ICICI Prudential Life Insurance Company Limited (ICICIPRULI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the ICICI Prudential Life Insurance Company Limited H1 FY 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. N.S. Kannan, MD and CEO. Thank you, and over to you, sir.

Thank you. Thank you, Stanford. I hope I'm audible.

Yes, you are, sir.

Yes. Good evening to all of you, and welcome to the results call of ICICI Prudential Life Insurance Company for the half year ended September 30 of the current financial year 2022. I have several of my senior colleagues with me on the call: Satyan Jambunathan, our CFO; Judhajit Das, who heads Human Resources, Customer Service and Operations; Amit Palta, who heads Distribution, Brand, Marketing and Products; Deepak Kinger, who is responsible for Audit, Legal, Risk and Compliance; Manish Kumar, who manages investments; Dhiren Salian, our Deputy CFO; and Mukesh Boobana from the Investor Relations team. At the outset, post the intense second wave of COVID-19 infections during the first quarter of this financial year, we saw significant reduction in new infections during the quarter gone by. Alongside, we have seen a significant pickup in the vaccination drive, with almost 1 billion doses administered in the country so far. As the country continues its battle to contain the spread, our thoughts continue to be with the families who are grappling with health issues, lost lives as well as livelihood issues. We continue to follow COVID-19 safety protocols at our branches, and 96% of our employees have got at least 1 dose of vaccination done. For the safety of our customers, employees as well as distributors, we continue to promote and adopt digital means for policy sales as well as servicing. During the quarter, we introduced a convenient and easy document pickup services for our senior citizen customers. Satyan will talk us through the impact of COVID-19 on our mortality claims in the later part of the opening remarks. Let me start by talking about a couple of developments during the quarter before moving on to our performance. I'm happy to inform you that we have won 2 awards at the Insurance Industry Awards 2021 organized by FICCI, Federation of Indian Chambers of Commerce and Industry. One is the Claims and Customer Service Excellence Award and the other is for innovation during COVID-19. The pandemic has been a challenging time for all. But with the state-of-the-art technology solutions, we have continued to innovate, empower and provide convenience to our customers and distributors. We believe these awards are a testimony to our responsiveness to the environment, customer sensitivity in these testing times and ability to innovate and give us the confidence to set new benchmarks. Moving on. During the last results call, we had highlighted various initiatives undertaken by us to incorporate ESG principles in our day-to-day business activities. Continuing on our initiatives, we have provided our customers an option to invest in an ESG-focused fund, which is named the Sustainable Equity Fund within our unit-linked portfolio. We have also launched an internal campaign, Green Calling. Employees are participating in activities like yoga sessions, walkathon challenges, plant a sappling, paperless work environment and usage of e-waste bins. As we speak today, about 1,400 employees have participated in various Green Calling activities instituted by us. I'll now move on to our performance for the quarter. Our 4P strategic elements, that is premium growth, protection business growth, persistency enhancement and productivity improvement, continue to guide us towards our objective of growing the absolute value of new business while ensuring that our customer is at the core of everything we do. I will talk through our performance on the 4Ps through Slides 5 to 10 of our presentation and then conclude with a commentary on value of new business. Let me start with the first P of our strategic elements, which is premium growth. Our annualized premium equivalent, APE, grew by 35% to INR 19.77 billion in Q2 of FY 2022, resulting in a 40% year-on-year growth for the half year ended September 2021. With this, we have registered a strong year-on-year growth for 3 consecutive quarters now. Also, our APE for Q2 saw a strong sequential growth of [ 62% ] over first quarter. Based on total new business premiums, the growth was at 32% year-on-year for Q2 FY 2022 to INR 39.02 billion, resulting in a 45% year-on-year growth for the half year ended September 2021. So our market share based on retail weighted received premium stood at 7.6% for the half year as against 7.2% in the previous year's whole year. The strong growth in premium was driven by our diversified product mix as well as distribution mix. As you can see in Slide 6, for the half year FY 2022, the contribution from linked savings products stood at 48%, non-linked savings at 30%, protection at 17% and the balance 5% from group savings. On the distribution front, our focus on acquisition of new partners and investment in creation of new sourcing channels helped us maintain the diversified distribution mix, as you can see from here. In our half year APE, bancassurance channel share was 39%, agency share was 24%, direct business share was 13%, the share of other partnerships was 9% and the balance was contributed by the group business. Moving on to the second P of protection business growth on Slide 7. As you know, protection products are available in retail, group term as well as credit life platforms. Given the continued pandemic environment, supply side constraints, including revised underwriting guidelines and general reluctance to visit medical centers, continue to impact the retail protection business. While working on these challenges, we have also focused on opportunity in the group term business. Despite an increase in prices on account of revised mortality assumptions, our group term business has registered a very strong growth. Also, with the pickup in credit demand and improved disbursements, we have seen higher growth in the credit life segment as well. As a result, our protection APE grew by 21% to INR 2.81 billion in the second quarter of FY 2022, resulting in 23% year-on-year growth in the half year. I would like to highlight that based on the total business sum assured, our market share has increased to 13.2% for the half of this -- first half of this financial year from 12.5% for the whole of last financial year. With this, we continue to maintain private market leadership on sum assured. Our efforts in encouraging customers to complement their life insurance coverage with critical illness cover have also contributed to the increase in sum assured. On the third P of persistency presented in Slide 8, we have revised the persistency definition in accordance with IRDA circular on Public Disclosures by Insurers dated September 30, 2021, which you would all be aware of. And accordingly, we have restated the comparative period figures. We saw improvements in 13th month and 61st month persistency ratios. Our 13th month persistency ratio has increased by 30 basis points to 85.1% at the end of September 2021 as compared to March 2021. Similarly, our 61st month persistency ratio has improved to 51.6% at the end of September 2021. For the ease of comparison, we have also disclosed the persistency ratios computed as per the old approach, considering that this is a transition period. On the fourth P of productivity, which is reflected in cost ratios, presented on Slide 9. Our cost to TWRP ratio was higher at 17.8% for H1 FY 2022. For the savings business, this ratio was 11.8%. While the absolute expenses are higher as compared to the same period last year, the new business growth is higher than the growth in expenses. Our cost ratios continue to be one of the best in the industry, and we leverage technology to improve our efficiencies further. Satyan will be talking about our technology initiatives during the quarter later in the presentation. Alongside our 4P strategy framework, we continue to maintain a resilient balance sheet, as you can see on Slide 10. On mortality risk for the half year FY '22, gross claims on account of COVID-19 stood at INR 18.79 billion. And net of reinsurance, the claim amount was INR 8.62 billion as presented in this slide. This net claim amount includes settled as well as notified and in-process claims. Further, as of September 2021, we hold reserves of INR 4.12 billion towards COVID-19 claims. Satyan will talk about this in much more detail. Our solvency ratio close to 200%, 199.9% as of September 30, 2021, as compared to the required regulatory ratio of 150%. On credit risk, only 0.3% of our fixed income portfolio is invested in bonds rated below AA, and we continue to maintain our track record of not having a single NPA since our inception. Of total liabilities, nonpar guaranteed return products comprise about 1.4%. We continue to closely monitor our liquidity and ALM position, and we have no issues to report to you. Moving on to value of new business, VNB. As a result of the above drivers, as you can see on Slide 11, VNB for half year financial year 2022 was INR 8.73 billion, a significant growth of 45% over the first half of last financial year. Given our APE of INR 31.96 billion, the result in VNB margin was 27.3% for the half year as compared to 25.1% for the whole of last year. As we have always articulated in the past as well as in the last results call, we continue to focus on absolute VNB growth, which is our stated objective. Before I hand over to Satyan to talk through some of the details, I would like to mention that we continue to maintain our objective of doubling our financial year 2019 VNB by financial year 2023, which requires a compounded annual growth rate of 28% over the current and the next financial years. With the VNB growth currently at 45% for the half year, we believe we are on track to achieve this aspiration. Thank you once again to you all. And over to you, Satyan.

Thank you, Kannan. Good evening, everyone. Our primary focus continues to be to grow the absolute value of new business, that is VNB through the 4P strategy of premium growth, protection business growth, persistency improvement and productivity improvement. The first element of premium growth, a product range with propositions to suit different risk characteristics of customers has been a very important enabler of premium growth. In terms of our performance on Slide 15, we have registered a strong growth year-on-year across all segments. Our annuity business grew by 97%. Linked savings business grew by 45%. Non-linked savings business grew by 42%, and protection grew by 23%, resulting in an APE growth of 40% year-on-year for the half year ended September 2021. More importantly, our APE for Q2 FY 2022 saw a strong sequential growth of 62% over Q1 2020. In terms of new business received premium for H1 FY '22, annuity business contribution stood at 20%, significantly higher than 15% in the same period last year. With a premium amount of INR 13.47 billion in H1 FY '22, we were one of the largest pension and annuity providers in the market. Our wholly owned subsidiary, ICICI Pension Funds Management Company Limited, distributes products under the national pension system and is registered as a pension fund manager. This business is synergistic to our annuity offerings and is expected to support the growth of the annuity business in the future. The AUM managed by the PFM has increased by 74% over September 2020 to INR 97.48 billion at September 2021. In fact, as we speak, it has crossed INR 100 billion as well. The PFM has a market share of 15.7% in the private sector AUM at September 30, 2021. With this growth, protection and annuities now constitute 45% of the company's new business premiums. Moving on to distribution. We have continued to enhance our distribution network across channels. In the agency channel, the approach has been to ring-fence our highly productive agents. We also added more than 12,000 new agents in H1 FY '22. Within the bancassurance channel, we now have a total of 23 bank partnerships. On partnership distribution, we have added 53 partnerships during the half year and now have about 700 partnerships across traditional and nontraditional distributors such as web aggregators, payment banks, small finance banks and insurance marketing firms. For the direct channel, the strategy has been that of upsell to our existing customers aided by analytics. Coming to the performance of these distribution channels on Slide 18. We saw strong growth across distribution channels. Our bancassurance channel APE grew by 30% year-on-year to INR 12.6 billion in H1 FY '22. Within this, ICICI Bank channel continued with a growth momentum seen since March 2021. Specifically, the annuity business from ICICI Bank channel more than doubled in H1 FY '22. Our new bank partnerships continued to contribute to a significant share of bancassurance APE. Our agency channel APE grew by 41% year-on-year to INR 7.55 billion. Direct and partnership channels grew by 49% and 39%, respectively, in H1 FY '22 over the same period last year. The second element of protection growth on Slide 20. With an APE of INR 5.5 billion, the protection segment saw growth of 23% over H1 FY '21. Our new -- our total new business sum assured stood at INR 3.37 trillion for H1 FY '22, a growth of 35% year-on-year. We continue to be the private sector market leader with a share of 13.2% for H1 FY '22 as compared to 12.5% in H1 FY '21. Recently, there has been a lot of discussion in the media on increase in reinsurance premiums for term policies as well as tightening of underwriting norms. Our reinsurer has intimated us about raising reinsurance rates. As we speak today, while discussions with the reinsurer are underway, we expect the final outcome to be a combination of price increase and applicable underwriting norms in line with emerging experience. Also, as demonstrated in the past, we would like to maintain the profitability of the overall protection segment impact. In terms of business impact over the short term, we don't expect it to be material given that the pandemic situation is still live and the constraints in the environment continue. Over the medium term to long term, given the significant underpenetration, we continue to believe that protection will be a multidecade opportunity and specifically for a company like us, which has a strong customer proposition and a wide distribution network. The third element of persistency on Slide 22. We continued to have strong focus on improving the quality of business and customer retention, which is reflected in our persistency ratios. Specifically, the early period persistency cohorts have shown significant improvement as compared to the same period last year. The fourth element of productivity on Slide 25. Our overall cost to total weighted received premium ratio stood higher at 17.8% for H1 FY '22 as against 14.3% for the same period last year. Similarly, our cost to TWRP ratio for the savings business stood higher at 11.8%. While the absolute expenses are higher as compared to last year, the new business growth is higher than the growth in expenses, and we would, therefore, not expect margins to be adversely impacted. I would like to reiterate that our cost ratios continue to be one of the best in the industry, and we continue to leverage technology. Some of our technology initiatives during the quarter include building an ability to prefill forms by uploading an image of a KYC document, thereby improving policy issuance turnaround time; enabling video verification and KYC authentication services at the distribution partner and to have a unified experience for our customer; and building an end-to-end digital as well as modular journey for onboarding members in the group business. The outcome of our focus on these 4Ps, as you may have seen on Slide 27, has resulted in a VNB of INR 8.73 billion for H1 FY '22, a growth of 45% over H1 FY '21. Given our APE of INR 31.96 billion, the result in VNB margin was 27.3% for H1 FY '22 compared to 25.1% in FY '21. We continue to focus on absolute VNB growth, which is a stated objective. Coming to some of the other financial metrics. First on COVID-19 claims. As you can see from the chart on Slide 29, beginning June 2021, we saw a significant reduction in new COVID-19 infections in the country. However, we continue to receive claims in Q2 FY '22, most of which were claims pertaining to Q1 FY '22. That is delayed intimations. We have also seen a significantly declining trend in these intimations across the months of this quarter. As a result, our COVID-19 claims, net of reinsurance, stood at INR 8.62 billion for the half year FY H1 FY '22. Each and every claim that has been notified at any of our touch points is accounted for in this number, even as they are being processed further. We have used preliminary information in the intimation of claims to classify them as COVID or otherwise. Further, at September 2021, we hold reserves for liabilities of INR 4.12 billion towards potential COVID-19 claims. These include provision for claims that have been incurred but not reported as well as new claims over the balance 6 months of the financial year. With a provision of INR 4.12 billion and net claims of INR 8.62 billion for H1, unless COVID-19 claims in this year exceed INR 12.74 billion, we would not expect any further negative impact. As you can see on Slide 31, the daily average number of deaths in the country has come down sharply during Q2 FY '22. Specifically for the month of September and October till date, the daily average number of deaths are significantly lower. This is also reflected in the significant slowdown in the intimations of claims on our portfolio that we were seeing in September and October. Within the financial metrics, our profit before tax for H1 FY '22 stood at INR 2.59 billion with a PAT of INR 2.59 billion, a solvency ratio of 199.9% at September 2021. Our AUM was more than INR 2.37 trillion at September 2021, a growth of 31% from September 2020. Our value of in-force business grew by 26% year-on-year and stood at INR 212.96 billion at September 2021. The growth in adjusted net worth was muted on account of COVID-19 claims and the dividend payout. With this, the embedded value grew by 17.5% and stood at INR 302.03 billion at September 2021. To summarize, we monitor ourselves on the 4P framework of premium growth, protection business growth, persistency improvement and productivity improvement to improve expense ratios. Our performance on these dimensions is what we expect to feed into our VNB growth over time. Thank you, and we are now happy to take any questions that you may have.

[Operator Instructions] We take our first question from the line of Arav Sangai from VT Capital.

So I have 2 questions. My first question pertains to if you all could provide the breakup of protection into retail protection and group term for Q2.

Can you hear me, Arav, now? Sorry.

Yes, yes, yes.

Yes. My line was on mute. Thanks, Arav, for joining and asking the question. We do that split only by the end of the year, Arav. During the year, we don't give the breakup. And we will do it like always at the end of this financial year.

Okay. No issues. Sir, the second question, sir, again, on the retail protection side. Since now the focus is shifting towards growth and we have been hearing about this reinsurance price increase, so is there any sense about what might be the quantum of increase that we might have to undertake in our protection policies to maintain our profitability? Any sense, any ballpark number as well?

Yes. See, the increase, as Satyan mentioned, yes, the increased proposal is being discussed with the reinsurers. I don't think we are in a position today to really talk about increase because still discussions are on. But our endeavor, our philosophy remains the same that whenever there is an increase, you would have seen based on our empirical evidence that we would tend to pass on that to the customer in order to maintain neutrality in terms of our profitability. I don't see any reason that any approach should change going forward as well. So I have a sort of a color I can give you that in the short term, we don't expect the impact to be material given that the pandemic situation is still live and the constraints in the environment continues. And also you have seen the general decline we have seen in the retail. At some point in time, base also will get reset. So we don't get too concerned in the short term. But if you really look at the medium to long term, given the significant underpenetration and also the fact that there is a huge sort of demand, which is picking up on retail protection, we continue to believe this is a multidecade opportunity. And specifically for a company like us where we do believe we have a very strong proposition and a wide distribution network, this should not really bother us. So what we have done as we go through this environment is that one side, we continue to work on the challenges of retail protection. But at the same time, we have been doing 2 other things. One is to focus on the group term segment where, as Satyan mentioned, despite the price increase to protect our margins, we've been able to grow the business in a very robust manner. That is something which we have been able to get the opportunity sized up much earlier. And also, we have been increasing the attachment of riders. So that is why you have seen about 23% growth you have seen in protection is on account of these initiatives. So the approach to summarize will be in the short term, we will look at other mitigants. Even as we go through the pandemic, there's no point in suddenly increasing the growth in the retail business amidst the pandemic. So we'll calibrate that business. If the -- as and when there is an increase, we will strive to pass it on to protect our margins with the approach we have. I think that has so far held us in good stead. And given our VNB aspiration also, this approach falls squarely within the kind of strategic objective we have. So we don't see any problem, Arav. I mean we strongly believe that there's no point in rushing into it given the pandemic situation and calibrate it as we move forward. And wherever there is an opportunity, we will take advantage of that.

Right. Fair enough, sir. Just one follow-up question. Since we have been writing GTI for the last 1 year, how has the experience been in GTI? And like are we still as aggressive as we were in half year FY '21 as like in GTI? Will we be as aggressive as that going ahead also in GTI since the protection mix has kind of moderated to 14%? So I just wanted to get a sense of what might be the mix we are looking at going ahead.

So Arav, my way of looking at it would be it's not as if we have been focusing on this segment only in the last 12 months. We have been focusing on this business for a very long time. In the last 12 months, we saw an enhanced opportunity arising out of this, which we chose to take. From an aggressiveness of pricing, I don't think we have ever been aggressive in pricing. We have been aggressive in client engagement. We have been aggressive in pitching, but I don't think we have been aggressive in pricing. Therefore, to that extent, all those policies that we sold before the second wave, of course, on those policies, claims are more than what we [ priced for ]. But everything that we started pricing through the second wave where we started reflecting expected COVID claims, from that, claims are within what we expected it to be. So the schemes that we are renewing are on a profitable basis. We have no concerns as long as we are able to get that business on appropriate terms.

And Arav, just to supplement what Satyan said, this growth we have seen in this segment is after calibrating the profitability and after losing a lot of deals. We are very clear that we want to protect our margins. After increasing the pricing, after losing a lot of deals, this is the growth we are seeing. So to that extent, we are quite confident. And also, we believe that there is an opportunity for focusing on larger growth rates. They are having COVID protocols for the employees. And based on our own claim experience also, we believe, at least in the second wave, the worst is over and the worst is behind us. Given that and also the fact that the group employees, the extent of vaccination is much higher than the country average, we think that there is -- it's a good business to build, and we'll continue to calibrate, look at the profitability. But as of now, we're very comfortable to grow at these rates.

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

So firstly, just on the protection business again. On one hand, of course, we're seeing the claims cycle essentially come down quite sharply. So rather than being cautious on the protection growth, don't you see an opportunity to ramp up somewhere down the line? Or are you concerned more about the longer-term impact of COVID on both mortality and morbidity? That's my first question. Secondly, on the potential price increase that could come through in the business. Again, does that impact your -- the VNB doubling guidance at all, if you are likely to see any reduced growth because of competitive activity in the segment?

Yes. Thank you. Thank you, Deepika. Let me answer from my perspective, these 2 questions. I would like to have Satyan supplement. First, we believe as a company that the long-term mortality/morbidity is too early to take a call based on the COVID impact. I think a lot of studies will -- are going on and will go on, and we need some time before we judge the real long-term morbidity/mortality related to COVID directly. But to answer your question, we will continue to be having a strong presence in this segment. It is not that we are getting out of the segment or going slow on this segment. It is just that while the demand is there, supply constraints are very high, we want to calibrate it so that we don't do any missteps in when writing a 40% to 50% business. And as you know, when we say that the margins are something like 80%, 90%, they're all based on first year 1-year premium. So to that extent, it's more a mathematical number than having an enormous cushion in terms of ability to undercut. So we do not believe that we should be undercutting. At the same time, we do not believe that we should be getting out of the segment. All I'm saying is that it will be a very calibrated approach. And sometimes, Deepika, you will see that the base effect will catch up. And already, we have seen weakness in this protection in the 2 quarters already. So at some point in time, it'll stabilize, and then it'll start growing. We are seeing the signs already on a sequential basis. So to that extent, I want to assure you that we will very much be there in this business. Second, on price increase, you asked the question that we will pass on. That is our strategy. As I said in the past, we should be able to pass on. And given the huge underpenetration, we do believe that there is enough appetite. Affordability will not become a big issue even if the increased pricing is what we believe. But we have done a few sort of sensitivities to see what kind of protection will impact our overall VNB aspiration. And we can -- we are happy to confirm to you that given the way we have diversified our product mix today, compared to being just a 90% ULIP wealth management-oriented company, today, we are a much more diversified company into real insurance. So given that, we don't see any issue when it comes to doubling our FY '19 VNB, irrespective of what happens in protection, that is -- that's what I can confirm to you.

So Deepika, if I may just add one more point here. I know we will be doing a lot of discussion on the protection business through the whole of this call. But all I would say is this, in the second quarter, where as you mentioned the protection mix was 14%, it's probably one of the lowest we have seen in a while. Yet, if you see the overall VNB trajectory, I don't think it really [ challenged ]. So that is one of the factors, which really gives us comfort that we are not a one-trick pony anymore. I've said this before. We have 4 sources of profit: linked savings, non-linked savings, retail protection, group protection. We are getting to a stage where each of these is a very even balance in the overall VNB pool. And therefore, if one of those for a period of time has to take an impact because of environment, so be it. The others pretty much will step in to fill the gap as we go through the cycle. So I would say that we are far less concerned about any of these single elements anymore than we would have been a couple of years back.

Got it, sir. That's very clear. And just one last housekeeping question. It seems looking at the claim and the pending results, there has been a minor [ top-up ] in results. Is that correct for COVID?

Effectively, yes, Deepika. In absolute terms, it's a bit of a drawdown. I had INR 5 billion of COVID provisions at the end of first quarter. We now have INR 4.12 billion. But effectively, because 1 quarter has passed and my prospective provision for COVID is now for 2 quarters instead of 3, yes, it is strengthening to that extent.

And just to put the numbers, Deepika, INR 5 billion was the actual intimated claims in first quarter on account of COVID. And another INR 4.98 billion or let's just round it off, another INR 5 billion, we had to cover IBNR and the future debts. So that was what the situation was in Q1 -- end of Q1. End of Q2, when I'm talking about Q2, in Q2 itself, we have taken a provision of INR 3.6 billion. So that is what has gone through the -- in terms of intimated claims, and we are left with INR 4 billion of future results, but just to take care of only the next 2 quarters. So one way of looking at this, that the INR 5 billion of results has become INR 4 billion. So to that extent, you can say INR 1 billion has been drawn from that. But again, as Satyan said, we have moved forward 1 quarter as well. So this is the full mathematics behind the reserving. And given the trajectory of claims we have seen, at this point in time, we can make a statement that INR 4 billion is more than adequate, but we will see how it progresses as we move forward.

We take our next question from the line of Prakash Kapadia from Anived Portfolio Managers.

A couple of questions from my end. On the ULIP, is it fair to say we'll see a positive kind of growth after 3 years of degrowth? And on the ULIP journey, where are we in the mass market target segment [indiscernible] credit from the HNI and the larger [ ticket size ], if you could give some perspective on that. And secondly, on the claim processing side, is there any backlog [ as yet that ] we managed to clear the backlog in terms of the operational [ hazard ] and claims coming in late and anything later pending at our end?

Yes. Let me just start off, Prakash, with the ULIP for the first part, I'll answer, then I will hand it to Amit to talk about it. Yes, ULIP growth is very much back. If you really look at the segmental numbers, which Satyan talked about, we are seeing ULIP growth at about 45% in the half year compared to last -- first -- in the first half of last financial year. So to that extent, the growth has come back. So -- and we believe that some of the initiatives we have taken such as the introduction of the Balanced Advantage Fund has really helped us to get that growth. Even moving forward, from affluent customer's perspective, we do believe that the recent launch we have done -- in fact, last week, we have launched a new fund of ESG fund we talked about, which is the -- which is called the Sustainable Equity Fund. We believe that, that can also attract a new set of customers, including other customers and affluent customers into the ULIP. You talked about on the mass side, how do we want to play ULIP. I will ask Amit to answer on the mass and mass affluent side, how to play the ULIP. And Satyan will take your question regarding the operational aspects you talked about. Amit?

This is Amit. See, first of all, I would like to just bring about the point 3 years back that the entire dominance on the large proportion of business that we used to do on unit-linked business was largely through affluent customer presence that we had at that point in time. And while we stated our objective to diversify and go beyond affluent customers, we are always sensitive of the fact that we were not to vacate that segment, which got us to where we were till 3 years back. And we had a lot of regard and respect for the strategy that we had in the affluent segment. And we wanted to, as a conscious step, look at not being fixed about the product suiting the customer segment, but walk the diversification route to provide more options to the customer in the affluent customers. So what we've seen over a period of last 1.5 years or so is that a lot of affluent customers have started exercising their choice on guaranteed range of products. And even while the market sentiment has turned positive, we have actually seen quite a few of our affluent customers looking at diversifying their portfolio into non-linked business as well. So we will continue to offer wherever the opportunity arises and offer multiplicity of products, whether it is linked or non-linked, and not carry any bias about any specific product category. We take a lot of pride in making products available and leave it to the choice of the customer to decide what he thinks and feels is most appropriate given the macro environment. And coming back to mass and mass affluent, like what we mentioned about affluent, we don't want to predecide on what is the most relevant and appropriate product for mass and mass affluent. The rich customer, HNI customers, have surprised us by moving into more conservative and traditional range of products over the last few years. And hence, I will not carry any notion about mass and mass affluent, again, making a choice, which could actually change as the environment changes. So that's how we want to stay flexible. We want to create products, make it available in the basket and allow customers to make a choice on what they want to go for.

First, on the claims settlement, I just want to say that the number of claims that we got in Q1 and through the early part of Q2 has been so overwhelming. We have not cleared the backlog. We have been able to ramp up capacity to 4x what we used to do before. We are working hard at clearing it. Hopefully, in the next month or so, we should get past most of them. But we still do have a backlog of claims just given the sheer volume of what came through to us.

I just wanted to assure you that the financial liability arising out of all those, whether settled or not, has been fully provided. And the actuarial liability based on an estimate also has been taken into account. So that's how I want to assure you.

That's helpful. And lastly, Satyan, is it fair to assume given the buoyancy of what we are seeing in terms of the APE growth, our cost to TWRP ratio should trend lower in the second half?

So Prakash, the cost to TWRP ratio will be elevated for a period of time because the metric as the denominator has total premium, including renewal premium. So while the new business premium has been seeing growth, the renewal premium has not been seeing that much growth despite an improvement in persistency. But more important, what affects margin is the increase in costs in line with new business or not. And if you see the cost numbers for the half year, costs have gone up by 30%. New business has gone up by 40%. So we are quite comfortable this will not take away from margin. If this productivity improvement that we are seeing of new business APE per employee increasing as it has, I would expect that to be a positive contributor to margin over a period of time.

The next question is from the line of Avinash Singh from Emkay Global.

A couple of questions. On the first one, if you can just provide some color on [ lapse ] and [ surrendered ] because I see that data is not typical in this issue. And secondly -- I mean because I asked lapsed and surrendered because, I mean, on the renewal premium growth side, I still see some sort of a weakness. I mean -- and that is not -- I'm just seeing a quarter for quite some time. And secondly, related to this, I mean, we have been doing fantastic on sort of forging new partnerships, [ new distributors ] are doing really good on [ this vehicle ]. But if I go beyond premium and look at the number of new business retail policies, that is somewhat not growing for the last many years, I mean. Considering that, okay, we are [ finding ] new and new partners if we are going to the small ticket protection where we are seeing meaningful traction, I would have expected at least that, that will reach, in terms of our policy contacts, would have also grown over the last 3, 4 years. So these are the 2 questions.

Yes. Good evening, Avinash. Let me start with a response to both the questions. Then I will request Amit and Satyan to supplement. On the first issue of renewal premium growth being weak because of surrenders or other aspects. So that is not really a big component, Avinash. The larger component is that after a couple of years, we have started growing only now. So to that extent, if you just model our growth of APE, it has been quite weak. If you look at FY '18, for example, FY '19, FY '20, we have been declining in FY '19 and FY '20. So correspondingly, the renewal book, which is available itself, is lower compared to the previous year. So even if the persistency is holding up well and in fact improving, it is not meaningfully adding to a growth in the annual premium. That is the primary reason. Because if I look at the surrenders or persistency and everything, that is ultimately reflected in our assumptions in our VNB calculation. So yes, of course, surrenders tend to be a little higher in times of market -- bull phase of the market or the robustness of the market because people do get into a profit booking kind of a mode in unit policies. But other than that, we don't have any adverse trends to report. It is primarily on account of the past year's APE growth being new business, APE growth being weak rather than caused by a surrender or anything. So I just wanted to assure you on that aspect. Coming to the second question, I totally agree with you that this is something, which is actually plaguing the industry in terms of not being able to grow in terms of the number of policies. It is not just with us. It has been generally with the industry. You would see the numbers put out by the regulator that the overall number of policies or number of lives, if you will, that has not been growing. Here, I just wanted to tell you that we have been quite proactive in terms of taking steps. I would request Amit to quickly talk about, a, the initiatives; and b, the early results arising out of this initiative of focusing on the new customers. So Amit, if you can -- if I can hand it over to you, then we can -- you can talk about those initiatives as well as the early results on the number of policies initiatives. Over to you.

Yes. So first of all, you're right, in terms of number of policies, the challenges that were experienced in quarter 1, I would like to categorize it into 2 issues that industry was facing in quarter 1. One was, of course, the activity dropped drastically just before and during the wave 2, which led to lesser number of customer engagement opportunities, which means that more and more customers were getting engaged on a virtual platform and a number of policies were getting impacted interface with distribution as well as with customers being engaged with distributors was coming down. So that impacted the number of policies. That was one. Second impact that we saw was what we have experienced in overall protection as a space. As you know, almost 40% to 45% of the number of policies in the industry, specifically in private space, was contributed because of protection line of business. So protection number of policies coming down was another impact that we saw in quarter 1 and also in quarter 2. So these were the 2 things. Quarter 1 impact on the business; and two is on the front of protection business getting impacted for entire H1. So these are the 2 things, which adversely impacted number of policies in a large way to the overall industry. For us, what we have done is that instead of getting bogged down by the impact that we saw because of wave 2, our entire focus was about building our activation process with new partners, new advisers and getting them onboarded and be productive as early as possible to compensate for any drop in number of policies that we had from our existing distribution. Two, we ran through various initiatives to build an appreciation for being present right across mass, mass affluent and affluent customer segments. And we ran quite a few internal campaigns to build engagement on our digital platform to mass and mass affluent customers, which led to a number of policies growth. In specific segments, if we were to look at the initiative where it was directed, we actually saw a growth of almost 35% to 40% in specifically second -- later part of the second quarter through these initiatives where we've got newer customer acquisitions to be driven on the back of this campaign that we ran internally. And second, of course, on new product category, we actually opened up a new customer segment, which was 50 to 58 years, which is typically a customer who is nearing retirement. That is by opening that new segment, which was earlier not buying life insurance, getting to -- get them to buy deferred annuity was another area in which we saw new customer acquisition really scale up over a period of last 3 to 6 months. So this specifically -- these are the specific initiatives that we have done to increase number of policies, but I guess that is now behind us. With markets opening, economy opening and activities are now getting closer to the normal levels, we do expect customer engagements to come back to the regular -- normal levels, and probably number of policies from here on will start growing.

The next question is from the line of Nidhesh Jain from Investec.

Sir, firstly, on the VNB margin. If I look at full year last year and this H1, VNB margin has expanded almost 200 basis points. But product mix on an overall basis has remained pretty stable. So what is the driver for VNB margin expansion in first half?

Pretty much product mix, Nidhesh. If you see full year last year, we had a protection mix of 16%. First half is about 17%. Give or take, that is the big reason for the change in the margins.

Sure, sure. Within protection also, retain actually...

And so margin -- Nidhesh, at the margin, some of the businesses, which have grown well like annuity and non-linked savings, they have also helped because as you know, their margins are higher than ULIP margins. So that has also sort of helped. Though it is not as high as protection, but it is better than some of the other segments of our business. Sorry, I interrupted your second question.

So you're right, Nidhesh. So retail protection, there was a bit of a drop. Group protection, there was a bit of an increase. So there's a negative-positive coming from there. And also, like Kannan said, the annuities and non-par mix became a little bit more. So that helped it. So overall, it's still a product mix, some pluses, some minuses, which is settling down to an overall number of 27.3% for the half year.

Sure. And then so within bancassurance, how ICICI Bank has done, if you can share what is the percentage of the business, which has come from ICICI Bank in this first half? That will give us some perspective how the ICICI Bank and non-ICICI Bank has done.

Yes. So I can answer it differently. If I really look at the bancassurance breakup, I said that 39% came from bancassurance in the first half of this current financial year. So roughly about 28% will be ICICI Bank and about 11%, 12% from other banks. Actually, it's a little bit of rounding involved. It's more like a 28% plus 12%. That is how that is shaping up. So 28% has been holding steady for some time now. That means that definitely, from a top line perspective, it is not a drag on the growth. And as we mentioned in our opening remarks that ICICI Bank is on the growth path. So -- and they are focusing a lot on annuity and protection lines of business. And of course, some of these savings lines are also doing well in the bank. So we will -- we are okay with that. I think we have found a equilibrium and a new base [ this time ].

Understood. Understood. And then lastly, in the non-ICICI banks, and I think the growth has been quite strong, probably more than 100% on a Y-o-Y basis, how should we see -- how do we see the trends going forward in that segment? Because we have added 3 large banks -- 3 [ different-sized ] banks last year. But post that, we have not added any large partners. So going forward, specifically next year, how do we see growth from that channel? And what are the drivers for growth for non-ICICI Bank channel?

Second part, I will say -- I mean, the second part, I will answer first. Such big acquisitions now and then is not easy, Nidhesh. We'll have to keep scanning the market, keep at it, but these are all lumpy acquisitions in terms of distribution acquisition that can happen only far and few whenever there's an opportunity. I can only say that we'll be allied to all the opportunities, but it will be very difficult to sort of speculate when we will get the next big one. But in the meantime, we will be scanning the environment and getting a lot of small ones. That is something, which has been happening. I think Satyan mentioned in his opening remarks that we have added so many new partnerships in terms of smaller partnerships. So that will continue. So let me -- of course, the 100% plus growth you talked about, there's a bit of base effect because some of those banks were not there in the base of the same period. But to answer your question on trajectory going forward, I would request Amit to talk about our strategy and what kind of growth trajectory we expect in these new partnerships going forward -- new bank partnerships going forward.

Yes. So I'll just answer your question in 2 steps. One is, of course, bank partnerships beyond ICICI and other non-ICICI channels. So I just want to bring to light the fact that the investment in some of our existing channels has also yielded growth in excess of 40% for our channels like agency, our direct channels, which includes our proprietary sales force, our online channels, almost every channel, which is existing in the operational now for more than a year now. And for a very long time, we've actually seen growth right across all channels. Coming to newer banks. As you know that we have -- we tied up with 4 new big partners, and all those 4 partners are at various stages of building up their business volumes. And we are quite happy with the way we have been choosing appropriate products, which are most suitable for their customer segments, and we have been able to build a fair share. Good part is that large part of the growth of some of these banks is being contributed by us as an insurer partner for them. So to that extent, it has been very gratifying. But I always would like to believe that it is a WIP. It is a process, which we have started, and we'll only see building it from current levels. But I'm drawing a lot of confidence from the way our agency channel; our partnership distribution channel, which includes our corporate agency and brokers; some of our other 20-odd banker partners that we have beyond these 4 new partners, almost every channel has contributed and grown in excess of 40%. So I think it is not just about new partners. It is also about what we are doing to our other existing channels. And in terms of newer partnerships on the corporate agency and broker side, we have added good 50-plus partners in first 6 months. As you know, they typically take some time before they settle into becoming significant in scale. We do expect over a period of next 6 months, they will also become significant in their contribution to our overall business.

Sure, sure. And then last, the P&L hit in this quarter because of the COVID mortality is around INR 3.6 billion or...

About INR 2.5 billion, Nidhesh.

INR 2.5 billion. Got it.

Yes. We released INR 1 billion of the opening IBNR, and then there were claims of INR 3.6 billion, so roughly INR 2.5 billion impact for the quarter.

The next question is from the line of Mayank Gulgulia from SUD Life.

My question is like a follow-up on reinsurance. So like what would be share of [ monetary ] within our reinsurance portfolio? That is first question. And the second question is like whether we have received an increase in pricing from just 1 reinsurer or it is more than 1 reinsurer?

So Mayank, we actually spread our reinsurance across various providers. So there would be a different reinsurance for every product or product line. So it's hard to say at an aggregate level what each of the share is. Nobody will have a dominant share in that sense. It is distributed. But typically, we distribute by product.

Okay. And you have received a price increase from more than one reinsurer?

For the term life, which is what is the most spoken about. So [indiscernible] already increased prices on group term. We have already increased prices on credit life in the past. Retail term was one where price increase has not yet happened, and we had said that we haven't received anything yet in the last quarter. That has now come. So retail protection is now possibly in the cards for review. I've spoken about in my opening remarks also that it's not only going to be price, it's going to be a combination of price and underwriting process. Eventually, that is what will determine the outcome.

We take our next question from Sanketh Godha from Spark Capital.

Satyan, my question, [ on the larger EBIT ], if I look at the Q1 to 1H margins, the margins have come off by almost 200 basis points. That is largely because of the product mix, which means that on a sequential basis, the contribution of protection and [ acquisition ] has gone up, that has resulted in the margin compression? Or is it a function of little higher OpEx, which we are incurring due to the business growth or new business acquisition cost is much higher than what we have anticipated?

So Sanketh, no cost-related aspects, purely product mix. We also spoke about it a little earlier in the conversation. We said protection at 14% for the quarter has been one of the lowest we have seen. Yet in spite of that, VNB growth has been quite robust. Yet in spite of that, margin has been upward of 27%. So quite honestly, at this point of time, the current trajectory of protection or any of the product mix element is not worrying us too much on our VNB pool.

Yes. Again, Sanketh, I would just add, and I would just, once again, appeal that our focus will continue to be on the absolute VNB and the growth of absolute VNB. See, whatever comes as a margin is a direct number. That is the way we look at it. And we have also said at the time of our -- at the beginning of the year that we need to get to a doubling of our VNB of FY '19 in 4 years would mean that it would require 28% growth this year and next year on an annualized basis. And we said that, that will be predominantly driven by the top line in the initial phase of this 2-year period, that we were very, very clear. So I think we are following that path. Yes, depending on the product mix of a particular quarter, the margins sort of get a little bit volatile. So as long as we are tracking same or better than the margin of the whole of last year. And in the top line, VNB growth of 45% is above the 28% trajectory we are targeting, we are very happy. That is what I want to tell you that it's more like a margin, once again, it's more like a derived number than shooting for a particular number. But if it expands, we will take it. But the primary objective will be to expand the absolute VNB.

Got it. Got it. Sir, next question was basically given you have mentioned 28% of the contribution came from ICICI Bank. Sir, if I do a back calculation, it seems that ICICI Bank just grew 6 or 7 percentage in the current quarter, Q2, and it just grew 11 percentage for [ first half ]. So despite the base being so favorably in favor of the channel, still growth seems to be very weak in that particular channel. So is there reluctance to sell other than annuity and protection -- retail protection being structurally weak for the industry as a whole, we believe the channel growth from other products will remain muted and therefore contributing to the growth will be challenged only from the [indiscernible]

You are right, Sanketh. The 2 strategic priorities that ICICI had decided to focus on, which was annuity and protection, delivered very, very different results for a variety of reasons. For protection, the reason is common to what we have seen as an industry. The supply side constraint has impacted ICICI as much as it has impacted other companies. On annuity, they have done very well. They have virtually done double of what they did last year in H1. It is just that annuity, as you know, internally, we weighed it by 10% and evaluating WRP. So overall, [ it doesn't show that quantum ].

Or APE.

Or the APE is only 10% of the annuity. So that number doesn't show. But they have virtually doubled their annuity business. 100% plus growth rate over last year H1 is what they have delivered annuity. So -- and last year also -- last year, it was not about a low base last year. Last year itself, again, was 100% growth for them. I believe that once the protection comes back to normal levels and once the industry is able to address the supply side constraints, I do believe ICICI continuing to have a very, very dominant play in both these spaces, which is protection as well as annuity.

Got it. Last one for me, I guess just from a macro question point of view because we believe that if [ RBL is successful, liquidity from the system ], the [indiscernible] will become flatter than what it is right now. So just wanted to understand the overall impact of -- on EV because of the change in the share of the curve, one thing. And second thing is that given how it will impact business and operations point of view, especially the non-par business because [ if our rates ] will not look as attractive as we have seen in the past. So do you take the non-par business [ that this is ] kind of the product that will get impacted because also of the change in the shape of the curve? This is the question I had.

So Sanketh, and we've discussed this in the past as well. If the non-par yields become unattractive compared to other instruments such as fixed deposits, then from the past, we have seen that participating business becomes more popular. So you may very well see a switch in mix between the 2. Overall, non-linked savings, I wouldn't be worried. We do look at it as a pool, which may shift from one to the other. In response to your second question on -- rather your first question on impact of shifting yield curve on EV. I think that's a very tough one to answer, Sanketh, because a nonparallel shift, what part of the curve will shift by how much is very hard to call. And effectively, the impact on EV will come from my cash flows and which part of the yield curve there is a greater weight of cash flows. So what we try to provide is a parallel shift sensitivity. Nonparallel shift is going to be very hard to estimate because the flattening may happen because the long end becomes lower or flattening may happen because the short end becomes higher. I don't quite know what the answer is going to be. So that's something that we'll have to wait and see how it plays out.

Assuming that the shortage, it becomes more -- leads to this happening, then the likely impact...

Then I don't think it will impact the EV in any material fashion.

The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities.

And a couple of questions. Like, firstly, we have reported INR 3.6 billion of COVID claims in the quarter, which is like 30% lower than the first quarter. However, like a few insurers are in traction for elevated claims, which can be potentially higher than the first quarter. So based on your assessment, have we outperformed the industry in terms of claims? And -- or like the decline that we have seen is going to be there for others as well?

So Nitin, the only thing that I can say is that if I provided fully for all notifications in Q1, Q2 cannot be higher than Q1. If I have not fully provided for notifications in Q1, I can assure you Q2 will be more than Q1.

Okay. So that helps. And second is on the EV growth, like our embedded value growth over the first half has been close to 4%. And I understand that higher provision and the losses that we took in the first quarter has dragged this growth. So if you can provide some color as to how this is trending over the second quarter so as to form a better view like on the full year growth?

So Nitin, I would suggest you look at the VIF growth because the net worth growth would be depressed by all of this. The VIF growth is more indicative of the way the longer-term trajectory will be. VIF growth even in the half year was more like a 9% growth in base. If I were to look at VIF growth from over a 12-month period, the 12-month period VIF growth was more like 26%. So for the half year, my VIF growth was 8.7%, close to 9%. If I were to annualize that, I think that's quite a healthy growth rate of VIF. As the net worth issues go behind us from the COVID and COVID provision point of view, that should stabilize. Of course, there was also some positive from the market at this point of time. Also, you have to keep in mind that in the first quarter, we paid out a dividend of INR 2.87 billion. So all of those will not be recurring into the second half of the year. As it is, you have seen profit for the second quarter, no dividend outgo is expected in the next 2 quarters. And if profit comes through in the next 2 quarters, even the net worth will see a reasonable growth. So EV growth, I'm quite happy about. I tend to look at it more from the point of view of VIF growth because that is what is going to feed into my future profit pool.

The next question is from the line of Shyam Srinivasan from Goldman Sachs.

Just the first one is on M&A. We've seen one of your peers actually announce one. So just want to understand how you're looking at M&A, what are the white spaces if at all that we are looking at where we would like to look at any targets potentially.

M&A is always on the card, Shyam. The key consideration for us -- or the key considerations, rather, are: one, a lasting distribution advantage. There are certain channels, which give you a short-term distribution advantage that may not be very valuable. A long-term lasting distribution advantage such as a bank or a corporate distributor is very valuable. Second is a reasonable price that it may come in. So these are 2 things that we are always looking for. If it comes by, we are happy to look at it.

And if you've been looking at -- are there deals there -- out there you think? Or is there a valuation hurdle? If you can give us some color on how the M&A market at least is.

So right now, I don't think there are any sustainable distribution opportunities that are on the -- that are in place.

Which will survive the M&A.

Correct. So there are a few smaller ones, which are there, but we are not seeing any of those as giving a lasting distribution advantage.

Got it. That's helpful. My second question, I think in your opening remarks, you talked about the synergies between the annuity business and the pension fund management business. Can you just outline us and help us understand how it can kind of propel growth for the annuity plan?

Yes, Amit, do you want to take the question?

Yes, I'll take that. This is Amit. See, we believe that our pension fund company right now is in the process ever since they have become a [ PoP ], where they have started acquiring NPS accounts themselves. They have become a very, very significant player in getting more and more subscribers under NPS. What we believe is a synergy as an opportunity for us is when these NPS subscribers will start reaching the maturity where they will start looking at annuity as a proposition for them. That is where close working with life insurance company, both teams can work together to convert and give us composite solutions to the customers who will probably do accumulation through NPS platform and will then culminate it into an annuity product from a life company. As you know that annuity products are exclusively sold through life insurance companies only, that is where the synergy lies. I couldn't believe...

Including the ICICI Bank [indiscernible]

Yes. So we also see opportunity that ICICI Bank will themselves also in [ PoP ], they can contribute to more and more number of NPS subscribers during the [ play ]. And we do believe that with the current underpenetration and with only 2% of -- the pension assets being only 2%, 3% of the overall GDP, we do believe that this accumulation over a period of time will convert into a huge opportunity for the industry on what will open up as annuity opportunity offered by all life insurance companies.

The next question is from the line of [ Dhaval ] from Kotak.

My question was also on a similar line. So if you can throw some color on -- while you said the annuity business has grown in the bank environment, how does it shape up with the other environment like partnership distribution, ICICI other banks, agency, our group business' superannuation fees? So while we have doubled the business, if you can give some color in terms of different flavors [ while bank has grown 100% ] how the other form of business kicks in into group retail and the different channels.

Yes. So [indiscernible] aside, on the retail side, our investment in annuity is actually quite well-rounded and is focused right across channels. And understand the start point of our focus on annuity, that was the time when we changed our target segment from only a retired customer to a customer who is nearing retirement. That is what opened a new customer segment for us, which is typically a customer in an age band of around 48 to 58 years. That is when the customers start thinking of retirement. And that is where we launched our new product offering last financial year, which offered a deferred proposition to the customer where he could start planning for annuity well in advance. And that opened opportunity. And this is one traction that we are seeing building right across channels. So there's no bias. ICICI, of course, is growing at double the rate, but then there are other channels as well who are matching up with the growth rate that ICICI Bank is delivering. So our agency business, for instance, is also for last couple of quarters doubling their business on annuity.

All right. One last additional...

Just to give you a color. Today of the overall annuity that we sell, a good 1/3 of our annuity actually comes from this customer segment, which is 48, 50 years age band, which earlier was not considering annuity as a proposition.

All right. And partly, you answered my next question. My next question was on the lines of what is the percentage of deferred annuities that you offer, fair enough. That gave me a perspective, sir.

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

Just a couple of clarification. So on the protection side between retail, GTI and credit, since early part of last year, are we done with one round of wage hike -- sorry, one round of pricing hikes from the reinsurers? Or has any section seen dual hikes also?

So Rishi, retail protection saw price hike. At least for us last July, group protection saw a hike from us during this financial year in May, June, July. We haven't seen a second hike on any categories so far in the last 18 months.

But you will be doing one on the retail side, I guess, now, right?

So like I said before, the reinsurer has given us notice of change in rates. Exactly how that will translate, we have to figure out. It may very well translate into a rate increase towards the later part of this financial year.

And when you mentioned group, you're referring to both GTI and [ credit protect ]?

That's correct.

Okay. And second, just can you give some sense in terms of what would be the margin differential between, say, your GTI business versus [ credit protect ] or would it be roughly similar?

We have not given that out publicly, Rishi.

The next question is from the line of Abhishek Saraf from Jefferies.

Am I audible?

Yes. Quite faint, Abhishek. It will be great if you could speak up a little.

Hello? Hello?

Sorry to interrupt, Mr. Saraf. We can't hear you that well. May we request you to use your handset, please.

Sure. Is this sounding better now?

Yes. Perfect, perfect, perfect.

Sorry for that. Sir, I just wanted to understand a bit more on the durability of price hike for reinsurance. So of course, the higher claims could be driving that. But as we have seen that now the claims have started to come off. So in that light, how should one see on the durability of these price hikes? And pardon me if you had touched upon this on the sensitivity of, let's say, there were certain percentage hike in reinsurance, what could that mean in the final price hike for our products? And if you can just refresh our memories in terms of how it played out last year.

Very hard, Abhishek, to really figure out how much of the price increase is -- I'm getting feedback.

Sir, you may proceed now.

Okay. So it's going to be hard to attribute how much of the price increase is coming from COVID or non-COVID. It's really -- it's a composite increase, and I don't think anybody is going to be sharing with us what the mix -- what the impact broken up by each will be. But my general sense is that you wouldn't seek to recover a 1 or a 2-year COVID claim into long-term price. So I would expect the pricing to substantially reflect a view on underlying mortality and not be oriented more towards COVID. In answer to your second question on what will be the impact of reinsurance price and customer price, again, like I said, too premature to even get into that conversation. It is still very early stage in the discussion. We have to work out what will be our combination of price, sourcing and underwriting before we determine what will be the price increase.

Mr. Saraf, do you have any further questions?

Yes, sure. And just on the [ last year part ], if you could help us refresh what was the reinsurance price hike that we got and how much is finally passed on in terms of price hike. And second question, apart from this, I had was on persistency. So persistency has been increasing since the first quarter of [ COVID ] last year. But this quarter, I noticed that across 13th month and 61st month, the persistency declined. So if you can just shed some light on why that has happened.

So Abhishek, last year, our price increases were anywhere between 10% to 25%, depending on sum assured, term and all of that. And reinsurance price hikes again were much higher than that. So more like 30% to 40%. So we'll have to see how it translates now. Persistency, I'm not so sure. I don't think persistency for us has declined compared to what we had earlier. In fact, it's actually improved across most buckets. Like Kannan mentioned earlier on, this time, we have changed the persistency definitions and we are giving the additional data as required by the new definitions of [indiscernible]. Basically, they're telling us now separate out your persistency to regular pay and fully paid. And fully paid include single premium. So to that extent, you will see the more relevant persistency measure come through now than you would see before.

Across companies.

Across companies.

This is on Slide 22.

If you see Slide 22, Abhishek, you will see the persistency numbers broken up between regular and limited paid during the premium payment term and fully paid and single premium, which is beyond the premium payment term.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Thank you. Thank you, Stanford, and thank you all for joining us on this call. I do hope that bulk of the questions has been answered. However, if you have any additional questions, my team and I are available to clarify to you. Thank you. Have a good evening. Bye.

Thank you very much, sir. Ladies and gentlemen, on behalf of ICICI Prudential Life Insurance, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.