Ladies and gentlemen, good day and welcome to SBI Life Insurance Company Q2 FY 2022 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. Mahesh Sharma, MD and CEO. Thank you, and over to you, sir. Yeah, thank you very much. Good evening, everyone, and we heartily welcome you all to the results update call of SBI Life Insurance for the half-year ended September 30, 2021. Hope you and your families are safe and well. An 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 our CFO, Sangramjit Sarangi, President, Operations and IT, Anand Pejawar, Abhijit Gulanikar, President, Business Strategy, Subhendu Bal, our Chief Risk Officer, Prithesh Chaubey, Appointed Actuary, and Smita Verma, SVP, Finance and Investor Relations. Before I brief you on all the performance highlights, let me acknowledge the effort taken on by our employees, distribution partners, and business associates for their dedication and professionalism, which is helping our customers to now navigate through challenging times with uninterrupted support. Thanks to their efforts, we are able to maintain the new business momentum since the last three quarters, and once again, we have delivered a strong performance in this quarter as well. Now, let me give some key highlights for this half-year ended 30 September 2021. Individual new business premium stands at INR 64.8 billion, a strong growth of 54%. Renewal premium stands at INR 128.1 billion, growth of 9%. Gross written premium stands at INR 231 billion, growth of 11%. Protection new business premium grew by 33% to INR 12.1 billion, with 166 basis points increase in protection share. Individual protection new business premium grew by 38% over the half-year ended September 30, 2020 to INR 3.7 billion. Annuity business stands at INR 14.2 billion. Profit after tax stands at INR 4.7 billion. On actual tax rate basis, value of new business is INR 12.2 billion, registering a strong growth of 64% over the half-year ended September 30, 2020. VNB margin is at 21.8% with an improvement of 300 basis points. Indian embedded value stands at INR 352.9 billion, growth of 18% on actual tax rate basis. Assets under management grew by 31% to INR 2.4 trillion. We will update you on each of these elements in detail. Let me start with the premium. Individual business has always been a focus area for the company. Individual new business premium has grown to 64.8 billion. That is a growth of 54%. Single premium contribution is 25% of individual new business premium. This is mainly attributed to growth in individual annuity product. Individual regular new business premium stands at 49.9 billion with a strong growth of 50%, which is leading to market, private market leadership with a share of 23.6%, and this is an improvement of 289 basis points over the same period last year. We collected new business premium of 102.9 billion with a private market share of 21.9%. Group new business premium stands at INR 38.1 billion. The renewal premium grew by 9% to INR 128.1 billion, which accounts for 55% of the gross written premium. Our gross written premium stands at INR 231 billion, with a growth of 11%. Total APE stands at INR 56 billion, registering a growth of 41%. Out of this individual APE stands at INR 50.3 billion with a growth of 52%. During the half-year ended September 30, 2021, total 7.7 lakh new policies were issued, which registered a growth of 29%. Sum assured under individual products registered growth of 28% over previous year as compared to negative growth of 10% at the private industry level. Now let me give you some details about the products, product mix. Individual protection is at INR 3.7 billion, registering a growth of 38%. During the quarter, we launched eShield Next, a pure protection product which offers three options. Level cover, increasing cover, and level cover with future-proofing benefit. This product is based on the dynamic risk pricing calculator based on the customer profile at the time of onboarding and assess risk, as required by the reinsurer. The product prices will be stable for the next one year. Group protection stands at INR 8.4 billion, with growth of 31%. On APE basis, protection contributes 11% of new business and registered a growth of 25%. Credit life business has grown by 41% and stands at INR 6.7 billion. Annuity business is at INR 14.2 billion and contributes 14% of the new business premium. During the quarter, we added deferred annuity option for group clients, and the option will extend to individual customers in the coming quarter. Total annuity and pension underwritten by the company is INR 30.6 billion, registering a growth of 20% over the corresponding half year ended 30 September 2020. On account of buoyant capital market, individual ULIP business is at INR 45.4 billion, which constitutes 70% of individual new business premium and has shown a growth of 67%. Guaranteed non-par savings product is contributing 8% of the individual new business and on total APE basis, this contributes 10%. As mentioned in the Q1 call, non-par guaranteed product has seen traction in quarter two. Growth over quarter one stands at 282%, while over Q2 FY 2021 growth is over 100%. We strongly believe that by year-end this product will contribute around 12%-13% on total APE basis. Fund management business is at INR 22.4 billion. Look at the distribution partners with strength of more than 50,000 SPs, that is specified persons. Bancassurance business marks a share of 63% and grew by 48% in individual new business premium. Bancassurance channel individual APE stands at INR 33.2 billion with a growth of 48%. Instant protection policy issuance through YONO app of SBI has covered more than 1.2 lakh lives. Agency, another very strong channel, registered new business premium growth of 60% and contributes 90% in the new business premium. Agency channel individual APE stands at INR 15.2 billion with a growth of 60%. During half year one, the company added more than 20,000 agents, and as on September 2021, the total number of agents stands at 143,232. There is significant improvement in active agents and productivity levels as compared to the previous year, and greater use of technology is assisting in better engagement in the entire value chain from recruitment and training through to lead generation, sale and customer service. During the period, other channels, direct corporate agents, brokers, online and web aggregators grew by 96% in terms of individual new business premium and 65% in individual APE. Protection new business premium through other channels registered a growth of 15%. New partnerships like Indian Bank, UCO Bank, South Indian Bank, Yes Bank registered growth of 64%. We are confident that all these partnerships will start contributing significantly in the coming period. Coming on to profitability. During the period, COVID claims net of reinsurance paid as well as outstanding stands at INR 13.4 billion covering various lines of businesses. The company has kept additional reserve amounting to INR 2.7 billion for COVID-19 pandemic over and above the policy liability. Our mortality assumptions are well within our estimates. The company's profit after tax for the year ended, half year ended, September 30, 2021 stands at INR 4.7 billion. Our solvency remains strong at 212% as on September 30, 2021. As mentioned in my opening remarks, VNB is INR 12.2 billion on actual tax rate basis with a growth of 64%. If you compare it on an effective tax rate basis, it is INR 14.2 billion with a growth of 77%. Similarly, the new business margin is at 21.8% on actual tax rate basis with an improvement of 300 basis points over the last H1 2020. On effective tax rate basis, this is 25.3%, an improvement of 510 basis points. Embedded Value value stands at INR 384.9 billion on effective tax rate basis, growth of 23%. On actual tax rate, this would be INR 352.9 billion with a growth of 18% over the corresponding period last year. Coming to operational efficiency. Cost efficiencies continued to be maintained with total cost ratio at 9.5% and the OPEX ratio at 5.8% for the half year ended September 30, 2021. Thirteen-month persistency ratio of all policies, that is regular as well as single and limited pay premium, stands at 87.7% as compared to 85.9% last year. In accordance with the recent regulatory requirement with respect to persistency of individual regular premium and limited premium paying policy, thirteen-month persistency stands at 84.7% compared to 83.2% in the corresponding period last year. As mentioned in my opening remarks, assets under management has crossed INR 2.4 trillion as on September 30, 2021 with a growth of 31% compared to the similar period last year. The company continues efficient use of technology for simplification of processes with 99% of the individual proposals being submitted digitally. 45% of individual proposals are processed through automated underwriting. Customer satisfaction is a key focus area. Our grievances with respect to unfair trade practices stand at 0.08%, one of the lowest in the industry. To conclude, we will continuously aim for protection and other lines of profitable business. Efforts are on to expand our vast distribution network to increase our reach. We will continue to maintain sustainable and consistent product mix, focus on automation and digitalization for enhancing customer satisfaction and provide value to all our stakeholders. Thank you very much, and we are now happy to take any questions that you may have. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question, may please press star then one on their touchtone telephone. If you wish to remove yourself from the question queue you may press star then 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. To ask a question, please press star then one. The first question is from the line of Gaurav Purohit from BNP Paribas. Please go ahead. Gaurav Purohit from BNP Paribas, your line is unmuted. Please go ahead with your question. Please unmute the line from your side. Gaurav Purohit from BNP Paribas, your line is unmuted. Please unmute. Hello. Yes. Hello. Am I audible? Hello. Yes, we can hear you. Go ahead. Sir, I can't hear you clearly actually. If you were hearing me clearly till now, then, we have not changed anything. Maybe it's at your end. Yes. That's the issue. I was not able to hear you properly. Am I audible now? Yeah, yeah, you are audible. Go ahead. My question is regarding the reinsurance rate hike. All your peers have mentioned that, you know, they've received notices from reinsurers for hiking the reinsurance premium. I just want to understand if that's the case with SBI Life as well. What is the quantum of possible rate hike that you are seeing? Yeah. What we said, I know that's why we included in my opening remarks itself that we are not envisaging a rate hike on our protection product for the next one year. Okay. Sorry, because I was not able to hear you properly. No, no issues. You know, sometimes technology is like that. Thanks. Thanks, Gaurav. Thank you. The next question is from the line of Hitesh Gulati from Unifi Capital. Please go ahead. Yeah. Thank you, sir. Just wanted to understand the driver for the VNB margin. I think it's increased by more than 500 bps. How do we explain that? Also, to understand better the VNB margin, you know, your competition, your peers only give one number. Which one do we look at to compare you with competition? Also if you could just explain a little bit more on the two numbers. What is the difference? What drives the stark difference? It's almost 400 basis points. What drives the difference? If you could kindly, you know, delve on this please. Yeah. I'll take one thing at a time. Why the first question was why the VNB margins have gone up. Basically there are many factors for going up. One is the volume of business. As you can see, the growth has been quite stupendous. You know, that is one of the major drivers for that. The other is the product mix also. The product mix and also the pricing. You know, we have in the past also been dynamically adjusting the prices of some of our products. Wherever, you know, we see that there is a change in the environment and that we need to tweak the prices, we have been doing that. It's a result of basically these three factors. You know, these are the major three factors. There would be many other things out there. That is the basic thing why we have been able to deliver a growth on the VNB margin. Now, coming to your question of why we are doing this on effective and actual tax rate basis, because you know, because we have always been reporting on actual tax rate basis. Some of the other peers are reporting on effective tax rate basis. Now we are, you know, because we want you to compare properly, and that is why we are quoting the effective tax rate basis numbers also. Also as a corollary, you know, because sometimes you have to change even though you may be doing things more rightly, but if the whole market is going to be showing one figure, you can't be showing another figure, even though you may be right in doing that, because that is more sustainable, that is more accurate, and that is more easily understandable. Now what has happened is that we have also gone into quoting the effective tax rate basis, and maybe we'll start reporting only one figure of effective tax rate basis going forward. We are working on that so that there is no confusion on that. Now if you ask me about what is the difference between the actual tax rate basis and effective tax rate basis, that is, you know, wherever there are any differences in the treatment of tax because of whatever the type of business that we are doing and whatever, you know, enablers that we get out of that, like for example, we get some, there are some dividend, there is no dividend tax or something, or something like that. All those things are taken into account and then this effective tax rate basis is calculated. Would you like to add something, Prithesh? No, no. Sir, I think you've already covered. Just to give a little bit more on the margin enhancement on the side. See, one is the product mix. Other is within the product line, we have keep doing the active pricing, so we have repriced the annuities, we have come out with the term plan. We have repriced our existing term plan from May. So all this term plan has reflected the current experience, and that's really reflecting also we enhance the margin. If you look at the savings product as well, Platina, so we have repriced recently, we get a lot of traction. But we see the yield has gone up from that perspective. We are able to hold up that return and that's also enables us to enhance our margin. So that's the perspective is coming from the margin. Okay. Just one last question before I hand over the other. Sir, our ULIP portfolio is still mostly- I'm sorry. You will have to be more clear. Sorry. I'm saying our ULIP portfolio is still around 60% of our total APE. As you know, you listen to your other peers, the larger peers who were earlier ULIP heavy are trying to go to a more balanced portfolio. ULIP is also driven a lot by market forces, right? Equity market is doing well, you'll see a strong growth in ULIP and vice versa. Any thoughts around diversification from there? I don't think we need to, you know, drastically change anything out here. There is a demand for these products, and that is what we are doing. I don't think we are losing any money on ULIPs, and our customers are satisfied. I think it, you know, savings plus cover is serving some of our customers very, very well. That shows in the popularity of the ULIP product and the stupendous growth that we have had of 67% in ULIP. That shows the popularity of the product and also the fact that we have the lowest, one of the lowest mis-selling ratios in the industry also shows that we are selling these ULIPs to the right people. Now, why would I want to change that? Sure. No, fair enough. Understood. Thank you. The next question is from the line of Shashank Mundra from Reliance Nippon Life Insurance. Please go ahead. Hello. Yeah. Shashank, go ahead. Thanks for the opportunity, sir. You mentioned about the COVID net claims. I want to know what are the gross and net claims total, COVID and non-COVID put together? Yeah. The net claims are INR 3,098 crore. That is the total. Okay? Okay. The COVID death claims are INR 1,338 net. You want the gross also? The gross is INR 3,695 for overall. Okay. Net of reinsurance is INR 3,098. In COVID, I have only the net claims, so that is INR 1,338. Okay. Thanks, sir. Thanks. Yeah. 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, again, on the margins and the expansion of that, and I'm trying to look at the way you try and report margins with the others at 25% now. I'm just surprised that despite being ULIP heavy, we have margins which are now almost in touching range of the others. Just want to understand, we have always been made to believe that ULIP margins are very low. Is there something in our product which makes it different? Just want to understand your thoughts here. First thing is that, you know, the ULIP margins are not very, very low. The ULIP margin may be slightly lower than the company margins, but then the ULIP margins are quite significant for us. What happens is that along with the high margins on the other products, we are able to still make a good margin. I don't know about the others because, you know, I've not really studied the ULIP business of some of the other people, and since some of the big names are shedding a lot of ULIP business, it may not be profitable for them, but it is very profitable for us. Sir, that's what I'm trying to understand. I, IPRU actually gives the number out clearly on what is linked margins, and it's like 11, 12%. You're telling us it's closer to 25%. Would just trying to understand how would that be- I said it is closer to 25%. What I said that it is lower than the company's margin, we make a significant margin on that. I wouldn't like to put any numbers out there right now because, you know, we don't want to actually put any numbers out there. It is internal, it is dynamic. It keeps changing from time to time. We reprice products, we have changes in product mixes. That is there. What I'm saying is that we make a good net margin on the ULIP products and the other products because the overall the other products have got very good margins. The average comes out to 25%. The way to look at it is our lowest cost ratio helps us give margin on ULIP. Including ULIP. Across all products, including ULIP. Correct. Because the charges that we get from the customers are similar across all competitors. Since our cost is lower, we make more margins. Fair enough. Second question is on retail protection. We have seen good sequential growth as well as YOY. Industry is struggling a bit here in terms of growing it. Can you tell us, you know, is it the ROP that is helping you here, or is it you also, like you said, you relaunched it. My ratios are similar. You know, ROP, non-ROP, this ratio is the same. You know we are growing at the same rate. If my ROP is growing at 33%, my other non-ROP is also growing at 33%. That's how it is. As far as we are concerned, we never went overboard on trying to push protection by underpricing or anything. We have always had very sustainable pricing and you know, I have been saying the same boring thing for the last 1.5 years, but it is true that you do the right thing. I mean, you get the returns, rewards for it. Got it. Sir, last question is on renewals. I think that is where we have seen the slowest growth, 8%-9%. Anything to read into that or you think that's a function of time? Sorry. Let me have a small correction. My colleagues have corrected me. It's not 33%, it's 38%. Yeah. Sorry. Go ahead. No, on renewals, sir. On renewals, the growth has been slower. Is it a function of, what we had been writing in the past or do you think renewal growth will also pick up? No, renewal. See, the renewals are a function of, you know, what how we've been doing. Last year we grew renewals at almost 30%. 29%, we grew renewals. Now, there is only so much renewal that you can renew. You know, if you look at the growth of renewals, we have first thing is that last year we had a huge increase in the renewals. You know, when you are looking at that base then the growth, further growth is going to be like a large part is the existing base. Persistency has gone up, but last year's new business growth because of pandemic was not very high. We grew only by 4-5% last year. That has reflected partially in this year's renewal growth. The key factor to watch is persistency, which has improved across, you know, cohorts. Of course, the single premium also has gone up slightly. That is also one of the contributing factors. Correct. Got it, sir. Thank you and all the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to one per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Adarsh Parasrampuria from CLSA. Please go ahead. Yeah. Hi. Another thing, couple of questions. One is, on, let's say till 2020, the margin was a steady 100 basis points increase over 2-3 years time period. In the last couple of years for the industry and for us, margin pace has accelerated and our product mix hasn't moved as much. Can you like, would it be possible for you to throw a little more light about margin outlook over the next 2-3 years time? What do you expect with the product mix improvement? Like, you know, we have noticed the overall mix has not changed very significantly, but the margins have picked up very well because one is the product mix has changed slightly and we are focusing on some of the things with higher margin. We are doing more of that business like protection and this. That definitely contributes to higher margin. We also, you know, see that the pricing, you know, that we have been doing, so that is one of the things that really helps us. We have been on the ball on pricing for some time now, and that has also contributed to this thing. That is basically how it is. We will continue to do these improvements. You know, we will continue to focus on protection. We have got a very good product and that should see more customers, especially you know eShield Next, the product that we have launched last quarter should do very well. That is there. Of course, we have Smart Platina, which is a very good product. I think it is with our dynamic repricing, you know, over time, we have made sure that we get the right kind of customers there. These are some of the things that we do. Got it, sir. Second question is on the non-par mix. Obviously the non-par business has kind of gone up as you rightly alluded. I want to understand that, you know, you did indicate that it could be 12%-13% and then I think around peers are at 20%-30% and that's been one of the key margin drivers for some of your peers. If you take a little more longer term view, let's say next 2-3 years time, any specific target because this product does require a lot of hedging. Any target on where you want to take the non-par mix? Yeah. I don't think we are going to be looking at the numbers of our peers, you know, to emulate or anything. I don't think. They've got their own model. Maybe it works for them. For us, I think we are looking at something like where we are plus something. Let's say about 15%, 16%. I wouldn't mind 18% also. You know, I am not pushing any of these things. You know, I'm not trying to tell people don't buy Unit, buy Platina or something like that. The products are good. People, there is a very good demand for this product and guaranteed, you know, guarantee, after the COVID, people have really been attracted to guaranteed products. I think the traction will be there. Because we are growing all our business lines, all the unit will continue to grow, production will continue to grow. I don't think the mix, you know, will get skewed too much. Of course, I will be happy with 15%-18% in Platina going forward. Got it, sir. Last with these margin improvement, you did talk about margin outlook. Any specific guidance over a 2-3-year period on VNB margins? I wouldn't like to give any numbers out there, but what we have seen, you would have also seen in the last four years, we have continuously quarter on quarter been improving our margins, and that is what we would like to continue doing. Now, the quantum itself will, you know, like, may go up or down a little bit, the quantum of increase. We would like to have directionally, we would like to be, increasing the margins, for some more time, going forward. Got it. Sir, last clarification, any one-offs in the margin that we have, which one should assume is not sustainable or all this margin improvement looks quite sustainable? It is very sustainable and like we, MD, sir, also mentioned that we are continuously monitoring and doing the dynamic pricing. We are- There is no one-off. There is no one-off item. Mahesh, you see we have not make any assumption change during this reporting period so that in this quarter or half year, you can look into that. We always change the assumption in the MAR. There's nothing extraordinary that we reflected here and that will not be sustained. What we do, the number we reported based on the assumption which is sustainable for longer term and from that perspective, we are saying that this margin enhancement will remain sustainable for future as well. Got it, sir. This is helpful. Thanks a lot. Thank you. The next question is from the line of Neeraj Toshniwal from UBS. Please go ahead. Yeah. Hi, sir. First question is on the interest rate sensitivity. I think that is kind of bit of relief for us. Is it largely because of the change in the mix coming from non-par savings or anything else we should be looking for? It is just the change of the profile. If you compare with the previous year number reported and this number, it is largely on account of change in the profile. Further also if you see the yield has gone up, so if you go the higher yield, there will be some second order impact will happen on the sensitivity as well. Nothing extraordinary in that. Okay. With the yield going up, as you mentioned in the starting statement that we are maintaining our IRR, ideally we should get the benefit of lower IRR and higher yields. That should be a reverse benefit we should be getting. I think if you look into this yield environment is really going up. We have the different directional impact on the different LOB. If you look at traditional product where you're giving a guarantee or even the par product, interest is going up will give you the positive side. If you look the unit linked business, if interest will go up, your MTM of the asset will fall down and then your future earning will be there. There will be some negative impact. If you look into any change of profile, we'll have some impact. Your profile can't remain same each and every reporting period. There will be slightly change will happen that will reflect some of the change in the sensitivity. Got it. Second question is on the COVID claims, given the severity is obviously a little higher for us compared to peers, likely because of the lower reinsurance support. Wanted to understand what the strategy will be in terms of the reinsurance going forward, given we have launched a pure term and we want to focus in that segment now. Are we looking to retain more or kind of reinsure more, and what would be the terms in the current scenario, if at all we are looking at in those lines? No, we have enough reinsurance support for the product that we have launched. I don't see any issues out there. The COVID claims are largely behind. We have kind of taken care of anything which surprises- That is what we are assuming, that if you look at the graph, if you look at the graph of deaths and you look at the graph of morbidities in India, then you will find that there is a tapering off. Similar kind of thing we have seen in the claims also. Since there is a lag, we are being slightly more cautious in keeping some amount aside for the next six months for COVID claims. Apart from that, we think that we have largely crossed over the main problem. In fact 70% of the adults have been vaccinated at least once. You know the figure for full vaccination is also close to 35%, so 35%. I don't think I think we are over it. The last question on the pure term, how is the response of that product and at what ideal mix we likely to have from 85-15 we have been maintaining for quite some time. Can we expect that moving. The response is very good, and we launched it only in the last quarter. You know, the numbers will start showing going forward. The response is good. You know, I think our term with return of premium is a very good product, so that will not, you know, suddenly crash away and go. The markets are different. The customers for eShield Next are different from the customers for my TROP products. I can grow both of them. As far as the 85/15 is concerned, well, I'm not overly bothered about the numbers as such, but I'm sure that with more and more eShield Next customers on board probably change that slightly. Okay. Got it. Thank you and all the best. Thank you. Yeah, thanks. Thank you. The next question is from the line of Abhishek Saraf from Jefferies. Please go ahead. Hi. Thanks for the opportunity. I have a question on the margin side. If you can just help me understand the delta in margin YOY on an actual tax rate basis and effective tax rate basis. On actual tax rate, it has moved up by around 300 basis points, while on effective tax rate it has moved up by around 500 basis points. Yeah. Can you just help me understand why that has happened? Second, on the COVID claim side, I understand that the worst is definitely behind us. Just trying to kind of get my head around it. Like in last quarter, we had INR 5.7 billion of claims, and then I think we had provided INR 4.4 billion of reserves, if my memory serves me right. That makes around INR 10.1 billion. On top of that, we have actually seen INR 13.4 billion claims in total for FY. Then we have further added INR 2.7 billion as reserve. Is that a right way to understand, sir? Yeah, yeah. Absolutely. Would you have- As far as effective and actual tax rate basis is concerned, I didn't understand your question. Can you just repeat what you are actually asking? The delta, I thought that the delta of the margin, whether it be on effective tax rate or actual tax rate between two periods should be broadly similar. Like, on an actual tax rate basis, it has moved up by around 300 basis points YOY. But on effective tax rate basis, it has moved up by around 500 basis points. Just wanted to understand. I don't think it is linear. Pritesh, can you please explain? See, if you look at the actual tax basis, the margin enhancement from the 300 basis points reflects the product mix, reflects within the product what, how, which kind of product we are pushing within the different product lines. That's the basis. If you move from the base actual tax basis to the effective tax basis, it also depends on what kind of investments you are having in respect of tax-free bonds and all. That will have a different differential tax treatment, and that differential treatment will have that impact. All assets that you are able to invest one year back and today, that will have the benefit by the new business will have a different and that will have differential benefits coming on account of the tax incentive benefit that we can claim for. Okay. Second part is just to add on that perspective, that if you look into pension, if you're writing more and more pension. Within the AVP you are writing some of the product which is higher pension. Pension product don't attract much of a tax benefit. That will have the higher effective benefit, tax benefit coming from that also. Okay. Largely it is product mix actually this year versus last year. Yes. Absolutely. Wider gap. Okay. Lastly from my one data keeping question on the group protection part, if you can help me understand on a QOQ, sorry, YOY basis for this quarter, what was the growth for credit protect and what in GTL, if we have it in any number. Quarter figure. On YOY, sir. This quarter, 2 FY- YoY H1 to H1 or Q2 to Q2? Q2 to Q2. Okay. Q2 to Q2 credit life has grown by 33% on NBP terms and, APE terms also the similar number, 33%. YOY basis, it has grown by 41% on the credit life. This is for only second quarter itself, YOY 41%. The second figure that he said, 18%, is half-year on half-year. Abhishek 41%. Abhishek, the H1 FY 2022 versus H1 2021, it was grown by 41%. 41%. Quarter-on-quarter, quarter two. Q2 to Q2. FY 2022 versus quarter 2 FY 2021, it has grown by 33%. 33%. Okay. This is on NBP basis. Both NBP, APE. APE both. Similar. On group term, how are we approaching that and have we written business in that part? What will be- Group term has increased actually during this quarter, second quarter, that is Q2 FY 2022 versus Q2 FY 2021 grown by 13%. 13%. Yeah. Okay. That's it from my side. Thanks a lot, Sudhir. Thanks, Abhishek. Thank you. The next question is from the line of Deepika Mundra from JP Morgan. Please go ahead. Hi, sir. Sir, it's on the protection side. You mentioned that you have already taken some pricing action over there. Just want to understand the quantum of the pricing action with the new product and in terms of where you stack up versus the top tier competitors on pricing. See, our pricing is very good, very competitive. I think with the reinsurance companies putting pressure on the other, then, they are having to hike their prices. If they have to do it, then we'll be even more competitive. Okay. Sir, why would you know I understand that you're not facing a reinsurance hike you've already launched at a particular price. Wouldn't the mortality profile not really be too different, or shouldn't why would SBI Life be on the lower end of the pricing versus peers? No, no. It's not that basic. What's happened, we have recently launched this product. When you price a product, we look into our geography and target market and customer base, what customer profile we are selling into. Accordingly, we discuss with the reinsurer and agree for the reinsurance rate for longer term. In that perspective, we are saying that since we already take in account of the reinsurance premium rate in the new product, this premium rate is going to be sustained for the longer period either. At least for the next 12-18 months, we don't expect the reinsurer will going to change because all the effect that they might be seeing in the past have accounted for. Whereas our peers might be working on the earlier rate, and they are going to reflect the current claim experience which is worsening in that perspective. Okay. Understood. Similarly on the non-par side, again, you had mentioned some pricing action. Can you give a little bit more color on that? If you look at the non-par side, we have recently priced our Platina product, which is saving product we're selling. What has happened, if you see the yield has gone up significantly over the last six months, and there is a possibility for passing on some of the benefit to the customer. To that extent, we have repriced and passed on some benefit to the customer. From that perspective, still our margin has been enhanced significantly. Understood. 20 basis points in the pricing action. It has gone up significantly. Ha. Got it. That's very clear. Just last question, I mean, we've been disclosing this actual and effective tax rate basis VNB for quite some amount of time now. What has been the key hurdle in not including it in the EV or in the reported EV thus far? No, no. It is all about the consistency. There's no hurdle on that perspective because what happen when you're reporting for several times on the several months and quarters on the effective and actual tax basis, we wanted to continue on that basis. We want to assess that perspective before we're just moving to the one number. Because some people still today also some of people looking for the actual tax basis rather than effective tax basis. That's the reason we wanted to do that. I think industry has moved. Most of the peers have moved to that basis. There's a possibility we might also start reporting only one number. There is no objection from the auditor or anything of that sort to include on effective tax rate basis, which is why you've not been doing it so far? As our MD, sir, already mentioned that as a process, good governance perspective and our thought process is we are here to report on the actual tax basis. Then we want to give the number because people are comparing our number with the markets. We have to be with that. There is no hurdle and there's no constraint on that perspective. This is our choice that we are reporting that, both the numbers. We'll we are also moving there. Like I said, you know, earlier also, we have already decided to move on to the effective tax rate basis only. Maybe we'll, you know, give the actual tax rate basis in brackets, you know? Okay, sir. Thank you so much. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities. Please go ahead. Yeah, hi. Good evening, sir. I have two questions around growth. One is we have been reporting very strong momentum in last few months and 50% sort of individual APE growth, even higher run rate in the second quarter. How do you expect this momentum to sustain over the coming months? Any outlook, if you can suggest over the next two, three years in terms of growth? Yeah, you know, we have changed. I mean, we have improved the way we are doing business. You know, we have done a lot of analysis of what we were doing and how we can get better growth. Some of the changes that we have made, not very drastic ones, but incremental improvements in how we do our business has effected, you know, effectively done this, you know. The power of the 1% daily change kind of thing. That's what we are doing. Because we are doing that, we are very confident that going forward also we'll be able to maintain the momentum. As I said earlier also, on this call, the quantum, actual quantum may go down from 50% to, say, 40%, or it may go up to 60% or some quarters, but then the direction will be the same and the numbers will be good. Got you. That's very good to know. Secondly, sir, on the annuity business in particular, wherein we are reporting strong NBP growth, but if I look at on APE basis, we have reported a 9% decline over 1H, while some of our peers have reported very strong growth in annuity. How do we see this, like, business line? Yeah, this is because of group annuity. That is where we have de-grown. Group annuity. Individual annuity, we have a very strong growth. In group annuity also it is lumpy, so you will- Yeah. We see some spikes coming. Usually at the year-end, we expect that from group annuity also, we will have an increase. Like last year, first quarter, we had a huge One particular client. Yeah. Huge. This is not something which happens every month, you know. What happens is that you engage with the clients and then finally you get the account. You know, it takes some time sometimes. Okay. Sure, sure. Thanks so much. Thank you. Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead. Hi. Two questions. The first one is on your persistency. I mean, the half year number versus quarterly, the difference is material if you compare with others. Does that mean that your renewal typically comes even with a delay of more than a month? I mean, a material process. I mean, just it's, I would like to get some color on that persistency difference is material when it compares to, say, a first half versus quarter. That's one. Second, on your COVID-19, like, in first half we took kind of a charges closer to INR 10 billion odd number. I mean, including the reserve and the sort of intimated claim. Now, we are sort of somewhere closer to INR 13.4 + 2.6, closer to INR 16 billion. Does that mean that like a INR 6 billion of charge, COVID-related charge, has come in Q2? Clearly, my two questions. Your question on persistency, I'm sorry, I didn't understand. On COVID, basically, you know, that like what we said, we had already made our provisions earlier. We have largely been, you know, in line with, I mean, the claims were largely in line with the expectation. There was some additional amount that we had to pay last quarter. Apart from that, it has been pretty much accurate. If that answers your question, because that was something which I didn't really I mean, at Q1, we were closer to INR 10 billion. I mean, kind of a INR 5 point something billion IBNR claim reserves and additional INR 4 point something as an additional reserve. Now when we are at the end of H2, the number is almost like you are saying that INR 13.4 billion is the COVID claims cost and additionally we are sitting on INR 2.6 billion. It has come closer to INR 16 billion. That means that the INR 10 billion has gone to INR 16 billion, whereas sort of a COVID-related, I mean, the wave has almost ended by June. That means that almost INR 6 billion, the INR 10 billion has gone to INR 16 billion. That looks like a material, sort of, you know. No, I think. See, there is a lag in the timing of the claims. If you look at the deaths that occur, the deaths were occurring till June, July. Okay? The claims come with a lag. The claims come with a lag, so what happens is that the June, July, and maybe the May claims also would have come in the last quarter, largely speaking. We have seen a tapering off of the claims in September, and therefore we are saying that going forward, we don't probably need to set aside the same kind of money that we were setting aside earlier. Yes, sir. There will be lag. When you are providing for IBNR and all, I mean, that sort of takes care of your, you know, expected that, okay, the claims that are not being intimated. INR 10 billion-INR 16 billion in a quarter, I mean, it's a material diversion. I mean, a material development in a quarter when, I mean, that COVID, Lots of people have died. See, the whole thing is related to the death claims. We are talking about death claims. Actual people have died out there. That is why we are having these claims and that is what we are paying. Let me just add two points on this. One is if you are looking into the claims reported in this Q2 quarter, it is most of the part will come from on account of two parts. One is the new claims happened during the year and reported in this quarter. There is a lag coming from this happened in the Q1 and reported into Q2. The death reported in Q2 and happened in Q1 is mainly classified as IBNR, and that is separately as a part of the IBNR provision that we continue to make from several years, not new. When we are in June, we are not very sure about this wave, how extending that wave will be and continue to be in Q2 and all. We make a provision of INR 445 crore to take care of the nine months new claims. That's all for the new incident happened or claim happened. Not on account of the death happened and not reported. When you come to the thirtieth September, we have seen the wave has stabilized, almost, finished now. Still we wanted to be prudent and decide, we're saying, okay, in case there will be some infection will continue to be live, certain maybe there will be some death will happen. We are saying that INR 266 crore that we provision, that we are making today, would be sufficient to meet any new COVID death that may incur in Q3 and Q4 and reported subsequently. This provision is not about the late reporting delay because that is separately dealt as a part of our IBNR provisions. Broadly, that INR 6 billion sort of a cost that has come in this quarter, I mean, on account of COVID. Is that my understanding clear? Yeah. If you look at the COVID, that is true, but some of you don't. You should not compare that with the COVID provision that we made five, because most of the claims are coming on account of IBNR. That IBNR was already there and that dated back from that perspective. The second is that there's a material difference in your persistency number for the quarter vis-a-vis half year. Is my understanding correct that your renewals are happening? I mean, they're happening but even beyond 30 days, that's why I mean kind of when we move to 1-year persistency or like six months is much better when you compare to say a quarter. Yeah. Avinash, you are absolutely correct. If you see half yearly basis. Yeah. The persistency has actually improved. That is precisely the point we mentioned in the earlier remarks, that the renewals are going as per plan. We expect that this will also improve because the majority of our 60% business comes in the last six months. What we have seen current year that the tracks, the cash, the policyholders payment stream is quite robust and we believe that it will also improve. For the quarter per se if you compare this quarter vis-a-vis last first quarter, then there is a slight dip. As far as YTD first half to YTD FY 2021, then there is an improvement and a substantial improvement. Okay. Thank you. Thank you. you. The next question is from the line of Nischint Chawathe from Kotak Securities. Please go ahead. Yeah. Hi. Am I audible? Yes, you are, sir. Yeah, yeah. Go ahead. It is actually my question pertains to you know the movement in EV over the last six months. You know, if I really kind of you know look at this number, the increase in EV is just around INR 19 billion or so, of which your VNB itself was around INR 12 billion. I know you don't think of complete movement in EV on a half yearly basis. You know, since in terms of first half, I was just wondering if you could kind of give me some pointers. Sorry, you are talking about the EV. You're not very clear actually. Your voice is cracking. Can you repeat your question, please? Yeah. Is it better now? Yeah. Yeah. Yeah. Sure. So the increase in EV over the last six months was around INR 19 billion, 1,900 odd crores. You know, the VNB for the quarter was around INR 1,200 crores. I would believe that, you know, there will be some unwinding et cetera as well. I was just wondering if you could give us a walk in terms of what really happened, you know, if there was a dividend payout or if there was a large investment variance, or if there was a, you know, a large operating variance because of COVID. If you could give us some color on that. See what's happened if you compare the VNB, it is the future profit for the business that we've written. Yeah. That's the VNB. Now, when you write a VNB, there will be some cost associated with that will have impact on ANW. Similarly, if there is unwinding will coming from retrospective. Yeah. There will be some movement that will happen from the VIF to the ANW as well. If you compare the VNB with the EV, it may not give a real picture because it is the composition of the adjusted net worth and VIF. If you look at only VIF growth, then you can say unwinding and value of new business will make sense on that perspective. My question is, was there a large negative operating variance in the first half? No, no. No, no. Mm-mm. On the investment variance side? No. Hardly you can see some of the impact will happen on the adjusted net worth on account of the market movement on yield because your net worth bond value will fall down on that perspective. There will be some adjustment that will be part of the adjusted net worth, not as part of the VIF. Not as a part of VIF, but you probably have operating variance, right? Or a non-operating variance in this case for investment variance. We don't have any extraordinary variance in the operating variance during the six months. On the non-operating side, was there a dividend payout or economic assumption change? No dividend payouts. Economic assumptions will always keep changing with the current yield. Otherwise, there are no changes in assumptions as such. Sure. Thank you very much and all the best. Thank you. Thank you. Thank you. The next question is from the line of Sanket Chheda from Spark Capital. Please go ahead. Yeah. Thanks for the opportunity. Sir, I have a very small clarification on COVID provision. At the end of March, the COVID provisioning was INR 183 crores. At the end of June, it was INR 445 crores. Just wanted to understand what is the balance sheet provisioning number, which is on September 21. How much it has increased if we have added INR 266 crores of additional provisioning in the current quarter? If you see the balance sheet provisioning, which is unutilized is INR 266 crores as on 30th September. Basically INR 445 getting down to INR 266 means you have dipped into the provisions to pay the COVID claims, right? Yes. Yes, sir. You got it. Okay. Basically out of that INR 13.7 billion of COVID claims, around INR 2.5 billion were supported by the reserves which you created during Q1. Yeah, absolutely. Yeah, you can hear me back. Yeah, definitely. Oh, okay. Perfect. This explains the COVID moment. Second question, sir, basically the persistency, if you look at it from the new method of calculation, 61% persistency has substantially come off compared to previous year. If I just superimpose that number along with the surrender numbers going up, is it fair to assume that after 5 years lock-in, you have seen a significant redemption, that's the persistency led to the fall? Yeah, there is an increase. There is an increase because the market is good, so we have a large number of units that we have returned. People who have made good money on their investments, many of them would like to lock into that benefit. That movement we are seeing. Okay, sir. Finally, just wanted to understand what extra provisions you have made with respect to unfavorable Supreme Court of India judgment on the group product which was sold couple of many years back in State Bank of India. We provided INR 1.6 billion including interest only for one product or we have provided for both the products where we have a litigation? There is only one product because there is a judgment there. The other is sub judice, so we have made a remark of contingent liability on the balance sheet. Including interest cost, what would be that likely hit, sir, if you assume it doesn't go in our favor? No. See, that thing is we have already disclosed in our, this is what we have taken as contingent liability. We don't want to conjecture on this because it is in Supreme Court. Okay. Fair, sir. Just final Just to add, Sanket, the first one which you asked, one- Nine hundred and fifteen. One hundred and fifteen. INR 115 is inclusive of interest. Yeah. Yeah. Yes, sir. For the first one it is there. I'm just wondering, for the second one we know the actual number. Including interest cost, what would be the likely figure if in a worst-case scenario we lose the case? Like I said, you know, it's in. No. Fair point, sir. Fair point, sir. Finally on the margin profile of eShield, to basically understand is that the new product of eShield is launched with the new reinsurance rates, which other companies are facing right now. For 12-18 months, the pricing of the new eShield is fully protected and therefore we don't see a price hike risk to us for that particular product, right? That's what I'm saying. Yes, that's correct. Yes, sir. Finally, the margin profile of new eShield will be far superior compared to ROP or it is similar to ROP? Yeah. No, it will be superior to ROP. It will be superior to the ROP. I mean, if you can give your X multiple, 1.2x, 1.3x kind of a thing. We don't want to give out the figures. Okay. We don't want to give out the figures and if I say something, you know, like X and whatever multiple of X, then, you know, I am almost giving away the figure. You know, basically we don't want to really get into that thing. It becomes very. I don't know why some of the competitors are giving out these figures and all, but it doesn't add to any knowledge gain in society. The idea is that the business should be run profitably and, you know, the customer should gain out of it along with the company. Got it. it. Got you. Finally, at the non-par growth, what we have seen is only Platina. We have not launched any other product because we have that missing product with respect to income planning non-par, which all other players in the industry have and we don't have it. It was completely driven by Platina and in future how we intend to launch an income plan on non-par? No, we are working on the income product. We'll launch an income product also. We already have one more product which is Smart Samruddhi, which is, you know, along with Platina, that is another non-par guaranteed product. We already have Smart Samruddhi, and then we have this and then of course the annuity, individual annuity is there. That is also a non-par product. Got it, sir. Yes. That's it from my side. Thank you. Yeah. Thank you very much. Thank you. The next question is from the line of Jayant Kharote from Credit Suisse. Please go ahead. Thank you, sir, for giving the opportunity. I wanted to understand what will be the two questions, sir. What is IRR on our guaranteed products right now after the repricing? What? I didn't get it. Sir, the range of IRR for the guaranteed return products. It varies from 3.59% to 5.5%. Right. Depending on the term and depending on the premium ticket size. Yes, yes. What would be the range like? Around 3.4%-5.5%. four to 5.5. Sir, secondly, I wanted to discuss a little bit on the YONO lives and premiums. I believe you had done around INR 30 crore of premiums in FY 2021 on YONO. So how has the first half been this year? And when you say you have done 1.3 lakh new lives, I mean, what is the cumulative lives so far sold through YONO? And if you could talk a little bit about what is the strategy going ahead. I mean, what kind of products are you doing, and if you plan to add anything more? Yeah. The YONO, this year we have done INR 10 crore and the last year's business that we had done, so there are a lot of renewals out there. That renewal business is also there. What we are talking ten crores is new business premium. You know, what happens is there are the digital platform. We'll have to expand the number of customers who go to the digital platform and buy. That we are working on right now because the people who the, you know, the low-hanging fruits, as you said, you know the cliché, that we have already tapped. Now comes the difficult part of tapping the people who normally wouldn't go digital to buy these things. That is what SBI is trying to do. I'm sorry, if I got it correctly, you mean the INR 30 crore included renewal premiums or INR 30 crore was a new business number last year? Because last year we hardly had any renewals. We had done very little business in the previous year. Okay. That INR 30 crore was new business premium for the last year. Okay. Now, what is happening is that when those people renew, that comes in the renewal business commission. On top of the INR 10 crore. INR 10 crore is the new business commission that we have. This is sachet life products, or is it? You can call them sachet life products. Sir, number of lives covered over here, I mean this 1.2 adds up to what is the cumulative lives covered through YONO so far? Around, I think the outstanding number of lives that we have covered would be around five lakhs including, maybe more. Because last year you mentioned INR 6.3 lakh. Yeah, yeah. I add this, but it goes to INR 7.5 lakhs roughly. Something, you know, the persistence will not be 100%. Right. There is something like, you know, the persistence is more like 80% or something. Let me take a look at the figures. You know, I'm just. Okay. Just guessing one second. Sir, around INR 7.5 lakh. Okay. Okay. In that 30,030, whatever, some dropout will be there. Okay. Overall, what is your digital strategy outlook right now and how? Because even say a INR 30 crore-INR 50 crore number is good 5%-10%, not 10%, but 5%-7%-8% of your protection mix. How do you plan to, and where do you see it going? Yeah, we will go up. See, what happens is, this is not the only channel, you know, YONO is one of the channels. We will be putting more products on the YONO channel in State Bank of India. That will also add to the digital reach of our products. We are also working on our own proprietary channel, you know, the digital channel that we have on our website. We will be selling more and more. In fact, there has been a significant increase in the number from 2,000 to 20,000 policies. You know, it is eleven crores now, in this half year compared to five crores last year. This is on a very small base. You know, INR 11 crore, but this will go up going forward. This is one of the channels which will really give us a lot of business going forward. Great. Thank you very much. You're welcome. Thank you. The next question is from the line of Sahej Mittal from HDFC Securities. Please go ahead. Yeah, hi. Good evening, everyone. Sir, most of my questions have been answered. Just wanted to check what's the current activation date for state branches, and how is this number been found out in last, Activation for State Bank branches? Yeah. Yeah. 65%. How is this number moved in last couple of months, given that we have seen a strong growth? Actually, you know, if you compare it with last year, it is 10% more. From last quarter also it has gone up. Last quarter figure I'm just trying to pull out. One second. Just give me a moment. Yeah. Basically, you know, from April was around 45%, May was 32%, and then it's been going up. Any aspirations to grow this activation rate going ahead? Yeah, yeah, absolutely. In fact, the idea would be to have 100% activation. How successful we are will depend a lot on various things. Normally every year, by the end of the year, we reach an activation rate very close to 100%, you know. 86% is what we have achieved in the last two years. I'm sure that at least that will be reached. We are aiming for 100%. Got it. That'd be all for me. Yeah. Thank you very much. Thank you. The next question is from the line of Dhaval Gada from DSP Mutual Fund. Please go ahead. Yeah. Hi, sir. Congrats on good set of numbers. I had two questions. One was the clarification, you know, on margin expansion. One of the reasons that you talked about was pricing improvement. This is the non-par guaranteed product that was the main driver on pricing improvement or there are other segments where we have seen a benefit in the last year or so? Second- Non-par product, you know, the pricing. What has actually happened is that we have actually made the price better for the customer, you know, because the yields have gone up. As a result of that, we have been able to sell 42% more. Okay. That has resulted in the, Sir, sorry, help me understand. When you say for the margin expansion, pricing improvement was one of the contributors, so which segment drove that? Which segment where we saw pricing increase? That was my question. It is across the board. If you particularly for the non-par parts. If you look into the non-par saving, it is individual annuity as well as group annuity and also on the protection side. We have repriced our term plan, existing term plan. We have launched a new term plan with higher RPM rates. We have increased this annuity, repriced the annuity and other. That really help us to drive the margin. Understood. The second question was on the, you know, migration to effective tax rates. Just wanted to understand normally, I mean, would we see an actuary change here? If yes, then would there be change in other EV assumptions as well? Because I think Willis Towers Watson has a more stringent EV methodology compared to others. Any comments that you have on that? We'll not comment on that because Willis Towers Watson is our reviewer, and they have signed off our number and we are aligned with our methodology. No comment on that basis. I think we are following the best practices that's required by the regulation and particularly APS. Both the SBI Life as such from a particularly for the as being a product, we are following that process. When you go to the Willis Towers Watson to review, they're also following that process. We are following very best and robust process as well. Just to give you, within the Willis Towers Watson, they do their peer review in the global firm as well. I don't think there is any comment we should making on our reviewer actually who will make review our numbers. There are no comment on that side. As for the effective tax, if there will require some changes in the model and other part, the moment we will start reporting one number, we will take care of that. As you know, there are public disclosure also coming now that companies, listed company in particular need to disclose their numbers which need to be independently reviewed by the independent actuary. If you look into the SBI Life, see we are not commenting on the others, but even these requirements were not there, half yearly basis when we disclose our EV and VNB and annual basis when we disclose our EV and VNB, including sensitivity and other movement, it has been independently and duly reviewed by the Willis Towers Watson. We are following best practices as a company and will continue to follow that practice. Perfect, sir. Thank you and all the best. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Mahesh Sharma for closing comments. Thank you. Yeah. Thank you very much. A very comprehensive set of questions, and we thank you very much for logging in and listening to us and also giving us your feedback and your questions. I hope we were able to answer all of them. Of course, we look forward to your investing. I thank you all once again for supporting us at SBI Life. Stay safe, and hope you have a great year ahead. Thank you. Thank you. Ladies and gentlemen, on behalf of SBI Life Insurance, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.