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 FY 2025 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anup Bagchi, MD and CEO of ICICI Prudential Life Insurance Company Limited. Thank you, and over to you, sir.

Thank you. Thank you very much. Good evening, and welcome to the results call of ICICI Prudential Company for the financial year 2025. I have several of my senior colleagues with me on this call. Amit Palta, Chief Product and Distribution Officer; Dhiren Salian, CFO; Chief Human Resources and Operations, Deepak Kinger; Chief Risk and Governance Officer, Manish Kumar, Chief Investment Officer; Souvik, Appointed Actuary Dhiraj Chugha, Chief Investor Relations Officer. Let me take you through the key developments during the quarter before moving on to discuss the company's performance. I'm pleased to inform you that Ms. Anuradha Bhatia has been appointed as an additional independent director effective March 12, 2025, subject to the approval of the shareholders. Ms. Bhatia is an ex-member of National Company Law Tribunal, Mumbai and a retired Principal Chief Commission of income tax. Product innovation has been a core focus of our business strategy. We continue to build on our legacy of innovation to meet the evolving needs of the customers with ICICI-approved GIFT Select, a non-par guaranteed income product being the latest addition to our portfolio. One of the key differentiators of the product is an increasing income feature, making it a quasi inflation hedge. Amit will subsequently cover it in detail. Now let me take you through the performance highlights. APE grew 15% year-on-year to INR 104.7 billion in FY '25. We delivered a strong RWRP growth of 15.2% year-on-year in FY 2025. Our endeavor will be to continue delivering business growth. Total premium grew by 13.2% year-on-year to INR 489.51 billion in FY '25. Retail new business sum assured grew by 37% year-on-year to INR 3,324.49 billion. Our 13-month persistency stood at 89.1% and 49% month persistency stood at 59.5%. We continue to deliver on our claims promise with claim installment ratio of 99.3% for FY 2025 with an average turnover time of 1.2 days for noninvestigated individual players. Cost to premium ratio improved from 18.2% last year to 18.1% in FY 2025. Cost to TWRP for savings line of business improved from 15.8% last year to 15.4% in FY 2025. PNB grew by 6.4% year-on-year to INR 23.70 billion in FY 2025. With an APE of INR 104.07 billion, the margin stood at 22.8%. PAT grew by 39.6% year-on-year to INR 11.89 billion in FY 2025. Embedded value grew by 13.3% year-on-year to INR 479.51 billion on March 31, 2025. ROEV was 13.1% for FY 2025. Our AUM grew by 5.2% year-on-year to INR 3,093.59 billion on March 31, 2025. We have been conferred awards by various industry platforms. The company set of awards one is presented on Slides 58 and 59. We are particularly delighted with the outcome on the independent industry Net Promoter Score survey, where we were ranked the best life insurance provider in India for the third consecutive years in a row by Hansa Research. To summarize, we will continue to offer the right product to the right customer and deliver it through the right channels. Our product, process and distribution are completely aligned with one goal, that is to deliver value proposition to our customers. Our 3C framework of customer centricity, competency and catalysts will help us deliver sustainable VNB growth by balancing business growth, profitability and risk and prudence. Thank you, and I'll now hand it over to Amit to take you through the business updates.

Thank you, Anup. Good evening, everyone. Let me start by giving you an update on the product landscape. In a dynamic macroeconomic environment, there could be sales of market volatility like the one that we have seen over the last couple of months. In such situations, customer preference tend to shift to products that offer guaranteed returns while ensuring wealth preservation. Through the addition of GIFT Select in quarter 4, we strengthened our guaranteed portfolio to cater to this shift in customer preference. It offers the benefit of guaranteed income that customers can customize as per their life goals and cash flow requirements. This product witnessed strong traction within days of launch, and help us offset the impact of market volatility witnessed in the linked business in quarter 4 to a certain extent. The non-linked business grew by 13.8% year-on-year in quarter 4 FY '25. The growth in the non-linked business reflects our capability to read the market sentiment swiftly shift product mix between segments and also demonstrate the agility of our distribution channels to support us during such transition phases. Further, within our linked segment, we have been increasing the proportion of products, which are not only aimed at wealth creation, but also offer gold protection, high sum assured and comprehensive benefits for employees, proud nominees. Such products are less impacted by market volatility, thereby insulating our linked portfolio to a certain extent. On a full year basis, linked business grew by 28.5% year-on-year and contributed 48.3% to APE in FY '25. Non-linked savings business declined 5.6% year-on-year and contributed 21.2% to APE. The annuity business grew sequentially by 41.5% in quarter 4 over quarter 3. While on year-over-year, we witnessed a decline of 57.8% in quarter 4 FY '25. As you may recollect, we launched a product offering 100% money back of premium in quarter 4 last year, ahead of the introduction of surrender value regulations. This product was well accepted by the market, resulting in annuity segment, delivering a year-on-year growth of more than 250% in quarter 4 last year. Thus, the decline this year is due to the high base of the previous year. However, the contribution of annuity continues to be greater than 8% of overall APE. Retail protection grew strongly by 25.1% year-on-year in FY '25. In the credit life business, the MFI segment was impacted due to continued challenges in the MFI industry. We expect some pressure to continue in the MFI segment in coming quarters as well. Non-MFI segment continues to do well, and we have been able to sustain the overall credit life business at a similar level to previous year. Group term business was impacted due to increased competition. As a long time player in the industry, we have a deep understanding of this market and our underwriting strategy remains focused on selecting businesses which meet our defined risk reward expectations. The overall protection APE grew by 7.4% year-on-year and contributed 15.7% to APE in this financial year. Group funds more than doubled over last year and contributed 6.4% to APE. This business involves managing funds for gratuity, leave encashment and superannuation and is typically lumpy in nature. Moving on to channel-wise growth and contribution. Agency business APE grew by 14.2% year-on-year and contributed to 28.9% of overall APE in FY '25. Direct business grew by 17% year-on-year and contributed 14.4% to overall APE in FY '25. Together agency and direct, that is our proprietary channels constitute more than 50% of the retail APE mix in FY '25. In quarter 4, we saw a decline in proprietary business primarily because of 2 factors: one, the high base of annuity in the previous year and customer preference shifting away from ULIPs. High base of last year quarter 4 annuity business was primarily driven by proprietary channels, specifically agency. Beginning FY '25, the market sentiment shifted towards ULIP products. Agency channel was very agile to shift gears and grew faster than the company on the back of high ULIP sales up to 9 months FY '25. As markets became volatile in quarter 4, customer preference started shifting away from ULIP products. Moving to the high annuity base of the previous year and ULIP business declining in the current year, agency channel got impacted in quarter 4, thereby registering a decline. It is also noteworthy that agency channel was quick to pick up the latest non-par product GIFT Select launched in quarter 4. Historically also, if you look at the last 5 years since FY '20, the channel has demonstrated the ability to shift its mix between ULIP and non-linked savings business depending on the prevailing macro environment. Therefore, we believe this decline is a short-term transition phase, and we will continue to invest in our proprietary channels to sustainably grow the business. Bancassurance business APE grew by 18.2% year-on-year and contributed 29.4% to APE mix in FY '25. Partnership distribution business declined by 3.2% and contributed 10.9% to APE mix. However, this business on a sustainable basis has delivered a 4-year CAGR of 18%. As you are aware, a large proportion of business this year was from ULIP sales while the partnership distribution business is non-linked dominated typically. And thus, they did not have the tailwind, which was available to the rest of the channels. Also, we continue to strengthen our partnership distribution channels and have added more than 200 partners in FY '25. Group business grew by 24.6% and contributed 16.4% to APE mix in FY '25. As you can see on Slide 10, we have a very diversified distribution mix. We continue to build capacity and have more than 2 lakh agents spread across geography. We have partnerships with 48 banks and access to more than 23,000 bank branches and 1,300 nonbank partnerships. We will continue to focus on improving customer experience through tech and digital integration in our day-to-day processes. Approximately 50% of policies were issued on the same day for the savings line of business in FY '25. Notably, we are also the first insurer to pay out commissions on the same day to our distributors. With customer centricity at the core of everything that we do, we will continue to work on our strengths that is product leadership, extensive distribution network and business excellence aided by building blocks of people, digitalization and analytics. All these initiatives together will help us achieve our core objective of increasing absolute VNB while delivering value to our customers. I will now hand it over to Dhiren to talk you through the financial update for FY '25.

Thank you, Amit. Good evening. Let me start with VNB, which is shown on Slide 15. VNB grew by 6.4% year-on-year to INR 23.70 billion in financial year 2025. And the VNB margin stood at 22.8%, which was at a similar level at 9 months of financial year 2025. From Slide 16, you can see that the movement in VNB margin from FY '24 is primarily on account of the shift in the new business profile and assumption changes. In financial year 2025, the market buoyancy led to growth of the linked portfolio, which has a lower margin profile compared to the company average. Within the non-linked portfolio, we've also witnessed a shift in product mix towards the par business. Further in the protection portfolio, the MFI segment of credit life business was impacted by the ongoing challenges faced by the MFI industry. As mentioned in our earlier calls, we have been working towards improving our profitability of each line of business through increasing policy term, sum assured multiples and ride attachment. Our retail policy terms from savings line of business has increased from 19 years in FY 2024 to 26 years in FY 2025. And our retail sum assured has grown strongly by 37% in FY 2025. The impact of the shift in product mix change in customer segments and the effects of repricing done during the year was a positive 2% as shown in the new business profile on Slide 16. Now the higher ULIP mix also results in a lower expense affordability. Along with other assumption changes, which I'll explain in the EV section, it has resulted in a margin contraction of 3.3% and which is shown under the operating assumption changes. The balance 0.6% impact on margins was due to movements in yield curve. As also shown on Slide 16, the EV grew by 13.3% year-on-year from INR 423.37 billion at March 31, 2024 to INR 479.51 billion at March 31, 2025. Our embedded value operating profit EVOP for FY 2025 is INR 55.34 billion. The breakup of EVOP as shown on Slide 17 is as follows: the unwind contribution for FY 2025 is at 8% of opening EV. The VNB of INR 23.70 billion is 5.6% of the opening EV. The unwind and VNB together constitute 13.6% of the opening EV. During the current year, we have strengthened our operating assumptions, which has led to a negative movement of INR 2.54 billion. As you may recollect, last year, we had shown a mortality variance due to higher expected claims incurred but were not reported in the group business. We continuously monitored this variance through the year, and we have now aligned our long-term mortality assumption here. We continue to see an improvement in the company level persistency levels and our persistency variance is positive. Consequently, the ROEV for FY 2025 stands at 13.1%. The total economic and investment variance is a negative INR 0.24 billion due to the shift in the yield curve and equity market movements. The sensitivity details have been provided in Slide #18. Our VNB and EV have been reviewed independently by Milliman Advisors LLP, and their opinion is available in the results pack submitted to the exchanges. Now back on Slide 13, our total premium grew by 13.2%, while our expenses increased by 12.6% for the full year. Notably, in Q4, our total premium grew by 11.1%, while our expenses decreased by 2.1%. Our cost to TWRP on the savings line of business improved from 15.8% in financial year 2024 to 15.4% in financial year 2025. I'd like to highlight that the cost ratios have been improving quarter-on-quarter, and we will continue to work towards aligning up our structure commensurate with the product mix. The profit after tax for FY 2025 was INR 11.89 billion. The AUM stood at INR 3.1 trillion with the solvency ratio strong at 212.2% at March 31, 2025. This concludes the financial performance section. Over to you, Ajit.

Thank you, Dhiren. I'll be sharing the salient aspects of our ESG journey. We're pleased to share that we continue to retain the highest ranking in the Indian insurance industry as per 2 leading ESG rating agencies. We are also delighted to share that during Q4 of this year, we received the Platinum Award for our ESG report for 2024 and the vision award organized by the League of American Communications Professionals. I'll now share the key highlights under each of the ESG focus areas, environment. As part of our overall efforts to reduce our carbon footprint, we have adopted green energy across various branches. We have also received the LEED platinum certificate, which is a green building rating for the company's headquarters and IGBC platinum green building certification for our another branch, and we shall continue our efforts to reduce our carbon footprint. On the responsible investing side, we are a signatory to the UN principles for responsible investment UNPRI. We have started annual reporting on responsible investing activities, and we shall continue to remain committed to promote ESG factors in our investment decisions. On the employee side, our gender diversity ratio has improved from 27% to 30% of women employees in this year -- calendar year. On the community aspect, our goal is to increase financial inclusion to specially designed micro insurance products targeting socially and economically weaker sections and we have now covered 73.7 million lives as of March 31, 2025. Our 13-month persistency ratio is at 89.1% and is one of the highest in the industry. This year, we settled more than 3.7 lakh retail and group claims with the overall claim settlement ratio at 99.8%. On the CSR front, through ICICI Foundation, we have trained 1,200 underprivileged youth for skill development and supported 50 cataract surgeries and 360 underprivileged cancer patients. Governance. Our Board has a majority of independent directors, enabling the separation of the Board's supervisory role from executive management and the representation of women directors on our Board has increased to 20%. I'd like to reaffirm our commitment once again to create a culture that invasive sustainability and goes beyond goals and targets. Thank you. And we are now happy to take any questions that you may have.

[Operator Instructions] The first question is from the line of Avinash Singh from Emkay Global Financial Services Limited.

A few questions. First one is on this operating agents and changes. If you can provide some more sort of a color that in terms of expenses, persistency, mortality, mobility, where sort of assumption has kind of a changed that is leading to such sort of impactful numbers on particularly VNB margin, that particularly because if we see, I mean, in the variance experience this year in most of the parameters, your operating variances are positive. So has led to this kind of assumption changes going towards the conservative, that is leading to this kind of a pressure on your margins as well as embedded value ROEV is also 0.6% negative impact on this. So that's one. Second is coming to your -- the capital and strategy there. So one thing, of course, if I see in the embedded the required capital has declined. I mean, for a growth company or in a growth environment, of course, I mean, required capital would be a function of product mix. But generally, I mean, it is kind of rare to see reduction in required capital in a growth market. And on that front, I mean, your solvency is now, of course, was 192% beginning of the year. Now you have also this sub debt and all at 212%. So what is the strategy or idea behind raising the sub debt when your solvency is comfortable anyway without had you not raised this sub debt? Even -- I mean, I'm mindful of the fact that okay, the carry cost would be very limited, not that great. But I mean, at the end of the day, you had enough solvency capital. So on -- the second question basically is what is leading to the decline in required capital and with this sub debt? And thirdly, I mean, if I may, again, on the partnership channel. So of course, you have a long tail of partners. But definitely, there will be a few meaningful ones. So what is leading to sort of this a bit of a growth struggle there particularly, is it something to do with the product environment? Or is it to do with something like the new surrender value or like AUM? what is that driving? Because the question becomes important to kind of forecast the growth particularly next year because this MFI side struggle on credit life will continue at left for H1 and if the partnership business does not fire, then of course, the growth is under question. So these are my 3 questions.

Thanks, Avinash. Let me take a couple of them, and then I can hand over to Amit. Your first question is on operating assumption changes. If you recall, last year, we had seen a large negative variance in mortality. That is one of the components that has gone into this operating assumption changes at this point. You see, our philosophy has been that if you start to see some variances and there are negative variances, and we'd like to correct them as quickly as we can. We hadn't seen that through most of last year, but we saw that at the end of the year. And as I mentioned in the call, this is something that we have continuously monitored through the year and taken corrective actions in terms of strengthening of assumptions. So what you see now with the negative operating assumption of [indiscernible] roughly with the positive variances that you see across the other line items, we believe we have been able to cover for what we see at that point in time. Coming to your second question, which is in terms of our capital strategy. Yes, you're right. We raised INR 14 billion in quarter 3. That roughly contributed about 18% to 20% on our solvency. And across the quarter, you have seen the solvency being broadly steady. Now you also have to keep in mind that about 4.5 years back, we had raised INR 12 billion of sub debt as well, which has a call option coming up in November of 2025 -- November 2025. So that is something that is in our minds as well, whether we need to call it at November. And then if we need to, we could reraise it. The choices will depend upon how RBC gets implemented and the time line for implementation of RBC, which you're aware is a discussion that is there in the industry. We are not sure of the final contours of the RBC. And therefore, we're not aware of any potential releases of capital that may come about. Once you've got some degree of certainty on it, we'll be in a position to determine whether we need to reraise it or we would let it lapse once the INR 12 billion has been called back. So in anticipation of this is why we had raised the INR 14 billion. Coming to your question on partnership distribution [indiscernible].

I'll take it from there. Thanks, Dhiren. See, on partnership distribution, first of all, let me share that it contributes to 11% of our overall APE -- distribution APE. And while I understand that the growth is relatively muted in this channel, and largely, it is on account of them not participating enough in the tailwind, which was available in the first half of the year, which was, as you know, unit-linked business was supported with positive market sentiment. And typically, partnership distribution channel focuses more on non-linked side of business. But -- so they could not capitalize on the tailwind, which was there in the ecosystem. That was one of the reasons why the overall growth for the year looks muted. Second, of course, there was a kind of adjustment subsequent to change in surrender guidelines, where the entire industry was adjusting to the change. And third, from our perspective, we were very happy to say that the business, which is of top focus to us, which is protection, there their mix -- our mix of protection in partnership distribution actually went up from 15-odd percent in the previous year to close to around 20% this year, which means that the business, which is of top priority to us, their partnership distribution significantly added value. So this is where I thought that I should also bring in context that if you were to look at 3- to 4-year period, this is one of the distribution channels, which has consistently delivered growth and on a CAGR basis, if you see, they have contributed to around 17% to 18% growth over the last 3 to 4 years. So I believe that now with an environment which is more volatile and the demand for guaranteed products may come back again. And now with their strength that they have now on protection alongside, I think they will come back, and I would like to look at FY '25 as only a transitionary phase.

One, just, I mean, if -- any discussions currently happening or talk on the banca or regulation regarding bancassurance or parent bank? I'm [indiscernible] of the fact that for you, it's not a big deal. But any discussion at the industry level, regulatory levels happening around the banca because there has been a lot of noise last year?

No, Avinash. We are not aware.

The next question is from the line of Swarnabha Mukherjee from B&K Securities.

So my first question, again on the operating assumption in part, I wanted to understand EV, as you highlighted, is led to mortality. I wanted to understand on the VNB part, what has been the reason. What I got was maybe due to the cost structure going to ULIP. But if you could give it a little bit more granular detail, that would be very helpful. That is the first question. The second one is -- if I were to think about the growth expectations for FY '26. Now in FY '25 for 9 months, we have very high base. We had very strong growth for the first 9 months and also till January. So if I were to think about it, would we -- should we expect the base effect playing out in FY '26 at least in the first half, what would be your comments related to that? And also in terms of VNB growth, the absolute VNB growth, should we expect to grow it faster than the APE growth that we should see going forward? And if yes, sir, what would be the lever of those?

Thanks, Swarnabha. On the operating assumption question that you raised, yes, part of it that we discussed in the EVOP has come through from some of the mortality changes that we had to do. Within the VNB also, there will be some element that comes from the expense affordability, which is what we discussed earlier in the comments as well, given the fact that there has been a shift towards unit-linked that does take a little bit of an expense affordability from a margin perspective. Coming to your second question in terms of the growth factor, yes, Amit explained in detail what happened in quarter 3. Now one of the things that comes about from the market-linked product is that typically whenever there's volatility, then you do have a little bit of a pipeline disruption. But I believe as there is some steadiness in the markets, we are able to build that pipeline back. The other thing that we have also on the unit-linked are a variety of other features and benefits that we've added. So it is not just a plain vanilla unit-linked product anymore. There are additional riders which provide benefits for customers, which we think can take away some of the market effects. Along with that, we do have higher sum assured unit-linked which also offer benefits that are different from a plain vanilla unit link. So from that perspective, I do believe that we've got some degrees of levers that we have built within a unit-linked base itself. And most of this has started to come through over the second half of last year and more towards quarter 4. So from that perspective, while, yes, the base does look steep when you compare Q1 to Q1 going forward. But our endeavor would be to continue to build upon the numbers that we have and build growth on top of that. On your third question on VNB. Of course, the endeavor is to be able to grow VNB ahead of the APE and that's what we will continue to work towards.

Sir, just one follow-up on the first question. So if I look at your overall cost structure, I think largely even in the savings line of business also we have improved as well as when I look at the cost to total premium, it is around 18.1% versus 18.3% last year. So in terms of the drag related to cost due to ULIP, I just wanted to understand, would there be any other parameter from which we can decipher that and -- I mean, how to look into it? Because this was I think, it was slightly something that is difficult to estimate beforehand. So just wanted your help regarding that.

No, you're right, Swarnabha, difficult to estimate from the outside. But as we have given you some perspective, the unit-linked product does have lower affordability and the shift in the product mix does create stress if the expense growth is ahead of what was -- what could be afforded within the product mix. Yes, so other thing also like to mention from a perspective of the underlying business that we have, there is a great deal of focus on driving the protection component within all product lines. You can see that number come through in our retail sum assured growth of about 37% for the year. So that is another area that we are focused on. So while we do have the core savings chassis, we are in a position to also increase the protection component within that.

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

I have 2 questions. First is on growth. I'm harping on this again and again, but we have challenges in the credit life segment. ULIP will remain challenged because of high base and the markets being volatile. Even with the non-par product, we are in a declining rate environment where the attractiveness of a 6.5% IRR product versus a 6% or a 5.5% product IRR. We know the difference of that. So I wanted to understand on a high base of FY '25, what would be a realistic number to look towards for growth for FY '26? That's my first question. In that, if you can also answer, will group funds continue to be structurally higher for us? Because earlier you used to do about INR 3 billion or so of group funds, now you're doing about INR 6 billion, INR 7 billion. So will that continue to be higher? Or is it a one-off this year? That's the first question. Now the second question is from your EV walk. There, you've given that the persistency and other variance, the number is INR 0.17 billion. But in the footnote, it's written that persistency was INR 0.73 billion. So something in the other variance has been a big negative, right? Can you help us understand what has gone negative over there? And yes, any details on that, that would be useful.

So Shreya, let me just pick up the last one. You're right. The persistent in other is positive of about INR 17 crores. And there's a negative that you see in others. Other is essentially a set of small items that are residual within the EV walk. In any case, it's not a very large number at the end of it.

Sure. But what is it usually? I mean, just for understanding, what are these line items basically, which are...

These are the residual components that will be left after accounting for persistency, expense and mortality. So these will be some minor modeling elements that come through.

So on growth element, just a few facts I would like to share that you spoke about the linked business being challenged in last quarter and will remain volatile and also guaranteed products not remaining as attractive in a downward interest rate scenario. So let me just share with you some numbers on quarter 4, linked business, while from expected levels, it was lower, but against the correction that you saw in the market, our decline was a very low single digit on a linked business, specifically in quarter 4, despite markets being corrected so much. And it's largely on account of investments that we have done over the entire last year in strengthening our unit-linked proposition beyond just an investment product. So today, it is powered with high sum assured. It is powered with good riders, rider choices that we have offered to the customer and a very strong and compelling nominee benefit propositions, which are very, very comprehensive in nature. That share of ULIP is now close to around 10% to 12% of the overall ULIP that we witnessed in quarter 4. So we are quite confident that this proportion within overall ULIP, which is isolated from market vagaries will hold us in good stead as we go and start this year. This is something which was not available last year beginning. Two, some of the things that you spoke about on interest rate correction that may happen. To start with, we'll take it step by step because very difficult to envisage as to when the movements will happen at what point in time during the year. Our job is to keep manufacturing products, which are suitable for all varying dynamic economic environment. So depending upon what customers decides to chose, we should have that available on the shelf. So like a single premium annuity business, which was impacted last year -- for a large part of last year because of fixed deposit rates being very attractive. I did see a pickup in February and March when this volatility happened and there was a flight to safety on the simpler guarantee kind of products during that phase. And third, there I'm very confident is that retail protection has remained very, very stable on growth perspective -- from growth perspective. So the retail protection is quite steady which is more than almost 37%, 38% of our overall protection business. Non-MFI side of credit life business also is very stable. In fact, it is growing at a good double-digit growth, close to around 20%. It's only the non-MFI part, which is 40% of our credit life, which has got impacted, which we believe that a couple of quarters down the line.

Sorry, Amit, that is MFI section.

Okay, non-MFI grew at a healthy rate, but MFI was challenged, which I believe a couple of quarters down the line, we'll follow the trend, whatever is there in the industry to pick up. So I think we'll take it step-by-step. We'll see how economic environment emerges. I think we're very confident on the propositions available and our ability to serve our customers irrespective of any changes in the environment that we witness.

That's very useful. Did you mention that in the credit life, the MFI segment is about 40%. Is that correct? Sorry, there was a disturbance. So I'm not sure.

No. So MFI had not done too well over the quarter 3 and quarter 4.

Okay. But it is now at 40%. That reading is right?

Yes, broadly.

Okay. Okay. And just the last bit on group funds. Will we structurally keep it high at INR 6.67 billion -- or can it be very volatile? Just to -- for our modeling purpose.

Sorry, can you repeat that question again?

The group funds business in your product mix, right? Historically, every year, you used to do between INR 2 billion to INR 3 billion of that, right? This time, it is much higher. It is about INR 6 billion, INR 6.6 billion or whatever. So going ahead...

See, I tell you, we have fair coverage. We have invested in our institutional side of business for a very long time. So we are present everywhere across our employee benefit propositions as well as group fund. So this is lumpy. At times, we get large lumpy deals. At times it works out, at times it does not. So when it comes, we are happy to take it. And if it doesn't, we don't lose our sleep on that.

So Shreya, this is lumpy business, difficult to predict how that would -- and forecast that into the future, but there's money on the table, so we take it.

Sure, sure. Very useful. Just one feedback. You guys used to give the VNB -- absolute VNB by product segment in your fourth quarter presentations. I'm not -- I couldn't find that in the PPT this time. It used to be very useful, so please do keep sharing that going ahead.

Sure.

The next question is from the line of [indiscernible].

Sorry, just a follow up on the VNB by segment. Do you mind -- do you have that handy? And do you mind share that with us?

No, Gav, we don't have that in the deck. So there was anyway context to this. We have introduced that split when we were largely unit linked, and we were just growing our protection business. In the current context, as you have seen the product mix by and large, stable across linked, non-linked annuity and protection. Of course, year-to-year, there are some minor variances. We don't see the relevance of the disclosure at this point. In any case, the market doesn't split it in that form.

Got it. And sorry to go back to this again, FY '26 growth outlook. I know things are more volatile. But if I look at your fourth quarter is minus 5% and as previous participant pointed out, the next 9 months is high base. So from a broad range wise, should we basically expect single-digit kind of growth or any number that you can guide us towards?

So Gav, very difficult to forecast growth. We don't give a guidance, but our endeavor is to be able to grow given the fact that we've got a fairly diversified distribution mix, and we have got a fairly diversified product mix. As Amit also explained in the opening comments, our channels have been able to nimbly switch between types of products depending upon the environment. We don't impose any specific thresholds in terms of how much of specific types of businesses can be done. And we allow the channels to nimbly switch across from one product line to another, depending upon the environment. The whole idea being that you should be able to partake in any opportunity that comes across to you while delivering growth, and that is going to be our endeavor.

And just to go back to the EV walk on the operating assumption changes. First of all, you said that part of this mortality assumption changes. Do you mind to quantify how much is that? And also what are the other large items that is contributing to this?

So we mentioned this earlier. We had seen that large mortality variance last year, which is one of the big things that we have taken into account as we have set out our operating assumptions this year.

Okay. The INR 2.5 billion, how much of that is pertinent to FY '25's VNB, just to double check.

So most of it -- actually not -- it will be split between FY '24, '25, mostly, primarily because this is from the group line of business -- group trade line of business and group terms. So that is all that we have seen from a delay perspective.

So sorry, just to -- so the actual FY '25 VNB, which is [indiscernible] so we have to deduct some of that from these INR 2.5 billion of operating assumption changes [indiscernible].

Yes, difficult to quantify how much of it. No, we've not quantified how much of that, but this is across multiple years.

[Operator Instructions] The next question is from the line of Supratim Datta from AMBIT Capital.

My first question is on the operating assumption bit. Just wanted to understand that given you had already made an adjustment last year, why didn't you change the assumptions at that point itself? And why did you have to wait for FY '25 to make that adjustment. If you could give us some color on how you think about this? This would be very helpful given we have been seeing some bit in negative either operating variance or operating assumption change over the last 2 years. My second question is on the cost bit. Now you -- in the initial opening remarks, I think Amit mentioned that the investments will continue. But if growth is slowing down and you have already seen a fair bit of cost build up over the last 2 years, then in that case, there could be significant operating deleverage if the cost growth remains at current levels going into next year. So how do you manage that, investment versus operating deleverage. If you could give some color on that. And lastly, you had launched a zero surrender annuity product last year. I wanted to understand how is the surrender experience there been till date?

Supratim, so the way we think about operating assumption changes is to understand what are the kinds of variances that we get and whether we have a view on these variances being sustainable at that level or they would tend to mitigate. So at the end of last year, we weren't certain. We had seen delays in claim reporting in group lines of business specifically on credit lines. And that is what we saw at the end of the year, which was at a negative of roughly INR 2.88 billion. Now as we monitor this experience through the year, we've been able to ascertain what are the kinds of strengthening that we need to do in our underlying assumptions. And that is what you now see resulting in the overall negative INR 2.54 billion. Having taken those assumptions on board, what you see are minor positives across the variances this year. So as I mentioned, we believe we've been able to capture most of it and actually almost all of it, and that is the reason why we see these positive variances. Of course, the reason why I cannot give you a definite answer is because we will keep monitoring this as time goes by. And our philosophy of this is to be able to catch variances as early as we can and then take them into account as part of our assumption changes.

Got it. And would this INR 2.54 billion completely go to the FY '25 VNB?

No, I answered that question. It's across the book. So a little difficult to quantify what portion of profit. Coming to the question on cost, what you've been able to observe is that we've been able to manage our cost ratios sequentially over the last couple of quarters. And you're right, it is for us to be quite calibrated as we look at growth into the coming year. That is going to be a trade this component because we wouldn't want to get into an operating deleverage situation, and that is going to be an endeavor very clearly. Coming to your question on the benefit enhancer, See one of the things that we've done with the benefit enhancement [indiscernible] commissions. So there is no real reason for customers to be able to -- or any customer to actually ask for the money back just because they're looking at some sort of a return because all they're getting actually is the sort of money that they've paid. Of course, they're going to lose the GST component top of it. And the fact is the distributor also has got his commission deferred across. So whatever we have, we built it as part of our assumptions and it's baked in at this point?

Got it. And given you highlighting the commissions, so there have been articles indicating that the regulator has been talking about or have expressed their unhappiness with how commissions have increased across both general and life insurance. So just wanted to understand how as a company is ICICI Prudential looking at it? And how are you looking at normalizing commissions? Because there has been commission increases that ICICI Prudential has also seen in the last 1.5 years. So I wanted to understand how you're looking at it as a company as well. And that's my last question.

Yes. Supratim, so the idea is to actually look at overall cost. So while we've been able to respond to the market in terms of increasing commissions where relevant, and do that in a stepwise fashion, what we've also done is take steps to be able to reduce our OpEx cost elements as well. So if you look at the overall cost base from FY '24 to FY '25, that overall cost has gone up by about 12% to 13%, where we've seen the top line grow at 15%. So we're quite cognizant that while there may be some expense increases around the commission line, and we'll calibrate that in line with the market, we will have to ensure that our residual OpEx has got some sort of a decrease, such that we're able to keep our overall expenses under control.

The next question is from the line of Prayesh Jain from Motilal Oswal.

Just a couple of questions. Firstly, on the VNB walk you have given a positive impact of VNB from product mix of about 200 basis points side. If you look at your product mix, it's all ULIP share has gone up, protection has gone down, group fund has gone up. So where has this benefit coming from? That would be my first question. And second, last year, you had taken a INR 2.88 billion hit of mortality and mobility variance in your EV. And that was again with respect to this business of what you spoke about in the assumption changes. Now again, you've taken about INR 2.3 billion. We're talking about almost INR 5.1 billion hit of this underwriting or modality experience, which is adverse. Is that -- and so is it like everything is factored in or we can expect some more changes? How should we look at this? Those would be 2 questions.

Yes, Prayesh, just a quick correction on what you said. What you saw last year was a variance of negative INR 2.88 billion. What you see this year is a negative INR 2.5 billion of assumption changes, which essentially is multiyear variances built into it. So therefore, when you look at the current set of variances, it's positive across other line items of persistency, mortality and variance -- and expenses. Seeing those positives, what we believe is we've been able to take into account all that we have been able to observe out of our portfolio so far. Otherwise, you would not have ended up with the positive variance. That's on your second question. On your first question, yes, so the business profile that you see as a positive factors the shift in the product mix, which, as you rightly pointed out, would have been negative, given the shift towards unit linked and of course, the drop in MFI. But as we've mentioned, we've been working towards improving the underlying profitability of our portfolio through increasing policy terms, sum assured multiples and ride attachment. Like I mentioned, the overall retail sum assured has grown very strongly by 37%. So what you now see is the impact of the shift in the product mix, that's again countered by the effects of repricing and the underlying profitability that we've built into it. And that has resulted in the positive 2%.

And within that's where your VNB mix helps us to understand the profitability of each of the product segment. So it would be great if you could reshare that because that helps us understand your product profile even better. So that would be helpful if you could share that.

The next question is from the line of Aditi Joshi from JPMorgan.

Just a couple of questions. Firstly, in the VNB margin walk, we have this impact of economic assumption change of minus 0.6 basis points. And I think we have already repriced some portion of the nonparticipating products in the last year. So just wanted to understand like the reason behind it. The reason I'm asking is that when you look at your EV sensitivity to reference rates, it gives you a positive sensitivity. I understand that it's mostly related to the discount rate as well using the market consistent embedded value. But just wanted to understand like when we take both of these two under consideration at the same time, it's still a negative impact on the VNB margins, if you can help understand like what all factors are playing here? And second, on the persistency side, more on the longer-term cohorts, there seems to be somewhat decline. So is it mainly from the cold years? And going forward, shall we expect that to improve?

Yes, Aditi, the economic change that you see in the VNB walk is largely on effect of the yield curve. Now technically, we should be able to reprice every month. Unfortunately, that itself is a challenge that one cannot execute. So to the extent that we were unable to reprice and we have seen that in the first half of the year, where because we had to make all the changes due to the surrender value guidelines, we were unable to reprice some of our interest rate-sensitive products through most of the year. But this element at the end of the day is small, it's about 0.6%, which is a function of how the yield curves have moved through the years and the pricing of the products at various points in time. Coming to your question on the persistency, I think you believe you're referring to the 61st month. A large portion of the portfolio that sits in the 61st month is unit linked, where we've been able to get our customers to continue staying in the product even though they're not paying premiums. This is something called a cover continuance option, which allows the customer to continue to enjoy the benefits while they're not making the payments -- premium payments. So that -- while it is value accretive to the company because we do earn FMC of the funds that are less in with us as well as the residual mortality elements, it does show up as a minor negative in persistency.

Okay. Got it. Just one follow-up to my first question -- my first question. On the Slide 69, you have shared the reference rates. And it has been broadly in the shorter tenors going slightly downwards. So just wanted to understand that the NBV margins that we have reflected in the earlier slides, it's basically adjusting these reference rates, right, post adjusting these reference rates and then economic assumption in downward revisions, it's a combination of both.

Yes. So the VNB margin does take to account the ref rate movements through the years. The sensitivities that you see are effectively built on the ref rates that you see at March 31 towards the end of the year, the reference rate that you see at the end of the year. One of the interesting parts that you see from the reference rate is that it's become far more steeper than what you had seen at the end of last year.

The next question is from the line of Umang Shah from Banyan Tree Advisors.

One question was with respect to the annuity product that we launched in the Q4 of last year. Now I understand that this year's Q4 would have a higher base but could you explain why there was a decline on a year-on-year basis for full year FY '25?

So Umang, last year when we had introduced the product, we actually had a lot of ATL support, along with our new product trust. So effectively, we had a very high base. In fact, in quarter 4, it was roughly about 20% of the business was coming in from annuity but as you look at through the year, that has stabilized, and it's come more closer towards the 8% mark. So on an incremental basis, we still do in the range of 8% towards annuity but when you compare it year on year, you do see this base effect come through.

Sure, sir. And sir, we have become quite active in the group fund space. Any reason why we picked it up in FY '25? And if possible, what is the range of VNB margins that we earn here?

So Umang, we have been very, very active in all group lines for many, many years now and we have been picking up group funds wherever available. As Amit also explained, this is the set of superannuation funds that are available in the market. This does have lower margins relatively, but there's money on the table, and we're quite happy to take it.

Mr. Umang, could you please come back in the question queue for further questions? The next question is from the line of Nidhesh Jain from Investec.

Can you share the approximate share of ICICI Bank in your APE for FY '25?

Yes, Nidhesh, this is roughly in the range of 14%, 15%. It's been broadly steady through the year.

Okay. So it has now stabilized and is growing in line with the company?

Yes, it's broadly stable, Nidhesh, through the year.

Sure. Second question is on VNB margin walk again. So the unaffordability because of ULIP, that should be a part of a new business profile, right? Because if ULIP share is going up, then that is a product mix change and not the assumption change or you have changed the unit cost assumption for ULIP and non-ULIP, then that's why you're reflecting it in operating assumption change?

Yes. Under the IEV, we are supposed to reflect all costs at the end of the year. So if there is an update to the expense unit cost, then that gets reflected under operating assumptions. Unlike other formats where you could work with the long-term cost and show an expense variance, under the Indian embedded value, you can't do that. So you have to reflect all costs at the end of the year and true them up. So if there is a change in your unit cost, that gets reflected in the assumption changes.

Okay. So -- but you have not changed the long-term unit cost assumption. It is just that FY '25, the costs are high. So that's why for that...

No, no, Nidhesh. Under the IEV, there is no concept of long-term unit cost.

Okay. So basically, just the way to understand is that ULIP margin in FY '25 is lower than ULIP margin of FY '24 or ULIP -- yes, that's the way to understand it or...

No, no, no. That's not. That's not the way to understand that. It is just that whatever expense hits that we have, we have reflected that within the VNB walk itself under the operating assumption. Not all of it is expense, but yes...

But we have not changed any expense assumption. It's just the experience of FY '25 that reflected in the VNB walk.

Yes, that is right. And given the fact that we had shifted towards...

Okay. And EV walk assumption changes entirely because of mortality?

So EV walk has other components within it, but this is largely explained by -- the numbers largely explained by mortality.

The next question is from the line of Madhukar Ladha from Nuvama Wealth Management Limited.

Just 2 quick questions. Number one, I think as an answer to one of the previous participant's questions, you mentioned that in that operating assumption variance, there is some component of FY '25 VNB as well. Is my understanding correct? And if that is the case, then to some extent, would it be fair to say that, that 22.8% VNB margin is slightly overstated and hence, going into FY '26, that should come off just not taking into account any other change, but just on a like-to-like basis. Second question would be just on an overall growth. I know we always aim for VNB growth, and we were sort of targeting about a 15% VNB growth in the beginning of the year, but we have ended up just about 6% to 7% VNB growth. Retail APE growth has been around 11%. I mean, can we get some sort of realistic expectations for retail APE growth going into FY '26, that will be very useful. Those would be my 2 questions. Most of my other questions have been answered.

So Madhukar, let me clarify for the other participants also on the call. When we take the operating assumption changes for the current year as part of the EV, this reflects all known experience that we have at this point. So when you look at the walk that you see currently, the VNB margin that at the end of the day accounts for all of these adjustments as well. Having made those adjustments, what you are seeing residual are small positives around persistency, mortality and expense. So to say, at this point that we would see something negative coming through, I don't think is correct. To the extent that we know and we have been able to see, we have reflected that as part of the assumptions. I hope that clarifies that point. The second bit around retail. For this year, we've seen retail growth quite strongly. One of the challenges that came across during the year was on the credit life and specifically on the MFI side, where we saw declines, and we saw -- this is something that is not within our control. This is what the environment is at. This has been well discussed in other forums, and to the extent that while the MFI business may be soft for the coming quarter or maybe further, we do not have any control over that. What we will do is we will work beyond that. We'll work beyond that, we'll be able to build other lines of business.

But like given your retail APE growth is 11%, right? It's the group APE, which has driven the total APE to 15% growth. So that's where I'm coming from.

No. Actually, if you look at the Slide #9, you can see that retail AP is at 13.3%. Along with group, it takes the overall AP at 15%. So you may be looking at an RWRP number. But if you look at the retail APE number, that's at 13.3%. RWRP does have an element of model business in it, but this is the number that you compare when you look at...

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

A couple of questions. One on VNB margin, right? So your report on embedded value results have given the breakup of VNB for savings and protection separately so we can calculate the protection and savings VNB margins. It seems like in the Protection segment, the margins have come down significantly this year despite not much change in the mix of protection that you have been able to record in terms of APE. So just wondering what is the reason for such a significant drop, almost from a 75% to a 55% VNB margin on the protection side? And the second question is your sensitivity to reference rates on VNB margin seem to be significantly higher than some of your peers as well. And as of last year, you were giving sensitivity to VNB. And it seems like almost 100 bps reference rate change changes the VNB by 15 percentage points for you, roughly. So what are the products that are driving that? And are we doing something to reduce the sensitivity?

Yes, Rishi, if you look at the ref rate change to VNB, frankly, this precludes any management action. So we discussed this earlier also on a different question, we would be in a position to reprice it. Sometimes you're not in a position to reprice it every month, but the idea is to be able to catch up and reprice this at every possible opportunity. So to the extent that we are able to catch this repricing, we're in a position to correct whatever gaps that we see in terms of the margin outflows. So yes, you are right, this number does look fairly steep. But in some form, this does get caught at every point. So some of the changes also to your other question in terms of the protection margins are largely around the updates that we have done on the mortality, which have flown through. But a large portion of the business, again, is on the group side, which we'll continue to look at pricing as time goes by.

So protection, these are the sustainable margins from here on?

Sorry, can you repeat what you said?

Yes, I was asking that the FY '25 protection VNB margins, are these the sustainable margins going forward?

See, we'd expect these margins to improve as time goes by, and we've got an opportunity to correct these pricing action that we have on the ground.

The next question is from the line of Dipanjan Ghosh from Citi.

A few questions from my side. First, if I look at your 13th and 49th persistency on the non-linked business on a Y-o-Y basis, there seems to be a good amount of decline. So if you can shed some color on that. Second, on the non-par, you mentioned that while growth has recovered in the fourth quarter, if I look, let's say, on a 2-year basis and compare with March '23, even excluding the one-offs which you had mentioned at that time of around INR 5 billion, there is actually like a decent high single-digit CAGR decline on a 2-year basis also. So what gives you confident that this segment should really pick up on a low base going into the next year? And lastly, just going back to the question of the previous participant. If your protection margins, is it fair to assume that ex of the credit life versus the other segments also have seen some amount of like retail protection and also maybe the credit life business, the margins have seen some amount of moderation? So those are my 3 questions.

So on your question on non-par, yes, through the year, this had declined. But what you've seen -- what we've seen in quarter 4 is a resurgence of non-par primarily on the back of the Gift Select product that we had launched there. And given the current economic conditions, where things are a little volatile, we believe this would be a product that would do well in this set of market conditions. With regard to your question on persistency, there have been some changes, yes, some minor drops that we've seen in terms of persistency. But that's largely around certain segments, which we will look at correcting as we go through the year.

Sir, the question on protection margins, subsegment wise, have they been stable or kind of have seen some change ex of credit -- ex of group term?

No. So on the retail side, we're holding margins on the protection.

So then one data keeping question. Would you like to specify the non-par mix, I mean, normally, you give a broad range for the year?

Yes. So roughly for the year, we are at about 50-50, thereabouts. About 55-45 on the par side. Of course, quarter 4 was roughly about 30-70 on the par to non-par.

The next question is from the line of Raghvesh from JM Financial.

Congratulation on strong set of numbers. So broadly, I wanted to understand the ULIP margin bit. So of course, you have not given it out this year. But the assumption is that as the volume growth has been much stronger in this year, 15% growth, the margins should have come up from the levels which we saw in the last 2 years. So if we assume something like a similar growth for the next year, somewhere around 15%, do our margins further improve on the ULIP bit? If you can give that even qualitatively?

So the margins of ULIP are slightly higher than where they were last year. But a large portion of that does come about based on the features and riders that we have attached as part of the product. So as we continue to attach more of them, we should be in a position to improve the underlying profitability of that line of business.

And this attachment, you have actually started much towards the end of 3Q and beginning of 4Q, right? So the next year, we should see the full impact?

If we're able to sustain the momentum, it should help. And that will be our endeavor. Sorry, Dipanjan, I think I misspoke the quarter 4, and this is pointed towards Dipanjan, quarter 4 par, non-par has been roughly half-half.

The next question is from the line of Prakhar Sharma from Jefferies.

Just 2 quick bits. One, is the steepening of yield curve positive from doing the business in the non-par side? Last year, practically, everything was around 7.2% to 7.3%. Now it's like 6.6% to 7.5%. So does it allow you better flexibility to do non-par at better margins? That's the first question.

So, yes, Prakhar, it does allow flexibility, but of course, it's depending upon the environment. And we've been in a position to correct our prices or update our prices based on how the market also evolves.

And any comments around the distribution-related regulations, both on bancassurance and the amendments to the act on agency?

None at this time, Prakhar.

We have not heard anything on that front till now.

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

There is an observation, if you see the fourth quarter, the non-commission costs have meaningfully come down compared to what you usually report in fourth quarter compared to third quarter. See, we saw that kind of phenomenon probably in COVID year. So this significant cost cutting, especially in the employee cost, has also played a meaningful role for margins to hold up to 9 months number? I just wanted to check whether this cost, what you have reported in the fourth quarter, is a new normal? Or is it a sustainable number going ahead to look from a margin perspective? That's my first question. And the second question was just maybe wanted to check is that this assumption change which you have spoken about, I don't know whether I might have missed it, is largely a reflection of non-retail protection business, right? So in the retail protection business, are there any meaningful assumption changes or it is largely related to non-retail protection business?

So let me take the second question first. Yes, the assumption changes can largely be explained by the group side of business which is the non-retail side. Coming to your other question on cost ratio, rather than look at the split between commission and noncommission, the idea is to be able to manage the overall cost ratio put together. The idea -- the endeavor that we will have is to keep our overall costs in line with the product mix and therefore, the affordability that we're able to generate out of this and we'd like to keep this as low as possible, while, of course, continuing to invest in areas that we think give us strategic advantage, such as IT digitization as well as supplementing channels with feet on street where required.

Okay. But this cost is a sustainable cost, what you delivered in fourth quarter?

The idea is to be able to keep costs under control across the quarters as well.

Okay. Okay. Got it. And lastly, then, this new non-par product somehow has cannibalized into your regular pay deferred annuity, 0 commission product, a 0 front of product. So that's the -- probably one of the reasons which led to a muted growth in annuity. So there is a bit of cannibalization among the products to some extent?

No, we don't believe so. These are 2 different lines of business. The annuity product is targeted more towards a person who is nearing retirement, the regular pay annuity, which would typically be a 55 plus. Single pay annuity would be targeted at a 60, 60 plus, whereas the Gift Select would be targeted at a much lower age.

See, also this annuity product that we launched last year, prior to that, our annuity mix used to range between 4% to 5%. So even now, after having stabilized the momentum that we got last year, quarter 4, we are still at 7% to 8%, in fact, 8% is what we delivered as an annuity mix. So annuity is holding on its own. And like what Dhiren mentioned, it is more appealing to customer who is nearing retirement, whereas Gift Select is targeted for relatively younger customers looking at that product for his own consumption needs. And hence, he looks at liquidity as one of the features which appeal to him. So very, very different products.

Got it. And sorry, Dhiren, one more thing. If your contribution of MFI or group protection comes off because that's where your assumptions have been a little off. So if last part of the protection in subsequent years is driven by retail, then this 54%, 55% margin, what you reported in the current year, should go back to those 70s level or even irrespective of the product mix, the new normal is somewhere around 55-ish in the protection business?

No, as we're able to correct some of the pricing actions on group as well, we should be able to bring this up.

The next question is from the line of Mohit Mangal from Centrum.

So first question is on the agency counts. If I look on a gross basis, we had about 60,000 agents that were hired but on a net basis, if I look, it was the 20,000. And so basically, 40,000 agents were out of the system this year. And even if I look at the last year, this number was around 35,000, 36,000. So is it rough -- is it right to assume that 35,000 to 40,000 agents would not be a part of the system every year no matter how much we kind of hire?

So Mohit, the idea is that we'd like to add productive agents, but the reality of the market is that most agents in India start off being part time and then they graduate to full time. So given the set of training architecture that we have deployed both for our front line as well as for agents, as well as the targeted approach that we have in terms of product training, we believe we should be able to get far more productive agents as time goes by and as these training programs become embedded within our systems. Now this is in terms of how agents get added and the count of 60,000 that you pointed out is going to be going through these training programs through last year as well as into the coming years. Now the reduction of agent comes about from agents who have not really been performing and we take a fairly long view of it. Typically, agents who have not generated any business for 4 years, 5 years, they are the ones who come on to the deletion criteria because we do believe that give enough -- give agents sufficient amount of time to be able to be productive and add to the top line of the company. There is no reason for us to be -- because every -- all of our agents are on a commission basis, there's no reason to be able to cut them off as quickly as possibly a year or so. So some of the agent count deletion that you've seen are from agents who have haven't performed for the last few years.

All right. Understood. My second question is in terms of repricing. So have you done any repricing on retail protection front over the last 1 year, if you see, for us some assured greater than about [ INR 10 million ] or something that is some assured.

So Mohit, repricing does come about through the year. Whenever we see some segments that we'd like to update prices both up as well as down. We do that through the year as well. So there isn't a single point where we take a big step change, but we'd rather do this in segments and across the year.

The next question is from the line of Manas Agrawal from Sanford C. Bernstein.

Two questions. One, on the economic variance that we've reported. Can you split this into debt and equity? I assume that could be positive and equity would be negative, but correct me if I'm wrong. And the second question is, can you help understand ballpark what is the contribution of ATC to Q4 or March sales? Because if I just look at the numbers for March trend line over time, it does seem to be a nontrivial amount.

So Manas, ATC has not really been a big drive for us for many years now. Even when we had gone to IPO when we had a large number of cases that were coming on the unit-linked side, the ticket sizes of these products have been typically in the range of 150,000 to 200,000. Even now when you look at the breakup of ticket sizes, that is part of our pack towards the end. You will see that with these sets of ticket sizes, the kind of, let's say, the kind of reliance that customers will be taking towards ATC would be extremely small. I cannot rule out that people would not be taking advantage of this for ATC. But when you're looking at 150,000, 200,000 ticket sizes, the expectation is that they would have covered these up through other investments and using this essentially to be able to save for the long term and towards goals that they have set out.

And on the first question on economic variance?

So this is split across both debt and equity. Let me just get back to you on that one.

Sorry, come again, please?

I don't have a breakup at this point, Manas.

But directionally, when rates have gone down, debt should be up. I think you said that it's both negative.

No, it's countered by both.

Okay, I'll await details and maybe take it offline.

The next question is from the line of Neeraj Toshniwal from UBS Securities.

So if I add back the assumption change operating assumption to your protection VNB, the normalized protection margin will be 70%, still much lower than last year. So would it be right to say that overall protection margin actually also gone down? And what is the right number we should be working with as you mentioned that there will be some pricing improvement, so it won't stay at 55%, but it won't actually go to...

So Neeraj, we will work at bringing the protection margins up back to last year's levels. That would be our endeavor.

Yes. But even if I claw it back, it wouldn't be more than 70%, won't go to 75-ish, which we've seen. So maybe you can look at the average of last 3 years, because it includes variances of earlier years also, so that is around 67%. So would that be the correct way to look at it because it's not just one year, which has impacted your assumption change.

Yes, as a pool put together, it's fair to look at 60% to 70%.

That is one thing. Second of the operating assumption in the VNB margin, 3.3%, can we call it out how much is from mortality and how much is from expenses?

We've not called it out. Like I said, the large portion of the operating assumption change can be explained by the update to the group side mortality.

So what is the normalized or maybe the fair question is what is the next year in terms of -- you're seeing [indiscernible] probably looking at growing faster than APE. Can we have some insight into how much APE growth can be actually built through over the next year?

Neeraj, very difficult to call into next year given the current volatility and the environment conditions. However, I think if you were to look at a medium-term perspective, I think we should be able to build in the range of 13% to 15% APE growth, definitely, as an industry, and we'd like to outperform on that perspective. But over the shorter term, quite difficult to call.

Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Mr. Anup Bagchi for closing comments.

Thank you, everybody, for joining, and have a great evening.

On behalf of ICICI Prudential Life Insurance Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.