Life Insurance Corporation of India (LICI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the LIC's FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have senior management of LIC led by Mr. Siddhartha Mohanty, Chairperson on this call. I now hand the conference over to Mr. Siddhartha Mohanty, Chairperson, LIC. Thank you, and over to you, Mr. Mohanty.

Thank you. Good morning, everyone. I'm Siddhartha Mohanty, Chairperson LIC. On behalf of the senior management team, I warmly welcome you all to the results and performance update call of Life Insurance Corporation of India for the year ended March 31, 2024. The results and the presentation can be accessed on our website and on websites of both the stock exchanges, BSE and NSE. Along with me on this call, I have 4 Managing Directors, Mr. M. Jagannath, Mr. Tablesh Pandey, Mr. Sat Pal Bhanoo and Mr. R. Doraiswamy. Senior officials of the corporation present on this call are Mr. Dinesh Pant, Appointed Actuary and Executive Director; and Mr. K. R. Ashok, Executive Director from the Actuarial team. Mr. Sunil Agrawal, CFO from the finance team; Mr. Ratnakar Patnaik, Executive Director, Investment, Front Office and CIO; and Mr. K. Seshagiridhar, Executive Director, Investment-Back Office from the investment team; Mr. R. Sudhakar, Executive Director, Marketing and CMO; Mr. Hemant Buch, Executive Director, B∾ Ms. Manju Bagga, Executive Director, Pension & Group Schemes; Ms. Vandana Sinha, Executive Director CRM, Claims, Annuities; Mr. Rachna Khare, Executive Director, CRM, Policy Servicing, C. V. Ramana, Additional Executive Director, CRM Policy Servicing; and Mr. Sanjay Bajaj, Head, Investor Relations. I would like to thank all of you for sharing your valuable time to join this call today and listen to the LIC team. Let me now mention the key business, operational and the financial highlights for the financial year 2023-'24. Premium income. For the year ended March 31, 2024, we have reported a total premium income of INR 4,75,070 crores as compared to the total premium income of INR 4,74,005 crores for the corresponding period of last year ending March 31, 2023. The individual new business premium income for FY '24 is INR 57,716 crores, and for FY '23, it was INR 58,757, crores. Renewal premium income, individual business for FY '24 is INR 2,46,052 crores as compared to INR 2,34,006 crores for FY '23. Therefore, for the year ending March 31, 2024, our total individual premium income, including renewals, is INR 3,03,768 crores as compared to INR 2,92,763 crores for year ending March 31, 2023. As measured by total individual business premium, we have grown by 3.76% on a year-on-year basis. The group business total premium income for year ended March 31, 2024, is INR 1,71,302 crores, comprising new business premium of INR 1,64,926 crores. In comparison for year ended March 31, 2023 last year, the group business total premium income was INR 1,81,242 crores and comprised new business premium of INR 1,73,250 crores. Therefore, for year ended March 31, 2024, the total group premium has declined by 5.48% as compared to similar period of previous year. Hence, our total premium income for year ended March 31, 2024, has registered a marginal growth of 0.22%. Our market share by first year premium income is 58.87% as per IRDAI for the year ended March 31, 2024, as compared to 62.58% for the similar period ended March 31, 2023. If we were to split this total market share of 58.87% into segment-wise share of individual and group business, we would have a market share of 38.44% in individual business and 72.30% in the group business for the year ending March 31, 2024. On a comparable basis, for year ended March 31, 2023, the respective market shares of individual and group business were 40.58% and 76.65%. Despite our market share falling both in group and individual business, we continue to retain the leadership position in both individual and group segments in the Indian insurance industry. As you would recall that I had mentioned earlier that we'll choose profitable growth rather than just market share. During the course of this analyst call, we'll share with you our progress on many aspects pertaining to profitable growth. Seen on APE basis, the breakup of business is as follows: Total Annualized Premium Equivalent, APE, for year ended March 31, 2024, is INR 56,970 crores, which is comprised of individual APE of INR 38,433 crores and group APE of INR 18,537. Therefore, on APE basis, individual business accounts for 67.46% and group business accounts for 32.54%. Further of the individual APE, the par business accounts for INR 31,392 crores and a non-par share amounts to INR 7,041 crores. As you can see, our par share of individual APE is 81.68% and the non-par share is 18.32% for FY '24. You will recall that our non-par share for the year ended March 31, 2022, and March 31, 2023, on APE basis within the overall individual business was 7.12% and 8.89%, respectively. I'm sure that you are noticing more than doubling of the individual non-par APE share from INR 3,436 crores to INR 7,041 crores and from 8.89% to 18.32%, which has been the outcome of our intense focus on enhancing non-par business. This has reinforced our strategy that we are on right track. Further, the welcome reception by our customers to our new non-par products, such as Jeevan Utsav, has added strength and confidence to our belief that our strategy is on right track. Profit after tax. The profit after tax, PAT, for the year ended March 31, 2024, was INR 40,676 crores as against INR 36,397 crores for the year ended March 31, 2023. The current year profit includes the transfer of an amount of INR 29,518.75 crores net of tax pertaining to the accretion to the available solvency margin from non-par to shareholder's account. The profit of FY '24 is not comparable to the published profit figure of FY '23, since FY '23 had an additional quarter of profit for the period January 2022 to March 2022 aggregating to INR 4,542.31 crores. VNB and VNB margins. Value of new business, VNB is INR 9,583 crores for the year ended March 31, 2024, as compared to VNB of INR 9,156 crores for the year ended March 31, 2023. As you can see, the VNB has registered an increase of 4.66% on a year-on-year basis. Further, the net VNB margin for FY '24 is 16.8% as compared to 16.2% for the year ended March 31, 2023. Hence, the VNB margin has expanded by 60 basis points on a year-on-year basis. Solvency ratio. The solvency ratio as of March 31, 2024, improved to 1.98 as against 1.87 on March 31, 2023. Indian Embedded Value, IEV. The IEV of the corporation has been determined at INR 7,27,344 crores as at March 31, 2024, as compared to INR 5,82,243 crores as at March 31, 2023. Therefore, the IEV has grown by 24.92% on a year-on-year basis. Assets under management. Assets under management as on 31st March 2024 grew by 16.48% year-on-year to INR 51,21,887 crores as compared to INR 43,97,205 crores as on March 31, 2023. Product mix and new product launches. Now I would like to inform about the new product launches. Continuing with our strategy of increasing the proportion of these non-par business, we launched 6 new non-par products during FY '23-'24 to cater to customer requirements, namely LIC's Jeevan Kiran, LIC's Jeevan Utsav, LIC's Jeevan Dhara-II, LIC's Dhan Vriddi, LIC's Index Plus, LIC's Amritball, respectively. In addition to the above, modified version of 4 plans namely LIC's Cancer Cover, LIC's Dhan Vriddhi, LIC's Jeevan Akshay VII and LIC's New Jeevan Shanti were also introduced. Number of policies sold. During the year ended March 31, 2024, we sold 2,03,92,973 new policies as compared to 2,04,28,937 policies in the year ended March 31, 2023, registering a marginal decline of 0.18% over the corresponding period of last year. Agency workforce. As on March 31, 2024, the total number of agents were 14,14,743 as compared to 13,47,325 agents as on March 31, 2023. We have a late addition of approximately 67,500 agents in the last year. At this point, I would also like to mention that we have started working on a project to transform our agency business to make it future ready and to be the best-in-class always. On number of policies sold basis, the agency force sold 1,98,15,990 policies during the year ended March 31, 2024, as compared to 1,97,80,314 policies during the corresponding period of last year, registering an increase of 0.18%. It can be seen that approximately 97% of our policies in FY '24 were sold by our agency force. Even on premium basis, approximately 96% of new business premium came from our agency channel for FY '24. Contribution by banca channel. During the year ended March 31, 2024, banca channel collected new business premium aggregating INR 2,078 crores, which was INR 2,020 crores for the year ended March 31, 2023, registering a growth of 2.9% on a year-on-year basis. With this, the share of banca and alternate channels by new business premium has increased to 3.61% for year ended March 31, 2024, as compared to 3.44% for similar period last year. Further, the banca channel sold 3,32,082 policies for the year ended March 31, 2024, as against 3,12,160 policies for the year ended March 31, 2023, registering a growth of 6.38% on a year-on-year basis. Our overall expense ratio stands at 15.57% for the year ended March 31, 2024, as compared to 15.53% for the same period of last year. As you can see, the increase is a marginal 4 basis points on year-on-year basis. Persistency. On premium basis, the persistency for 13th, 25th, 37th, 49th and 61st month for FY '24 stands at 77.66%, 71%, 65.47%, 66.31% and 60.88%, respectively, as compared to 77.09%, 69.93%,70.05%, 63.53%, 61.80%, respectively for FY '23. On number of policies basis, the persistency for 13th, 25th, 37th, 49th and 61st month for FY '24 stands at 66.99%, 57.47%, 52.50%, 53.23% and 48.59%, respectively, as compared to 64.28%, 56.97%, 56.90%, 51.05% and 49.86%, respectively, for FY '23. Hence, persistency has improved for 13th, 25th and 49th month year-on-year, both on a premium basis and the number of policies basis. Operational efficiency and digital progress. In our digital initiative to the agent assisted ANANDA App, we have completed 11,58,805 policies through this app during the year ended March 31, 2024, as compared to 8,11,278 policies for the comparable period ending March 31, 2023, thereby registering a growth of 42.84% on year-on-year basis. It is a matter of extreme pride that we have comfortably crossed 1 million policies mark through ANANDA App. I would like to recall that during FY '21-'22 and FY '22-'23, we had sold 2.74 lakhs and 8.11 lakh policies, respectively, through ANANDA App. Claims. On the claims front, during FY '24 we have processed 2,17,62,985 number of claims, which includes 2,09,33,667 maturity claims. On an amount basis, during FY '24, the maturity claims were INR 2,08,136 crores and the death claims were INR 22,625 crores. On a comparable basis for FY '23, the maturity claims were INR 1,85,044 crores and the death claims were INR 23,423 crores. Therefore, the death claims are lower by 3.41% and maturity claims are higher by 12.48% on a year-on-year basis. Before I close my opening remarks, I would like to share significant achievements during the year. Our non-par APE share is now at 18.32% within the individual business. We have successfully launched a series of non-par products this year, which have been received well by our customers. We are moving ahead steadily on our digital transformation project, and I hope that before the end of this calendar year, our stakeholders start experiencing the changes in our digital transformation. We are expanding our agency force and a good proportion of our agency force is accepting new technologies in a proactive manner, completing more than 1 million policies via ANANDA is a clear indication of this end. I would like to share that the Board has recommended a final dividend of INR 6 per share in it's meeting held on 27th May 2024, subject to shareholders' approval. This is in addition to INR 4 per share interim dividend that was declared and paid earlier during this year. Thank you, friends. Now we are open to questions.

[Operator Instructions] The first question is from the line of [ Mahek ] from Emkay.

Yes. Avinash here. Two broad questions. So the first one will be more around expense. As we can see, I mean, past legacy, a lot of expenses and all. So, one, broadly, if I see in your EV walk, you have charged close to INR 14,000 crore on account of, I believe, one, part is due to that additional INR 7,000-plus crores of excess EOM for FY '23. And if I'm not wrong, close to INR 5,500 crores or INR 1,000 crores for the increased pension liability due to the wage revision. So is this excess EOM, there will be more even for FY '24 or is that FY '24 is taken care? And additionally, I mean, why did not you sort of took -- I mean, you have enough profitability, so why to sort of spread it over 3 years, why don't just charge also in the P&L account at once and move ahead? Because, I mean, from a solvency perspective or even from a medieval perspective anyway it will not make much difference. So in terms of cost, if you can also tell that with this wage revision will there be any other impact coming in future? Because, one, I can see that, okay, wage revision-led pension charges you have taken -- but I mean, at least in EV, but any other impact coming from this wage revision or anything else? That's one. Second question will be broadly on the kind of regulatory development. So one, I mean, we read in media some thought process of yours on health, if you can add something? And also some media report is coming that the regulatory thinking on this surrender regulation once again. And there's also a talk of kind of removal of the upfront higher commission and moving more towards the mutual fund-led kind of a trail commission model. What's your thought on that? Is that upfront commission removal going to happen? And if at all, how ready are you and if that can work here?

So thank you. I would just answer this health space and regulatory changes with regard to product regulation surrenders. So as far as health is concerned, you see, we are already in health business. We are selling health insurance products. Though these are not indemnity products, fixed benefit products, we are quite experienced. But looking to the scenario, there's composite license, because act will be amended and composite license will come. So we have done some internal work ourselves to occupy some space in health insurance segment because we are not expert in this general business -- general insurance business, but health will be a natural choice. And for that, we are exploring some inorganic type of growth to acquire some stake in some companies so that we'll also cater to the need of the society in health insurance space, but that is at a very, very preliminary stage. So as far as this regulation is concerned, we -- as insurance companies, we have placed before regulator our views, discussion is going on, some final outcome will come which will be in the best interest of customers as well as industry. So that is going on till now. Nothing finalized yet, but it will be in the best interest of the customers keeping in mind the interest of the industry that is at this stage. So as far as expenses and other things...

Good morning. I'm KR Ashok. Regarding the point on analysis of movement on IEV and the future charge on shareholder's fund amounting to INR 12,914 crores. Yes, it comprises of -- for both the years, '22-'23 and '23-'24, the expenses over the allowable limits, which IRDAI has allowed us to charge it to the shareholder fund starting from '24-'25.

Yes. So on this -- I mean -- so this recent wage revision-led pension hike is also part of this INR 12,900 crores? And the second question, followup on this is that why not just, I mean, even in the P&L account just charge it once because your solvency is perfectly fine, your profitability is high. So why this permission to spread it out over 3 years?

See, the wage revision comprises of 3 components. One is the arrears, one is gratuity revenue and cash flow, and third is the pension liability. So the pension liability is futuristic in nature, and amortization over the next 3 years is purely pertaining to the pension liability which is futuristic in nature. And based on the regulatory approvals, we are amortizing it over a period of 3 years, starting from '24-'25 financial year.

Okay. And in your employee cost for this quarter, particularly while there is sort of a -- kind of a negative impact from bond yield-led movement on your pension liability because I mean, in Q4, suddenly the employee expense had gone up. So is there some sort of that revaluation of pension liabilities that is also playing? If yes, then what's the quantum?

No, it is not because of interest rate [indiscernible] because this liability for the pension and the employee cost continues to be valued on a consistent basis. So it is not just based on any quarterly thing. Basically, it is on account of wage revision as has been explained earlier because we -- actually, LIC has been very prudent, if you see, in that context because this wage revision has come, circular notification has come in April. But because we considered it as a adjustable item, we've gone to the regulator and taken the approval. And all the expenses, which were actually, for example, for the existing employees and wage revision have been provided for, as explained by CFO, the expenses, which have been -- which are pertaining to futuristic and something like pension is provided for fully in the embedded value calculation to give reflection and this replenishment as for the IRDAI approval will happen over the next 3 years in a systematic manner for a smooth experience.

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

So my first question was on the margin front. So I wanted to understand what has resulted in the margins on the par and the group business going down last year versus this year? And third quarter versus fourth quarter also, there has been a margin decline. So if you could explain that what has resulted in this? Has the product benefits gone up, in which products has this gone up? And why did you have to revise the product benefits? If you could give us some clarity on that, that would be my first question. The second question would be on the expense of management. I understand the first participant also asked questions around this. So I just wanted to understand on the expense of management, the excess expense is related to the year FY '23. Now in FY '24, what has been the experience compared to the current year -- the new year guidelines? And could there be another negative impact next year as well due to this? If you could give some clarity on that as well that would be helpful.

I will take the question on the expense of management. This is Sunil Agrawal. The expense of management, if you look at the Note #9 and Note #10, we have disclosed appropriately in the LODR. The amount of INR 7,230 crores pertains to excess of expense under management for the year FY '22-'23. And Note #10 provides for excess of expense of management of INR 5,477 crores for '23-'24. And both these expenses will be amortized over a period of 3 years starting from '24-'25. Now this experience has been come due to the wage revision aspect, which happens once in 4 years -- 5 years. So now for the next 5 years, there is not going to be any wage revision. So this is not likely to repeat in the future years, as you were asking.

As regards to the margin, the margin for the par and group has fallen, mainly because of movement in the risk-free rates. And in case of group, the benefit enhancement include the -- done in the annuities is the major cause of it.

So if I understand correctly, so on the group side, on the annuity business, you have enhanced the benefits. Is that correct?

Yes.

But given you have 70% market share already in this product, what is the need to enhance benefits here?

See, there are 2 aspects in the group business as well as overall business. In group business, in fact, the annuity rates have been improved across for individual as well as group side. But you would see that in the group business, there was a lot of deficit in the earlier quarters, which has been significantly made good by increase in volumes in the funding business during the last quarter in particular. Now typically, the funded business margins are lower as compared to other products. So typically -- if you see in fact during the last quarter, despite of overall APE growth of about double-digit figure, the VNB by volume has been maintained. So it's a conscious strategy of the company to strike the balance between the growth trajectory and achieving the VNB number. So VNB margins in that context will undergo -- keep on changing and that's partly because of the benefit structure. As well as in the last quarter, there is a significant impact of the change in the risk-free rates. So that is something which is not a controllable thing, and there's significant business. So all of these combined together have impacted.

Understood. And if I could ask one last question. So when I look at the channel mix, I understand you don't provide it on the APE basis. That -- if that is something that you could provide, that would be very helpful. But even on the NBP basis, if I look at the channel, like the banca business despite being a small base, it hasn't moved fairly significantly over Y-o-Y despite you're adding new partners and focusing on growing that channel. So if you could talk to us regarding what is your strategy going forward in this business? How are you planning to drive growth here? That could be very helpful. And currently, what proportion of your new business premium would be coming from IDBI, if you could disclose that, that would also be very helpful?

I'm Doraiswamy here. See the bancassurance business of LIC has been -- has always been a smaller part of the overall business strategy of the corporation. We have been focusing on a very significant growth in terms of bancassurance business. And towards that, the tie-up with IDBI Bank is getting leveraged. They have contributed close to INR 900 crores of premium the last year. And we are expecting to have a really good contribution from them in the current year as well. Apart from that, we are also in the process of entering into partnership with some more leading banks at the national level and at the regional players at various state levels that's also activity for the current year. We expect a very decent growth in banca business, but without losing focus on our major strengths, which is the agency channel.

That's clear. Now again, the previous participant had also asked this. I know there was a question on trail commission because there was an article recently that you're talking about moving from front-loaded commissions to trail commission. So could you give us some clarity around how would that impact your agents? Or how would you look at that as a regulatory change? If you could give us some color...

Actually, it's a thing which has been in discussion for long because even previous discussions also, there is concepts of trail commissions or accumulated commission being allowed in the regulation have been a part of the discussion. Possibly, there are pros and cons of every type of commission structure. Front-loaded commission structure historically have been there in case of insurance business because of it is large a push-driven it's a difficult business, not very easy business. But then persistently becomes a challenge. And then with the new expectations around what should be the right exit value, one of the options is whether accumulated commissions or allowing distribution of commission in a fair manner commensurate to the persisted experience. Obviously, these are being examined and regulator has already allowed liberal commission regulations, but then it has also got an impact. So all the discipline around this is being examined. As it comes about industry will implement it. And the industry within itself is also examining what is the best way of self-regulation. So that the win-win situation is arrived at in the context of the policyholders as well as for the distributors while ensuring that the shareholders' interest or all stakeholders' interests including profit margins. So a fair good discussion is happening between industry and the regulator and that activity is going in that direction.

The next question is from the line of Uday Pai from Investec.

I just wanted to know what is the commission in our non-PAR products? And have we seen an increase in the commission rate over the last year? That is the first question. And on the second question, the recent regulation states that the policies are now to be issued in an electronic manner. Are you looking for an e-insurance account or are you doing it in some different way? Because last year we have tied up with the post office to issue manual policies, so how has that process changed out, is what I was looking for?

You see, for this non-par product, as you are telling, commission varies. Commission depends upon term and other factors, so it is not fixed. Depending upon term of premium payment commission structure varies. Secondly, IR, insurance repository, we are also working on that for this e-insurance account and electronic mode of policy issue. That is also being discussed now, but it will take some time. Already, some groundwork, we have already started at our level. We are fully ready.

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

Sir, firstly, on the economic assumptions and changes in variances, what would be the share of equity and debt and what assumption changes you would have done?

See, the assumption changes, actually we have been observing uptick can be a better experience in the mortality in case of group business and post COVID, we thought that going forward this experience has improved and that is the major assumption changes that has contributed to the increase in IEV of 4,800 crores shown in the analysis of movement. And regarding the MTM, that is the economic assumption changes, there are 3 components in that. One is the MTM, the second is the investment A/E, and the third one is the RFR, which actually pushes down the IEV. The MTM is the major component in that investment variance.

Okay. What were the other 2 components apart from MTM you said?

Sorry?

What were the -- apart from MTM what were the other 2 components?

One is the investment A/E, which is the actual investment over and -- the investment performance over and above interest estimate. And the third one is the movement in risk-free rate which has moved actually down compared to last year, and it has impacted the IEV.

Sir, secondly, if I look at your protection business, that saw a decline this year and private players on the other hand have been seeing a strong growth. How do you think this will play out now and especially looking at the VNB margins protection is the highest VNB margin segment. So how do you expect this segment to grow and what are the strategies around this?

See, if we look into the term business in isolation in form of product only, you are right that there is a downward thing. But a very interesting change has happened in the current year. The take-up rate in the rider, which also come in the form of -- for the term side, there is a significant actually jump there. So if we include the rider premium for the current year and last year, so our non-par protection would be around 201 APE would be there as compared to 190 last year, so almost 6% growth would be observed there. So this is a very interesting phenomenon which we have seen in this current year almost again 14-15 crores of riders, 75 crores of riders have been taken up. So people -- our job is to offer products and the options to the customers, they will decide to pick up in which form. Whether they want to take in base products or whether they want to take in forms of riders. Of course, but the term and pure protection continues to be one of the important focus areas for us. There has been a rate revision in the previous year which did impact both the ticket size as well as the take-up. We are working out on more variations of term products, and we expect them to deliver in this segment in the current year.

Got that. And if I look at your agency force and you've given that 35% of your agency force is 50 years old and above. How much of these guys would account for your premium? And do you think that there is kind of transfer to the next generation possibility in this business. How do you see this 35% of your agency for the 50 years number and above which is quite high. So how do you see this?

I'm Sudhakar, ED, Marketing and CMO. See, in one way, the agency force which is above 50 that is the segment which brings us our majority of the annuity product that's one of the larger ticket size product. Even if you look at the age of entry of the person, a person who is in the middle age or even above, they would bring ticket sizes and customers from their particular age group which is likely to be more wealthy than, let us say, the age group of 18 to 25. So we take it as a -- we take a balanced approach. We -- when we recruit people, we recruit from all the segments. So the age of 50-plus, that is where the majority of our club members were the most professional of the lot and whose productivity is very high, is also [indiscernible]. So for us the agency is a sort of profession, which they'll continue throughout their lifetime. We need that these people should be with us even at a later age, during which time they bring us the most valuable, I would say, ticket sizes and the customers. So it's a balanced approach we are taking. [indiscernible] we have agents who are second generation and third generation agents are continuing with LIC which has been a major source of strength for us. And in fact, these experienced agents really add value in terms of cutting across generations and getting us the indoor into the business segment as such.

Is it fair to assume that these 35% will contribute more than 50% of the premium collection?

45%.

How much?

45%.

45%. Okay. Got that. Got that. And last...

Out of all new recruit every year we recruit more than 1 lakh agents, you'll find more than 50% are below 35 age. Youngsters we are adding.

Okay. Sir, my last question is now LIC had a kind of an advantage in the Tier 2, Tier 3 towns, given its presence out there, but now private players are also kind of expanding in these geographies. And -- so do you see increased competition and do you think that there could be some pressure in terms of margins coming from the lower-tier segments? And just one clarification, we moved from 7.5% sharing in non-par -- sorry, in par to 10% next year, right? And that...

No, no, 18.32.

It's already from 8.9, it has gone up to 18-plus. [indiscernible] distribution you are talking about.

No. No. I'm talking about distribution of profit, sharing of profits.

From this year onwards. From '24-'25 it will get implemented.

And just on the Tier 2 strategy, Tier 2, Tier 3 strategy?

See, Tier 2, Tier 3, we are -- already we are there and we have further strengthened. As you are telling competition is going on, now our private peers, they are also focusing on Tier 2, Tier 3. This year, we have taken a target, we should represent every panchayat. Every panchayat in the country must have 1 LIC agent at least. So that is the target for the current year and in that direction we have already started. And this year, we have also taken 1 project -- agency transformation project for the current year, we call it Jeevan Samarth. So that has just started. So we expect in current year, we'll be more strong in those areas, Tier 2, Tier 3 cities and also rural areas.

Just to supplement. This is Jagannath here. We have -- around August 2023, we have recruited around 6,000 probationary development officers, they are all in action. And most of them are Tier 2, Tier 3 branches and satellite offices. So they are on a good mode as far as recruitment is concerned of agents.

The next question is from the line of Nischint Chawathe from Kotak Institutional Equities.

Yes. I'm looking at your par business net VNB margins. And despite the fact that your share in economics has gone up, the overall margin has gone down. So how should one think of it?

As far as par VNB margin is concerned, there are 2 factors. The predominant factor is the southward movement of the risk-free rates and that had impacted not only par, it had impacted all lines of business.

And your group business, you mentioned that you have increased payouts, right, or basically increased the returns?

Sorry, can you repeat?

In the group business, you mentioned that you have increased the IRR payout, right?

Yes, we have -- actually, we have increased the annuity payouts, yes.

So we were just wondering, while there is an increase in non-par business, and I think that's playing out quite nicely. This is kind of taking out the benefit, and that's where I think our margins are sort of inched up a little bit. So going forward, what kind of a margin expansion guidance you would want to give? Because on one side, we see that the non-par share, I think, as you had articulated is nicely going up. But then somewhere, we have these kind of distortions in the group business or maybe even in the par business.

See, actually, we need to look at both the strategy short-term strategy in garnering new business and also the outlook on the margins. So there has been a constant review and constant movement on how we need to take the things forward. And there is also -- in terms of group, there is also a competitive pressure. So we have to balance all these things. And if we look at the overall margin, the overall margin has moved up by 60 bps by sort of balancing and articulating on all the elements to be there.

And in the EV walk, we saw the unwinding rate going up, and I think you have fairly large world, yes.

As far as the unwinding rate is concerned, the major component that is coming is the equity backing ratio sitting on the ASM fund. See what is happening is the ASM fund also contributes to the long-term outlook based on what is going to be our outlook for the long term on the interest rate. And therefore, the unwind has slightly increased. Going forward, because this is sort of a market consistent basis the entire valuation, so looking at how the market play out, we will be revisiting that.

So summarily, you are looking at a rally in the bond market in the near term?

Sorry, what is the question?

Yes, summarily, you're looking at a rally in the bond market.

No, no, it's not only about bond market. See, what has been described is that there are certain components of embedded value, which remain there. And they are significant and long-term -- see, Indian equity market expectations in long term remains to be good. So that being a component of our embedded value gives actually a long-term and consistent stable strength to us. Bond market has got a different purposes. Bond market, in fact, the interest rate will go up, the market valuations may not go up because of that thing. So it's a balance of the portfolio and this equity backing ratio allows us to give better returns and create actually long-term value for the embedded value purpose also.

Just one final one is on the health insurance business. Some of the non-life insurance companies have a fairly good health insurance practice. So would you kind of consider looking at a merger with any of the nonlife companies as well or would you want to stick only to health?

No, no, there is no such proposal for merging with [indiscernible] non-life PSU companies. But we'll definitely explore possibilities to have some stake in some standalone health insurance companies, something like that, that also we are working on that, too. What will be the best interest of our customers as well as all other stakeholders, that has been worked out now.

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

So I have 3 questions. The first one is on the product mix target for the 2025. Sir, can you please help us reiterate what is the target mix for 2025? And second, on the channel mix outlook as well. So I do understand that the current share of bancassurance is very less, but because that you are targeting a good growth in this segment, so what will be the channel mix target you have in your mind? And also, just wondering that because of the slight changes or slight potential changes in the channel mix, do you think that some sort of mix change we can see in the products as well, for instance, a popular product in the bancassurance can be a ULIP products, maybe a slight increase in that product as well? And just lastly, on the agency channel. Can you please help highlight as in now what potential challenges do you see in growing the agent headcount? And are we targeting any growth -- like additional growth, incremental -- accelerated growth in the year 2025 in agency as well?

Both product as well as channel, last year already, because of a directional change, we have launched some products in non-par segment and we got desired results and share of non-par APE 18.32%, it rose from 8.89% more than double. So current year, of course, those non-par products focus will be there, but there are certain segments, so we will have certain products catering to particular segments. We are now planning suppose for banca, we will have banca-specific product that also we are focusing. And for marginalized people products should be there to sell through CSC, so that also we are working on that. So product line this year, we'll find a different varieties of product to cater to various segments. And the focus, of course, will be on profitability and growth. So far as channel is concerned, banca channel already some deployment has been done, and we want to grow at least 5%, 6% from the present 3.61% share of banca to total our business. So that will grow at least 5%, 6%, that is our target for banca.

And on the -- just following up on the third question on the agency channel. So what is the -- any growth target for the agent headcount for this year? According to you, we might see some accelerated growth in the headcount in this year or just maybe grow around...

Yes, absolutely, agency channel, as I told earlier, it will be further strengthened. We want to enhance the capability of our agents, their competency must also increase. We want to enable them through technology. Already, they are using our ANANDA mobile app. We want to make them totally tech-enabled agents, so that further growth is there and their competencies should also increase -- should be competitive in the market. And the growth will also be expected from agency channel, definitely growth because the agency channel, they comprise 96% for the business, so there will be growth in agency channel also.

Yes, just to supplement the FY '23 agency recruitment, new agents recruited was 1.79 lakh. Last year, it was 2,71,000 new agents recruited. So close to 1 lakh added during FY '24 as new agents. Of course, there will be also attrition, but going forward for FY '25 as well, the thrust on new agents recruitment is going to be there. And our probationary development also as well yet to run around half of their probationary period in this, they will also be definitely coming into play with regard to fresh recruitment of agents from the market, more particularly from Tier 2, Tier 3, et cetera. So, therefore, I'm confident that there will be good agency growth, agency recruitment growth in the current year as well.

Ladies and gentlemen, the last question for today is from the line of Mohit Mangal from BOB Capital.

My only question is in terms of the protection. You said that you are working on more variants. So can we expect more products in financial year '25 or you're working on the repricing? Because I think that's 1 area, I think, you need to kind of catch up with that compared to the private players.

So that is a continuous process. Looking to the need of the market, we design products from time to time. And this year also, definitely, there will be some product -- unique products to cater to the needs of the market.

Okay. So will it be a pure-term product or you're also thinking of return of premium products?

Various segments -- it will be in various...

We already have return of premium products, which is quite -- gaining quite good popularity, and Kiran, we've got that product. And what we are trying to work out is more varieties of product, I would not like to discuss, which is something in the making. But all options will be given. And even, in fact, repricing, adding newer features into the existing products, all of that is we are open to it and we are considering that.

Ladies and gentlemen, that brings us to the end of the question-and-answer session. I would now like to hand the conference over to Mr. Mohanty for closing comments.

So thank you friends. I'm grateful to all of you on this call for your patient listening and for your quality questions. We hope that we have been able to answer all your queries to your satisfaction and we have spent significant time and energy for realigning our par, non-par mix and channel mix in the last year. We are setting ourselves a new ambition for this year, which is to enhance our dominance on market share with it. Thank you very much and have a good day.

Thank you. On half of LIC that concludes this conference. Thank you for joining us, and you may now disconnect your lines.