up and, you know, what's missing on that.
Thank you, sir. When I think of the question, I think, and VNB, let's take the VNB one. When we compute the VNB, we don't take any asset backing. That's the reason when interest will go up, you see the positive update coming from. When you do the sensitivity, we do take the asset backing benefit. If you see, we are writing a lot of non-par products, and to hedge the interest rate risk, we do write forward rate agreements. Now, you know, when interest will go up, MTM losses will incur on the FRA, and that's the reason you are seeing the sensitivity is giving negative direction in upward scenario, wherein in normal walk you are getting a positive. In general, if I have to remove this FRA benefit, you might be seeing the positive sensitivity on the interest rate as well.
Yeah. Very clear. If you can help me on the FFA. Yeah.
Yeah. FFA, you see this what happened, FFA we normally declare, this is our asset calculation, declare the bonuses and recommend in the third quarter. What's happened, we see a lot of improvement in the par persistency over the period. When a policy get revised, you get significant premium. Because then you have to ultimately go and declare those bonuses. It's natural things. Second thing you see, the par business has not gone to that extent that you two have done. Par business, you write more non-par business, it relies some of the FFA. That's the reason FFA is building up. There is no changes done to build up the FFA. It's a normal things. End of each year, we'll review these things and additional FFA will be utilized to distribute the bonus to the policyholder in the current year and in the future as well.
Okay . That's clear. If one just small data keeping frame allow, can you, I mean, give a brief, I mean, broad idea of number of in-force policy currently in SBI Bank channel? I mean, I just want a broad sort of a number to get broadly that, okay, where, I mean, we could be where is the potential. Number of in-force policy in SBI Bank.
I will send you the information, okay? You know, I'll have to dig it up.
Okay.
Thank you so much.
Thank you. The next question is from the line of Ansuman Deb from ICICI Securities. Please go ahead.
Yeah. Good evening, sir, and thanks for the opportunity. My question is on the product trends that you are seeing. We have seen a little bit of improvement in the ULIP mix in this quarter. I just wanted to understand the sense of demand that you are seeing on ground, the protection because some of your peers have indicated that there has been a inflection point in terms of quarter-on-quarter growth in protection. Also, you know, non-par segment because of the higher interest rates and, you know, you have shown improvement in ULIP. If you could give a broad outlook on the demand outlook on each of these segments.
See, basically, you know, protection is something which is growing. The for us also it's growing. In the till December end, we have 25% growth over last December. This is a good trend that we have. We think that it will, you know, it will, it will be there for some more time, even though there is no COVID effect, like last two years when there was a sudden spurt in the demand in some of the quarters. We, we have been still growing steadily over the last four years in protection quarter-on-quarter. We will continue to keep growing at a good pace in protection. Now coming to ULIP.
We had said earlier also that, you know, when other things are all equal, then obviously, you know, ULIP, we have got very good ULIP products which are, which have been in good demand. ULIP demand will be back. Even though it was growing always, but I think the growth has slightly accentuated in this quarter. That is definitely there. Going forward, I think non-par guaranteed will continue to see a good traction. ULIPs of course, will definitely because they right now the markets are also good. you know, and I think people have come out of that fear of the markets, suddenly moving or something. Maybe the demand will go up. We had earlier also seen good traction even when the markets were, you know, doing so many things. We were seeing good traction in ULIP. We will continue to see good growth in ULIP.
Thank you. One, just to follow up on that. Any particular channel where you are seeing an improvement in ULIP and if you have any overall, you know, margin guidance for this, margin and volume guidance for this year?
It is across the board. you know, the ULIP growth and the business growth, both is there in all the channels. I don't think we will pick out any particular channel for any particular product.
Would you have any margin or volume guidance for this year, FY 2023?
Yeah. Y ou know, margins have been very good for us, so it'll of course change a little bit here, there with the product mix. largely it is going to be around, you know, what we have right now.
Fair enough. Thank you, sir. I'll get back in the queue.
Yeah. Thank you.
Thank you. The next question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Thank you for the opportunity. Sir, couple of questions. First one on the product mix. Now ULIP mix for the third quarter is quite close to what it used to be earlier. Now I wanted to understand, you know, would we be, you know, having some kind of a target mix in mind, or we will kind of offer the products to the customer and then let the product mix take the shape? What would be our, you know, strategy in this?
Last, what you said is what I've been maintaining for a very long time now. We actually have the entire product suite and we offer to the customers and whatever, you know, comes out of that. Of course, we get the feedback from the customers what products are good, what are, and we do keep changing or, you know, adding products to the bouquet. But largely we don't really aim for a particular product mix. But then what we would be, you know, looking at probably is about 60% around thereabouts ULIP and remaining to come from the other products. You know, that's largely around. I wouldn't be worried about 4%, 5% here, there, because it's, you know, finally what the customer wants and, you know, if it is giving good margins and it's giving a good product to the customer, then I think, you know, it's a win-win, both.
Hello? Hello?
Ladies and gentlemen, thank you for patiently holding your line. The management line is reconnected. Thank you and over to you, sir.
Yeah, thank you very much. I don't know, Mr. Mukherjee, how much you were able to gather. I think you must have got my reply.
Yeah. Yes, sir. Yes, I broadly got it. I just wanted to understand that between say second quarter and third quarter, what had changed that resulted in this appetite for ULIP? Is it only the markets or anything in the product that we have done or any commission structure we have changed for our channels that made it come back so strongly?
We have been maintaining all along. I don't know if you were on the call last quarter and the quarter before. I have always been maintaining that, you know, ULIP demand will be there. It has always been there. It's only that, you know, the pent-up demand for non-par was probably very high in the beginning couple of quarters because we didn't have that product in our suite. Now that we had that product, we had a huge demand for that, and that growth sort of probably overshadowed all the other growth. Otherwise our ULIP has been growing steadily. I think, you know, it's just part of the continuation of that. There is nothing spectacular about it.
Okay, sir. That's helpful. in the non-par product, this new variant, what would be the contribution in terms of APE within the non-par basket?
26%.
26%. Given that, you know, this, environment, I mean, this particular segment is very competitive and, few players have also increased pricing.
Sorry, 22%. Yeah. 22%.
Okay. Sir, given that this segment has become very competitive, so how are we in terms of margin, are we able to maintain the margin or are we taking some amount of impact on the margin to ensure that, you know, there is a pickup in our product?
No, I don't think we are taking any impact on the margin or anything of that sort. Really, you know, that the non-par product, like I said, you know, that there was a demand and there was a pent-up demand and that was what, you know, we saw earlier. I think the demand will go on.
Okay. Sir, just to clarify, because these are all income products and longer duration, would it be fair to assume that they will have a margin profile which would be much better compared to the endowment variant that we had, the older version?
Slightly higher.
Slightly here or there. Slightly higher.
Okay. Got it. Thank you, sir. That's all from my side.
Yeah, thank you. Thank you very much.
Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Good evening, and thank you for taking my question. Just the first one on the SBI productivity per branch.
Thank you, Mr. Shyam, but we are unable to hear you clearly. Your voice is sounding a little muffled.
Okay. Is it better now?
Yes, please go ahead.
Yeah. The SBI productivity per branch, the number was about INR 40 lakh last first half. We've seen it jump to INR 62 lakh. Is it just seasonality that the bank starts doing more in Q3, Q4? Is that the explanation or have we done anything in terms of a strategy to kind of push up the productivity in the SBI banks?
No, no. The seasonality takes care of that. It will all look.
Got it. Instead of when I try and look at you and compare with some of the private peers, this number we are now closer to where some of them are. Do we think there is upside here from a productivity per SBI branch perspective? What's working for us? We are now bridged the gap within them. If I were to look at penetration numbers of SBI bank customers, I don't think it's the same. Just if you could help us understand what's happening at the branch level.
You know, we have been expanding the market. If you look at the number of policies that we sell, the growth has been huge. I'll just give you a sense of the number. The NOPs growth.
Growth in our policies, sir.
Yeah, growth over last.
Around 20%. 19%, 20%.
Policy?
Yeah.
Number of policies growth was 22%.
Yeah, 22% policies growth, you know, in a market where almost, you know, if you look at the industry, the policy growth has been negligible. In that industry, if you look at one year CAGR, three-year CAGR, our number of policies growth is huge. That, you know, explains the slight difference in productivity that you may find with other players. You know, we are selling everywhere, not only in Bombay, Delhi, but we are selling in all the places across the country and we are introducing newer, players to the market, newer buyers to the market, newer people who are insured. The ticket sizes are going to change a little bit and therefore the productivity, you know, is going to be slightly lower. Going forward, we would, you know, we would look to track the number of people that we cover the NOPs plus the average ticket sizes which are increasing and plus the number of branches that are selling. You know, all these parameters will keep increasing.
Shyam, to just clarify further, we do expect our productivity per branch of SBI to go up. You rightly pointed out that, you know, we have not penetrated the customer base of SBI. There is still some leeway there for us to catch up, and increase our business through the SBI channel.
Sir, is it just data point, is that number like 2% of SBI customers have an SBI Life policy? Is that?
It is very rough, you know, because we don't have the exact data. SBI customers. I wouldn't...
Fair enough. Got it. Second and last question, just on protection, just going back to some of the earlier participants. Nine months we have got 18% APE growth, retail has been slower than group. If I look at QOQ, like Q3 versus Q2, there's actually no growth. In the sense it's flat. If I were to look at YOY on retail, Q2 was a 3% or 4% decline. Q3 is just +4%. I just want to understand competitive dynamics here, sir. I think so many of our peers now have launched the ROP product. Some of the peer 2 days back has 30% coming from ROP versus zero, three or four quarters back. Anything that you're seeing from a competitive standpoint that is leading us to lower retail protection growth? Thank you.
See, our customer base is totally different from what the others are selling to. I'm not trying to sell to the same people. The question of Somebody preferring somebody else's TROP over mine is, you know, like very vague because our agency is one of the strongest and we are there in, you know, so many banks. Really speaking when I'm pitching to the customer, I'm pitching to him and we have been selling TROP for such a long time, you know. It is probably some kind of a catch-up that many of these people may be doing on the TROP because they didn't have this product and now they are able to pitch that product or something like that. Having said that, our protection growth has been quite strong.
If you compare the particular quarters that you are comparing right now, you'll find that they have grown. You know, our protection has grown on in those quarters and that is why you may find that the comparison is like flat. That is the only reason I can ascribe to it. Our demand for protection has not been affected by any other company bringing in any product, similar product.
Got it, sir. Thank you and all the best, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Madhukar Ladha from Nuvama Financial Services. Please go ahead.
Hi. Good evening. And congratulations on a good set of numbers. I had two quick questions. One, you know, what are the margin buffers you have? I know that you change your assumptions at the end of the year. You know, I wanted to get a sense of , are there any areas where, you know, you could see some positive or negative variance, some color on that, you know, persistency, mortality, expense assumptions that could help or drag margins? That and, secondly, your agency, you know, continues to do very well, and you've beaten peers by a big margin, if I look at it over a longer duration of time. Can you help us understand what really has driven this good performance?
You know, about the margins, you know, really speaking we don't have anything to say. We have given you a color about the product that we are expecting to sell and all that, you know, it's I wouldn't like to add anything to that. About the agency, see, the idea is that we are doing a lot of things there. We have increased the agency force and now we have not yet got the entire fruit of the effort that we have put on the ground. We have, you know, increased the agency force by a huge number this year. Almost 45,000-46,000 people we have increased this year. that the benefit of that is going to come now.
Really speaking, you know, whatever we see in the agency we'll probably see the growth going forward. We are doing the right things out there. We are taking care of our agents. We could say that we are generating so much employment out there. Our training philosophy and our training methodology is very good. We have a very good sales force supervising these agents. I think these are the things where you do the right thing and you get the right results.
One more question on, you know, with the new new framework coming or at least right now in introductory phase, you know, commission caps are expected to be removed. Wanted to understand how is, you know, SBI thinking about it? Have we had any discussion? Could SBI come and increase commission rates for us?
You know, really speaking that you'll have to ask SBI, but right now we don't expect any such thing. More importantly, you know, there it's not only the commission cap that matters. It is a whole other host of things that are actually involved in that. you know, even if the caps are gone, it is not as if you can simply pay through the nose to get business. You have to have a board-approved policy, and then there will be so many other things that are to be taken into it. I don't think that it is going to change the, you know, ground reality too much.
Okay. Okay. Thank you. Thank you, sir.
Thank you. The next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.
Yeah. Thank you for the opportunity. Sir, when we see the non-par business, which you said pent-up demand led to the growth, but if you look it from second quarter to third quarter, the growth seems to be fluctuating around 950, 960 odd growth. Given the deposit rates are moving up across the bank, is it required that we need to up the IRR in the non-par product to probably drive the growth further from what you have achieved till date? That is the first question what I have.
The second question, sir, is that our ticket size in non-par is 60% of probably ULIPs. If we really want to achieve the growth what we have guided somewhere around 20%-25% is for the entire year and subsequently. ULIP still remains the core, given the ticket size is higher. Really, I mean, given this quarter growth is driven by ULIP predominantly or more importantly by ULIPs. You believe that, ULIP is core in the entire thing to manage the growth, otherwise you will have a quarter like second quarter where we struggle to grow.
No. As you see, you know, the first two quarters were almost entirely driven by non-par product. I don't think that, you know, it is we have to fall back on ULIP or, you know, that something like that. I think it's a very, very, very drastic statement to make. What I would say is that as we have said before, we will let the customer determine what he wants. If we find that, you know, the demand is not there or demand has gone down because we are also talking to the people on the ground, we are talking to the customers. It is not as if the customers are buying it blindly or something. Our people are talking to the customers.
When we get the feedback that there is a question of the pricing involved, then obviously we'll take a calibrated look at that because we'll have to look at the market, how we see the long-term interest rates going. All those things we'll calibrate, and then we'll take a calculated call on that. Right now, you know, if you tell me whether I believe that only ULIP can grow, I'm sorry, I don't think that is the correct position. The other thing is, will I say that I will grow by non-par irrespective of how what the customer wants? No, I will not do that. I will, you know, we'll try to strike a good balance between what the customer wants and what we will be able to offer. You know, that is how we'll try to do great value for the customer. At the same time, not actually, you know, burning a hole in our pocket.
Got it. but sir, are you getting an incremental feedback from the customers or your branch managers or agency channel that now you need to increase the IRR because your product IRR looks a little on, are not competitive versus the bank deposit rates?
I have not received any such feedback.
Got it, sir. Sir, a couple of more questions. One question is that there was a news article, or there was a diktat from the finance ministry, that PSU banks should avoid mis-selling. So, taking the statement on face value, do you think there could be some cautious approach by the State Bank of India to incrementally grow, given it has come from the media?
Our mis-selling ratios are the lowest in the industry. Period. I don't really need to, you know, think about mis-selling as one of the reasons for any reduction in growth.
Okay. The last one, sir. If you can tell us at the end of nine months FY 2023, what is our hedging coverage ratio? Means what are the future cash flows based on sufficiency, what you expect, how much you have hedged with all the possible instruments like forward rate agreements and CCP today?
Today, I think it's a too much of a, you know, futuristic .
No. I'm asking current coverage ratio, sir. Today, I mean, based on the anticipated cash flows, what is the coverage ratio you have today?
Yeah. We have enough hedge, sufficient hedge according to our policy.
Okay, sir. That's it from my side. Thank you.
Yes. Thank you.
Thank you. The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead.
Hello. sir, I had few questions. First is on, group protection. If I look at it on sequentially, it has actually come off. Is it coming from GTI or Credit Life? If you can split the growth numbers for both Credit Life and GTI.
I'm sorry to interrupt, but management we are unable to hear.
Yeah. I'm sorry. Yeah, the growth is mainly from Credit Life.
Okay. Can you substantiate it? How much should that be, the growth number? If GTI we are cutting down on, the kind of mix, if you can give the numbers?
Like, I think we have, you know, we'll have to give it to you later.
Okay. What is the attachment rate now? Have we seen because of the improving disbursements, has the attachment rate started moving up?
About 50%.
About 50%. That's interesting. The second question was, if I look at the data in terms of channel mix, what we have given in presentation, the ULIPs are actually down on agency channel. While are we expecting that because of the NBDC closure would have picked up. Have we any kind of KPIs we have kind of, you know, given to different channels? Because there's sharp improvement in ULIP from the banca channel, while on a year-over-year basis, there has been some decline on ULIP from the agency channel. Can we have some color on that?
Sir, there is some kind of a difference. You know, even though we would like to believe that all the channels have a similar profile of customers, there will be some differences between channels. That sort of accounts for it. Having said that, you know, ULIP demand, ULIP demand as we have seen is already there. If it is there in bank, it will also be there in agency. You know, maybe you'll see it in this quarter.
It has actually declined, 5% year-over-year. Might be last year was very strong. Could be part of this. Okay.
I don't think there is any specific reason for it.
Sure. Can we substantiate the growth from other banker channels? If you can give that number.
Yeah, I think it's 54%, we have grown in the other banks. That is other banks and other corporate agents, you know.
Are we seeing any stress? Sorry.
It's on a lower base. It's a 54% growth.
Coming from a lower base, you're kind of mentioning. Is it that the other banks have been focusing more on deposits? Is this the case? What we are hearing that deposit acquisition is a focus for few of the banks. We have SBI support, it's fine.
I think I said that we are growing faster, that is in by 54% in the other bank.
Yes, that I got it, but I just wanted to understand if there is any pressure of deposit acquisition across the industry, not particularly for in the banker channel.
Deposits, deposits, I think all the banks are now looking for deposits, I don't think it directly affects insurance sale because, you know, that would imply mis-selling. I don't think there is any. Our own ratios of mis-selling are very, very low. Lowest in the market. I have already said that to the last caller.
No, no, This was not my question on mis-selling. That I aware that it's very low next to LIC, it's lowest for us. The question was more on deposit acquisition. Nevertheless.
Yeah. There is no competition between life insurance purchasing and deposit acquisition.
Got it. Got it. The last question is on the composite license. What are our thoughts?
These are exciting times where there are a lot of changes happening. We'll take a look at, you know, what it entails and what it means, and we'll evaluate.
Sure. Got it. Thank you so much.
Yeah, thanks.
Thank you. The next question is from the line of Dipanjan Ghosh from Citigroup. Please go ahead.
Hi. Good evening. Just a few questions from my side. First is you have reported very strong growth in the individual annuities business. Just wanted to get some sense of the price sensitivity in that segment. Are you seeing some pressure, especially when the market leader has been consistently raising rates? Second, you mentioned about the new par product. Just wanted to get some sense of the margin profile on that product compared to your other products that were there earlier. Last, I think, on the SBI channel part, I think there have been a lot of discussion in this call also. You have mentioned that your attachment rates have been going up. You know, at least on a medium-term basis, what is the strategy to increase the mining of the captive customer base that SBI is setting out there? You know, are you trying to deploy more manpower or is it just the ecosystem benefits that you want to accrue? Just wanted to get some perspective on these three parts.
Yeah. The first point I actually wrote. I'm sorry I was already with note down. What was the first question?
The first was on the individual annuities business.
Yeah. Sorry. Yeah, that's right.
No, annuities have been growing, you know, throughout the year and we have changed the rates couple of times. In IT, there has been strong demand across all areas and across all channels. Annuity has been growing. It is not so much rate driven, if you ask me very frankly.
Coming to the par product, you know, so the margins are positive. It's a, it gives us a, delivers a good margin. You know, for any mix that we have, I think it's always good to have, you know, offer all the kinds of products to the customer because the traditional products, especially par products, have a very good role to play in both insurance and also savings build up. These are very good products. This product is, you know, we've got new features in this product. We think it will do very well. That, that is as much as the par piece is concerned.
SBI, see what happens is that SBI has a lot of customers and, you know, insurance awareness is something which we are trying to create. As and when we are able to create more and more awareness, more and more demand comes and we are able to do better. I think, you know, that is one of the things. The other thing is of course SBI does a lot of analytics on its data and you know they also come up with who will buy what kind of thing. They have a very strong technology back-background, so.
All right. Sure. Can I squeeze in one more question?
Yeah, sure. Go ahead.
Just on a non-par, you know, let's say over the past few quarters, over the past three, four quarters, what has been a change in, let's say, tenor, pay variant between regular or single or payout variant between lump sum, income variant, I mean, or ticket sizes? I mean, if you can just give some color on, you know, with the rising rate regime and questions on deposit mobilization. How has the customer behavior changed in terms of product constituents or product contours out there?
Well, the income product has taken up a significant part of the growth that we have delivered this year. We were among, you know, later players where the pent-up demand was large, and that trend continues till now. The income variant has more demand than the lump sum variant for now.
If it just want to, you know, get some sense on sequential basis, have you seen any change, let's say, over the last , let's say 60-120 days or something?
No, no. I think what happened in the first day of the last financial year, we launched the income plan. We do see a lot of attraction, so income going up and then endowment, so both are. Last nine months, we have not seen any change in the mix between the income and endowment. There are different customer who are looking for the endowment and different for income. Both the need we are providing. Only one benefit we got in this is that now we have a complete suite in the non-par income side, both in income and endowment and annuity. I think that's where change happened. To be honest, last 128 days or last 10 weeks, we have not seen any change on that side.
Okay, sure. Thanks and all the best.
Yeah, thank you very much.
Thank you. The next question is from the line of Nidhesh from Investec. Please go ahead.
Sir, thanks for the opportunity. Firstly, can you talk about operating variances, experience during the first nine months on persistency and mortality?
See, as you know, we have not disclosed this AO variant. We normally disclose in the year-end. Once we declare, then we'll be able to comment that. Just to give confidence to you that, all three operating variance, persistency, mortality and expenses, there is a positive variance coming from. There's not a single operating variance where you see any challenge in terms of the profitability perspective.
Sure. secondly, sir, at the SBI bank, how many manpower, bank we have deployed?
No, See, I'll tell you, we have 54,000 SBI people who are selling SBI Life products.
Okay. We don't have any manpower supporting those people.
We have. We have manpower. We don't want to go into that detail.
Okay. Okay. Lastly, if I look at the VNB margin walk, there is a positive benefit of economic assumptions. If we look at it, as interest rate increases, our ULIP margin should come down, and since non-par is already hedged, there should not be any margin uplift. What is giving us margin uplift because of interest rate going up in nine months?
See, the two things happen. You see this, nine months is AUM move up significantly. Secondly, we do sell the higher non-par product proportion. You see non-par product you must have. Thirdly, that we are able to sell the product, with the customer in the growth without repricing. We get, able to optimize the interest rate uplift in our margin, and that's the reason we're getting the upside on that.
The, I think all those things should be a part of new business profile, right? As interest rate moves up, ideally the margin should come down.
No, it's not necessary because in case of ULIP, you'll get the down. In non-par products or even the traditional one, you'll get upside because you are guarantee certain thing and you're getting certain results. Interest rate up, you'll get a positive uplift in that side. ULIP, you'll get a negative variance. Depending on the composition of your margin, V1B composition, you'll get the uplift. We have the very positive composition coming from the non-linked products. That's you're seeing the positive variance.
Okay. Okay. Got it. Got it. Thank you, sir. Thank you. That's it from my side.
Thank you.
Thank you. The next question is from the line of Amit Jain from Axis Capital. Please go ahead. Amit Jain, please go ahead with your question. Your line is unmuted.
Can you hear me?
Yes.
Yeah.
Hi, sir. Thanks for taking my question, sir. I had a question on margin. If we see that your new business margin for H1 was 31%, whereas for 9M it is 29.6%. Is this decline is due to some change in assumptions, or are you seeing some margin pressure on some particular product? For full year, will it be fair to assume that we should take a, like, sort of 30%, 31% margin? Is it fair to assume?
No, no. Basically, the change happen only on account of the product mix change. If you see the six months versus nine months, you see the ULIP proportion increase. ULIP has the margin lower than the company average margin. That's the reason we see some movement happen from the 31% to 29.6%.
Those are change in assumption. Okay. For full year, will it be fair to assume that it will be in this range around 30% also?
Yeah, hopefully. That we always keep saying that margin will be, w e guide the VNB and margin outcome, but we expect the margin will be around in range of 28%-30%, up and here and there. Partly, maybe you can assume that what margin we declare will be able to maintain that.
Sure, sir. Thank you, sir. Thanks.
Thank you. The next question is from the line of Deepika Mundra from JP Morgan. Please go ahead.
Good evening, sir, thanks for taking my question. Sir, just on a slightly more medium-term perspective, how at the product level, do you see margin expansion opportunities in specific products, and, you know, which would those be?
It's difficult to comment, Deepika. I think in my part, scenario, depending on the customer demand, I think, if you're able to hold up, then there will be certain expansion happen. Secondly, in case we revisit our assumption and because we see improvement coming on the percentage side and also on mortality side, so there is a possibility some expansion happen. Thirdly, which is most important, that we continue to reprice the product and coming with a different segment. If there we able to do some particular segment which having higher margin, I think we can get upped on that side. But not specific to any, difficult to comment on any specific product, but again, definitely product line there will be possibility for operating the margin.
Understood, sir. You know, with slightly moving towards a more open architecture in the industry, do you see cost of, you know, new customer acquisition going up or do you think that, you know, with SBI, you don't as a majority channel, you don't face that kind of, expense pressure?
See, SBI being a major channel is, you know, a reality, so, you know, I will not comment on that. If you look at our cost structure, the way we have structured our business, both banca and agency, we have lower costs than other players. That advantage we will hope to carry forward. The other thing is for acquisition of new customers. What happens is that if there are expectations of higher payoffs from partners who we may try to acquire or something, then we'll have to see whether that is going to be pro-profitable for us. Obviously, you know, that we'll have to take it case by case.
Got it. The last one, on health insurance, if, any thoughts on, you know, if this is allowed for life companies, how can you leverage the opportunity?
Yeah. Health and life, you know, so mortality, morbidity, the actuarial side of it, there are a lot of commonalities. There is a lot of synergy out there. Y ou know, that is something worth looking at. Having said that, we'll have to take a view looking at our business model which is right now and then to see whether we want to have a totally different business model going forward. That is something which we will, you know, sort of, evaluate internally and then if such a thing possibility comes up, then we'll see what we need to do.
Okay, sir. Thank you so much.
Yeah, thank you.
Thank you. The next question is from the line of Nischint Chawathe from Kotak. Please go ahead.
Yeah, hi. Just one question from my side. On the VNB walk, can you just sort of call out the, you know, the negative change in operating assumptions? What exactly?
See, I'm sorry. Just to clarify that we have not make any assumption in this period because we're showing this walk from the YOY December 2021 to 2022. In March we have made the assumption changes, that corresponding effect is reflecting this walk. If you remember in March, we had just made the changes on account of the insurance rate and their perspective. Absolutely there are no change in any assumption as for this walk.
Yeah. Got it. Got it. That clarifies. Thank you.
Thank you. The next question is from the line of Supratim Dutta from Ambit Capital. Please go ahead.
Thanks for the opportunity. Just wanted to understand on the other channel that has declined year-over-year by around 30%. Just wanted to understand what's happening there. The second part of that question is, you take into, that channel includes all the non-SBI banks, and you said that has grown by around 50%, but just wanted to understand what is the strategy there to increase the APE share from 3% to 6% or 10%. If you could please help me with those two questions.
Yeah. The other bank channel I, can you repeat the question, the second one?
Yeah, sure. The second one was that, you know, currently the non-SBI bank channel that is around 3% of your APE, it's growing at 50%, but it's still very small and you have around 10,000-12,000 branches. Just wanted to understand how we are looking at penetrating into that branch network.
Yeah, yeah. I'll take that first. Basically, you know, we show the potential to the bank and then we also, you know, we do the same, kind of thing that we do always. The branch, the bank teller or the bank employee will pitch to their customers for insurance, you know. You know, So we develop them, we develop their capabilities, we give them training, we give them the knowledge, we show them the product. We show them how, what product will be suitable for which customer, and they go and they do the selling to the customer as they come across the counter or, you know, whichever way they would like to do that.
As you can see, the growth is huge, and that is on a smaller base. However, if you look at the last two years, we have been growing at this frenetic pace both the years. You know, there is nothing which prevents us from continuing to grow at this kind of a rate for some more time to come till the, you know, low-hanging fruit, as so to say, is all taken up. The group business is where the growth has not been very high this quarter, and that business seems to be lumpy, group one business. That's why you see outside of the individual business where we are showing good growth in other channels, the group business is why the overall growth looks muted.
Yeah. Yeah. If I could just, you know, ask one follow-up question to your answer on that, you know, non-HDFC Bank channel. Just wanted to understand, given, you know, these are banks which are in open architecture, so you have, you know, other life insurance companies also competing. How can you impress upon that, you know, bank seller to sell HDFC Life policies and not other company policies?
See, we don't tell them not to sell other bank policies or other insurer policies. That is the first thing. We show them the product which is good. We show them our best-selling rates are the lowest. We show them that our delivery is the best. We show them the strength of the company. We have been there for 21 years, and we've been, you know, we were the first to start making profits. We have been continuously improving our delivery, our service, and our products. That sort of, you know, really works. I mean, if you go back to the basics, you know, you don't need to be too cynical about it. Actually, good work on the ground will actually get you good business.
Got it. Thank you, sir. Thank you.
Yeah. Thank you a lot.
Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Yes, sir. Thank you for taking my question. Just wanted to understand this on the persistency side, we've seen a drop in over the first half for the 13-month persistency. Secondly, on renewal premium growth, it seems to lag the one of the large peers, which has reported yesterday. Just wanted to understand that.
Which growth?
The renewal premium growth.
Okay.
Is lagging HDFC Life to be specific here. Just wanted to understand, you know, how, what would be explaining that slower growth in renewal premiums. I guess it could be linked to the persistency question which I asked earlier on the 13-month persistency.
Very, very simply, the persistency has not fallen down.
I'm looking at 13 months, and I'm looking quarter-on-quarter.
Yeah. Our persistency in nine-month FY 2023 it is 84.6 against 83.9 last year.
I know. I'm looking quarter on quarter, 85.2 for the first half.
Actually, you should not look into the.
Yeah. So the behavior of each of the quarters is different. If you look at March, every time March will be higher than December or June or September. That is how you look at it, because a lot of people, you know, end up paying up by March. There is a, you know, there is a tendency to sort of delay the payments, but in March it all gets crystallized. That is the trend that we always see.
Right. year-end we should have similar persistency on a year-on-year basis.
Yeah, absolutely. We would want to improve the persistency over last year.
Right. Sir, secondly would be on the renewal premium growth, at 15% year-on-year.
Yeah. Renewal premium growth, you know, I don't know about the peers. You know, I don't look at the peers' data so much in detail, so I really don't know about them. What I can say is that the renewal premium growth will depend a lot on what was sold last year. You know, so to that extent, if whatever was sold last year, we are able to get the collection to the same efficiency that we had last year or better than that, we are happy with that. Let me tell you that we are at a better collection efficiency than last year. Persistency will drive renewal premium. Renewal premium is outcome of persistency.
Right. Yeah. That's, why I linked the two questions. Now you said about the product mix. Would it be that, you know, we've been increasing our share of product protection and would that be also a cause for the renewal premium not to grow that far?
Protection, we would want to increase the share of protection .
The renewal in protection would be lower. Basically, is persistency in protection lower?
Not really. Not really. We have various products with various persistencies, but on average, I think it all levels up.
Right. Thank you so much.
Yeah. Most welcome.
Thank you. Ladies and gentlemen, this will be the last question, which is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Hello?
Yeah. Hi.
Yeah. Am I audible? Yeah.
Yeah, yeah.
Can I get a sense of, you know, what the back book, how much the back book surplus has grown and versus the new business stream? Your surplus has grown about 50% year-over-year. If we were to exclude the COVID impact, which was there last year, in the ninre months, and I'm looking at nine months numbers, not only for the quarter. What would the surplus growth be if you could give that data point?
Normally we don't disclose this thing, but you can make a sense that we are growing faster than compared to last year, and our profit is also growing. This means our back book is generating enough surplus that not only absorbing our for the new business, but also helping to grow the profit as well. A very healthy growth in coming profit is coming from existing book.
How much has the new business stream grown by?
We don't disclose that. We don't disclose. It is similar to the AR as well. Sometimes depending on the product mix and all keep changing and we don't disclose. We don't want to comment on that.
All right. Thank you. All the best.
Thank you very much.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Mahesh Kumar Sharma for closing comments.
Thank you very much, ladies and gentlemen, very patient hearing for very interesting and very intelligent questions, and we hope that we have been able to answer your queries. If there is anything for a follow-up, you can always get in touch with the company. Once again, thank you very much. Stay protected. Have a good night.
Thank you. On behalf of SBI Life Insurance, that concludes this conference. Thank you for joining us and you may now disconnect your lines.