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 Q1 FY 2027 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. 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.

Good afternoon, and welcome to the results call of ICICI Prudential Life Insurance Company for the quarter ended June 30, 2026. I have several of my senior colleagues with me on this call, Amish Banker, Chief Distribution Officer; Dhiren, CFO; Ajit, Chief Service Delivery; Manish, Chief Investment Officer, Souvik, Appointed Actuary; and Dhiraj, Chief Investor Relations Officer. Let me start with the key update for the quarter. We held our 26th AGM via video conference on June 30, 2026, and all the items specified in the AGM notice were duly approved by the shareholders. The Board at its meeting held on July 6, 2026, has approved the proposal to rename the company as ICICI Life Insurance Limited, pending regulatory approval. The name follows the Board approval of BCHL's request to change its status from promoter to investor. The proposed name reflects the strength, trust and legacy associated with the ICICI franchise. The company's core operations, strategy and governance frameworks remain unchanged and continue as usual. We remain well positioned to drive sustainable growth, enhance customer outcomes and create long-term value for stakeholders. On the regulatory front, I has introduced regulations linking key management compensation with customer-centric outcomes and has issued a draft exposure draft for intermediary disclosures. These initiatives are aimed at enhancing transparency, strengthening accountability and further reinforcing policy protection across the insurance industry. We view these developments as positive steps towards fostering greater trust, improving customer outcomes, supporting the sector's long-term sustainable growth. Macroeconomic conditions remained volatile in quarter 1 2027, driven by geopolitical uncertainties, inflationary concerns and fluctuations in financial markets. While some of these pressures eased during the quarter, equity markets remain volatile. Inflation remained a key area of focus with weather-related risks, including the potential emergence of El Nino conditions warranting close monitoring. Against this backdrop, the RBI maintained a balanced policy stance. Despite these near-term uncertainties, strong structural fundamentals continue to support resilient demand for insurance products. As a company, we delivered a strong and resilient performance with VNB growing by 24.9% year-on-year to INR 5.71 billion in quarter 1 2027 and VNB margins at 26.7% PAT also increased by 27.8% year-on-year to INR 3.86 billion. These results reflect the strength of our diversified business model, disciplined execution and continued focus on delivering sustainable growth. Our business model is built on 2 pillars: protection business, which provides coverage and savings business, which creates value through long-term engagement of customer funds. In quarter 1 2027, our sum assured grew by 31.8% to INR 4.90 trillion, supported by a strong 5.7% year-on-year growth in protection APE. Our sum assured market share stood at 11.8%. Retail sum assured increased by 45.9% to INR 1.13 trillion, driven by robust year-on-year growth of 60.4% in retail protection during the year -- during the quarter. As of June 30, 2026, our total assured stood at INR 48.6 billion, reflecting the trust reposed in us by our customers and the scale of protection provided by the company. Notably, our new business sum assured has grown at a CAGR of 18.7% and 25.1%, respectively, over the 5- and 10-year period ending FY 2026, and we remain focused on sustaining this strong momentum going forward. In the savings business, scalability and cost efficiency are key drivers of profitability. In quarter 1 2027, new business premium grew by 21.3% year-on-year to INR 48.6 billion, driven by 13.2% growth in the number of policies, reflecting the continued expansion of our customer base. Over the long term, we have delivered a new business premium CAGR of 13.7% and 13.9% over the last 5 years and 10 years ending FY 2026, respectively, demonstrating the consistency and sustainability of our growth trajectory in the savings segment. During the quarter, API grew by 14.6% year-on-year to INR 21.36 billion and RWRP grew by 13.4% year-on-year to INR 15.38 billion in quarter 1 2027. We continue to focus on driving operating efficiency through leveraging economies of scale, aligning our cost structure with the evolving product mix and investments in technology, digital and AI initiatives. Consequently, our savings cost to premium ratio reduced by 50 basis points year-on-year to 13.6% in quarter 1 2027 despite the increase in expenses resulting from unavailability of import tax credit. Our growth continues to be underpinned by a strong focus on risk management and prudent business practices, which is reflected in the resilience of our balance sheet. Our claim settlement ratio remained strong at 99.3% in quarter 1 2027 with an average turnaround time of 1 day, underscoring our commitment to customer service. Our early claims ratio stood at 22%, best-in-class in the industry, highlighting the high quality of business we have consistently sourced over the years. During the quarter, we settled INR 13.06 billion of death claims and paid INR 33.60 billion in maturity and survival benefits, reflecting our continued focus on delivering timely financial protection and peace of mind to our policyholders. Notably, in FY 2026, we settled INR 51.49 billion of debt claims and paid INR 53.63 billion in maturity and survival benefits. Customer retention also remained healthy with persistency at 84%. We maintain a robust solvency of 25.4%, significantly above the regulatory requirement of 150%, positioning us well to sustain future growth while maintaining financial strength. Further, we continue to maintain our track record of not having a single nonperforming asset in our investment portfolio since inception. Our assets under management stood at INR 3.34 trillion as on June 30, 2026, reflecting the scale of our franchise and the trust placed in us by our policyholders. To summarize, despite ongoing global geopolitical uncertainties and market volatility, FY 2027 has started on a positive note demonstrating our business resilience. We remain focused on sustaining this momentum throughout the year. Our priorities continue to be driving sustainable VNB growth while balancing business growth, profitability, risk and prudence. Thank you, and I'll now hand it over to Amish to take you through the business updates.

Thank you, Anup. Good afternoon. Let me start with product-wise performance. Our core focus area, retail protection grew by 60.4% year-on-year in Q1 FY '27, driven by the GST exemption on protection products and various company-led initiatives. This marks the third consecutive quarter of retail protection year-on-year growth exceeding 40% following the GST reforms. Consequently, the retail protection segment accounted for 10.5% of AP compared to 7.5% in the corresponding period last year. With only about 13% of the addressable population currently covered through retail protection, we believe this segment presents a significant long-term growth opportunity spanning multiple decades. Our group protection business comprising credit life and group term delivered strong growth of 37.8% year-on-year in Q1 FY '27. The MFI segment witnessed recovery after an extended period of moderation, while the non-MFI segment continued to demonstrate healthy momentum. Group term business also registered strong growth during the quarter. Consistent with our approach, we remain focused on disciplined underwriting framework and pursuing opportunities that meet our risk reward expectations. Ongoing global geopolitical uncertainties and volatility in the equity markets influenced customer investment preferences during the quarter, leading to a shift in the overall product mix. Consequently, the savings business mix moderated from 78.1% in Q1 FY '26 to 72.1% in Q1 FY '27, while the protection business gained share. Our savings APE stood at INR 15.4 billion in Q1 FY '27, registering a growth of 5.8% year-on-year. Within the savings category, our linked business APE grew by 6.4% year-on-year. In this segment, we continue to focus on offering wealth creation solutions that help our customers navigate market volatility while achieving financial goals and family milestones. The non-linked savings business, including annuity remained broadly stable year-on-year at INR 4.94 billion in Q1 FY '27. The segment continued to operate in a competitive environment with alternative investment products offering fixed returns and fixed maturities, attracting customer interest. Within the non-linked category, we witnessed a shift in product mix towards the participating products. Group funds business APE grew by 42.2% year-on-year in Q1 FY '27. Now let me talk about channel-wise performance. Agency channel APE grew by 2% year-on-year in Q1 FY '27 to INR 4.63 billion. Direct channel APE grew by 8.3% year-on-year in Q1 FY '27 to INR 2.86 billion. Together, these channels contributed 45.5% to retail APE in Q1 FY '27. As a strategic priority, we have been investing in the agency channel over the last few years. We continue to recalibrate the channel with our road map centered on a micro market-led brand strategy, complemented by the use of technology and analytics to enhance productivity. We remain focused on ensuring that our cost structure is aligned with the prevailing business mix. Within the channel, we have been optimizing the product mix in favor of products that enhance business quality, improve profitability and support sustainable growth. In the direct channel, our focus remains on scaling online business through differentiated customer offerings and digital capabilities and deepening our presence in the NRI segment through GIFT City. Bancassurance channel grew by 5.6% year-on-year in quarter 1 FY '27 and contributed 27.4% to APE. The growth reflects the continued recalibration of business at some of our partner banks while maintaining a strong emphasis on business quality. We view this as a normal part of the business cycle. Partnership distribution channel grew by 29.5% year-on-year in Q1 FY '27 and contributed 14.6% to APE. Both in banca and partnership distribution channel, we continue to focus on deepening existing relationships and adding new partnerships. Our approach remains anchored in business quality with mortality and persistency serving as key metrics that are integral to driving sustainable long-term value creation. Group business grew by 38.8% year-on-year in Q1 FY '27 and contributed 22.9% to APE. Today, we have a strength of 2.44 lakh plus advisers, 52 bank partnerships with access to more than 26,800 bank branches and 1,500-plus nonbank partnerships. To summarize, in the proprietary channel, our focus remains on driving growth through our micro market-led strategy and scaling the online channel. broadening both our distribution reach and customer proposition, we continue to create a more diversified business model that is better equipped to adapt to changing market conditions. This will support a balanced product and channel mix and enable sustainable long-term growth across market cycles. I'll now hand it over to Dhiren to talk you through the financial updates.

Thank you, Amish. Good afternoon, everyone. Let me now take you through the financial metrics. As a company, our focus is on growing the absolute VNB, which has been demonstrated with the growth in VNB by 24.9% year-on-year to INR 5.71 billion in this quarter. The VNB margin stood at 26.7%, an expansion of 200 basis points from the full year FY '26 margin of 24.7%. This growth in VNB has been achieved through an improvement in product mix and operational efficiencies even after accounting for higher operating expenses. Our product mix has moved favorably towards the protection business [indiscernible] assured registering a strong growth of 31.8% year-on-year in this quarter, thereby supporting value creation. Additionally, we keep working towards improving the profitability of each line of business through longer tenured policies, higher sum assured multiples and increasing ride attachment. On the efficiency front, we have undertaken various cost optimization initiatives over the past few years in order to make our cost structure aligned to our prevailing product mix. One of them being the use of AI/ML, which is being embedded across the entire customer journey, and that is driving targeted demand generation, automated underwriting, improved renewal retention, enhanced customer service and effective claims investigation. Some details of the usage of AI/ML across our processes is shown on Slide #32 of the investor presentation. The result of our productivity enhancements has led to cost to premium ratios for our savings line of business reducing by 50 basis points to 13.6% in this quarter. The reduction in cost is despite the increase in expenses due to the unavailability of input tax credit. Total cost to premium ratio for the quarter stood at 21.8% as compared to 21.2% last year same quarter, primarily due to increase in protection business. We monitor cost ratios for the savings line of business separately. Our objective is to bring efficiency in the savings line of business while we continue to focus on growth in the protection business. The company's profit after tax for the current quarter stood at INR 3.86 billion, an increase of 27.8% year-on-year. Our assets under management stood at INR 3.34 trillion, and our solvency ratio continues to be strong at 25.4% at June 30, 2026. Thank you, and we're now happy to take any questions that you may have.

[Operator Instructions] Your first question comes from the line of Shreya Shivani with Nomura.

Congratulations on a good set of numbers. I have 2 questions. First is on -- I wanted to understand the total VNB margins, how it has played out for the quarter. If I simply put the product-wise margins, it looks like there's some probably a lesser margin that we've made on the protection book. If that's not true, then is there still some impact of GST cut on our margins, which is making the -- I mean, it's great margins, but it could have been even higher with the kind of growth that you've come with. So what is it in the margins? Is it there some product level slowdown in margins or still a drag of GL cut? That's my first question. My second question is on non-par sales. Any outlook on how we are planning to go about nonpar for the rest of the year? Have we stayed away due to the price war? Or was there any -- I mean, we are still focused on bringing more efficiency. So we have still not scaled up. So those will be my 2 questions.

Shreya, this is Dhiren. On your first question of VNB margin, [indiscernible] partially explained due to the product mix. But again, you'll have to consider that we don't have the GST availability in this quarter. And this is the third quarter where we've had the impact of the GST nonavailability, input tax rate not availability. So you have to factor that in as you look at the margins, but it's largely being explained by the product mix.

So can you quantify how much drag we are still seeing on -- I mean it will continue for one more quarter until you have it in the base in 3Q.

That's right. Yes. Yes. It will continue for another quarter. That also will then form part of the base as we get into quarter 3 and quarter 4. But on your second question -- on your second question on non-par, no, we are not staying away from the market, but the environment is such that there are products on the fixed income side that at this point are a little more lucrative for the customer when compared to some of our products, purely from a sticker price perspective. And again, this is the environment that the customer is living in. As time goes by and we see some sort of tempering of those alternative investments, we should start to see some pickup on the non-par side as well. Nonetheless, we look at every opportunity to be able to give value back to customers. So we constantly look at all of our nonpar products, looking at various tenures, looking at various segments, and we keep repricing as is available at that point in time. So we're not staying away from it, but environment is such that the pickup of non-fare is quite subdued relative to previous periods.

And alternative products that you're talking about, is it more fixed deposit, more pension products? I mean, any...

Largely fixed deposits. Yes, the sticker price of some of these products is extremely high. So that does tend to attract customers when we see this sticker price in any of the distribution shops.

Right. And just a follow-up on the overall VNB margin. This is a great start for the year. But sustainably, what our aim, where are we going to keep our margins for the year and for maybe the medium term?

Good question, Shreya. We don't have a margin fixation. We've gone over that answer before as well. Absolute VNB is what we look at growing. And in this period, we have grown VNB by 20% on the back of the growth in protection. So absolute VNB is what we will continue to focus on. Clearly, we see a lot of opportunity on the protection space. The good part is, I'm not so fast about how the retail protection growth rate numbers are, of course, they're elevated at 50%, 60%. But the fact is we have now been able to all distribution channels to sell protection in significantly larger volumes than what was being sold over a year back. . So the endeavor to continue to hold these levels and increase going forward so that we continue to take the advice of the opportunity that takes us in the protection. Within the sim space, as we've discussed before, we'll allow the market to dictate this direction that we get the product mix to move but we've also ensured that our cost structures are nimble enough to be able to align with the prevailing product mix. So margin is not a fixation for us. It's growth in absolute VNB that we will continue to focus on. No change in the strategy there.

Right. And are we giving out any guidance. Last quarter, you said things were still very volatile on the macro side?

No, no guidance. No guidance.

Your next question comes from the line of Manas Agrawal with Sanford C. Bernstein.

I have 2 questions essentially. One is [indiscernible]

Sorry to interrupt, Manas, sir, your audio is not very clear.

[Technical Difficulty]

No, sir, this is not good at all. Our next question comes from the line of Swarnabha Mukherjee with 360 ONE Capital.

Congrats on a good set of numbers. Firstly, on the margin side, [indiscernible] mentioned that it is product mix, just wanted to think that anything else to read into? And your thoughts on if this going forward, if we are seeing, say, a higher growth on the traditional side of the savings side, would this normalize if you can share your thoughts on that? And on alongside that, just wanted to check that our growth in the month of June, the pickup in growth what led to that growth? And what product mix is leading to that growth? And does it continue in July? If you can give some color on that, that will be very useful. Second is, I just wanted to understand the growth in the partnership distribution channel, what products are driving that? And what are you doing differently now is leading to that growth? And same thing for your comment on the protection business. You mentioned that you are now able to push more protection products through multiple channels. So apart from the GST led tailwind, what -- is there any other -- what other efforts are going [indiscernible] those will be my questions.

Margin, I explained in the previous question as well as largely product mix. There is, of course, the impact of higher [indiscernible] of GST input tax credit that exists. So when you're looking at all of it, this is where we land a pack. I didn't quite get your question on what is normalized trajectory for traditional. [indiscernible] if you want to clarify that, I can attempt to answer that.

Yes. So I mean, sir, this particular quarter, our -- we have seen a softer growth print on the savings side of products. So I just wanted to check that one that, say, going forward, as that picks up, then should we also expect a normalization in all these trends?

Yes. One should because one of the challenges that we have seen in this current quarter and the last quarter as well has been around the nonparticipating product and which is what I explained in the pre-question as well. some of the reasons why the non-par pickup has not been as strong. In quarter 1 last year, the non-par has done exceedingly well. So in that sense, we're working off that base. And in the current context, current environment, non-par is really not selling at this stage. So that's creating this bit of drag in terms of where the overall traditional growth is. But like I also explained in the previous question, if this -- the alternative investments do tend to become a little more benign in terms of rates, then we should start to see some of the pickup on non-par and as I also explained, we will look at every opportunity that we can to be able to position our non-par products from a longer-term perspective, look at what are the rates that we could offer and look at building that category as well. Coming to your second question in terms of growth, I think it's sometimes very difficult to read month-to-month. This is really a long-term business. So our effort is to make sure that we keep growing every month, but there can be volatility in the growth, we look at it from month-to-month, but our endeavor to keep it as smooth as we can. In terms of July early numbers, yes, it's still too early in the month, but yes, it continues to do well. In terms of partnership distribution, I think a lot of work has happened across the quarters, which you are starting to see the output at this stage. There is a fair degree of protection business also sits within it. That has also contributed to the growth that you see here. Again, the point is we've got 1,000-plus partners, and we keep continuing and diversifying this channel to become as large as we can. In fact, if you look at the long term for this particular channel, this actually has delivered a near 20% CAGR over the last 5 years. So we continue to grow as much as we can keep working with our partners and ensuring that we've got all products and propositions that work in each of these customer segments. To your question on what are we doing on protection? We can't [indiscernible] the credit. There is, of course, the environmental tailwind of protection due to the GST impact. But [indiscernible] credit were able to socialize this across all channels and look at embedding this as part of our sales culture. There are a variety of propositions also that we have launched in this period. Some of these are the preapproved summer short, which are exclusively for certain sets of customers. Again, these are identified cohorts that we are going with. There is a lot of work that we have done on the onboarding stage. As we continue to deliver quarter after quarter improvement in terms of the frictionless onboarding that we are working through, deleveraging digital income validation that's available with external agencies. And in all, look at making sure that the onboarding of protection is as smooth as possible without letting go of any of the guardrails. So what you're starting to see at this point is a culmination of efforts across multiple quarters, and we're quite happy to take the benefit of the age. Work's not done. We will keep working at it going ahead as well.

Understood, sir. Very helpful. Just one quick question. If I can squeeze in terms of the persistency trends. How should we read because there looks to be marginal softening year-on-year? So if you could [indiscernible]

Across the quarter, you've seen that stability. It will see 4.5% as we left March and it's 84% at this point.

Correct. So [indiscernible] quarter-on-quarter, right?

Yes, yes. You should see it sequentially as you see across the quarter. .

Your next question comes from Avinash with Emkay Global.

A couple of questions. The first one would be more on bank. So now rental is exiting a promoter. Tender charter is part of their Asia exclusive deal with Prudential. So what is the state -- I mean, current state, I mean, of your agreement with Prudential [indiscernible] is it going to be available like [indiscernible], the Indian open architecture way and you being one of the insurers there or it will go exclusively to the prudential India entity the way I mean they have across [indiscernible] so far, I mean, how that channel has been doing? And related to that, another I mean there is another bank where I mean the group has now got an insurance company of its own. So the question we had, okay, your business [indiscernible] changed, you counter [indiscernible] that particular bank because now you tell in-house kind of. So these are the kind of a question around Banca. The second question would be more around as you have [indiscernible] the margin is not of success. But just going by how kind of the year progresses. The Q1 typical year, a very, very heavy protection contribution one, this time, of course, [indiscernible] is growing very strongly and typically, the DTI credit liability basis, Q1 is there [indiscernible] in our retail protection will have a kind of -- will moderate from that base because last year, it started to pick up. And then, of course, so protection typically from 28 might end up somewhere lower. So in that context, I mean, you see, at least for this year, the margin to hold up at this level or because the product is naturally going wait from protection, it will moderate from here on?

I'll just take a second question first, Avinash. Again, we don't have a margin fixation. It's absolute VNB that we're looking to drive. So if you look at it, you're right, typically, protection is higher in the initial part because savings has not grown as such. Protection tends to be a little more even out relative to savings. But we are going to continue to use every opportunity that we can to be able to grow protection. And one of the more important things is that as you look into the second half of the year, also, you will see us an uptick that will come through because of MFI business, which is part of our credit life business. . That had not done so well for most of last year. So we should start to see the benefits of that as we look at the base effect into the later part of the year as well. Again, no margin fixation. We will take the margin as it comes. Absolutely VNB growth is what we're looking at. Coming to your first question on Standard Chartered. Now Standard Chartered has been a partner with us for the last 10 years, right? And in this decade, we have built a deeply integrated relationship that spans not just products, spans, technology, processes and customer service. Now both these organizations, both [indiscernible] value this partnership very much, and we're focused on delivering the best outcomes for the customers. Having said that, all distribution partners are important to us. And one of our stated objectives is that we have to be the most partnerable life insurance company. So we continue to invest in areas such as seamless onboarding digital capabilities, strong customer service support, product propositions. And we keep doing this in each of our partners. Now that has helped us build this highly diversified base of distribution that you see with over 52 banks, 1,500 partnerships across the partnership distribution space. So in that sense, we are very well diversified. The largest single channel for us is ICS Bank. Outside of that, most channels contribute 5% and less for our business, most single distribution engines. So in that sense, are very, very diversified. So in that sense, we are very resilient from a distribution footprint perspective. And in terms of what standard would do, I think they value the distribution partnership that they have with us. And we continue to look at building it going forward.

Next question comes from the line of Prayesh Jain with Motilal Oswal Financial Services Limited.

Congrats on good set of numbers. Just a few questions. Firstly, could you highlight as to what is the kind of expense trajectory that you would have built out? And how is it kind of playing out? Is there an operating leverage benefit coming out in the margins today? That would be point number one. Point number 2 is, again, having a bit more on protection in the second half of FY '27 would have some -- would have a high base effect on protection, at least on the retail protection side, you kind of alluded that the MFI growth will come through. But do you think that the high base effect will kind of lower down the growth or margins in the second half as the product mix kind of shifts towards probably more nonprotection kind of businesses. And third would be on your the partner growth again, right? You've seen a very strong growth. Now generally, that would come at higher cost, I would presume. So in that sense, in spite of that, the margin seems to have kind of held up really well. And Dhiren, just trying to pull up -- if you are talking about a target of growth in VNB, if you could allude to that number is whether it's 20%, 24%, 25% that you're looking at for this year. Those would be my question.

In terms of the expenses that we have seen for the current quarter, clearly, there is elevation due to the unavailability of input tax credit. But we've been able to mitigate some of that through some of the cost initiatives that we've been doing across the past couple of years. So we are seeing the benefits of all of those. I also spoke about briefly about the outcomes that you've seen in terms of the AIML. So a lot of work that we have done on the tech space, digital space, is analytical space. All of that is helping us improve the cost efficiency that we have, and we continue to feed that back into our margins. . To your second question on what does the protection mix look like in the second half of the year? You're right, protection does come across a fairly steep base as we come into the second half of the year and that base effect goes away. So the question is, will I expect to see a 60-plus percent growth in the second half of the year, very unlikely. This, of course, is elevated because we're carrying through the levels that we have built up over quarter 3 and quarter 4. Our endeavor would be to keep these levels of protection on a production level the way they are and continue to build on growth on that. So of course, the growth of that is expected to taper down. But again, I keep looking at the opportunity. This is an area that we continuously focus on protection is a core focus area for us. Clearly, this is a multi-decade opportunity. And the endeavor on our part is to make sure every part of our distribution is getting more and more immersed about selling protection and to be able to drive the momentum of this forward. To your other question on partnership distribution. I think your going assumption is that partnership distribution is a low-margin business. I would be to defer there. It just depends upon what products you sell because you have to tailor make the product for the customers that you have access to. If you sell the wrong product to the wrong customer set, then you end up with order outcome, especially when you look at persistency. But when you have got that tailor-made, then you end up getting decent outcomes.

And [indiscernible] anything on VNB growth, that 20%, 25% is a good assumption for this year?

No guidance on that, Prayesh.

Your next question comes from the line of Sanketh Godha with Avendus Spark.

Sir, just one small clarification. I mean tomorrow Prudential becomes fully [indiscernible] you are confident that [indiscernible] will still remain an open architecture, and you will continue to do business with [indiscernible] or it will be a full migration of time fee to a new company? Any color or any discussions you had with the bank on these lines?

So Sanketh, this is a question that's best answered by stance, but let me give you our perspective on this. As I had mentioned in the answer to a previous question, this is a partnership that we have developed over the last 10 years. And again, the deep integration across technology, products, processes, customer service is not something that is trivial. It does take a lot of effort across both teams to be able to sit down at the table together and build solutions that benefit both parties while keeping customers at the center of everything that you do. And that is something that [indiscernible] extremely focused on. . So both of us value the partnership, and we are clear that we will deliver the best outcomes for customers while ensuring that it delivers value for both the partners as well. I think that gives you a sense of what we think about [indiscernible] also thinks about us.

And sorry, my second question is on the protection business because last time when the GST thing happened, you guys saw [indiscernible] has not changed the prices of the production business despite [indiscernible]. Have you guys or in general industry has moved to a direction to reprice the product to the extent of negating the impact and if you intend to do it in a couple of quarters when you highlighted that growth might slow down on a bigger base in second half? That can be seen as an additional lever for the margin to you and to the industry in the second half? .

Let me give you our perspective on this. When the GST change has happened, we saw this as a customer trust enhancing move, and we had repeatedly told on call as well that we have to take advantage of the opportunity. Whatever we have to do, we will do that over a longer period of time. if you were expecting on mass price changes, that has not happened, and we don't expect that at all. There will be certain segments that we will do repricing that. And these will be specific segments where we think we're not getting enough value. And there is sufficient cushion that's on the table that we could reprice our product at. So anyway, this is a continuous exercise. We continuously look at what are these cohorts that we need to reprice and we treat this as business as usual. Now very clearly, I don't expect the industry also to have any on mass price changes even as we get into the second half of the year.

Understood. Understood. And lastly, on some data keeping questions. The annuity growth, what you saw 3 percentage in the quarter year-on-year is largely single premium led? And second, if you can give a broader mix of nonlinked savings broken down into nonpar. You alluded that it is more for heavy. But if you can give a broader color where it is standing that will be useful.

So annuity in this quarter is led by regular premium as compared to what we had seen in the previous quarter. In terms of non-par, [indiscernible] 2:1 on the part to non-PAR ratio at this point.

So when you say regular premium, actually, we did not sell that product, which is a 0 [indiscernible], right? We went back to the same regular in deferred annuity plan. .

Yes, this is a regular deferred annuity plan.

Next question comes from Vinod Rajamani with Nirmal Bang.

I have 2 questions. One is on annuity and also protection. It's -- they've both done well. Have you tapped into newer channels and so on? So just some color on -- what additional, say, distribution capabilities we have employed during this quarter? That's the question one. Second is, so I track NBFC as well. So post January of next year, I suppose the regulators allowing NBFCs to distribute, say, insurance products without with -- they can distribute insurance products with less -- when they require approval they don't need -- they have just taken approval from IRDA as an RBI approval is not required. So any color you can provide on what impact that will have, say, on credit life and so on post say, January 1? That would be helpful.

No, Vinod, on your last question of NBFC is allowed to sell insurance, no, I don't have any view on that yet.

So the NBFCs can distribute insurance products without seeking RB approval?

But that could just be to distribute...

So that was [indiscernible]

Yes. But if they have to distribute any insurance product, then they would need to be registered with IRD as well.

No, that is right. But the full approval process will get speeded up in my sense. So anyway, that...

[indiscernible] from RBI side. But if they have to distribute insurance, and they would have to do this approval with IDA.

Well, no, that will stand, but it might get a little speeded up as my sense. But yes, I mean it's slightly hypothetical at this case. But yes, I just wanted any color on this on what additional channels you are selling annuity and protection from besides the...

This is all in across all channels. Actually, it's across all channels. The levels that we've seen on protection has actually increased across all channels. some more than others. So it is actually secular in terms of growth. In terms of annuity, I think when you look at it, this is another opportunity area that we're continuously focused on. And clearly, we've been doing double-digit CAGRs for a long time now. So this is a -- and frankly, we're getting this opportunity, so we should be able to [indiscernible] this space and we keep building on that.

The next question comes from the line of Samant Singh with PhillipCapital.

Just 2 questions. First is on, again, coming back on partnership distribution. So it is like 14.6% of the total mix and it is normally a commission-intensive business, [indiscernible]. So how we are sort of balancing this growth versus [indiscernible] So is there any internal ceiling on partnership mix? So that is the first one. Second is on the total cost to premium ratio, which expanded by 60 bps to 21.8%, can you please split into GST input ITC disallowance and maybe a second like discretionary sales related spend? So what is the [indiscernible]. So that is the second question. And third, maybe if you can just sort of provide what is the fund level AUM utilization for FY '26. So split between participating and nonparticipating including [indiscernible], what is the buffer to the 100% regulatory limit on each for you? So these are 3 questions.

So in terms of our expense of management, we are well within the cap. We've not disclosed that number, but there's very well within the cap. In terms of cost to premium, I think the schedules will carry the details subsequently. You should be able to look at what is the GST component that sits within both Schedule 2 and Schedule 3. And you should be able to drive, if you want, what the full year's impact could be in terms of GST. Coming to PD, and this is something that I mentioned earlier. What you're expending as commission effectively has to take into account base commission and whatever else that you need to provide us overlight which ensure that there is quality in the business. I think most people forget that if you are getting good quality business, then there is a cost to pay for that. We are clear that we focus on those partnerships, which gives us value. Value in terms of business growth as well as quality. We look at the overall cost that we can expect, which includes commission as well as our own OpEx and that tends to be broadly stable across channels. So that means you look at commission, you look at overheads, you look at OpEx. All of it put together tends to be broadly similar across channels. And that's how we look at [indiscernible] business. So when you look at the total cost, yes, just to close that point, when you look at the total cost of business, you will also consider any training costs, any supervisory cost, any support costs that you have, you have to consider all of it when you look at the cost that gets expanded at a channel level.

Sure. So we can fairly assume that there's some sort of internal ceiling sort of 15% is quite significant. But we can sort of assume that this can continue to grow as and when the sort of opportunity in the...

So the good part is that it's 15%, which is brought about by some thousands of partners. So it's not one partner that you have to worry about a concentration mix.