HDFC Life Insurance Company Limited (HDFCLIFE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to HDFC Life Insurance Company Limited Q3 FY 2021 Results Conference Call. Joining us today on the call are Ms. Vibha Padalkar, Managing Director and Chief Executive Officer; Mr. Suresh Badami, Executive Director; Mr. Niraj Shah, Chief Financial Officer; and Mr. Srinivasan Parthasarathy, Chief Actuary and Appointed Actuary. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to MD and CEO, Ms. Vibha Padalkar. Thank you, and over to you, ma'am.

[Audio Gap] our results for the 9 months ended December 31, 2020. Our results, including the investor presentation, press release and regulatory disclosures are already available on our website as well as that of the stock exchanges. I have with me Suresh Badami, who's our Executive Director; Niraj Shah, CFO; Srinivasan Parthasarathy, our Appointed Actuary; and Kunal Jain from Investor Relations. I will run through the key highlights of our 9 months FY '21 results and would be happy to take questions post that. Starting with an update on business performance. We are witnessing a lift in customer confidence, which is also reflected in the new business premium trends for both the individual as well as the group Credit Protect business. We continue to see a pickup in savings business on a sequential basis on account of an increase in both the average ticket size as well as number of policies. We've recorded a growth of 8% in terms of individual WRP during 9 months FY '21. This is on a base of 31% growth last year. Our performance compared well against the private industry, which de-grew by 6% on a base of 16% growth in 9 months last year. We sold about 6.8 lakh policies, registering a Y-o-Y growth of 6%. Our market share in terms of individual WRP has increased by 214 basis points from 14.3% in 9 months FY '20 to 16.4% in 9 months FY '21. Our market share for the group and overall new business segments amongst the private sector players is at 27.3% and 22.3%, respectively. Our product mix remains balanced with ULIPs at 23%, non-par savings at 30% and par at 35%. Our individual and group annuity business saw strong growth in 9 months FY '21 of 42%, with annuities contributing over 5% of our Individual APE. Our constant endeavor is to identify sources and means to grow our annuity business including empaneling corporates and introducing new product variants, while ensuring appropriate pricing and risk management. We see signs of demand for Individual Protection reverting to normal levels after the strong surge in quarter 1 on the back of the pandemic and expected price increase. We remain confident about the medium- to long-term prospects of protection in the country on the back of underpenetration as well as increased awareness around the need for protection. We remain focused on maintaining pricing and underwriting discipline whilst addressing this opportunity. Growth in protection business for 9 months FY '21 stands at 17%, with a share of protection at 7% for 9 months FY '21. Renewal growth continues to trend well at 22%, with 87% being done via digital mode. While we continue to monitor collections closely and remain watchful about emerging persistency trends, we are seeing good renewal traction on our new products that have now come up for their first renewal premium collection in the last few months. New business margins continue to show an improvement on sequential as well as Y-o-Y basis on the back of growth and a favorable product mix. The NBM for 9 months FY '21 stands at 25.6%, with the value of new business in the 9-month period at INR 1,408 crores, having surpassed 9 months FY '20 value of new business. Our operating return on embedded value stands at 18.3%. We settled 1,271 individual and 542 group COVID-related claims as of December 2020. The frequency of claims intimations have been higher in quarter 3. While our actual overall experience remains within our estimates, we continue to monitor the claim trends closely. And we'll keep reevaluating the adequacy of the COVID reserve through the course of the next quarter. Our profit after tax grew by 6% to INR 1,042 crores, and our solvency position remains healthy at 202%. Next, on channel performance. We continued to see strong growth in the bancassurance channel, which has grown at 20% during 9 months FY '21. Within bancassurance, growth at HDFC Bank continues to trend well with us retaining our market share. Agency channel continues to gain gradual traction in quarter 3 with a focus on a profitable product mix and maintaining quality of business. We are actively collaborating with our new bancassurance partners, including YES BANK and SBI Capital Markets on systems integration and commencing new business. We remain focused on tapping a new generation of customers through our online channels, while expanding our geographical presence across the country, especially in nonmetro. Moving on to product performance. Our focus on driving a balanced product mix backed by our suite of innovative products is enabling us to effectively meet customer demand. I'm happy to share that we have launched a new term plan HDFC Life Click 2 Protect Life Yesterday. This plan has innovative features such as auto-balancing life cover and critical illness cover, an option to get a fixed survival payout from the age of 60 years, amongst other features. There's been a concerted effort to smoothen customer journey, refine pricing appropriately, while continuing to be stringent on underwriting. We believe that these are some of the critical building initiatives taken to address the long-term protection opportunity. Our Credit Protect business for quarter 3 stood at 95% of previous year's volumes as compared to 64% for quarter 2. This has resulted in CP premiums improving to 63% of previous year's volumes for 9 months FY '21. Our balanced product mix continues to provide a natural hedge across mortality and interest rate risk. We continue to closely match our asset liability cash flows for the guaranteed savings book. While sensitivity only tests small and linear movement in interest rates, it continues to be range bound. Our risk management approach has been stress tested and validated by an external reputable actuarial firm. Next on technology. We continue to invest in digital assets, with a view of simplifying and buying and servicing experience for the customer. These include life easy and end-to-end term plan buying platform; POSP, a simplified lean journey for sale of point-of-sale products; InstaSIP, a simplified buying journey akin to the SIP way; Life Next, a comprehensive 360-degree platform for group business, providing capabilities from issuance to claims. These assets also give us an edge in a competitive multitie environment by enabling us to integrate with partners quicker and issue policies and service faster. To conclude, given that the vaccination drive has been initiated and the economic momentum on the ground seems sustained, we will strive for continued new business growth and an upward trajectory on new business margins, whilst adhering to a conservative risk management approach. Our focus remains on ensuring a balanced product mix, diversified distribution with innovation on both new product offerings as well as technology-led solutioning being core to what we do. The detailed disclosure on our results is available in our investor presentation. In the end, I would like to thank all of you for your continued support of our company. We are happy to take questions now.

[Operator Instructions] The first question is from the line of Suresh Ganapathy from Macquarie.

Yes. 2 quick questions. One is on the new labor code, which, of course, seeks to increase the basic pay, right? I mean in the sense that you at least need to have 50% of your overall salary in basic pay and thereby increasing the overall 80C limit. Do you think this has the potential to actually increase the PF amount automatically, thereby clubbing the INR 150,000, and therefore, reducing the limit available for insurance? And therefore, do you think that can have an impact on your business? Point number one. The second thing is on the non-par guarantee. Now that you have, of course, crossed more than a year, would you be in a position to share what is the 13-month persistency ratio there, Vibha?

So non-par guarantee, actually, we already have put out the details on our -- in our investor presentation. I'll tell you the slide in a minute. And while we do that -- yes, it is Slide 29. So we have split up in terms of traditional. If you want a further breakup, we can maybe give that to you off-line. But right now, we have traditional unit-linked protection and then overall company, wherein it is 92%, but it's comfortably above 90%, Suresh, in the 13-month persistency. So very low surrenders. And anyway, as you know, we have stress tested it. Even if they were 0 surrenders or lapses rather, even then there would be no stress on the guarantee that has been given. But as we stand today, it is above 90%. On your point on tax, even there, we have a slide actually in our investor presentation, wherein tax is now no longer becoming really a big reason for us to -- for people to buy life insurance. It used to be -- it used to be as high as in quarter 4, as much as 40% contribution of quarter 4 towards buying insurance. But now it is like number 7th or 8th reason. This is on Slide 27. So even when there was an entire change in all the allowances, even at that time, our financial consultants were not up in arms to say that this is going to impact us a lot. And really, there was no murmur at all. Maybe it might be amongst certain customer base, but not that relevant for us. So coming back to your question, any kind of labor law changes or PF changes, we don't really expect that to be a big driver.

Okay. And finally, on your distribution, there have been some of your peers, where, obviously, some of your bank partners have taken a stance not to sell certain kind of products and stuff. That is not something which you're seeing across your distribution channel, right? I mean every distribution partner that you add is quite open to selling the entire product suite which is there, right?

Absolutely. So this is on Slide 15 of our presentation, wherein we have broken down channel-wise, segment-wise cuts. And there, you'll see that, yes, it is pretty much balanced. If I were to take bancassurance, it's like 1/3, 1/3 between unit-linked par, non-par and so on. So absolutely. And then that's where different products are suitable for different types of customers rather than just taking a simplistic view that customers don't understand it. And today, customers are getting reasonably nuanced, at least amongst the mass affluent salaried and nonsalaried. So they do understand as to what they're buying. So yes, I'm happy to say that it's more driven by what -- the suitability rather than the distribution partner not wanting to sell it.

I can only add, sorry, Vibha, on this, that Suresh, we do work very closely with all our partners to understand what is their strategy in terms of their customer segment, their customer profile and their comfort of products. So like Vibha said, we look at it from a customer perspective, what is the suitable product, right mix, then we also look at what is the partner strategy in terms of what kind of products we look at. And that is why we have the ability to work with partners who are, let's say, [ 80 traditional 20 ] well and the other way around also where people are higher on UL. But the idea is to sit and work this whole piece together, where do we get good quality business and the right customer. So we don't have any partner which is saying, look, we don't want to sell this or this is not something there. We work together and work out. And overall, because of our diversified distribution base, we are able to manage the mix, which reflects in our...

Sorry, 1 last quick question I would squeeze in. At the margin, we are hearing that some of the pent-up demand, which is there for protection, has been waning off in December or November. Are you seeing something like that happening, Vibha, in your portfolio?

Yes. So in terms of just Google searches, it went to a peak and then had tapered off. However, within whatever was happening in terms of Google searches, we have been right up there in terms of whatever people were searching. Although overall, it might have gone down. Now in December, we are again seeing an uptick. And frankly, Suresh, we like it when it is more sustainable than something that is just flavor of the season because that's usually not sustainable. So we like it when people realize that they need protection. Maybe there's a lag, but we are beginning to see that lag coming through, and now an upward. Let's see whether that is sustained. But I would also like to believe that it does take time. And usually, we have seen, even in some of the other pandemics, 6- to 9-month lag between a pandemic and really people realizing the need for buying especially term insurance.

The next question is from the line of Shreya Shivani from CLSA.

Vibha, this is Adarsh. I will just continue, Vibha, on the...

Sir, we are sorry, but we are unable to hear you clearly, sir. Can you take the phone off speaker, please?

Yes. I hope this is better.

Yes.

Vibha, the question was on continuation to the production trend. Whatever we imply from IRDA numbers, even December sum assured looked like a 20% kind of contraction and probably reflecting in our protection APE also. Now what I find a little underwhelming, if I can use that world, is now even for 9 months after the spike, we've had a 17% protection APE growth and that obviously has some pricing impact as well. So the sum assured growth is actually a little underwhelming in a pandemic year, which should have actually been quite a -- the impact should have been larger. So just want to have your -- a little more detailed view on how you see this?

Yes. So Adarsh, savings has come back quite meaningfully in quarter 3. And that's why you see, as a percentage, sum assured, just given that savings does have a lower amount of sum assured, optically, looking like it has tapered off. But that's not the case, like I explained. Also people have been used to, in India, getting protected through savings products. I don't think that is a wrong strategy necessarily. Today, the IRRs are as competitive as some of the other products that people can invest in. And so to some extent, that has gone back to savings. People are also, post pandemic or towards the end of the pandemic also, allocating higher ticket sizes towards savings products. And that is really what you're seeing. Now within that, HDFC Life will tend to overall grow well, you mentioned 17%. Our NOPs have grown as well as our ticket size. So all the indicators are in the right direction. It appears subdued due to this reason.

So basically, if you sell a large Sanchay or non-par Sanchay product, the protection bundle with that itself is meaningful, that's why you are seeing protection being a little -- the sum assured growth in pure production being lesser, is that what you're trying to...

And they might have had -- they might have bought -- our customers might have bought a pure term also earlier. So they are looking, as a bundled product, they might buy a Sanchay Par Advantage, Sanchay Plus or even a unit-linked product. And so there, you will see typically a 10x cover and -- versus, say, 100x cover or 40x cover. And so optically it will look -- versus say quarter 1. Quarter 1, our term grew by 50%. H1, it grew by 38%. So versus that, it looks subdued, but I am a believer, and that -- it's not only going to be a protection story like it has made. Protection will increase gradually, but it has to be done in a calibrated manner with underwriting in mind, at least for us. So it will be, for the foreseeable future, both coexisting. And slowly, it will be wherein the younger people buy more of protection, while people above 45, for example, will continue to buy savings-led protection.

Okay. And my second question related again to protection is from a reinsurers side, do you get the comfort that the reinsurers may not ask for another hike anytime soon? Are we there? Or that's still uncertain for next year?

No, I think that will remain uncertain into the foreseeable future. And that's why if you overall look at our term growth, it has been somewhat muted because especially in this quarter, we don't want -- we want to partner with our reinsurers. We don't want to just throw caution to the winds and write business and take on business whatever is coming our way because in a pandemic, people will want to buy protection, but that's not necessarily what fits into our risk appetite and certainly not what fits into reinsurers' appetite. But if companies continue to write a lot of term business, which they haven't done fairly robust underwriting, then at some point in time, reinsurers are going to reprice. So it really depends on the collective underwriting behavior of the industry more than any 1 insurer or the other. But it's -- the story is by no means over. And that's why it's important that as a sector, we are -- we treat the extension of reinsurer arrangements as if it's our own risk management part of our company as against just passing on the risk to somebody else to hold that hot potato. So -- and all of that is part of the growth -- orderly growth of selling term in a young country.

Perfect. That's it, Vibha, from my side. And I should have started off, but congrats, your traditional business volumes have been surprising -- very, very strong. So congrats on that.

The next question is from the line of Sanketh Godha from Spark Capital.

I have basically 3 questions. First question is on ULIP persistency. And if I look at 13-month ULIP persistency, which you have disclosed in that particular slide, has come up by 4 percentage year-on-year, especially on 13th month, and I can see a similar change in 25th month, too. But still, I see an operating variance number of INR 80 crores. So just wanted to understand if persistency is behaving little negatively, how we are able to see the operating variance number, whether it is largely driven by the cost-saving measures or mortality experience? That's the first question. Second question is the new product which you have spoken about. Whether -- just a basic doubt that whether it will be classified as a saving or protection? And is it like a return of premium because if survival benefit is paid out as a lump sum or income payout? Then, can we [ it be ] said that it's more similar to a return of premium policy sold by the other companies? And I just wanted to understand the margins of that particular product compared to, let's say, your protection plan. That's the second one. And third, finally, one is that if you look at the protection business, you largely answered it, but I just wanted to understand the protection business has declined 13% in the quarter, and we broadly took a 10% kind of a price hike. And probably we sold even more LP compared to RP. Then the volume impact on the growth on protection business seems to be significantly higher than what is getting reflected in 13%. Just wanted to understand that the protection demand is somewhere threatening for the sector or for our company?

Right. So Sanketh, 3 questions that you have. I'll answer the first one. And then second one, Srini can take on the new product. And third one, Niraj can answer. On unit-linked, yes, you're right that the persistency does show stress, and we have flagged this off even as far back as at the start of this quarter towards the end of last year. And that's when -- if you recall, we had strengthened our persistency assumptions on unit-linked portfolio. I'm happy and relieved to say that there is nothing further that we need to do. And that strengthening has helped us stay within the revised assumptions of how unit-linked book persistency is going to pan out. So I hope that answers your question. But more broadly speaking, just the construct of the product is going to be, especially at the 61st month, it is somewhat difficult to retain large flock because there is some reference to some of the other geographies, wherein maybe 61st month is much higher. But without really barriers of exit, it does become a challenge. Plus there is, as you know, the discontinued policy fund guarantee. So that's what I'm alluding to as the construct of the product. But nevertheless, within the current construct, whatever we had done in terms of shoring up our assumptions, we have done that in March, and that suffices. So right now, we are -- we have a positive operating variance on persistency. Srini, you want to take the second point on products?

Sure. See, Sanketh, whether it's classified as a protection or a savings, so the new term product we launched yesterday, see, if you look at the plain vanilla term product, where there is -- without an ROP at the end, for us, say, a profile, say, INR 1 crore sum assured, without ROC, the premium maybe say, INR 20,000, just as an example, for a given profile. Now if the person wants to take an ROP, the premium maybe, say, INR 30,000 or INR 35,000. So the -- if you divide the sum assured by the premium the person is paying, it's still about 250, 300x the premium he is paying. So in my view, for such a large sum assured relative to the premium one pays, it should still be categorized as a protection product. So that is my view. And writers also in their sort of -- in their product -- this whole product is categorized as a protection product. So that's my view on whether it's savings or protection.

Okay. And just on completing that question, this payout is lump sum payout or income payout? And how different the margin of this product would be compared to the -- your term life what we typically write?

So the margin, we don't give product level margins, but protection typically tends to have a higher margin than company average. So that's what I can tell you on the product margin.

Okay. Okay. All right. Good. And the last one on the protection growth, basically.

So Sanketh, on protection growth, like we just -- Vibha mentioned in the opening comments as well, for us, honestly, nothing's changed from a medium to long-term perspective. Of course, we are very watchful in terms of what's happening in the near term, closer to ground in terms of what's happening due to the pandemic. So we've been tracking very closely in terms of what's happening with the claims. Overall basis, we are still within our estimates. So there's -- mortality variance is also positive. But we are seeing COVID claims increase and especially in -- towards the end of quarter 2 and beginning of quarter 3, we started seeing that. And we saw a peak coming through sometime in October. Since then, November, December have been on a lower trajectory. So this is something that we need to watch. And in this environment, do we want to completely go out there and put ourselves as well as the reinsurance capital at risk, we do not want to. So we will be calibrated in the short term. Quarter 4, with the launch of this new product and the environment improving, we are absolutely looking forward to getting back to the growth there. This is also coinciding with some of the search trends that you would have seen. It did -- absolutely peaked in the first quarter given all this apprehension around the pandemic and people getting extremely uncomfortable with everything that was going out. With every passing month, people are getting a little more, let's just say, more normalized in terms of the way they're thinking about it. And they will, with a cool head, think about protection as they should, rather than as a knee-jerk reaction. So the searches have also indicated that. And again, since December and January, we started seeing an increase in searches. And within the searches, HDFC brand as a search, we've seen a fairly consistent top of the mind recall there. So that is something that we are very bullish about. But in terms of the demand coming back, it will take a lot of things coming together for that, and we are fairly confident that from a medium to long-term perspective, there is no issue that we see there. But yes, in the short term, we will be calibrated in our approach.

[Operator Instructions] The next question is from the line of Harshit Toshniwal from PremjiInvest.

Ma'am, 2 questions. I think the first one is on the protection piece itself. I think the reduction which we see in volumes, I guess that given your commentary, it looked like more a conscious shift to not be very aggressive in that segment in the last 2, 3 months. But can you throw some color on what is happening on the distribution piece for us? So -- is it something that we want to be more selective when it comes to which channel for this segment given the risks could vary across different segments? Some broader color whether online is better than off-line or a bank channel like HDFC is better than many of the other partners? And secondly, ma'am, when we look at the overall growth, banca in 3Q has been an excellent growth driver, north of 40% based on the number. But when we look at the agency channel, that has been flattening out. Now is it that the Par Sanchay which we are having -- so do -- like Sanchay non-par did a great job at the agency channel. Do you think that there could be more products or differentiated combination combi products, something which can be done to bulk up the sales on the agency piece?

Yes. Harshit, very good question. I'll take the second one first on banca, agency. You're right that banca has, in the first 9 months, grown pretty well. Agency has been, to some extent, muted. But I'll give you, on agency, why I'm not worried at all, a couple of data points. Our quarter 1 de-growth was 39%, quarter 2 was 6%, and quarter 3 was almost flat. So a breakeven has happened. And I have no doubt in my mind that we'll end the year with growth. And second point is that last year, agency grew over 60% and on a 9-month basis, about 32-odd-percent. So it was -- so there is a fairly significant base effect as well. Also online, for example, grew about 56%, while banca last year grew only 6%. So the base effect for the different channels is very different. So optically, it looks like banca has grown disproportionately. With the agency channel, another aspect is that quarter 1 was a bit of a struggle because just adopting digital and also accepting that this is going to -- COVID is here to stay for a pretty long time as against it being a 1 quarter problem. When that started becoming evident around June, I think that's when -- a lot of credit to our financial consultants and our front-line people in agency channel to embrace -- and I won't talk about it again because I've been mentioning this last couple of quarters, our platform-wise and also other modes of selling digital. And that's why you see the quarter-on-quarter very significant improvement. Quality of business also has been retained. Again, there could have been either dilution in terms of selling a lot of unit-linked or somewhat not as desirable quality of business that the channel hasn't slipped on either of that. So very much adhered to the product mix that is optimal for agency channel continuing to be a very profitable channel in terms of NBM, so very much right in terms of building blocks. Also, we are right up there with a second company in terms of ranking to add, I think, if I remember, about 18,500 agents in the 9 months. So again, all of that is important in terms of building blocks for the future -- so for the rest of the year. So that's really the backdrop of -- my fair amount of confidence that this will start evening out. And this is more a COVID-related aberration than anything else. And quite frankly, even with bancassurance, given all what they were going through in core banking in the first quarter, there was a fair amount of focus on selling other things, and insurance was also one of them. So it is a combination of factors. On your first point about protection and how distribution, Suresh you want to -- sorry, Harshit what...

So on the agency part, how has the Sanchay Par been working? So you think that, that product specifically has clicked more at the bank channel than agency channel? Because for us now maintaining that balance mix requires that across both bank and agency that can be maintained.

Yes. But if you look at Slide 15, Sanchay Par is 36% in the first 9 months, slightly higher than bancassurance channel or really higher than other channels. So very balanced in terms of -- non-par savings is 36%, which is largely Sanchay Plus; par is 38%, which is Sanchay Par Advantage. And term is very noticeable, what Suresh is mentioning, 13% term. So actually better than where we ended last year. And this is reasonably creditable because if you look at some of our peer group, you will not find agency channel having this high level of term. It's somewhat easier in a bancassurance channel, especially if one is able to -- to be aligned with your distributor that you have to sell protection. But agency is a lot more dispersed. And engagement is with, in our case, over 1 lakh agents and counting. So really moving the needle on this one is quite creditable. So -- and that is something that we haven't diluted upon. Growth will come back. Suresh, you want to add anything?

No. I think broadly, Vibha, you covered it. I think, look, we are monitoring each of the channels based on -- right from the claims experience to the quality of business and persistency as well as growth on top line. And we do kind of balance the product mix that we are looking at each of these. So in agency, like Vibha mentioned, look, there's a certain retail equation which works as the new agent addition as far as the productivity builds up post COVID, we will see the growth coming back. And protection also, we are fairly calibrated in terms of which channel will contribute to how much. Broadly, banca, agency and online have contributed significantly to our -- and direct have contributed significantly to the protection business. And I think that will continue as long as we ensure that we maintain all 3 aspects of the business.

The next question is from the line of Deepika Mundra from JPMorgan.

Many congrats on a great set of numbers. My first question is that if rates were to hypothetically harden from here, like you have done in reducing rate cycle, how would you alter your product mix in that environment?

You're referring to a non-par product presumably when you say rate?

Yes. Yes, because -- yes, if you see the sensitivity, I mean right now with hardening of rate, it shows negative sensitivity, but I'm sure -- yes, that's obviously because of all the hedging that you've put in place, but generally, how would you think about product mix in a hardening rate cycle?

So the way we look at this, Deepika, is that it is all relative to what else is available in the market. And we will reprice. We have a dynamic repricing governance and in line with what is the prevailing rates that are available on -- for new business, which you're referring to. So that happens. That is number one. Second is we will peg it to what else in terms of financial products that are available. And as long as we are competitive, there is a place under the sun for products like this. And also, what is the outlook? Is this a temporary fall? Is it a more permanent or into the foreseeable future? If it's in the foreseeable future and we reduce rates, for example, usually, the customer is also having a similar outlook and thinks that it could drop further. So even at a reduced rate, so for example, from the higher 6% today, if we are closer to 5%, even then, it is an attractive product to lock in some of your savings. And I think customers are beginning to realize that it's not all equity versus debt versus ULIP. So they realized that some portions, they wanted to be -- to completely eliminate risk in -- post-retirement or when they're older. And that's where this product comes in as an attractive product, regardless of what it might have been a year ago or 1.5 years ago. So rear view looking, I think, happens lesser. We've rarely encountered that with customers. It's usually forward-looking as to what is the outlook.

Vibha, just to add to that, Deepika, in terms of the hardening of interest rate, basically, the sensitivity that you're referring to -- so -- I mean interest rates go up, obviously, from a product perspective, it becomes more attractive for -- both for us to price as well as from a customer to buy. The implication in terms of the sensitivity is really more in terms of the implication of the cash flow hedging that we have, which is the excess assets which get -- that come through, which do not have a corresponding liability, that is what is causing the interest rate sensitivity that you're seeing. And that is something that we are comfortable with given that we always have the option to hold that in cash, but the problem is -- with that is that you end up losing a lot of yield unnecessarily. For us, the key is that assets are matched very well with the liabilities. As long as that is done, the long term and the tail risk is protected. Any sensitivity that is happening at the shorter end is more a trade-off between yield and holding the assets and cash. So that is a trade-off which is something that we continue to monitor. And the sensitivities, as you see, across periods has been fairly range bound.

Okay. Just 1 follow-up on my side. Vibha, you mentioned earlier that the industry should together be slightly more disciplined on the mortality risk as a [ pool ], which could potentially protect from further reinsurance rate hardening. In the current context, how -- I mean we've seen some competitive activity in the past year. This year, how do you -- how would you think you are positioned in terms of term pricing amongst your peers? And do you see overall term prices hardening further?

Srini, you want to take that?

Yes, sure. So Deepika, the underwriting practices have actually largely strengthened across the industry, thanks to the intervention from the reinsurer fraternity over the last 8, 9 months. So I would expect the quality of the book going forward, as a result of all these stringent practices now being adopted, should actually help build a stronger protection book going forward. And as far as the price hardening is concerned, already different companies have sort of -- are awaiting approvals from the authority on increasing the prices. IRDA has approved a few products in the industry already. And one of our products got approved, which we launched yesterday. And -- I mean this is like any other products. So there will be experience that will emerge from the book that has already been written. And based on the experience, reinsurers will keep revising the prices. So if the experiences are adverse, they will jack up the prices. And if the experience is favorable, they will reduce the prices. So this is a continuous process. What we are now probably seeing is it's a little bit on the experience being adverse. Reinsurers are hardening the prices now. And if they harden the prices, the companies like us also need to sort of keep pace with them and increase the prices. But so far, whatever has happened thus far is only 1 rate increase that has happened. But there is also, like I think you alluded to, there could be a further increase also along the line, but we just need to wait and watch as to what happens. But as of now, there are a number of companies which have already increased the prices over the last few months.

The next question is from the line of Prayesh Jain from Yes Securities.

Yes, congratulations, Vibha, on a good set of numbers. Firstly, on the term insurance, continuing on that point, is there underwriting tightening that has gone on and the rejection to application ratio has gone up? Is that -- is there some kind of trend that's emerging there because what we are hearing is that the reinsurers are...

I can't hear you very well, sorry.

Is this better?

Yes, it's better.

Yes. So I'm asking on the term insurance bit, whether the underwriting tightening has happened and that has caused the rejection to application ratio move higher? And what we're hearing is that the reinsurers are asking for a much higher number of medical checkups and the customers' willingness to go to the medical center is still very low, and that is possibly one of the reasons why the protection slowdown has happened. And that would be just one of the reasons. And the other part of the question -- the other question was on the non-par side. So is there -- we hear that on the ground, the demand is pretty strong. So is there a conscious effort that you all have slowed down? And what is your outlook going ahead for the non-par part of the business?

Yes. On the first part, I think it was -- it is inevitable when you -- we're in the business of writing insurance and we have to evaluate risks that we take on to our balance sheet as well as reinsurer's balance sheet in order for it to be a long-term sustainable value proposition. And that's where I think one can write short-term business if one has been used to being somewhat aggressive on underwriting practices and there is an entire spectrum. What I can say about our practices is that it is what we've been following at least for the last 5, 6 years when we've been very active in this space before protection really became very topical. We continue to see emerging risks. There is a fair bit of analytics that we look at every second day, really, to see what is emerging and what is the dynamic underwriting that we need to do without it being a one-size-fits-all that if it's ex-salaried individual of this age. That's a very simplistic way of underwriting. We've long moved away from that kind of underwriting. That might form an input, but it doesn't stop with that. And so yes, it is inevitable that whether we reject, whether we rate up and very such combinations or whether we go back with a proposal of a lower sum assured, that has to be because a short-term buildup of protection number isn't that difficult to show. But really, over a period of time, when you're talking over the next 5, 10 years, what is the variance on mortality experience versus assumptions, that's the only moment of truth. And that's what we don't want to leave a legacy to another team at HDFC Life down the line who has to be saddled with this. And so we are cautious. Whether that results in higher rejection ratio or higher checks, yes, it will. And more than higher, I think, different checks and those checks keep evolving and changing so that even distribution and channels don't often know what is going to be asked because of the dynamic nature. And also to have an open book with the reinsurer to say, come and see whatever you want to see, because we are aligned with the risk that you are seeing. Otherwise, we will push it back with you conceptually. But once we agree, then we will follow whatever it is that you're saying. And there are different market practices of perhaps simple things like not asking for COVID questionnaire. Lot of pushback with our sales teams also because market practice was not to ask for that. But I think in a pandemic, how does one price against a pandemic? It is virtually impossible. We are in a law of probability. So one -- there is a reason why we have to ask because if you don't ask, you can't reject. If, for example, he or she was COVID positive at the time of taking a policy. So here, we would counsel the individual to wait, and so on. These are just simple examples. But that's why -- my earlier point is this is nascent. If all of us just start something on 1 number, which is my protection percentage is X, that's not that difficult in the sense that some of these nuances could start unraveling down. So at least we operate in the zone that we understand risks that we reasonably have a sense as to what are we underwriting and build this business brick by brick. On your second point on non-par, not at all about diminishing demand. It's really -- we believe in a balanced product mix, while we are fully hedged, and we are both cash flow and duration matched, and we have been engaging with all of you on the modes of how we have done it. Nevertheless, just in the underlying philosophy that we don't want all our eggs in 1 basket, any basket, and that's why we have brought it down very meaningfully. So 9 months, you saw non-par savings at 30%. In the first quarter of last year, for example, it had gone upwards of 60%. And so our ability to really steer the vehicle to -- in a particular direction that we want to get to is something that we have demonstrated time and again. And that's why you'll see almost 1/3 give or take in terms of exposure to any segment. And that is what really has enabled us to withstand and survive a lot of volatility that we see impacting our sector time and again.

Just lastly on standardized term product, these products are about to be launched any time now. So only 1 or 2 players have launched that product, but most of them would be launching them in the near term. Any thoughts that you can share?

Srini, you want to take?

Yes. So yes, I think we should launch the product fairly soon. So my hope to start from, say, 1st of February or so, we should have the product on our shelves.

Sir, my question was more on how do you see this product panning out in the sense that it's more of a segment where you will be writing more riskier cohorts in a smaller ticket and lower income category segments. So how do you see whether you would be able to maintain the profitability, what you're earning on the pure term plans which you're having right now vis-à-vis, so something on that sort would be helpful.

So yes, it is certainly a new segment for us since, I think, collectively as an industry we never really sold individual terms on long-term protection products at that kind of a segment. So it will be a new experience for the entire industry. But we can still do underwriting. So you can always, based on different parameters that one would have from the past experience and also with the reinsurer's support, we will learn collectively as an industry to assess the risks that we take onboard. So I would expect the underwriting to get a little bit more stringent since I think the price at which the product would be launched in the industry maybe slightly lower since it's going to be a mass -- the product is going to cater to a -- sort of a lower middle class kind of segments. So I think the way to ensure the book is financially viable is through stringent underwriting norms. So I think people will adopt different underwriting styles which will evolve over a period of time. And with that, I think there will be a learning phase for the next, say, 6 months or so. And then post that, people will -- some equilibrium will settle down, I think, in this segment.

[Operator Instructions] The next question is from the line of Hitesh Gulati from Haitong Securities.

Ma'am, my question is on the working committee report on indemnity sale by life insurance company that came in November. So from what I understand, the committee did not allow life insurance to sell indemnity independently, but they said that you could sell products of non-life insurers. Is that understanding correct? And is this practically doable?

So Hitesh, it is certainly doable. And frankly, when you look at -- if there's a single regulator, then those products are approved by the same regulator. So if a bank can sell insurance products, then perhaps a life insurer can be a distributor to sell health indemnity and even maybe vice versa. Why not sweat our distribution channels that we have built painstakingly over the last 2 decades to really maximize. And also, if we were to look at customers, keeping the customer in the center, the reason is how do you get to the customer? Because today, if a customer wants to buy health insurance, he -- does he really know who to go to for health and the general, there is SAHI, there is fixed benefit that life insurers like us sell, and so on. We ourselves used to sell health indemnity in the past. So it is quite confusing for overseas medically goes to a general insurer and so on. So if, for example, hypothetically, if a life insurer is allowed to sell indemnity, then in a 1 conversation, you are taking the product to the customer rather than making the customer run around to various insurance company and do homework for the nth time. So that is the reason for -- behind this logic, but we are yet to hear back from the regulator.

So if my understanding is correct, this will be like a commission fee income product for you and not a -- you will not be a product manufacturer. Is that understanding right?

So we would like to be a product manufacturer, but it looks unlikely just given the current construct between the way there are 3 arms of insurers in India. And in that construct, it just looks -- there's no -- in our view, it makes a lot of sense because health penetration is woefully inadequate. And life insurers, a, have done it before, and, b, have the distribution muscle power. But it looks somewhat doubtful for that happening. We are saying that as a second best option, if we want to -- and the intention is to keep customer in the center, why not allow us to distribute like we are allowing other financial institutions to distribute.

The next question is from the line of Rishi Jhunjhunwala from IIFL Capital.

Couple of questions from my side. One is just on a balance between par and non-par. So in the last 12 months or so, par, which used to be almost half of non-par in terms of size, is actually now crossing it. Just wanted to understand what -- how are we deciding to maintain that balance between par and non-par given that it would be customers' requirement versus our push strategy to the customers? Especially when -- we really look at the difference between the 2, for I'm assuming 90% of the people, it is more about what we end up pitching to them rather than what they exactly know what they require. So any reason why par would actually grow faster for the past 9 months versus non-par? Or going forward, how it can potentially pan out?

Suresh, you want to take this?

Yes. So Rishi, frankly, look, the customers out there, we believe there's a large opportunity, whether we were to look at UL, non-par, par, pure term. And our strategy has actually been to drive a balanced product mix based on channel-level profitability and challenge-level capability. So the way we look at it is, it's not that we are trying to pitch a par product to somebody who's got a non-par requirement. Yes, there are product value propositions which are there. A par product has a certain value proposition and non-par has a certain value proposition. There are customers who we want to make sure are right fit for whichever product we are selling. So there's a lot of effort that we do in terms of balancing the product mix through each channel: one by building capability; two, by ensuring that look, our people are trained, the reach out happens. And we do believe that over a period of time, the market is large enough for us to be able to drive a certain product mix, right? So -- and internally, also, we keep looking at what does the par product proposition compare as compared to what is available in the rest of the industry and as well as how does it compare to the non-par proposition internally as compared to the rest of the industry. So frankly, the product has to be good enough for us to be able to sell it to the customer and ideally, a lot of us should be buying it ourselves. So some of us may want a non-par, some of us may want a par where there is probably a higher bonus which comes in and you find a return reasonable. So we do benchmark it. I do think that, look, there is space for both. But given that as a strategy, we want to have a balanced product mix, we do definitely make sure that the channel-level strategy, the drive, the capability building is all aligned to make sure that at the end of every quarter, we kind of remain within certain boundaries.

And just to add, Suresh -- to that what Suresh just mentioned, is that, see, ultimately, whatever product is sold and bought by the customer, as long as the persistency is good, it is a proof of the fact that the customer, one, has understood and, second, needs the product and is going to benefit from it over the long term. So that's something that we track very closely across each of the categories that we sell.

So Rishi, just to add, we launched a product called Sanchay Maximiser. It's actually a combo of both the par and the non-par. It's a great value proposition because from the end solution point of view, the customer can see a huge value in terms of how the product features are both actually combined, and he gets a certain guaranteed component and he gets a certain par upside. So we have looked at how do we take it across the people who are looking only at par, who are looking at non-par, who may probably want a combination of both.

Understood. And on just on ULIP, right? So if I really look at your ULIP click-through when a product which is available online, it seems to be the most efficient product on the street when it comes to the consumers in terms of pretty much 0 charges except FMC and a little bit of mortality. I just wanted to understand our strategy around it. Are we not pushing it enough because of the low profitability? Because otherwise, I don't see a reason why that product should not be a super hit?

Thank you, Rishi, for that because that's something that we have been trying to also evangelize. It's exactly that. It's a very low -- slimly priced product. And so we haven't really gone to town in terms of allocating an ad budget for that. But yes, through word of mouth, the fact that, that product is so slimly priced, it is very, very accretive to the policyholder. And over a 5-year term, it's definitely better than, say, an equity mutual fund. And exactly, like I said, with a cap of 1.35% versus, say, 2-odd-percent and fund switches that are not taxable, there's a life -- and I'm not even mentioning life cover that is over and above the IRR that I'm talking about, means that it's a very good wealth accumulation. And especially when you -- if you take it in the life of a -- on the life of a relatively young person, even more so, as the mortality charges are, again, very minimal. Yes, I think it is just that it is like I just explained. So we are hoping that over a period of time, people come searching for products like this because they're used to buying digital products from HDFC Life, and they will start having this following in terms of people who -- exactly like the evolution that we saw that happened in the asset management sector. So we expect that to continue to happen. And even our Click 2 Protect series, and you mentioned Click 2 Invest, even other Click 2 Pension -- or Click 2 Retire rather and Click 2 Protect, of course. That -- all of that is now gathering a brand unto itself. And we'll see -- it will be steady growth. It's not going to be phenomenal, at least in some of these products with low visibility. But yes, they are very good products.

Actually, Vibha, just to add, look, some of these products are meant to look at a segment which is new to us. In some sense, it is targeting the mutual fund market because these are equally comparable in terms of returns or better over a long period of time. So we do believe that, look, like there is a protection space, there is an annuity space. There is clearly an online unit-linked space like products like Click 2 Wealth and Click 2 Invest, which by itself will evolve, customer will be able to come and take digitally.

And frankly, the very reason we solved for this product was that -- we just wanted to put to risk the time and again repeated line that one should unbundle and buy protection separately and equity investment separately. We demonstrated that this product in the current uptide of a unit-linked product can deliver superior returns while giving protection.

The next question is from the line of Ajox Frederick from B&K Securities.

My question is with respect to ROP, return of premium, in the short term. From your perspective, how do you see that panning out going forward for industry from where we are -- for a country like India? Which of those products do you think will be growing as part of this?

Srini, you want to take this?

Yes. So I think from a customer perspective, I think I just gave this example a while ago on the call. So for INR 1 crore sum assured, the non-ROP version will be, say, for a given profile might be INR 20,000, whereas the ROP version will be, say, INR 35,000, INR 40,000, right? So that's the kind of -- so if someone wants to get the money back at the end of -- at the end of the term, and which I think the Indian psychic generally prefers a return of the premium. I think for our market, people would prefer the premium to come back because the plain vanilla option, if you survive the term, there's nothing to be paid. So I think it's a good value proposition. Also, it also -- in some markets, it sort of plays as a legacy planning tool, especially if you sort of stress the term a little bit to, say, 85 or 90 years old. You can actually make it a legacy planning tool as well. So with that both aspects in mind where Indian psychic prefers refund of premium at the end of the term and also it serves as a legacy planning tool, I think the market would probably more tend towards an ROP than a non-ROP. It's my view.

Okay, sir. Great. Just a bookkeeping question, sir. Last time, I think we discussed about the protection share from HDFC Bank. How has that moved? Given that now the prices have almost -- the difference has almost shrunk and our prices are almost competitive to what the competitors are sharing through HDFC Bank. So how has our share of business, particularly protection share of business on the HDFC Bank?

Suresh, go ahead.

Yes. So look, we have always been pricing our products competitively, and we do understand that, look, there are 2 other players who will offer their product at a certain price. I think it's not just the price, it's also a question of the brand, the service levels, the claim settlement ratio. So we have been constantly benchmarking our overall market share as well as our term market share of the bank. I think the idea is to stay comfortable in a certain segment based on the pricing as well as on the margins as well as on the overall claims that is supposed to come in. We've actually gained. We had kind of recalibrated our pricing somewhere at the beginning of the year. And we did a few tweaks to our overall proposition. And we found that our market share at HDFC Bank in protection has actually gone up as what we were last year. With the launch of our new product, which is the Click 2 Protect Life, we have again relooked at the features. It's a fantastic product if you were to go back and have a look at it, especially given the current context in terms of being able to balance between your protection as well as your critical illness health requirements. We do believe we have a winner. The pricing has been also again looked at. Like I said, the pricing has to make sure of multiple aspects. It has to make sure that the customer pricing is right. It has to make sure that the overall margins are right. And second, in today's context, the reinsurer is also looking at it favorably. I think our product team has done a good job of balancing all 3, along with the features. So yes, the market share in -- firstly, the overall protection in HDFC Bank has been going up. They have done a very, very good job in terms of focusing on the standalone term. Within that, our share is going up, and we do believe with the kind of products that we are looking at and the way we want to position ourselves, we will probably see better in the future.

[Operator Instructions] The next question is from the line of Manish Shukla from Citigroup.

Vibha, the point that you mentioned earlier about propensity of Indians to look at insurance more as savings rather than protection and also the ticket size differential, is it realistic to expect, in terms of mix, more than a percentage point kind of increase per year on individual production on an ongoing basis?

There are 2 aspects to this, Manish. One is that if one is not as tight on underwriting, then certainly -- and these are the comments I made earlier overall on how protection can grow in the short term versus medium term. So yes, one can make a sprint and -- because all of you are tracking this number. And I think today, we have -- I think 50% of the call today has been to discuss protection. So it is not that difficult to show each year increasing by 300, 400 basis points. So that is one. Second, it is also easier if multitie is not the case. And you have 1 distributor with whom there's alignment, even if the pricing is significantly higher or reasonably higher than what could be out there. So there is perhaps not equal amounts of information or just a way of selling is that the customer does not want to compare, put it that way. And so one can drive protection through that. But in the medium term, and longer term, in a completely open architecture and open market and decisions that are made -- informed decisions that are made, I think that growing 100, 200 basis points would be more sustainable than growing 500, 600 basis points suddenly. So that is the reason. It's also a graph between growth and risk appetite and what it does to operating variance on embedded value. And also, most companies don't disclose what their operating variances are, don't even disclose embedded value. So really, on one side, we are so nascent as a sector. On the other side, we are talking about galloping on protection. And that's where I would just want to balance it out. And I think what reinsurers are doing are just an early warning indicator of that. And so it needs to be tempered, growth as well as risk. There's a tempering and toggling between the 2. And so from HDFC Life's point of view, it will be a brick by brick growth in protection and savings will continue to also grow and be an important aspect of even coverage, even in terms of sum assured for us in the near term.

So specifically for you, the way annuity and individual production businesses are growing, is it fair to assume that 2 to 3 years out, annuity might be a bigger piece than individual protection?

Undoubtedly. And that's something I've always said. I think that retirement is an even bigger opportunity than protection. And the numbers, the share numbers just show, and also a whole host of demographics of people living longer and so on and inflation where it is. If you look at Slide 14, we are very, very aspirational of growing our retirement corpus 3x by the time we reach 2025. And that really -- we put out a number in terms of our aspirations, and this is -- there is a lot of interconnectedness between various aspects of retirement, whether it's superannuation and whether it is NPS and whether it is our own pension policies and so on. And it is also stickier business. It's also a little bit -- takes a little bit longer to engage, especially on government business. And that's something that enthuses us. So it's a -- I mean we are equally enthused by both. Protection is seeing a different here and now play, retirement is a slightly longer play.

The next question is from the line of [ Prateek from Nippon India ].

Ma'am, I just wanted to check -- you talked about -- in savings, we have reached a balanced product mix. And protection, there are some headwinds, which are basically that we have been cautious about that segment. In terms of VNB margins, how should I think about levers going ahead, ma'am?

So we've always had several levers for us to work on our VNB margins. And that's where I think the balanced product mix comes in very handy. So it's not just all eggs in the protection basket. But really it's a nuanced approach of which -- what is the cost of acquisition of a channel? What does the customer want as well as what is the underlying product construct? And it has to be a 3-way win-win value proposition. And calibrating that on a daily basis. So we track our product mix as a channel, subchannel level on a daily basis. And that it's really the devil is in details. And even with the Sanchay Par Advantage, which is a participating product, just substituting if the customer is not really looking for market-linked products, substituting it with Sanchay Par Advantage, we'll see an uplift in terms of margins. Likewise, some of the other product features on term could be -- could see an uplift and so on. So that is -- so the product mix and the nuances on product mix is one. Costs are another feature. Persistency plays a very important aspect on margins and paying attention to persistency. And saying -- either saying no to business that you think is not going to be persistent or is going to be fraudulent as well as doing dynamic underwriting that I talked about earlier, which is risk-based underwriting, than one size fits all. All of that adds bits and pieces to margin. So it's not just one lever of protection that goes into that. If protection goes down, margins go down. You won't see that one-on-one equation because of this multi-pronged approach to profitability.

Got it. Got it. And ma'am, lastly, just wanted to check, what should we look for so as to get some comfort that -- what are you looking for from the end market to go aggressive on the protection side or to ramp up growth again? And what changed really man in the last 3 -- I mean last 2 months or 3 months, which made you cautious? So I'm just trying to look at both of these things.

Well, Prateek, we are in the midst of a pandemic. We really can't get adequately cautious. And in some of the geographies, especially in the western world, they're just not able to sell term because how does one price against a pandemic. And also with the gestation period easily of 2 weeks, even if the individual doesn't know that he or she has. And there is no waiting period. Of course, there will be a waiting period once we have the new term product. But right now, there is no waiting period and so on. So -- and that's why they're cautious and also when we juxtapose that with the trend in COVID claims, it was not -- it was no rocket science for us to go slow. So to your question as to what would we like? I think we would -- if, for example, there was a way wherein we could access hospital records or people could voluntarily say that, okay, I will share my hospital records, and there is a single number, for example, either it's an Aadhaar number or something, which is a unique number. Similar to, say, in the U.K., you can't get NHS availment unless you -- sorry, availment in an NHS hospital unless you give your social security number. It's mandated. So there is 1 record of each individual of all health-related treatment that has been done. Now me as an individual, I might be able to share a score with a life insurer. So that I can show -- get a cheaper. So that kind of a nuanced approach is really what we are looking for, where we can help connect the dots rather than really be reasonably blind in terms of not having adequate information to be able to price risk.

And ma'am, wouldn't medical inspections help you in this? Like I remember speaking to you in a conference and you said, we are putting a lot of policies on hold because customers are really worried to go to diagnostic centers to get their medical reports. And isn't that -- can't that be done? Or that could be one of the ways to get over this, right, where you get to know the customer profile -- I mean the customer's medical history based on which you can sell protection, right?

In terms of having telemedicals or...

No. I'm saying he can go to a diagnostic center...

The patient, he is not going to be happy going to a diagnostic center, right? So he is not -- he was not even happy until quarter 2 for home visit from one of our empaneled medical professionals. So that's the challenge that we face against the pandemic. People were not even okay for -- to come downstairs into common area below their building to get something done or -- so telemedical was the only thing that was maybe that we could make some connect with the customer. But that telemedical in terms of headroom is not endless either. So these are the challenges wherein -- do we just go ahead and sign up somebody because he's a salaried customer, he is mass affluent? Really it makes no sense because just because with that profile, that doesn't tell us a lot about his medical profile. Sorry, Suresh, you were...

So Prateek, just to add, look, frankly, it is always good to recalibrate. We have looked at the little bit of reinsurance feedback, the tightening, the COVID claims, or whatever. But we do believe in the long-term protection is a large opportunity. And the idea is to build a full ecosystem from what we're seeing. There's a fair amount of analytics going in. We have a lot of learning in terms of which geography, which profile. We do understand what kind of product and pricing, what distribution. You're right in the sense that we need to look at how should the medicals be taken care of, whether it should be preapproved, whether it should be non-medical, whether it should be tele underwriting. And over a period of time, how it will all evolve is to build up further. Till such time, we are getting the customer on board, we are a little careful. Over a period of time, what we will see is once the customer is on board, if we're able to drive health related, if we're able to drive other ecosystems where we are able to work with the customer to lead a healthy life, the protection opportunity will increase all over again. So even the new product that we have launched right now, the Click 2 Protect Life, is very well targeted to make sure to say that, look, you need to come and protect yourself. But as you grow older and you have more health-related concerns, you can actually shift and the product automatically shifts from some critical illness, right? So these are the kind of innovations which we have constantly been bringing across. And I do believe that the protection opportunity will grow. And we need to be right in terms of what kind of scale up you want to do, at which period.

Ladies and gentlemen, in the interest of time, we take the last question from the line of Vinod Rajamani from HSBC.

I just wanted to know this IRDA move towards standardization of products. So on this, things like Saral Bima and so on. Is that -- I'm sure the volumes -- it will definitely help in terms of volumes, but is there a risk of some bit of, say, cannibalization of your existing product portfolio and also the sum assured is -- will be lower than the products you currently sell, but is there a risk there? And do you think it's a bit of some overreach on the regulator? How are you currently viewing this standardization move by IRDA? And could it sort of -- could we have a standard par policy, standard non-par products and so on going forward?

Srini, you want to take this?

Yes. So yes, it's a good initiative in my view by the regulators to come up with the standardized products because the -- it will help sort of the -- help customers understand what they are buying. So standard products would also get that [indiscernible] and it's actually beneficial for the industry, I believe. So largely, I think it's set in the right direction. But specifically on this standard term product, whether it's going to cannibalize our product, I doubt since, like you rightly mentioned, the sum assured that the industry currently caters to -- the average sum assured is roughly around INR 75 lakh, INR 80 lakhs for the industry, whereas this one is kind of [indiscernible] quite capped, but it is going to be less than INR 25 lakh segment. So it's not going to really cannibalize, I don't think. But in terms of the -- whether market is going to be different, yes, it's certainly a different target market. And whether the price is going to be commensurate with the risk, only time will tell. And -- but there, the important aspect there, in my view, is the underwriting norms an individual company follows. So the -- I think it's very important that industry doesn't get very aggressive in writing protection, especially in the standardized term product. Since it's an unknown market, it's better to tread with caution, at least in the initial days. And once there is some experience that develops, let's say, next 1 or 2 years, then based on the experience, then we can probably go a little bit more aggressive. My preferred kind of strategy would be to tread with caution, do stringent underwriting in the initial days. And once the experience develops, then we can see -- based on the experience, we can see how to sort of take that forward. Whether there will be non-par saving standard products, in fact, there is a talk about annuity standard product. But I think annuity is already fairly standard, in my view. So it may not be very different from the current annuity products that companies have. But let's see how that new standard annuity product contents are. And I think based on the success of these initial standard products, I think IRDA might come up with more such standard products is what I think.

I would now like to hand the conference over to Ms. Vibha Padalkar for closing comments.

Thank you, everyone, for being there on today's call. The detailed disclosure on our results is available in our investor presentation. I would like to thank all of you. Stay safe and take care.

Thank you. Ladies and gentlemen, on behalf of HDFC Life, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.