Ladies and gentlemen, good day and welcome to the Q2 FY 2023 earnings conference call of SBI Life Insurance Company. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Kumar Sharma, Managing Director and CEO, SBI Life Insurance. 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, 2022. The update on our financial results can be accessed on our website as well, and as well as on the websites of both the stock exchanges. I have along with me Sangramjit Sarangi, President and CFO, Ravi Krishnamurthy, President, Operations and IT, Abhijit Gulanikar, President, Business Strategy, Subhendu Bal, Chief Risk Officer, Prithesh Chaubey, Appointed Actuary, and Smita Verma, SVP, Finance & Investor Relations. Now, let me give you some key highlights for the half year ended September 30, 2022. New business premium registered a growth of 37% YoY and stands at INR 130.9 billion, leading to private market leadership. Individual new business premium stands at INR 84.6 billion with a strong growth of 31% and private market share of 25.3%. Gross written premium stands at INR 279.7 billion, a growth of 21%. Protection new business premium grew by 32% to INR 16 billion. Profit after tax stands at INR 6.4 billion, 36% growth over corresponding same period last year. Value of new business is INR 3.2 billion, registering a strong growth of 53% over the INR 13.8 billion in September 2021. VNB margin is at 31% with an improvement of 630 basis points over 24.7% in September 2021. Embedded value of the company around September 30, 2022 stands at INR 424.1 billion. Assets under management grew by 16% to INR 2.83 trillion. Robust solvency ratio of 2.19 as against the regulatory requirement of 1.5. I would also like to highlight a few key initiatives taken by the company. Considering the various requirement of the customers, we have launched SBI Life Retire Smart Pl us product, which is a unit linked pension savings product. This product offers a comprehensive range of pension savings with varied fund option with an option to defer the vesting date as compared to our earlier version of Retire Smart, which didn't have this feature. With a view to broaden our reach. SBI Life has tied up with India Post Payments Bank Limited, a leading bank in rural markets. With this, it will be able to enable our customers, especially the section living in unbanked, underserved areas, to become financially secure and empowered. We will update you on each of the key elements. Let me start with the premium. Individual new business has grown to INR 84.6 billion with a growth of 31% YoY. Single premium contribution is 32% of individual new business premium, which can be attributed to growth in our individual annuity product. The company gained private market share of 196 basis points to reach 25.3% market share. All individual retail new business premium stands at INR 60.5 billion with a growth of 21% and maintained private market leadership with a share of 23.7%. Also, group new business premium stands at INR 46.3 billion with a growth of 21%. In all, we have collected total new business premium of INR 130.9 billion, registering private market share of 22.6%. Renewal premium grew by 16% to INR 148.8 billion, which accounts for 53% of the gross written premium. The sum of GWP stands at INR 279.7 billion with a growth of 21%. In APE terms, premium stands at INR 58.3 billion, registering a growth of 22%. Individual APE stands at INR 61.2 billion with a growth of 22%. During the half year ended September 30, 2022, 9.2 lakh new policies were issued and this registered a YoY growth of 21%. Individual new business sum assured registered a growth of 14% over the corresponding period last year, which was, and which is compared to a growth of 7% at private industry level. Considering our robust performance for FY H1 FY 2023, we continue to expect healthy growth in our performance in H2 FY 2023. Let me give you detail about the product mix. We are happy to report that the company has steadily moved towards a more balanced product mix. On a half year basis, our guaranteed non-par savings products are contributing 20% of the individual new business, and on APE basis, this constitutes 26%. Non-par guaranteed new business has registered a growth of 21%. Sorry. A growth of 221% YoY, mainly due to the new business contribution of Smart Platina Plus, which is INR 12.69 billion in the half year ended September 30, 2022. This product was launched in March 2022, and has seen a strong traction in the new business premium, mainly due to the product features which are having a high acceptance in the market. ULIP has been one of the flagship segments for the company. Individual ULIP premium is at INR 43 billion, which now constitutes 51% of individual new business premium. Individual protection is at INR 4.3 billion, registering a growth of 17%. Group protection stands at INR 11.8 billion, with growth of 38%. Credit Life new business premium have grown by 36% and stands at INR 9.1 billion. On APE basis, production contributes 11% of the new business and has registered a growth of 23%. Annuity business is at INR 19.8 billion and contributes 15% of new business premium. Under annuity, the company is offering immediate as well as deferred annuities. Individual annuity business is growing at 136% over the same period last year. Total annuity and pension underwritten by the company is INR 32.8 billion, registering a growth of 7% over the half year ended September 30, 2021. Group fund management business is at INR 31.1 billion with a growth of 39%. On our distribution partners, with a strength of more than 54,000 CIFs, SBI and its RRB Bancassurance business contributes 67% and grew to 38% of individual new business premium. On individual APE basis, it stands at INR 41.3 billion with a growth of 24.5%. Agency, our other major channel, registered a new business premium growth of 24% and contributes 18% in new business premium. Agency channel individual APE stands at INR 17.1 billion with a growth of 10.5%. As on 30th September 2022, the total number of agents stands at 178,367. During the half year, the company added nearly a net of 32,300 agents. During the half year, other channels grew by 52%, which include direct corporate agents, brokers, online, white label, aggregate, et cetera, and 45% in individual APE. Protection new business premium through other channels registered a growth of 38%. Partnerships like Indian Bank, UCO Bank, South Indian Bank, Punjab & Sind Bank and Yes Bank registered a growth of 62%. These partnerships have started contributing 3% of the individual new business premium. For profitability, the company's PAB for the half year ended 30th September 2022 stands at INR 6.4 billion with 36% growth year-over-year. Our solvency remains strong at 219% as on 30th September 2022. Value of new business is at INR 31.2 billion with growth of 53% YoY against INR 13.8 billion in the corresponding period last year. VNB margin is at 31% vis-à-vis 24.7% in H1 FY 2022, with an improvement of 630 basis points. We have aligned the value of new business and VNB margin for half year ended 30 September 2021 in line with 30 March 2022 disclosures. Growth in VNB margin is fueled by change in product mix, with predominantly non-par segments have contributed, and of course, the business volume. With our growth targets and the product mix shift, we expect to maintain a healthy VNB and VNB growth rates. Coming to operational efficiency, operations ratio reduced to 5.6% for the H1 FY 2023 from 5.8% for the similar period last year. Our total cost ratio stands at 10.2% for the first half compared to 9.5% for the same period last year. With respect to persistency of individual regular premium and limited premium paying policy, 13-month persistency stands at 84.3%. The company has registered a significant improvement in 49-month and 61-month persistency by 276 basis points and 363 basis points respectively. We have witnessed improvement in persistency ratios across all the cohorts. As mentioned in my opening remarks, assets under management stands at INR 2.8 trillion as on September 30, 2022, having grown 16% as compared to September 30, 2021. The company continues efficient use of technology for simplification of process. 91% of individual proposals are being submitted digitally. 43% of individual proposals are processed through automated underwriting. To conclude, we continuously endeavor to maintain our leadership position and continue to further increase our market share by offering innovative products that meet the evolving needs of our customers. With our widespread robust distribution network complemented by digital technology, our innovation strength, and above all, our people power, we are well placed to make the most of the abundant growth opportunities offered in India's under-penetrated insurance sector. We will continue to leverage existing partnerships and explore new partners and launch new products to meet customers' needs. Thank you very much. For patiently listening, and we are 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on the good set of numbers. I have couple of questions. First one, I'd like to have your comments on how do you see growth panning out in the second half, given that you have a focus on diversification now and what I think the expectation is that unit will now be slightly lower proportion of the mix than it used to be earlier. Given that these generally the average ticket size will be higher than what your rest of the product segment or correct me if I'm wrong in case that is not correct. So, how do you see growth panning out in AP going ahead for the second half? That would be my first question. Second is on the margin side. This particular quarter sequentially there has been an increase in contribution for units. That has been I think the major change in the product mix, along with non-pars contribution also going down slightly. Despite that, we have seen an expansion of the margin. Just wanted your thoughts on how to read into this. Is this again a function of the cost ratios being lower this quarter? How should I look into this? What is the operating assumption change that has been shared in the MBO if you compare some items? Those are my questions, sir. You know, if you want to get growth for the second half, our second half has always been very, very strong. If you see historically, Q3 and Q4 are extremely strong for us, right? We don't imagine that there is anything that should actually change all that. Our own projections are based on our historical trend of Q3, Q4 being the strongest quarters for us. We look forward to a good robust growth there. You will, as I have been mentioning earlier also. Sorry. Yeah. Sir, please go ahead. I just wanted to see if you could quantify, you know, what would be a growth guidance for the year at least. I have already said earlier that we would like to grow at 20%-25%, and that remains. We are working towards that. I think directionally we are going right. You know, like I said, Q3, Q4 being strong quarters for us, we are very confident that we'll be able to achieve our projections. Unit, I have said earlier also in, I think remembering all my earlier calls I have said this, that unit growth will be there. We see a lot of traction already happening for a demand for unit, and unit will also continue to grow. Obviously, you know, the non-par products that we have launched was a super hit with our customers, and as a result of that, it appears as if the focus is slightly off unit, but unit will continue to grow because it's a very you know the products that we have are very customer-friendly products. We will also recollect that I just said about new product that we have launched, it has Smart Shield Plus, and that's also a unit linked product, and that is also expected to be very well going forward. I think the growth and you know the whole idea about ticket sizes and all, you are right. The ticket sizes of non-unit products may be slightly lower, but then our idea, our own idea is that unit will also continue to grow in accordance with its you know usual pace that we grow with. At least that is the view that we would expect it to grow. Therefore, we don't see any major reduction in ticket sizes or in our ability to meet our targets. Last question about the VNB margins. You are asking about margins, how come the margins are continuing to be robust even though I think you said that non-par has gone down or something like that. No such thing has happened. Non-par has grown. Non-par in the mix. I was pointing towards the mix change. Non-par share in the mix has If the volume grows, obviously that team is going to be there, the contribution is going to be there. The volume has grown, overall. If you see the growth, non-par has grown in this quarter. Also just to add what Mahesh mentioned that you may see some slight reduction in this quarter-over-quarter in the non-par stream. Within the non-par saving, it's also depend on combination because we have several non-par products, which are in the higher margin. Even the new product that last year we have launched, they have a different option, and each option has a different margin. There is a shift happening on that front. We are able to optimize those margin within the non-par. Also in case of annuity, we have the different annuity in an individual platform, which we launched subsequently. That's also helping us to enhance our margin. I think we just continue. Help us to maintain the margins that at current level. Just to clarify, the product mix change is only 2% compared to the other product mix has moved from non-par to retail only by 2% in this quarter, so it's not very material change. Mahesh had answered the remaining points. Yeah, sure. That's very helpful. Just a follow-up on the growth side, sir. The growth number guidance that you gave, is that on AP basis or NBP basis? We will take it on APE basis. Okay, sir. That's very helpful. Thank you so much for your input, sir. I wish you a happy Diwali. Yeah. Thank you. Wish you a happy Diwali. Thank you. The next question is from the line of Deepika Mundra from JP Morgan. Please go ahead. Hi, sir. Good evening. I believe that on the VNB side on the base number there has been some restatement, right? For 1H 2022. Correct. Yeah. Sir, could you give us? What you have done is whatever we had projected in March. Yeah. 2022, that same methodology we have used on September 2022. You'll remember that we had Yeah. We were stating on a different basis, and we changed our methodology in March 2022. To compare the September 2022 figure, we have done the same thing with September 2021 and come up with these figures. 24.7% that you are seeing is as per the new methodology. Right. Sir, could you help us with this, you know, that break for June 2021 and September 2021, or if you have it handy? The what? Breakup of what? Sorry. The second quarter number I need for, like, in terms of the VNB margin, which equates to the 31.5% under the same methodology. We can calculate and give it to you, but I don't think we have it there. I don't have it there with me. So Yeah. Mahesh will answer your question. Okay. See, earlier, what we have been mentioning that earlier we need to show the base number, and then we need to give some sensitivity and effective tax that we have modeled subsequently in month of March, and model was reviewed by Milliman at that point in time. What we did that just to be comparable number, we have rebased those numbers, and that's the reason the 21-point rate becomes 24.7. And hence we are comparing our VNB margin growth from 24.7% to 31%. Now if you look into June as well, as Q1, I think, also we have rebased same approach. While June opening number was 21.2 on base, we have restated to 22.7. Closing number for 2022 was 30.4%. If you want to compare the comparative number for June 2021, the rebased number was 22.7%. For September 2021, it is 24.7%. Okay, sir. Very clear. Sir, just a question on the EV sensitivity. It has gone up to 4%, in the first half of year, versus I think 1.8%, which was in FY 2022. Any clarification on that? What is driving the higher sensitivity in EV? This is For interest rate. This is basically on the base effect. If you see the yield from the March to September has gone up significantly. When you do the sensitivity on current level, base has changed. As a result, you see high sensitivity coming from the interest rate side. Sorry, would you mind elaborating little on that? What happens, suppose your yield is on thirty-first March was lower. When you do the sensitivity for 1% up, you do the sensitivity from that level. What happens from the March till September, yield has gone up. If you look into the shorter duration, yield has gone up more than 100 basis points. As a result, there will be MTM losses coming from, as compared to the March 2022. That will be becoming your base. When you do sensitivity, you start with a lower MTM base. As a result, you see the same base number will get changed. The major contribution coming from those funds, including particularly the shareholder funds, where there is no corresponding liability. While other AOV has the corresponding liability to get an offset on that basis in shareholder fund, there is no subsequent liability. All MTM will impact your sensitivity. Subsequently, if you also look into this discounting because the EV is a run up business of future, and initially your base has increased. When it's not linear impact on whether it's business or EV. When you go and start looking with the higher number, the impact will be different. That's the reason you see higher sensitivity coming up. Okay, sir. Thank you very much. Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead. Yeah. Hi, good evening. So the first question, I mean, of course, numbers are too good to argue, but in terms of improvement, I mean, of course you have hired a good amount of agency workforce over the last one, two years. Now, at this juncture, I mean, what kind of productivity improvement, I mean, how do you see the growth across agency channels comparing with the banks that of course have been fine? That is my one. Okay, what are your sort of plans around agency and how do you see this performance improving? That's one. And second, within Banca, I mean, ex-SBI, what will be the contribution? Because some of the public sector banks, I think we are already almost covered them for two, three years now, and they have a, you know, of course, a larger footprint there. What will ex-SBI contribution to Banca be? These are my two questions. Thank you. Yeah. Agency, you know, you are right that we have recruited. What has happened is that with COVID, basically there were a lot of agents who were not able to perform, and we have not actually removed any agents from our rosters in the last year. Only we started that process once again to rationalize the numbers. What we have done is we are going all out to get more and more agents and to increase the agency business. You know, as you can see, we have the biggest agency in the private sector by a long margin. Our productivity, per agent productivity is INR 3.5 lakhs. I don't think anybody else has got anything near that, and this is what we would like to grow. It can go higher also. There's already been a growth of about 10, 6, 7% in productivity. I think there is a lot of scope there. Plus the numbers, if you see the net numbers have gone up by 22,000, and this is not my target. We are targeting a much higher number. Once these agents, you know, in the same proportion start getting productive, I'm sure agency will contribute much more in the future. The other question regarding the non-SBI Banca. I can say that, you know, right now we've got 3% of the business comes from these banks. Our idea is that this should go way up because if you look at the way SBI has grown, if these public sector banks partnerships that we have, if they can only take, even take that same trajectory, I think the growth is going to be huge. Having said that, you will notice that these relationships have grown by a much bigger amount. You know, almost 63% growth across the other partners. That's something which we have already achieved. Okay. Thank you, sir. You see, happy to help. Thank you. The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead. Yes, sir. Wanted to understand our outlook on last quarter we spoke about we'll be looking for passing on some benefits in terms of the over the course of time. Where are we and how much would that be, if any, effect on our margin expansion? That is the first question. Second is on the Bima Sugam, wanted to know that we are not too active on third party regulated platforms, but could there be any change of strategy with the opening of this online exchange by the regulator? See, you know, interest rates, it's basically a thing that we keep calibrating. Now, if you look at the movement of the interest rates, you really don't know whether there are going to be any more interest rate hikes. You know, this is something which we are looking very closely and the product itself has got a very good demand that we have, the non-par guarantee. The guarantee that we are offering is finding very good uptake. Right now we are evaluating, so we'll see how it goes. Obviously, if I increase the guarantee rates, the margin is going to go down by that much amount. There is no way, you know, you can increase the interest rates paid to the customer and increase the margin. That is not happening. You know, we will keep close look on the interest rate movements and decide whether we want to do any such thing. Obviously, the customer is paying and if the customer will buy only if there is a higher guarantee, then obviously we'll reprice and we'll give a better guarantee there. Bima Sugam was a good initiative by the regulator. I think IRDAI is going in the right direction with that kind of a thing. I think, we'll have to see what the contours of the platform are going to look like and you know, what kind of business can happen out there. Prima facie, I think it's a very good idea. We were not on these earlier platforms because, you know, they were very expensive to be on, frankly speaking. I don't think, you know, it has got anything to do with our reluctance to be on a public platform, but we don't like to be on fixed platforms. You know, platforms which are fixed by somebody else. Therefore, we were reluctant to be on other platforms. Bima Sugam, coming from the regulator and having all the right credentials, I think. I don't think we will have any hesitation in going all out on that platform. Okay, sir. Got that. That is very helpful. Thank you, and all the best, sir. Thank you. The next question is from the line of Anirudh Shetty from Solidarity. Please go ahead. Yes. Hi, sir. Thanks for taking my question. My first question is on our non-par books, and you know it's grown quite well. I just wanted to get a sense of do you all see enough availability of, you know, hedging instrument to keep growing this book at the pace that you all would look like to desire. Also typically, what percentage of this book, you know, is hedged for us? Also can you give a sense of what is the average tenure for this book and like how much would be before and how much is immediate? Yeah. Yeah. You know, the availability of hedging, obviously, you know, we would like to hedge any kind of such a guaranteed product. We can't go ahead without hedging unless we have a crystal ball and we know exactly how the interest rates are going to behave. Failing to do that, we would like to hedge, and we will continue to hedge so long as the availability is there. Right now we don't see any problem with the availability, and we are able to hedge to the extent that we want to cover. You know, I wouldn't like to give any percentage out here. It's something which we do at our end. It suffices to say that we are well-hedged to you know take care of the uncertainties of the nature of the product. You know, it's a long-term premium paying product, so it goes from 7-10 years. Therefore we are properly hedged there, and we would like to continue to be hedged there. Right now we are able to get what we want. Got it. Sir, you know, there's a lot of opportunity to grow within the SBI branch network. Can you just give a sense of, you know, what is the share of branches that are activated? What is the long-term number that, you know, you think you can kind of get to at? I think- Almost all branches of SBI are generally active. You know, it may vary from month to month, but on average, all the branches of SBI would be active with some minimum number of policies being sold. That you know is something which contributes to our growth in you know in SBI, and that has been very steady, if you can see over the past. See our number of just under INR 40 lakhs per branch is what we have achieved, which is lower number than some of our leading private competitors. We hope to bridge that gap over the years. sir, that was very helpful. What do you think is the right, I mean, the productivity of INR 40 lakhs, how do you see that trending over time, and where do you see what is a more healthy number that you guys are targeting? It can go up. See what happens is in India it is not a question of the availability of people who need insurance. It is a limit of just people who understand that they need to buy insurance, you know. Mm-hmm. You keep talking to people and, you know, like any sale, you talk to 100 people, you get two, three sales. In insurance it is like, you know, it is probably on the lower side there. You have to talk to a lot of people. It is not a very easy conversation to have. When you start the conversation saying that, you know, suppose you die tomorrow, who will take care of your family? It's not a very easy conversation to start. That is why insurance business in India is taking a little while to actually reach that penetration level which is there in many advanced countries. Having said that, there is huge scope. You know, there is a lot of scope. If you ask me, I will tell you the global figures or overall figures that you see there is a 82% protection gap in India. So the amount of protection that Indians need overall, only, 18% of that is fulfilled. So, you know, you know, the kind of potential that exists out there. That's true of SBI customers also. Absolutely, sir. One final question. You know, typically at these SBI branches, how many SBI Life employees would be stationed over there on a, as a rule of thumb? Yeah. I don't like to say that, you know, every branch would have one person who sells, who should typically be able to sell insurance. No. What happens is we have support provided in each and every branch of SBI. Unlike other players, we have multiple branches being handled by one BA. Of course, there are some- No, no. Not Not our SBI. He's asking about SBI employees. No, not our employees. SBI employees. You're asking about SBI employees, no? No, sir. SBI Life employees. No. SBI No. SBI Life. I'm sorry. I was talking about SBI employees. Typically, there should be one per branch. At least that is the minimum that we need. In bigger branches there would be more. Our own employees, we have a very different kind of structure. There would be about one employee per 10 on average. Per 10 branches on average. But that can change, you know, depending on the distance and all. For example, Northeast, I can't say that I'll have 10 branches covered by one person because they'll still be 100, 200 km away. Do you see the need to add more there because as you mentioned, protection is a tough product to sell, so do you think that adding more of your own No, see, the whole idea of our model and why our model is cheaper is because we are following the regulatory instructions of the bank people doing the sale and our people training, handholding them, helping them with the sale process. That is the model that we are following, and that is why we have the lowest cost. If I were to put one person per branch to sell from my side, then I would be defeating the requirements for regulation also, and at the same time it would be a very high cost model. Got it. That was my last question. Thank you for answering. Yeah, yeah. Thank you. Thank you. you. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead. Hi. Good evening. Congratulations on good set of results. Two questions from my side. One is you alluded to the change in product mix within the non-par segment, which kind of supported the margins during the quarter. Would you like to throw some more color into the mix of the products in terms of policy term or customer age or tenure? And second, on Credit Life, you know, last year you have been guiding that you are focused on increasing the attachment rates at SBI's counter. What is the kind of progress that you see out there on that particular segment? Yeah. See, the non-par, I think, you know, basically what Sangramjit Sarangi was trying to say is that, you know, there are products and products and therefore, you know, you can't really put a figure from outside on what it is. We do the exact calculations and then we arrive at the margin. You know, the products, there are different products, there are different tenures. You know, for example, even the non-par guaranteed product, it would have a 10-year tenor product and there would be an 8-year tenor product, then there would be a 9-year tenor product or a 7-year tenor product. You know, every one of these will be having different margins. Even a slight shift in those that demand would change the margin. Really speaking, it's not a very big deal. You know what, Abhijit said very clearly, there is only a shift of 2% in the overall mix, you know, towards unit. On top of that, you know, their Credit Life has grown very robustly. That can be explained by the product changes, you know, in margin et cetera. I mean, it would be very difficult. We would have to sit with an Excel sheet and talk about, you know, how many of each of those products got sold and all that. We know that, but I don't think we can, you know, we need to discuss on the call. The other thing is Credit Life, like you say, yes, we would like to increase the attachment rates, and we have increased the attachment rates from 47%-48% in the similar period. Last year we ended with 50% attachment rate, and this year we would want to take it much higher. I think SBI has also taken higher targets because they feel that this is a very good product for their customers to protect themselves and their families. In fact, the product itself is called SBI Life - Smart Shield Plus. This is something which I think, you know, we will try to increase our attachment rates. Sure. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Sanket Godha from Spark Capital. Please go ahead. Yeah. Thank you for the opportunity. Sir, the bit of higher base impacted the growth in second quarter, and we also have a higher base problem in third quarter of FY 2022. What makes you so confident that the growth of 20 or 25% can be achieved for full year? Because we had a decline in the second quarter, and if the base remains high in third, even if you grow by 20% in the fourth quarter, it still seems the guidance of 20-25% seems to be tough to achieve. If you can give a little more color on that, it will be helpful. Yeah, yeah. Absolutely. You've You've got a very good question, but I think what you probably have ignored is that there was a peculiar circumstance in the last year in which you had April, May being totally washed out. You know, that pent-up demand spilled over into part of it. Of course, everything doesn't get fulfilled because people forget, people don't buy, people don't fulfill. Part of it gets fulfilled in the next quarter. That was the spike that I was talking about and not the normal spike. Normally, you know, we have a seasonality which we take for the first quarter, the second quarter, the third quarter and fourth quarter. Third and fourth quarter, generally we face the highest seasonality because the numbers, the demand and the sale, everything happens in the second and third and fourth quarters. In fact, whole of India works on the basis of a busy second half rather than the first half. You know, kharif season is always less busy than the rabi season. Okay. That is where all the money comes, that is where all the harvesting takes place, that is where all things happen. As a result of that, the money flow, the demand and especially the year-end demand, you know. Before the year-end, people want to do a lot of things to within their budget. As a result, naturally, during the last Two quarters, there is always more activity. Last year also, I mean, it's not a question of the base. You know, the base is only to explain, the lack of growth in the second quarter. If you look at the numbers, they are very robust numbers in the second quarter also. The only thing is when you compare it with the quarter of only last year, there is an issue out there where it is not showing a growth. If you look at sequentially, it is a very good growth. Going forward, every quarter 3 and quarter 4 has been stronger than quarter 2, always in the past for HDFC Life. That is where our confidence comes. Got it, sir. Last couple of things. In one quarter you mentioned that income plans of non-par, this Platina, contributed almost 30% of the total business. If you can put some color how much it contributes either for one month or second quarter. Can you say when you said that the product within the product within the non-par design helps your margin expansion. Is it higher contribution of income plans or higher spreads you made in the current quarter contributed to the margin expansion? Sure. Non-par, I think, it is good. You're absolutely right that non-par income plan has higher margin and that helps us to enhance the margin as well. If you see, depending on the premium payment term, we have the 7, 8 and 10. 10 has higher margin. That's where we help us. Now we have other non-par part which is the endowment, and if you compare to the endowment versus the income plan, the income has high demand. That's the reason this year, this quarter particularly due to, while we see this, slight decline in the non-par's proportion overall, the proportion has increased more toward the Platina Plus, the income plan, and that really help us to give this margin. What is that number, sir? Last quarter it was 30%. If you have that number handy. Yes. It's like 22-25, I think somewhere around there. So, so- If you see this quarter it is around 25%. Okay. Got it, sir. Another question which I had was that, sir, you restated VNB based on the revised methodology which you applied for FY 22 full year numbers. Can you restate the EV which you reported in FY 22 based on or not based on the methodology you used in FY 23? Because if I use that number of FY 22 what you have reported and look at EV growth, it looks muted 10%. Naturally the growth should be better than that 10% because assumptions were probably not appropriate in FY 22 on that. If you can restate that number it would be very useful, sir. Related to it, wanted to understand how much EV got impacted in FY 2023 because of MTM. See, we have not published our AOM from EV walk. Since we have not published our AOM walk, we have not restated numbers publicly. We are not quoting those numbers. If at the end of the year or financial year, we will go and do that. You get a like comparison from March till next March. March number already under new base. Yeah. We have not done that. We don't want to quote those numbers at this point in time. Okay. Second is second question on your MTM as well, I think, because again this is economic variance coming from that. Since we have not publicly disclosed those numbers, we do not want to comment on MTM how much or more. But the moment you will see this, our MTM losses will be similar to the sensitivity that we've shown in 31st March, not different than that. Second point is if you look into the EV growth which you might be seeing is muted. In the first six months of the year EV growth of 10% is quite significant because most of the business will be coming in the second half. So EV growth will be much, much higher I believe. Third point, I think though we have not given the AOM, I can confirm that in operating variance all the aspects including the mortality, expenses and persistency we have a very positive variance. We are expecting even better because you know we have used a COVID assumption as far as mortality is concerned, and we have not diluted our COVID provision as on 31 March 2022. We still carry forward. By end of the year, we see more positive operating variance and you might be seeing more of robust ROEV. But at that point in time, I think we have to wait till our year ends when March 2023 will be there. Okay, sir. The last one from my side. See, we are seeing improvement in the cost ratio. We are seeing improvement in the persistency. Our VNB, which is 31% of first half, is still based on last year's cost and persistency. We have not touched assumptions yet. Sir, even just wanted to understand that lever itself is still available for you to report a margin even better than what you have reported in 1H, sir? See, I think you can expect that margin would be better in same product mix. If you see the product mix will be changing over the next six months. I think while margin will be more or less similar. I do see there will be some investments coming from, but I don't see any risk downside margin from the current baseline. Current level is not there, exactly 31%. We are looking for some range of 29, 28 to 30, 31% range. But definitely, you know, margin will be looking. I think basically, you know, this is largely conjecture because, you know, like I keep saying, and I've said this, I know till I am also bored of saying it, that we are basically selling products which that customer wants and, you know, that doesn't change. I'm not pushing anything down anybody's throat because it has got higher margins. Obviously, you know, the margin will depend a lot on the demand that is there. We will continue to give meaningful products to our customers and they will find, you know, it useful. As a result, we will grow our VNB, we will grow our EV. Margin, of course, will be a high, healthy margin. Got it, sir. Thank you. That is so much, sir. Thank you very much. Thank you. The next question is from the line of Madhukar Ladha from Elara Capital. Please go ahead. Hi, good evening. Congratulations on a great set of numbers. Most of my questions have been answered. Just, I wanted your comments on the new draft regulations on commission and expenses of management. Our expenses of management are significantly lower than that 70% limit. I believe they're closer to 50%-55%. What I wanted to understand is, how can this impact us? Could it lead to a scenario where, you know, our largest distribution partner and parent then demands for higher commission payouts? Yeah, your sort of thoughts on this. I cannot speak for our distribution partners. The whole idea is that a business is good so long as it is sustainable, and so long as it is, you know, it's like, nobody would want to kill the golden goose. Okay. If you are doing good business and you are getting good, you know, results out of it, good revenue out of it, I don't think you will want to kill the business by saying that you give me everything and leave nothing for growth. Tara. I don't anticipate such a situation, first thing. Secondly, I think what is being attempted is, you know, that there are a lot of companies which have been, you know, constrained because of these regulations, and they would like to have more freedom in the way they spend the Expenses of Management. I think that is where the regulator is looking at, you know, giving some higher degree of freedom. I am very, very confident that the regulator will still be looking very carefully at how it is being spent and how it is being managed so that, you know, there are no wrong practices coming in. I'm very confident that the regulator would think about all these things and there would be a good framework for that. Having said that, we have never been challenged in terms of either EoM or commission payments. You know, we don't think it is going to affect us directly. You know, like you were saying, the scenario that you were thinking about, any such scenario looks like coming up, then we'll see what we need to do. While, you know, SBI may not take all of that as commission, but there can definitely be a scenario where there is some sort of payout increase. Have there been any discussions, anything on that? No, I think this is all very conjectural, you know. This is very, very conjectural. I don't, I wouldn't like to comment on this. If there is something concrete that comes up, then, you know, we'll discuss this. All right, sir. Thank you. All the best. Thank you. Thank you very much. Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go ahead. Yeah. Hi. Yeah. Good evening, sir. I have two questions on the annuity product. Firstly, what is really driving such strong market share gains in this business? Like, I want to understand how important pricing is behind the growth of this product. Like you have always said that ROP product, the customers are not so price sensitive, and they want their money back in return. How competitive this product is when it comes to pricing? And if you can also provide some color on distribution mix in respect to this specific line of business. Annuity product, you know, it is something which is very transparent, you know, in the sense everybody, you know, person can go and search for annuity products, and he'll know what kind of returns he'll get. If I'm able to sell a product, it has to be competitive. That's what we have. We have a very competitive product, and we are giving value for money, and that's why it's selling. All channels are selling? All channels. Yeah, yeah. Both are selling. Yeah. Annuity products. Yeah, yeah. All channels are selling. How do you see the growth going further in this product as interest rate rises and banks are also increasing deposit rates, which can go sharply? See, I don't think there is a direct connection between deposit rates and these products. Because, you know, these products are totally different in structure. Deposit you will get for 3 years or maximum 10 years. You know, today you can get a deposit for 10 years and you can lock in the rate of interest for 10 years back. In an annuity product, you are giving for life. Okay, that flavor is totally different. In the deposit, you get the money back and you have to deploy it again. There are two things out here. One is liquidity, when you have the money, but again, you will have to deploy it, and there is no guarantee what rate you will get it then. If it is like euro, if you see in the last 30 years, the rates of interest have gone down to zero and minus also. If somebody imagines that, you know, after 10 years he'll put it in FD, and then he will put it again at a better rate or something like that, after 10 years, he may not get interest at all. He'll have to probably pay interest to do that. In an annuity product, I cannot afford to do that. I have to give him whatever I have committed today. I have to keep paying him till, you know, somebody certifies that he is no longer there. There is a huge difference. I don't think that this is driven only by interest rates. It is driven by the returns that are generated and the guarantee. You are able to give a guarantee that 50 years down the line, if you are alive, I will give you this much amount. That is what is driving that business. I think it's a totally different demand and supply thing to fixed deposits or any other investment. You know, you can compare it probably with a 40-year bond or something, but that's about it. We do see a lot of growth in this annuity business and particularly we see the Yeah, because most of India is not covered. You know, We get a lot of NPS converted to annuity products and retirement is happening for the people by- You know, most people don't have any pension or protection. Demographic, which is. Yeah. On a small base, but the fastest growing demography. Yeah. Yeah. People above 50 to 60 years age. Right. Got it. Thanks so much, sir. Thank you very much. Thank you. The next question is from the line of Ansuman Deb from ICICI Securities. Please go ahead. Yeah. Hi, thank you for the opportunity. I have two questions. One is that, you know, you mentioned you had a tie-up with India Post Payments Bank, and so has been the case for another leading private life insurer. I just wanted to understand the competitive intensity around you know the tier two network distribution or tier two kind of a presence. Has it increased? And you know how comfortable is SBI sharing an open architecture with like a leading private life insurer? You know that is question number one. And the question number two is, our sensitivity has increased, sensitivity to interest rates. You know, in terms of strategy, do we have a strategy to kind of lower it down or, you mentioned about product being decided by the consumer, but you know, changing the product mix or changing other things to keep a control on the sensitivity to interest rates. These are the two questions. See, when we are talking about open architecture and with private insurance, we are already in that kind of a situation with some of the banks. We are already in competition with other insurers in three public sector banks and two private sector banks, apart from this IPPB relationship that we have just started. There is no question about that. We are the leading insurer in all these relationships. You know, we have the leading share in all these relationships. I don't think we are bothered with open architecture per se. We have got a very strong brand name, we have got very strong products, and we have got very good services, and we've got a very good company. I don't think we are bothered about that too much. Of course, we will keep pace with whatever developments are there. Coming to India Post Payments Bank Limited, basically the idea is that, you know, this would expand our reach into the hinterland. You know, into the deep rural areas, into the unbanked areas, the underserved areas. You know, State Bank is one such medium. We have about 23,000 branches, then we have about 9,000 branches of IPPB's RRBs. This is another attempt on our side to, you know, cover all those black, dark spots that we would like to change, where we don't have our complete presence in rural, semi-urban areas. This would help us to do that. In the urban areas also, then, you know, we could probably expand this whole thing. The idea is that there are more than 600 branches or 635+ branches of IPPB, which are then connected to all the post offices. We are trying to have a model which we can then scale up. This is not going to happen overnight. We'll work on it. It's a very, we think it's a very exciting opportunity. For a country like ours, we have two purposes out here. One is of course to grow the company and to make sustainable profits and all that, increase the customer base, but very importantly, to develop insurance in India. You know, we would like to be known as a company that actually grew insurance in India. That is something which we will take a lot of pride in if we are able to achieve this objective of giving more and more Indians insurance cover. Sure. Sensitivity just to add that we explained earlier on. This is simply an increase on account of the base effect and particularly in the shift in the, you know, parallel shift because it has gone up on short-term bond. Something happened on account of the FRAC and writing value for it. I would say. Having said that, I think we should not be worried about the sensitivity for interest rate because it's investment that we're making to hold to maturity. In case interest will go up subsequently, I think we'll be able to make more money on that side as our earnings growth is concerned. There is no strategy that we're going to change for products. I think gradually we'll be able to manage that. Because you have said it yourself very clearly, you know, that the consumer is at the center, and therefore, you know, there is no attempt to fix the whole product mix. What we would probably do is we'll try to introduce more products which will, you know, find better acceptability with the customer to try to influence their buying decision and not the other way around, you know, trying to push our existing product where they are not suitable. First we find what is suitable for the customer, what he needs, and then we'll give it to him. If his needs are slightly different, then we'll develop a product and give it to him. Right. You know, I was just coming from the perspective that you also said, right? For example, in the first half, if I were to calculate the economic variance, you said you can use the sensitivity to calculate it, right? What I'm trying to Absolutely. Absolutely. What I'm trying to say is that, let's say if I'm projecting a two-year ED and, you know, I'm assuming let's say hypothetically a 200 basis point increase in interest rate, then your sensitivity is the highest, right? I'm trying to say that on that perspective, as a business strategy, do you have a benchmark sensitivity that it should not go above that, or something like that? Just want your comments. I think basically the sensitivity is a construct. Basically, you know, you use it to see what could likely happen, you know, in the unlikeliest case. Like for example, the sensitivity is around, say, +2%, -2% and all that. That is not something which we are anticipating to happen in the next, say, one year or so. If it does happen, what happens? You know, a 4% sensitivity out there is, you know, peak age may be higher than 2%, but it is still not something which will, you know, affect the company negatively in the long run. Just to add. See, there are two points I think I would like to mention here. One is that our sensitivity, even 4% is similar to our other peers in the market, so not very high sensitivity. Second point I think we need to look into that. If you look into our public disclosure in the past, we have successfully been able to reduce our sensitivity gradually in last 4-5 years. This, as you mentioned earlier, this sensitivity is at this point at the moment, and that also reflects some of the movement in the yield curve and how the shape of the yield curve has changed. Anyone has to look into the longer term. I think if you look into March and even give a longer period, I'm not going to change the strategy because one, six months back our strategy, in six months we might see a lot of impact, some impact coming from the rate. But if you see the other side, because now we are shifting the writing, we're getting better value. So I think the sensitivity is in our mind when setting our strategy in the product mix and other, though we try to, first preference is the customer. At the same time, we always adopt a long-term view in each and every places that we mention. Hence we are not too worried about the short-term movement in the case of sensitivity and interest rate. That's the reason I mentioned that we should not be more worried about the sensitivity, particularly for an interest rate of saving because we are writing the product annuity in longer term. If we're able to invest and able to lock in these things, able to put even the unhedged book, if we're able to reinvest our coupon further higher yield, ultimately it's going to help us in managing EV in future. Thank you, sir. Thank you all and happy Diwali to you. Thank you. Yeah. Thank you. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Mahesh Kumar Sharma for closing comments. Thank you very much everyone for all the questions. You know, the questions that we get in the conference always keep us on our toes. You know, it gives us an opportunity to understand our company even better than you know, we ourselves could. Thank you very much once again. Wish you all a very happy Diwali and hope that going forward, we all keep ourselves insured and safe. Thank you. Thank you. Thank you. On behalf of SBI Life Insurance Company, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.