Ladies and gentlemen, good day, and welcome to the ICICI Prudential Life Insurance Company Limited H1 FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anup Bagchi. Thank you, and over to you, sir. Hi, good evening, and welcome to the results call of ICICI Prudential Life Insurance Company for the half year ended September 30th, 2024. I have several of my senior colleagues with me on this call. Amit Palta, Chief Product and Distribution Officer, Dhiren Salian, CFO, Judhajit, Chief Human Resources and Operations, Deepak Kinger, Chief Risk and Governance Officer, Manish Kumar, Chief Investment Officer, Souvik Jash, Appointed Actuary, and Dheeraj Chugh, Chief Investor Relations Officer. Let me take you through the key developments during the quarter before moving on to discuss the company's performance. ICRA and CRISIL, the domestic rating agencies, have reaffirmed the rating of our existing INR 12 billion subordinated debt program as AAA Stable and CRISIL AAA Stable, respectively. The board, at its meeting held today, has approved raising additional capital by issuance of non-convertible debentures of up to INR 14 billion in the nature of subordinated debt instruments in one or more tranches over the next 12 months on a private placement basis. The additional capital raise will further augment the solvency position of the company and aid the ongoing business growth. I'm also happy to share that our available-to-sell products have been redesigned in line with the new product regulations, keeping the interest of customers, shareholders, and distributors in mind. Impact on customer benefit has been minimized, except for where necessitated due to the yield curve changes. On the distributor front, we have been working on the various propositions, such as clawback of commission on non-persistent policies, progressive commission structures, and reduction of commissions. Discussions with partners are still ongoing, and we believe that these will evolve. We have been leveraging our experience on level commission structure in GPP Flexi with Benefit Enhancer and trail commissions in Platinum product in these conversations. The impact on the company is also mitigated through a combination of measures by offering longer tenure products, higher sum assured product multiples, and increasing rider attachments. We believe that such customer-centric changes will boost the industry's long-term growth. For us, the comparatively lower share of non-linked products on our business mix, existing experiences of GPP Flexi Benefit Enhancer and Platinum gives us confidence that the impact on our profitability due to the change in surrender value norms will not be material. During the quarter, we also introduced the 3C Framework to deliver the sustainable VNB growth. The presentation detailing the framework is available on the exchanges and the company's website. As a company, customer centricity has been at the core of everything that we do. We aim to deliver superior customer value for our core competency of comprehensive product suite, seamless onboarding and sourcing by a diversified distribution network, and best-in-class servicing and claim settlement. Simple technology and analytics are the three catalysts that help us utilize the full potential of our competencies and improve the overall customer experience. We believe that the 3C Framework of customer centricity, competency, and catalyst will help us deliver sustainable VNB growth by balancing business growth, profitability, and risk confidence. We delivered RWRP growth of 33.9% year-on-year in Q2 FY 2025, and 39.2% year-on-year in H1 2025, outperforming both the private and overall industry over the last four quarters. With this, we have gained 1.1% primary market share on RWRP basis, to end at 10.3% in H1 2025. Our focus segments, annuity and retail protection, grew by 99.5% and 17.2% year-on-year, respectively, while new business grew by 54.5% year-on-year on H1 2025. In line with our proprietary channel, agency and direct together have delivered 45.7% APE year-on-year in H1 2025. The overall APE grew by 26.8% to INR 44.67 billion, and number of policies increased by 12.5% year-on-year in H1 2025. 48% of our policies were issued on the same day for the same line of business in H1 2025. Notably, we are also the first insurer to pay out commissions on the same day for our distributors. We continue to deliver on our claim promise with leading claim settlement ratio of 99.3% in H1 2025, settling with an average turnaround time of 1.2 days for non-investigative individual claims. Our 13-month persistency stood at 89.8%, and 49-month persistency stood at 69.9%, a testimony to our customer's continued trust in us. VNB grew by 4.2% year-on-year to INR 10.58 billion in H1 2025, with an APE of INR 44.67 billion, the margin stood at 23.7%. Embedded value grew by 19.4% and stood at INR 460.18 billion in H1 2025. Our business growth and profitability have been delivered with risk confidence and is exhibited in a strong and resilient balance sheet. We continue to be the highest-rated Indian insurer as per the two leading AM Best rating agencies. We successfully retained our double A AM Best rating from AM Best, which also makes us one of the top-rated life insurers in India. We have also been conferred with awards in the areas of digitalization, customer service, and claim management by various industry circles. Our complete list of awards won during Q2 FY 2025 is presented on slide 53 and 54. Thank you, and now I'll hand it over to Amit to take you through the business updates. Thank you, Dhiren. Good evening, everyone. Now let me talk about the business performance for H1 FY 2025. Our total APE grew by 26.8% year-on-year to INR 44.67 billion, and retail APE grew by 32.7% year-on-year to INR 38.27 billion for H1. Contribution from linked savings product to overall APE increased from 42.4% last year H1 to 51.6% in H1 this year, on account of customer preference shifting towards unit products from non-linked products, given market buoyancy. Non-linked savings contribution to overall APE declined from 26.6% last year H1 to 18.1% current year H1. The overall protection APE stood at INR 7.76 billion and contributed 17.4% to overall APE in H1 FY 2025. Retail protection business grew by 17.2% in H1 and 30.7% in quarter two of FY 2025 on year-on-year basis. Credit life segment has done well as we continue to add partners and introduce propositions aligned to the various lines of businesses of our partners. Coming to the group term business, there has been a continued and significant trend of price reduction in this area, largely attributable to increased competition. As a long-time player in the industry, we possess a deep understanding of this market, and our underwriting strategy remains focused on selecting businesses which meet our defined risk-reward expectations. Annuity business contribution increased from 6.2% last year in H1 to 9.7% of overall APE in H1 current year. Protection and annuity are our focus segments, which together constitute 48.2% of the new business premium, and we expect it to continue doing well. Agency business APE grew by 51.1% year-on-year and contributed 13.4% to overall APE and 35.5% to retail APE in H1 FY 2025. Direct business APE grew by 36.3% year-on-year and contributed 15.5% to overall APE and 18.1% to retail APE in H1. Together, agency and direct business contribute 45.9% to overall APE and 53.6% to retail APE in H1 FY 2025. We will continue to invest in our proprietary channels to drive business growth further. bancassurance business APE grew by 30% year-on-year and contributed 29.1% to APE mix. Partnership distribution and group business contributed 10.6% and 14.3% respectively to overall APE. We continue to build capacity and have added more than 29,000 agents during H1, spread across geographies. We have tie-ups with qualified banks, with access to approximately 22,000 bank branches and more than 1,200 non-bank partnerships. To summarize, our product, process, and distribution are completely aligned with one goal, that is to deliver value propositions to our customers. We continue to focus on improving customer experience through technological and digital integration in our day-to-day processes. We strongly believe our 3 C Framework elements comprising of customer centricity, competency, and catalyst, will play a crucial role in delivering sustainable VNB growth by balancing business growth, profitability, and risk improvements. I will now hand it over to Dhiren to talk you through the financials. Thank you, Amit. Good evening. Now let me take you through the financial metrics. The VNB for H1 FY 2025 was INR 10.58 billion. Given our APE of INR 44.67 billion, the resulting VNB margin was 23.7%. The relevant comparison of H1 current year margin should be with the FY 2024 margin, as it captures the impact of all assumption changes done on March 31, 2024. The movement in margin is primarily due to two factors. One is the shift in the underlying product mix towards unit link on account of the continued market buoyancy and the decline in the non-participating business. While quarter-on-quarter, the overall product mix may vary based on the customer preference, the wide range of our distribution partners spread across geographies with access to varied customer segments, will help us sustain a balanced product mix. Second, on the macroeconomic front, over the past few months, G-Sec yields have declined. Given the product changes necessitated in quarter two in FY 2025 due to the new regulations, we had limited ability to align rates in our non-linked and annuity portfolio in line with the market movement in G-Sec yields. Starting October, we have started aligning product rates with prevailing G-Sec yields. Coming to expenses, our cost to premium stood at 22.0% in H1 FY 2025. Cost to TWRP stood at 29.4% in half year, which has come down from 32.6% in quarter one. Our cost to TWRP on the savings side of business stood at 17.9% in H1, which has come down from 19.2% in quarter one. Our objective is to bring efficiency in savings side of business while we continue to focus on growth in protection business. We have been investing in people, technology, and process improvements, and the increase in cost towards these elements should be seen from the point of view of investments that we have made in our capabilities rather than pure operating expenses. That will deliver operating leverage in the future. On the other financial metrics, the company's profit after tax for half year stood at INR 4.77 billion, an increase of 5.8% year-on-year. Our embedded value grew by 19.4% year-on-year and stood at INR 160 billion at September 30, 2024. Assets under management stood at INR 3.2 trillion, and our solvency ratio continued to be strong at 188.6% on September 30, 2024. Thank you. We're now happy to take any questions that you may have. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. 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. Our first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead. Hi, sirs. Good evening, and thank you for the opportunity. So three questions from my side. First, I wanted to understand a little bit, you know, how to read this, you know, how the margin development has been in the first half. So, just wanted to compare the margin which you had in first quarter and in first half, and if I look at the product mix, that is broadly similar across, you know, these two time periods. So, you know, also, if I look at your cost ratio, which you have disclosed, you know, this has kind of remained broadly stable. In fact, I think EOM ratio has increased, I mean, improved marginally as well. So I just wanted to understand that from 1Q to 1 H, what is the factor that is driving the margin, margins, downwards, or whether it is a factor of that at individual product level, some move has happened due to designs, et cetera. So if you can highlight on the same. Secondly, on the channel side, wanted to understand a couple of things. One is on the partnership distribution channel, so that is still showing weak trends. So, is this, you know, what is the challenge there? And is credit life, does credit life get counted here, or is this particularly the retail product? And if that is the case, then, you know, what could be the reason why this weakness that is there? And also, in the, regarding the channels, wanted to understand how, you know, ICICI Bank's premium development is playing out. Is it still at a similar level? Yes, so these are my questions, sir. Thank you. Thanks, Swarnabha. This is Dhiren. Let me pick up your first question on quarterly movement. Part of the movement is actually the underlying mix itself. You would have seen that the unit-linked, while it has been steady, there is movement across in the non-linked segment. Participating has done better than the non-participating, and that has had an impact on the in terms of the overall margin flow. In addition to this, there are elements around the yield curve that we had experienced earlier, where given the fact that we had product changes that had to be done in this current quarter, we had limited ability to change the rates. Of course, starting forward into October, we started realigning these rates. Understood. So- Change, as you see, is quite negligible, Swarnabha. It's marginal movement across the quarter. Sure, sure. Just one follow-up, Dhiren. Can you split or give us some color on the par/non-par split in the non-linked portion? Yeah, roughly two-thirds, non-par lift take. Okay, sure. Over the course of the period, we've got a little more par than the non-par as compared to the previous periods. On your second question on partnership distribution, this is retail business. This does include trade-like business. Amit? Yeah, so on partnership distribution, I think first of all, this partnership distribution over a period of last 4-5 years, has been delivering a CAGR growth of mostly a round 20% for us very consistently. And what we see as a trend is temporary in nature. As you know, that systemically we saw a much larger proportion of business coming from unit-linked products, and typically, partnership distribution is where you see prioritization done on non-linked business. So they technically did not have the tailwind, which was available to the rest of the businesses because they prioritized non-linked business. That's one. Two, we are quite diversified in the kind of partnerships that we have, and hence, you know, few months or few quarters, we may have performance volatility in one or two partners, but that is fine with us. We are adding new partners. We have added close to 20-odd partners within H1, which has added to our overall base of distribution. And we believe that after the surrender guideline changes settling down and markets normalizing, these other businesses picking up, part of the distribution will come back on track overall. Coming to ICICI Bank premium levels, ICICI Bank is now quite consistent at INR 100 crores, INR 100, INR 110 crores on a monthly basis. So they've been quite consistent. The growth may vary depending upon what the growth was in the previous year quarter, similar quarter. Their focus has been on protection and annuity, and on protection side of the business, they are growing quite significantly. But on the overall top line, they are quite consistent at INR 110 crores level. There's no change in our organizational strategy when it comes to bancassurance with ICICI. Okay, that's very helpful, Amit. So just one quick follow-up. So in the new scheme of things, in this new surrender value, you know, post this regulation has come through. Now, given that, you know, if ICICI Bank is steady, then the 27% growth in your bank is largely driven by the non-MPI partners. So just wanted to understand, you know, the contours of the conversations in terms of commission payouts, how do you see that trending? And can there be a possibility that our payout levels, you know, can change due to, you know, how the competition is, you know, would also be having, you know, terms with those distributors? So if some color on that would be very helpful. Yeah. So we've been conversing with our partners, and I guess, first of all, I really acknowledge that most of our partners are quite understanding of the situation and the philosophy behind this entire regulatory change. And the unanimous understanding with the partners is to ensure that we try to protect and get the best for the customer. And we are working with our partners to work out various models which could be around clawback of commissions, if paid in full or deduct commissions, or even reduction in commission in certain products, where to protect customer interest, that is the only option available. All these options are being explored, and I'm sure over a period of next couple of weeks, we should be able to take it to closure. But good news is that, most of our partners are quite receptive, to the idea of protecting customer interest and keeping proposition paramount. So from that perspective, we are quite comfortable. Okay, sir, that's very helpful. Thank you so much. I'll come back in the queue. Thanks. Thanks a lot. The next question is from the line of Prithvish Uppal from Elara Securities. Please go ahead. Yeah, hi. Thanks for taking my question. So firstly, just wanted to understand on the annuity side. I think one of the competitors had highlighted that there are some concerns around the pricing. So just, you know, we've reported a good set of numbers in annuity. So, you know, what is the outlook for this segment, given where the competition is? So that is the first, you know, part. Second part would be related to the group protection. So here, you know, there has been degrowth, so is this purely credit life-driven, or there is some element of group term also? And it has the pricing environment for group term improved. And third question would be around, you know, the ULIP. At a product level, has the margin profile of ULIPs, you know, increased given the higher share of sum assured that, you know, companies have been selling? So to that extent, you know, would that have also had some impact in terms of negating the margin decline, you know, with on account of the ULIP mix increasing? So these are my three questions. Yeah, so I'll start with annuity. See, it's on a base of last year, we did not have Benefit Enhancer as a proposition. If you remember, we last year, towards the last quarter, we launched our Benefit Enhancer as a proposition with a belief that customers who had apprehensions about buying a life insurance product on annuity platform. Which typically is a segment whose age is more than fifty years, was not buying insurance because of the loss of, or because of the apprehension of losing principal in case he was to not buy, or not be able to pay premium for second year. So that opened up a lot of customers coming and buying annuity business, annuity products, who were probably earlier not buying. So that segment opened in quarter four, and that continued. That trend continued in quarter one as well as quarter two. In absolutes, in fact, quarter two did even more than what we delivered in quarter one. Essentially, on the base of last year, we did not have Benefit Enhancer as a proposition, which is very different. So in comparison, you would say that, you know, the growth is good because, but that growth was largely impacted with the new product introduction that we did in January, March. On rates, we were just comparable to the market, not that we were any different in terms of pricing. So it was less of pricing, more of the uniqueness of product, which actually got this growth delivered for us. That's on annuity. On group protection, you are right. Group protection, if you were to split it, credit life on a non-MFI side is doing fairly well for us. MFI, all of us know kind of challenges that we have on disbursements, so there is a bit of an impact with quarter two. The quarter one numbers were okay. Group term is where we have seen pricing pressure, like I mentioned in my opening script as well. On sum assured side, we have continued, we have started growing now on group protection, group term. However, on premium, because of pricing pressure, it has delivered a little bit of a degrowth for us. So that's how group protection combined between credit life and group term is showing a relatively muted growth. That's largely on account of MFI business, credit life MFI business, as well as group term business. Third question on the ULIP, you mentioned rightly that, you know, typically, if a consumer preference is tilting towards ULIP, one of the ways of maximizing margins is either selling a longer tenure product, two, attaching riders and increasing commission multiples, three, to start with, sell a high commission product, and fourth is about, you know, just ensuring that you have the same getting delivered in a composite manner. So all this leads to maximization of the underlying products profitability. This is a journey that we have been following for the last couple of quarters, and that is something that we want to believe, that within the line of business, where the margins are relatively low, these three steps on longer tenure, high commission multiples, and better rider attachments will help us maximize margins within the category. ... Prithvish, sir, you have any other questions? Yeah. No, that's it. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead. Hi, thank you for the opportunity. I have two questions. So first is on the net commission that I can see from the PNL for either from you look at 1H, you look at 2Q, there's a very sharp jump, and we thought there was a sharp jump which already happened last year. So even on that, there is a very sharp jump over there. So wanted to understand what products, product segments, what channels, what is driving that? And second, on the VNB margins, now, we closed first half at 23.7%, and assuming we continue the same run rate of 20%-25% APE growth, where do you see the second half margins landing up? Should we expect 50 basis points or 70 basis points cut from the current 1H margins in the 2H? Or how should we look at the margins? Or you can just give us an outline on how to look at the margins for the full year of 2025. Hi, Shreya. Dhiren here. Yeah. So, the commission rate increase, if you recall, quarter one last year is when we started implementing the new set of commission across partners. Quarter one was quite low to that extent, but these commission structures started to get implemented over quarter two, and they got into full force in quarter three. Which is why as you look at H1- H1, you will see an increase of commissions across the two periods. So they're not directly comparable. Okay. I think if you look at it sequentially, you'll start to see that, commission rates are broadly in line, at a product level. Yeah. Yeah, correct. Got you. Yeah. Okay, sure. Amit, sure. That's the reason why on a year on year it looks quite elevated. Okay, okay. Got it. But you also note that we've been able to look at non-commission expenses, and we're starting to see the decline there as well. Yes, correct. On your second question on VNB margin, do we have a forecast? No, we don't have a forecast. We are not guided by VNB margin. We are looking at growth in absolute VNB. Based on where the customer opportunity is, and we've seen this in this particular half year, and actually over the last nine months as well, the market buoyancy has led to an increase in the unit linked product. We're quite happy to participate in the opportunity, quite happy to sell our products to our customers in the form that they would like. There are no artificial cycles that we want to put in terms of product mix by itself. And therefore, we would let the customers' choice dictate where the final margin bands are, because that would be where the product mix ends up at. Yeah, but I was asking more from the point of view, when what timeline do you think we will get a clarity about the margins from the new surrender value product? I know that it's only 20% of your mix right now, but even on that product segment, are we any time close to getting a, you know, clarity about how the commission structures will be finalized, how the margins for those products will look like? So I would expect the commission structure conversation to continue through this quarter. We have already had initiated conversations and come to conclusion with some of these partners. But, we still have, space in terms of closing the conversation. I expect that the market will settle over this particular quarter in terms of, the commission structures. As we said, the way that we've been approaching this problem is to ensure that it's a win-win situation for all three parties involved. We're quite mindful of the fact that, one cannot take away the customer's, return. And therefore, some of the changes that you're seeing in the IRRs have been necessary only due to the yield curve changes. The conversations with distributors around the three lines that Amit also spoke on, deferment of commissions, progressive commission structures, clawback of commissions where required, and of course, where needed, we have actually proposed a reduction in commission. My sense is it will take this quarter to settle down because I believe the entire market is having this conversation so let's see how that evolves, Shreya. Yes, yes. Very useful. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Supratim Datta from Ambit. Please go ahead. Hi, thanks for the opportunity. My first question is on the growth side. So we have now seen for quite a few quarters that growth on the agency side and direct channel has been fairly strong. Just wanted to understand from here, what gives you confidence that, you know, this growth, you can sustain this growth over... And I'm not talking about, you know, the next quarter or two, but, you know, if I'm looking at it from a 2-3 year horizon, what gives you confidence that this growth can sustain, particularly considering that in, you know, post the surrender charge regulations, commissions could actually go down in some of, you know, particularly in the agency or in a non-ICICI Bank channel? So that would be my first question. The second was one was on the variable annuities. Now, this has been one product which the regulator has allowed through the new product regulation. Just wanted to understand that, you know, is this a product that you're looking at launching? And, you know, how would you be hedging the risk in this product? You know, if you could give us some color on that, and that would also be very helpful. Thank you. Yeah. So, coming to consistency that you spoke about on agency direct business as well as non-ICICI business, as you can see that agency direct business, we have been speaking on the investment in capacity that we have been doing for last two to three years now very consistently, both in terms of people that we have deployed, capability that we have created, the formal learning architecture that we have, that we have institutionalized now, both for our people as well as for the entire capability framework that we have created for our advisors, as well as our employees, both in proprietary as well as agency. It's something which has taken very long for us to put up a very strong and robust process, which gives us a belief that what we created, over a period of nine to 18 months, on the capability side, will really stand in good stead for us in holding on to our growth, specifically in these two. Not just this, we are also looking at going very granular and not looking at a strategy which is only at a matrix level. The strategy has been now created at a micro-market level, and as you know that India is very, very diverse. Every market is different and unique, and the effort is to go and understand local unique markets, which we call them as micro markets, and create strategies which are unique. And hence, we believe that with heterogeneity of micro markets that you have in India, there will always be an opportunity area which will play out and deliver growth for us, because not all markets are similar. So I think the heterogeneity of the strategy at the micro market level, and the learning capability that we have created will hold us in good stead. And apart from that, even in our proprietary distribution channel, which we call it as proprietary sales force, direct sales force, we are seeing a good traction, in the alternate, sources of businesses that we are opening and few experiments that we are doing, which gives us, good confidence that we will continue to grow on that front. On other partnerships, multi-insurer partnerships, of course, the paramount will be that, eventually the main objectives of our partners, whether corporate agency or brokers or banks, will actually be driven by their own internal objectives of, continuously working and innovating ways and means of reaching out to untapped markets within their customer segments. So to that extent, we will be not following one strategy to stay on path of growth. We will be governed by the strategy that will be chosen by our partners, and I'm sure revenue growth for them is as important to them as it is to us. So we'll be governed by different strategies by different partners. We don't want to have our strategies to decide what we want to do. We would rather get our partners to decide what they want to do to maximize their revenues. I'm sure with the capitalization on revenues, the growth will be protected by doing things differently and reaching out to untapped markets. Got it. So, on your second question on variable annuity, I think that's a great opportunity. But frankly, at this point, we don't have a product. We continue to explore what are the structures that we could put in place to provide this product to our customers. And again, we also have to evaluate what are the hedging strategies one would have to take as you create these products. So at this point, this is still a work in progress. We don't have a product ready at this point. Got it. And I have just two follow-ups. One, Amit, could you clarify how many advisors have you really added over the last two to three years, and how many do you plan to add going forward? And, you know, Dhiren, if you could give us some clarity on what would be the negative carry impact from the NCD that you plan to, you know, launch, in the second half? That would be very helpful. Yeah. So, on adding advisors, there's a focus on not just adding licensed advisors to our base, which actually has grown by almost 60% in H1, but also to look at distinct profiles of advisors who can give us access to specific customer profiles for whom we are designing our products. So it is actually, you know, when you create products, you have customers in mind, and then you search for the right profile of distribution to get your product available to the right distribution set. So I think, not just we will grow on the number of advisors that we license, but we'll also endeavor to reach out to the right profiles to give us the access to the customers most appropriate for our products. So that is one area which we have really invested, and quite a few profiles have been, you know, successful in terms of acquisition and licensing. And we continue to work on that path and see how it progresses. So over the last two and a half years, I think we've added over a lack of agents. So the first number that comes to mind, can check that and come back. On your question on what kind of carry do we have on the sub-debt, it's going to be very, very marginal. It's not something to worry about. Got it. Okay. Thank you. Thanks. Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead. Hi, good evening. Thank you for taking my question. Just, a couple of things from my side. First, can you quantify the impact of, you know, not readjusting the IRRs on the non-par products, in Q2? So that could give us some sense of what the more normalized margin in, you know, Q2 and first half would be. Second, you know, as renewal premium continues to sort of lag and is just growing at about 3%, plus we're also seeing continued outflows. So, can you give us some sense of when this, this actually stops? Yeah, those would be my two questions. Thanks. ... Yeah, I know the question. So, yes, there was an impact, partially because of the yield curve in the second quarter. It is small, but it did have a pathway as it moved across the quarter. But as you look from Q1 to H1, you see that the margin movement actually been quite negligible. That's one. The second point that you raised in terms of renewal premium being much subdued relative to the new business, that's right. There are two elements to this. One is that we do have some of our policies which are of a longer tenure, typically 10 years and above, which are now hitting the point of maturity, where, of course, these are in some sort of a planned outflow. So those are coming into the forefront at this point, policies that were sold back in 2013, 2014, which are now exiting the book. In addition to this, the unit-linked book, some of the larger numbers that we've done in FY 18, 19, is now hitting the five-year-plus mark, where you could say, given the release of the lock-in and the fact that markets are running at this levels, customers, some customers may choose to exit the policies either completely or partially. That's creating an outflow to that extent. What are we doing about this? Obviously, the longer the policy stays with us, the better for us from a company's perspective. One of the products that we have launched is the Platinum product on the unit-linked side, which has a flat commission format. The idea being that there is skin in the game for both the distributor as well as the customer to continue, as well as that gives us the benefit of a longer tenure and potentially higher margins there. So these are some of the structures that we're evaluating, and we also put in place in terms of elongating the stay that we have with customers. But of course, there could be points in time where given where the markets are, some customers may choose to book profits. Also, just to add, as you know, that we are going through a recalibration in our distribution strategy and we were walking that path of diversification on channels. We did have an impact on our growth over a period of last 3-4 years. The year prior to 2022, we did have a relatively muted growth area. So that, muted growth phase had relatively lower renewal premium coming through now. That also is a third element which is, impacting overall renewal premium growth, apart from what you mentioned. And now as the growth has started to pick up over the past few years, we should start to see improvement in the renewal premium, over the next few years. Right. And, just as a, follow-up, I remember that, you know, in Q4 last year, because of these, you know, you had gotten a negative sort of persistency variance, in your EV Walk. And, one of the reasons was obviously the ULIP, right? And, increase in mass surrenders. Given that, this seems to have continued into this year, so, do you expect a higher sort of impact, I mean, another negative impact coming through in this year as well? Has that been accounted for in your EV calculation for first half? And what is your economic variance? Can you give me that number? What is the positive economic variance in first half? One quick correction, Madhukar. It wasn't mass surrender. We've just seen elevated surrenders. Elevated surrender. Yes, yes. Sorry. It wasn't mass surrender. Yes. So as you compare H1- H1, surrender rates themselves have dropped. But of course, the eligible book itself is much larger, and therefore, you would have seen an absolute volume go out. This experience, we continue to monitor, and eventually we expect the ULIP persistency to come towards the long-term average. In any case, we will reassess it at the end of the year, and if we need to, we'll take an assumption change. But like I said, H1- H1, we are seeing lower surrender rates. There is a marginal variance that we see, but that's not large at this point, and we will continue to watch through to the end of the quarter, end of the year. In fact, let me also add to it that if you were to look at only persistency, whether 13, 25, 37, 49 months, actually it is quite best in class when it comes to unit linked products. It is only the design of the product which allows liquidity after five years, and good markets has led to an impact on renewal premium collection. So persistency-wise, it should not be construed that ULIP has a problem on persistency. It doesn't. It is best in class for us when it comes to persistency. So we don't have any problem on persistency. Right. Right. And on the economic variance, can you quantify that? We've not broken that out this time. We do that at the end of the year, but there is substantial economic variance. Got it. All right. All the best. Thank you. Thank you. The next question is from the line of Abhishek Joshi from J.P. Morgan. Please go ahead. Yeah, thank you for taking my question, and good evening. Just a couple of questions. If I look at the presentation on page 67, there have been some, you have specified the reference rate in September 2024. So is it fair to assume that you have taken some cut in the economic assumptions, and that could likely impact the EV movement in some way? And second question is related to the yield movement that you have mentioned that it has had some impact on the margin profiles. Now, when we look at the non-linked product category, it has been somewhat weaker. So I just, I wanted to understand a bit more from you as in which particular product category has been affected by that movement in the yield curve. Is it fair to assume that some impact has been seen on the annuity level margins as well? Yeah, those are my questions. Thank you. Yeah, good evening, Abhishek. So taking your second question first, yes, the impact of the yield curve has been felt on the non-par as well as the annuity product line. That's true. Now, on your first question that you pointed out, see, we are on the IEV method, so whatever is the risk-free at that point in time, at the end of the period, that's what we will take into account. So yes, as you see the yield curve move, the second column is what we have now factored into the current EV. I hope that answers your question. Yeah, yeah, yeah. Sure, sure. And are you able to? I mean, you have mentioned somewhat substantial amount of economic variances, but any comments on the operational variance that you are able to make for the first half EV movement? So we break the entire EVOP at the end of the year. That's what we normally do. So we will take that into account then. Okay, sure, got it. Thank you very much. Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah, hi, good evening, everyone. So just on the new commission structures and discussions with the partners that is ongoing while you know the business is on. So the current commissions are being paid in the previous structure itself, and which would basically mean that the margins in this quarter, in Q3, could be impacted to that extent in this quarter. That would be my first question. And the second would be what is the experience in the new product structures in the October month so far with respect to YoY growth or any product mix changes that you could highlight? Those are my two questions. So, Prayesh, hearing you. The new commission structures have been in place for some distribution and partners, and we continue to have conversations with some other distribution partners. They'll anyway be effective for the entire quarter, so I don't expect material negative from that perspective coming through at all. Okay. Yeah. So in terms of October, 21 days of October, we are not seeing any fundamental shift in our product line. It's broadly the same kind of trends that we had seen in quarter two. That continues into the early part of October. But again, October, November are festival months, sometimes a little difficult to call, but let's see how that progresses. But nothing dramatic for us to call out at this point. So no major, you know, sudden jerks in terms of declines or nothing of that sort, right? No, no, not out of line. Okay, thank you so much for this. Thank you. The next question is from the line of Deepanjan Ghosh from Citi. Please go ahead. Hi, good evening. Just two questions from my side. You know, first, if I look to your non-linked savings growth, that has been quite weak. It was down 10% and 15% YoY in Q1. And you know, this seems to be a tad lower than some of your private peers. And also, you mentioned that in the second quarter, it was more skewed towards par over non-par. So the question over here is, in case, let's say, ULIPs were to go through some sort of a slowdown in the second half, how do you think some of the par and non-par products will see traction from a going concern basis? And my second question is, if I look at your, cost to RWRP ratio for the savings business, and again, you give the first half and first quarter numbers, but my assumption would be that the second quarter YoY increase, in cost by RWRP for the savings business would be higher than the YoY increase in one Q, despite the fact that ULIPs mix increase YoY was, relatively, lower in 2 Q compared to one Q. So, just wanted to get some sense of the, payouts, in the quarter, and, also how do you see it incrementally? Yeah, so the f irst question with regard to non-linked business, as you know that, you know, on the ULIP plan product was typically the consumer preference between these buying product, buying markets. That is something which was quite visible. We anyway don't insist on any specific product preference when it comes to distributor making a choice. From that perspective, we actually saw customers relatively choosing lesser of non-participating guaranteed products in comparison to ULIP plan, as well as, you know, participating products. Let me also highlight that, you know, participating and non-participating is something that all of us understand very well. What is being currently sold in the market is the customers' demand for easy liquidity in the product. You know, as you know, that most of the products sold in life insurance industry are not liquid. The proposition that has really emerged over a period of last year and a half in the industry is about offering liquidity in the form of immediate income, which was the option available both on participating as well as non-participating products. Different companies have taken different calls. Some companies have offered this proposition on a participating platform, some companies have offered it in a non-participating platform, so we incidentally offered this proposition on the participating platform, so participating platform has delivered a good, significant growth for us, but they are of course not in line with the unit-linked growth, and second, when you also look at growth, you know that typically surpluses, investable surplus is generated with customers who are, you know, higher in age, and that segment we also have annuity placed in the guaranteed space. If you were to combine non-participating business along with our annuity, then savings growth is not very way off from the industry trend. So you need to look at non-linked savings in conjunction with annuity performance. So because eventually the customer segment is similar, with investable surplus and has opted for annuity products, with us. So looking at all together, it is not very way off from the market. Deepanjan, on your second question on cost ratios, if I understood it right, the overall cost ratios have increased, but when you look at the savings line of business, the increase is quite small. Evidently the higher cost ratios do come in from the protection line of business, which is also more margin accretive, so quite happy to have that on board, despite the higher cost ratio. We want to do more of the protection business, of course, which does add to our VNB. But, given, you know, what I want- Given the opportunity that exists in the market. No, so completely agree. So we just wanted to understand that, you know, while it has increased marginally in the savings business, but also your unit mix has gone up significantly, both 1Q and 1H. And I would assume that, you know, some of these products, because units are lower margin, maybe your payouts also, you would be relatively more conservative in that. So despite that, the ratios have increased. I just wanted to get some color on the market competitiveness. That's true. That's true. I think, the way the ratio gets computed is actually cost to the TWRP, which also takes into account renewal. So if you look at the cost ratio growth, cost growth versus top line growth, you see that, top line is ahead of cost. But because renewal numbers are weak at this point, 3%-5%, that is what impacts the cost ratio adversely. Got it. And second, just a small question. I mean, your fourth quarter last year, unit growth was quite strong, also the base was low. Now, on this base and given the current market conditions, and again, I completely understand that you kind of don't push your products above the customer demand. But, you know, do you feel confident of sustaining the 25% or 20%-20.2% sort of a growth trend that we have been seeing in the second half? See, the proof of the philosophy that we have been staying true to for a very long period now is my request to you to trace back our three quarters performance in last few years, and you will see that whenever consumer sentiment shifted towards products other than unit linked products, in those quarters, our unit mix had actually dropped to close to around 40-odd%. So whenever there has been a shift in consumer preference, our portfolio has actually reflected that. Just that you have to trace back in which quarter it happened. And one of the quarters which I can recollect is typically in that FY 2023, when there was impact to equity and there was a demand for specific kind of products. And also in between, we saw a lot of volatility in markets, and that was typically in 2020, 2021. That volatility led to a demand for participating and non-participating products picking up, and our products reflected exactly that. So we are quite confident that if there is a slowdown, do I truly believe that long-term story on Indian equity is not, it is still quite strong. And we have mature set of customers who are investing with full knowledge on unit-linked products. But even if there is an impact, I guess we have all the bouquet of products available with us, which can stand the test of any change in the market environment. Deepanjan, if you look at our new business mix, about half of it comes in from unit-linked, 30% comes in from non-linked, and 20% comes from protection. Now, this is in no way reflective of the amount of time and effort that we spend from a product development perspective. We are quite aware that there are various segments of the business that have got differential product propositions that need to be made available to them, and we spend adequate time with them because we are able to reach these customers through our diversified distribution network. And each distribution network requires a different set of products to be able to cater to their customer pools. So the amount of time that we spend is not reflective of the outcomes in terms of APE. We do spend adequate time making sure that our propositions on the par, non-par and annuity side are in line with what the market offers, so if there is a swing away from unit-linked, we've got propositions in the non-linked space, which cater to customers, and we should be able to take advantage of the opportunity there. Got it. Thank you and all the best. Thank you. The next question is from the line of Gaurav Jain from ICICI Prudential Mutual Fund. Please go ahead. Hi, thanks for the opportunity. A couple of questions from my side. One is if you can share a little more update on this unit Platinum as a product as to what the total units sold, how much change from this product? Second is, for H2, what are the new launches that are lined up, and which segment of the business should we expect them to be launched on? Repeat your second question again, Gaurav. New launches? New launches. New products. So first on Platinum, see, first of all, you know, like I mentioned, not every partner pick all products. So, different partners prioritize products, and Platinum also helping prioritize the certain distributors of ours, which is mostly agency and, some part of the direct distribution. And there is a proposition there because, the claim conditions, being based in the product design, customers tend to see much lower cost in the initial part and then eventually see the value getting accretion, through, conditions over a longer period of time. But if you ask me, there is a fair number of customers and a fair mix of unit linked products, where customers are still choosing our regular unit linked products. Because we do believe that long-term investment is INR 1.2 billion unit-linked products, they are quite beneficial if a customer was to stay invested for 11 years, or 11 years onwards. So from that perspective, not that everything is linked to Platinum kind of products, but there are certain category of distributors, certain category of customers, we have prioritized products which are different in structure. But yes, it has definitely got newer customers to come and start buying market -linked products. On second part, on new product launches, this is one regular exercise that we keep doing, so that's as a process. Almost every quarter we have either added new products or new features in our existing products. So that process will continue, and we'll keep you informed as and when we have new launches scheduled in the coming time. Jus t a follow-up on Platinum. Sequentially, we see month on month, are we seeing higher activation in number of partners or volume of growth that we are seeing here? I mean, I'm starting to understand, to a degree, the product really tested, and should we expect it to become a meaningful chunk quarters down the line? It will remain stable. Like I said, Gaurav, you know, see, I have at a company level, from a strategy perspective, we don't have a bias for any specific product. We are only creating options. Eventually, customers and distributors pick up what they find is more suitable. Like I mentioned, long-term unit linked product, if a customer were to stay invested for eleven years, twelve years, fifteen years, is as good as Platinum, you know? So some customers may be comfortable with a clear line of sight of making premium payments for ten, fifteen years, and they still find existing units as attractive. So we don't have a bias. We leave it for our manufacturing partners to pick up insight from the customer. We create it, put it on the table, and then let the distributor pick and decide. So from that perspective, what product affords is what we make it as part of our distribution commission. So we pay what we can afford. The rest, the choice is entirely with the distributor. So it will remain sustainable. It will remain one of our significant propositions, and we see how it goes with it. Okay. Just a question on solvency. If we raise this INR 1,400 crores sub-debt, how much will the solvency increase to? And will we still have room for more sub-debt to be raised, or will this be the final sub-debt that can be raised given the equity that we have? So, Gaurav, if we raise INR 14 billion, that should increase solvency roughly 20%. This is the cap that we have hit at this point. Based on how the numbers pan out, then maybe we could look at raising subject additionally, but that, of course, depends upon what the underlying share premium, et cetera, is. At this point, this is the cap. So we've got INR 12 billion on board. INR 14 billion is what we can raise additionally, and that contributes to 20% of solvency. Got it. Thank you so much, and all the best. Thank you. Next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead. Yeah, hi. Thanks for taking my question. You know, what is the share of, you know, the in the banca business, you know, what is the share of, you know, single insurer partnerships? You know, I think last time you had mentioned that, you know, ICICI Bank and, I think in one more foreign bank, you are the single insurance company. It is. To clarify, customer for retail business is ICICI Bank together. 25% of the retail business. Retail business, not inclusive of both. So of the retail business, it is twenty-five. Sure. Got it. You know, just a little bit on VNB growth target, because I guess, you know, that's, that's the key focus now. How are you looking at, you know, this growth target for the year? So we are looking to grow. We've got a decent growth for half year, 25% plus. We continue to build upon that growth through the year, Nischint. But of course, one needs to aware there are regulatory changes that have happened in this current quarter. And then of course, the unit link has done quite well in this market environment. So like I said, we will take whatever opportunity is available to us. Whatever the customer wants to buy, we'll make that available. So, the focus is essentially on, I mean, is it kind of AP and a VNB target, or is it sort of more on a overall VNB growth target? At the end of the day, it's all going to come to absolute VNB growth. Okay. And which you are saying kind of sustains at around 20% plus? We haven't put out the numbers, Nischint. We will do as much as we can. Sure about it. And you know, just finally, you know, couple of changes that we make on the distribution side, and I know it's early days and take a couple of months to stabilize. But you know, generally, what is the success rate of you know, some of these change in structures on deferments or you know, kind of you know, trail commission structures, et cetera. If you could give some qualitative color on this you know, in terms of how do you see the you know, offtake evolving over time? And you know, is it open... Is it more with the larger distributors or smaller distributors? If you could give some qualitative color on that would be useful. Yeah. So see, like I, I mentioned as an answer to the earlier question, that our partners are quite understanding of the regulator's position on the changing guidelines, and they're quite receptive to this proposal of these options that we spoke about, which is clawback or a different across categories of products. So it could be that different category of products may have a different proposition on clawback or deferment. So it does have an impact on cash flows. So probably smaller players in corporate agency in focus, and we may see that business models will have to be evolved into growing the overall top line to manage for any impact due to persistency gaps. But we do believe that partners with better persistency will probably have least impact of these changes. So from that perspective, you know, different partners, different fabrics and different combinations will evolve, and we'll see how it pans out. But one thing is clear, that we have to work towards overall expanding the market, through different propositions and look at compensating for whatever impact is on revenues on account of lapsed policies. So that is something which will really emerge. We would not know, how it will evolve, but at this point in time, for the changes that we have been discussing, most of the partners are very receptive. And this entire philosophy of, you know, good for customers and fair to, fair to shareholder, as well as fair to distributor, is something which is really understood well and it has not been as complicated as it has been made out to be. I think partners have been extremely forthcoming in, accepting this proposal as a new way of distributing life insurance going forward. And we truly believe that eventually it will convert into a good outcome for the customer. That includes banks and the larger partners as well? Yeah, of course, banks as well as anywhere where we have multi-insurance partnerships. So in fact, proprietary distribution specific to agencies, we have already implemented changes. And, in banks, I mean, we have only 22% of our business coming from multi-insurer corporate agents and banks. So only to that extent we will be impacted. Rest, I guess, mostly it is in place. Sure. Got it. Thank you very much. I just want to keep the detail that eventually non-linked business is only 25% of our business. So from that perspective, exposure to the product categories where commissions will undergo a change is much lower impact on us. No, but you would be looking at changing the structures or kind of, you know, having more kind of trail-based structures, I guess, across product lines, right? I mean, that's, I guess, the new way to look at things. That, for that we did not wait for under the guidelines. We actually I'm not connecting the two. Yeah, yeah. So that, as a philosophy, we do believe that deferment is the right way of doing it and promote long-term contracts with customers. So from that perspective, it's really a philosophy, we have no disconnect. We have already experimented in the past, and that gives us the confidence that we'll be able to tide through this phase as well. So as a philosophy, as a strategy, we have a lot of conviction in deferment as a process to manage overall profitability, overall outcome for the customer as well as for the shareholder. Got it. Thank you. Thank you. The next question is from the line of Neeraj Toshniwal from UBS Securities. Please go ahead. Neeraj, your line is unmuted. Please proceed with your question. Sorry, yeah. So on credit line, some of your peer reported and mentioned that they have seen some slowdown in because of lower disbursements to NBFCs, while we are, you know, have seen good growth in the quarter. So what different we are doing here? Just get some sense of how the growth is looking for us. Yeah, so credit line slowdown, like I mentioned in the opening script as well, is largely on account of, business, in the NFI segment, for a reason which is well known in public domain. On the, business, being, done through non-MFI partners, there we have seen quite a robust growth. So we don't see any slowdown happening on that front. So that is how it is syndicated. So overall, this means if you were to look at credit life, growth did, come down in quarter two, but largely on account of, slower disbursements in NFI as a segment. So otherwise, non-MFI looks okay. It is completely aligned to the credit growth. It moves in tandem. What we try to do to create an alpha over general credit growth in the industry is to work with that hardworking model of increasing attachments and opening new lines of businesses with every partner of ours. And also, it to the extent of adding new partners, which we have done it, we continue to do. We added another 10 partners in quarter two as well. So to that extent, addition of new partners, opening new business lines with our existing partners, we've had great relationships with them. So that is something which is going to help us in creating an alpha over the industry credit growth. Otherwise, industry credit growth, 1%, 2%, plus, minus, is something that we are quite confident of, but this alpha, like I mentioned, is going to be about existing customers and new customer addition, new partner addition. Got it. And in terms of margin, at the margin, you did mention that Q4 exits should be- Neeraj, we're not able to hear you. So, is it better now? Yeah, go ahead, Neeraj. So Q4 exit margin at the time of March, you did mention that that should be the, overall margin for FY 2025 as well. And given the changes in surrender, some impact out there and product mix change, what is the margin trajectory we should be, you know, working with in the H2, going ahead, given, how do you see the product mix evolving from here and the competitive intensity landscape changing from here? So Neeraj, we haven't given a margin guidance. What we have seen was, look at full year margins as you look at quarter one and quarter two, and that has been the relevant point of comparison. Yes, you are right, that there are a set of changes that are coming through on the non-linked space in terms of the surrender value regulation. But as we mentioned, these are there are ways in which we are looking at contracting the impact. And these will evolve over the course of the next couple of months and into the rest of the year as well. So there is no margin guidance to that extent. We are seeking to grow absolute VNB, and we will continue our endeavors on that, bringing up every product line that makes sense for the customer, and we'll offer whatever the customer wants. Sure. Sure. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. So thank you everyone for joining the call. Have a great evening. Bye. Thank you. On behalf of ICICI Prudential Life Insurance Company Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.