SBI Life Insurance Company Limited (SBILIFE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to SBI Life Insurance Company Limited Q1 FY 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Kumar Sharma, MD and CEO, SBI Life Insurance. Thank you, and over to you, sir.

Thank you very much, Nira. Good evening, everyone, and we heartily welcome you all to the results update call of SBI Life Insurance for the quarter ended June 30, 2021. Hope you are all taking due care of yourself and your family members. Along with me on this call, I have Sangramjit Sarangi, President and CFO; Anand Pejawar, President, Operations, IT and IB; Abhijit Gulanikar, President, Business Strategy; Subhendu Bal, Chief Actuary and CRO; Prithesh Chaubey, Appointed Actuary; and Smita Verma, SVP, Finance and Investor Relations. Update on our financial results can be accessed on our website as well as on the website of both the stock exchanges. Before I brief you all our performance highlights, let me acknowledge the efforts taken by all our employees, distribution partners and business associates who have worked tirelessly to provide continued support to our customers. Thanks to their efforts, we have delivered a satisfying performance in these unprecedented conditions. Now let me give you some key highlights for the first quarter FY '22. Individual new business premium stands at INR 18.4 billion, a growth of 37%. Renewal premium stands at INR 50.3 billion, a growth of 10%. Gross written premium stands at INR 83.8 billion. Individual protection new business premium grew by 75% over the quarter ended June 30, 2020 to INR 1.3 billion. Annuity business witnessed 26% growth and stands at INR 6.5 billion. Profit after tax stands at INR 2.2 billion. On actual tax rate basis, value of new business is INR 3.4 billion, registering a strong growth of 45% over the quarter ended June 30, 2020. And value of new business margin is at 21.2% with an improvement of 250 basis points. Assets under management grew by 32% to INR 2.3 trillion. We will update you on each of these elements in details. Let me start with premium. Individual business has always been a focus area for the company. Individual new business premium has grown to INR 18.4 billion, a growth of 37%. Single premium contribution is 27% of the individual new business premium. Individual rated new business premium stands at INR 13.9 billion, leading to a private market leadership with share of 18.9%. We collected new business premium of INR 33.4 billion and private market share of 19.5%. Group new business premium stands at INR 15.1 billion. Credit Life business has grown by 56% and stands at INR 2.4 billion. Funds management business is at INR 7.9 billion. The renewal premium grew by 10% to INR 50.3 billion, which accounts for 60% of the gross written premium. Our gross written premium stands at INR 83.8 billion, a growth of 10%. Total APE stands at INR 16.2 billion, registering a growth of 27%. Out of this, individual APE stands at INR 13.9 billion, a growth of 36%. During the period, total 2.6 lakh individual policies were issued, and it registered a growth of 35%. Let me give you details about the product mix. Individual protection is at INR 1.3 billion, registering a growth of 75%. Group protection stands at INR 3 billion. On APE basis, protection contributes 13% of new business and has registered a growth of 37%. Annuity business is at INR 6.5 billion, a growth of 26% and contributes 19% of new business premium. Individual ULIP business is at INR 12.4 billion, which constitutes [ 68% ] of individual new business premium and has shown a growth of 59%. Guaranteed non-par savings product is contributing 6% of individual new business. So something about our distribution partners. Bancassurance business marks a share of 58% and grew by 30% in individual new business premium. Individual APE stands at INR 8.7 billion, a growth of 34%. Insurance protection [ policies ] through YONO app [ of SBI ] has covered more than 51,000 lives. Agency, another strong channel, registered growth of 36% and contributed 32% in individual business premium. Individual APE stands at INR 4.6 billion, a growth of 36%. During the quarter, other channels, direct corporate agents, brokers, online and web aggregators, grew by [ 132% ] in terms of individual new business premium and 79% in individual APE. Protection new business premium through other channels registered a growth of 7%. New partnerships like Indian Bank, UCO Bank, South Indian Bank, Yes Bank registered growth of 86%. We are confident that all these partnerships will start contributing significantly in the coming period. On update on profitability during the quarter, COVID claims, net of reinsurance paid as well as outstanding, stands at INR 5.7 billion, covering various lines of businesses. The company has made additional reserve amounting to INR 4.4 billion for COVID-19 pandemic over and above policy liabilities. Our mortality assumptions are well within our estimates. The company's profit after tax for the quarter ended June 30, 2021 stands at INR 2.2 billion. Our solvency remains strong at 215% as of June 30, 2021. As mentioned in my opening remarks, value of new business is INR 3.4 billion on actual tax rate basis, a growth of 45%. And on effective tax rate basis, it is INR 3.9 billion, a growth of 52%. VoNB margin is at 21.2% on actual tax rate basis, an improvement of 250 basis points, and on effective tax rate basis, stands at 24.1%, an improvement of 400 basis points. Coming to operational efficiency. Cost efficiencies continue to be maintained with total cost ratio at 10.5% and OpEx ratio of 7.2% for the quarter ended June 30, 2021. Our 13-month persistency ratio has improved to 88.4% as compared to corresponding previous quarters. On regular premium basis, 13-month persistency stands at 85.9% versus 82.6% in the corresponding previous quarter. As mentioned in my opening remarks, AUM, having crossed INR 2.3 trillion on 30th June 2021, has a growth of 32% as compared to June 30, 2020. The company continues efficient use of technology for simplification of processes with 99% of individual proposals being submitted digitally. 45% of individual proposals are processed through automated underwriting. Customer satisfaction is a key focus area. Our grievances with respect to unfair trade practices stands at 0.08%, one of the lowest in the industry. Our rapid adoption of online capabilities paved an increase in business activity. Automation and digitalization have significantly enhanced customer experience and uninterrupted services during the time of the pandemic. To summarize, we will continue to focus on protection and other lines of profitable business. To further on to enhance our vibrant distribution network to penetrate our reach, we will continue to maintain sustainable and consistent product mix, improve customer satisfaction and provide value to all our stakeholders. Thank you very much, and we are now happy to take any questions that you may have.

[Operator Instructions] The first question is from the line Ajox Frederick from B&K Securities.

Sir, again, this question is on COVID. So you have an additional reserve of INR 4.4 billion. What is the total reserve, sir, including the business as usual that, excluding COVID, that you're holding?

Prithesh?

And anything out of the results [ you made ] in March where we're able to carry [ forward -- those additional forward ]?

So the COVID reserves, let me tell you, as on March 2021, we had INR 183 crores COVID reserves. As of June 2021, we have INR 445 crores COVID reserves.

See, our total reserve for this quarter 1 FY '22, which includes [ all ] lines of businesses, amounting 9,930 crores. It's a mixture of par, non-par and ULIP altogether.

Okay. [ So 9,900, all of them ]. Sir, second question is on group protection split, if you can give us group term, Credit Life this quarter versus last year.

Group term, Credit Life, one second.

And what is the [indiscernible]?

Credit Life, this quarter we have come, as far as NBP is concerned, INR 240 crores. As far as NB -- APE is concerned, so that is INR 24 crores. So it's a growth of 56% quarter-on-quarter.

Okay. This is year-on-year, sir, right?

Yes. Yes.

Correct. Quarter 1 '22 [ versus ] quarter 1 of '21. And this year specifically -- this year [indiscernible] taken together, we have done almost kind of INR 500 crores.

Do you have separate numbers, sir?

This year -- at this moment, I don't have separate numbers...

Okay. [ No worries ]. I'll take it with you. Sir, what is your thought process [ on GTI ]? Some of the peers have diverging views. Like, what is your view with [indiscernible]?

So [ GTI ], we will evaluate and continue with [ GTI ], and it will depend a lot on what kind of business we are looking at and also the reinsurance and the whole thing put together. So we'll -- we are evaluating on a case-to-case basis, and we will [ take good ] business.

All right. So sir, final question on the non-par piece, where both agency and banca we -- slowed down during the quarter. So what's happening out there on the non-par, sir?

So basically, what is happening is that in the first quarter, we saw good traction on ULIP possibly because the markets are on a rebound and very, very -- doing very well. So I think that was one of the reasons. We saw good traction in this ULIP business. But going forward, we have targeted for good growth in non-par, and we are also coming out with slightly revised pricing on our non-par offering. So I think that will also help us to get more non-par business.

The next question is from the line of Madhukar Ladha from Elara Capital.

First, on this COVID provisions and reserves. Sir, what is the closing outstanding provision at the end of 1Q?

Yes. So that is INR 445 crores.

Okay. So in the beginning of the year, we had INR 180 crores approximately...

INR 183 crores.

Yes, 183. And then [indiscernible] benefits paid are at INR 5.7 billion [ for this quarter ].

Yes. Correct. Correct.

Okay. And so then what would be the hit in this quarter's P&L?

Well, the -- well, our reserves are enough to take care of the change situation also. But having said that, we have made prudent provisions going forward because you don't know really how things are going to pan out in the future. Our hope is that with the vaccination rollout and almost 24% people already being vaccinated and the numbers coming down, we are hopeful that this will [ tide over ]. But knowing that there are a lot of [ importable ], we have actually set aside a larger number as COVID reserve.

Sure. And sir, can you give us some idea in terms of severity? So in FY '21, what was the severity on a per claim basis? And how did it trend in 1Q?

See, really last year was not a time to actually look at it because there was a total lockdown kind of situation and claims really were not coming in. And as a result, the claims were much lower and all. So it's a totally different situation then and now. So really can't compare those 2 things.

No. Sir, what I meant was if we take the full year number, full year FY '21 number versus 1Q FY '22 number?

Yes. So there is -- the numbers, if you look at our position, it cannot be very different from what is happening in the country. So if you look at what is happening in the country, so last year, the numbers sort of grew until, let's say, October or something and then started coming down, but it was a very gradual kind of increase and a gradual kind of decrease. Now we have seen from, say, March, April, May, we have seen a sudden spike. So those 2 are not really comparable, and this is not in anybody's experience. So really speaking, we take it as it comes, and we make conservative estimates.

Right. So just -- I just did some calculations. So if INR 257 crores are the additional reserves and then INR 570 crores is the net claims, so then the total hit in the P&L for this quarter is INR 827 crores. Would that be correct?

See, claims, you have to look at in a different kind of way. There are COVID claims. There are other claims. So we look at all claims as one thing because a claim is a claim. So a person dies of COVID, heart attack or whatever, we have to pay, okay? So if you look at that...

Sir, but you mentioned in the PPT COVID-19 claims net of fees are in the 570 crores?

Yes, yes, yes. So this is those that which are marked as death due to COVID in the death certificate, okay? So I think what I'll do is I'll ask one of my colleagues to clarify, okay?

Thanks, sir. Just to explain to you, see, when you look at any impact of death, you look into the overall sales, correct? So for the quarter, our overall claims is well within the provision that we made for as on March 31. I mean so our -- if you remember, in March 31, we have strengthened our mortality assumptions. On top of, we had additional provision of 183 crores. If you look into this quarter performance, our actual claims are within that provision. As a company, [ we wanted to be prudent on the size ]. So despite our claims within that limit, we make additional provisions and increased 183 crores to 445 crores as on June 30.

Understood. And can you verify, on the 827 crores, which I just said 570 crores of COVID claims, plus 257 crores of additional reserves. So would that [indiscernible] P&L?

So that's what I'm saying -- that's what I would like to say. It is not a direct hit on P&L or anything, okay? So the 570 crores, even though it has come from COVID, we look at overall mortality.

Yes. So just to add that what -- the way you are calculating doesn't make sense because when you look into the impact, you will see the overall claim rather than looking one part of the claim. So COVID claim is a part of overall claims. So when you look into the impact, you look into total claims and what we have provided for, any [ differential ] impact will come on the P&L. To that perspective, we are saying that our actual claim for the Q1 is well within the provision we made for on March 31. But [ as it's prudent ], we have increased the COVID provision from 183 crores to 445 crores.

The next question is from the line of Prithvish Uppal from IDBI Capital Markets.

Sir, am I audible?

Yes, yes, yes. Go ahead, Prithvish.

Okay. My question was on the individual protection. So we've seen a good growth, and peers have reported a slight slowdown in this segment. So any color on like what helped us during this quarter? And any -- and how is the outlook for individual protection going ahead? Are we still going to be aggressive in this segment? And how are we looking at underwriting right now for this particular segment? So that's my first question.

Yes. So individual protection, as you see, we have been trying to grow this -- I mean, we have been actively growing this for another 3 years, 3 or 4 years. We've been focusing on this segment, and we feel that this is a way to increase the penetration of insurance in the country and also to get more and more customers, more and more coverage across. So we have products in protection which offer cover from, say, 5 lakhs cover to, say, 50 lakhs, 1 crore or even above that. So there are various segments. So we are growing in all these segments. So that is the truth. And going forward, we would very much like to grow this segment at least for now.

And sir, any breakup between how much is the [ ROP ] versus [ your term ] like [indiscernible] this quarter?

Yes, I'll...

Similar percentage. Similar like past.

Yes, so about 85-15 kind of [ term ].

Correct. So just to reiterate the individual protection, we do think that with appropriate repricing of the product and tactically enhanced underwriting to protect the no risk that we are currently doing, we do think there is scope to grow this segment.

Okay. Sir, any kind of number or like a growth rate target that we would look at [ for individual protection ]...

No, no, no. See, I -- we generally don't look at any particular -- we have our internal targets, but those are only -- that will depend a lot on the circumstances and the situation outside demand from customers, acceptance of products, et cetera. But I wouldn't like to give any numbers. But you can say that we expect a steady growth in this business.

Okay. Okay. Sir, my next question is in terms of the distribution. So how much [indiscernible] penetration within the SBI channel itself, [ if we pull the -- ] give some ballpark number as to how much it is and how -- what are our plans to increase customer acquisition purely from the SBI customer base? So how are we going about that?

See, basically, this whole strategy we've been doing, we've been increasing this business. We've been growing both the SBI business and the agency business. And now we have other channels which are also growing very well. So SBI business, we will look to continue the strong growth that we have. And maybe if we don't have the limitations of the previous year, then maybe the growth can be even more. But we are also looking to grow the other channels at a good [ range ].

Okay. Sir, within SBI, how much penetration, if you could share a number based on the customer base how much is -- will be our share?

[ We'll ] tell you, we have not penetrated very large base of SBI, and there is still scope to increase. So what we do track is what is the penetration base for customers below age 55, what percentage of saving account we have penetrated. And similarly, for pension product, we track for [ people above ] 50 also what we have penetrated, and we will actively try to increase that penetration from current levels. The public figure that we do disclose is per brand productivity, and that per brand productivity from 34 lakhs will go up substantially in the current year.

Next question is from the line of Jayant Kharote from Crédit Suisse.

Am i audible?

Yes, yes, yes. Jayant, go ahead.

Sir, [indiscernible] the number for IBNR reserve as of March and as of June?

Sorry? Can you repeat the question?

The IBNR reserve number, incurred but not [ reported ]?

See, IBNR is a part of our [ actuarial ] liability, and we generally don't call out what is our IBNR or not because it's a part of our [ actuarial ] liability [indiscernible] number that we reported [indiscernible].

Okay. Sir, on the protection side...

[indiscernible]

Am I audible?

Yes.

Yes. [indiscernible] secondly, on the reinsurance side, have you had any communication with the reinsurers on the rates? And what is your outlook on premiums? Some of the peers are indicating that the rates might go through another round of hike. So what is...

Reinsurers, we keep talking to them for each product, for each new launch, for each thing. We have a meeting with the reinsurers. So we keep talking to the reinsurers. So there is nothing new to be talking on a daily basis. We are following up with them for various things. So while reinsurers [ make a hike rate ] based on pool, but at the company level, 80% to 90% of the [ hike ] burden usually depends on the company specific factors, such as concentration, divergence and experience, et cetera, okay? So to that extent, SBI Life is relatively insulated from reinsurer hikes given that we have low dependence on reinsurance risk-based pricing. We are very sustainably priced in most of our products. And then different protection products, like I said, I already told you that we have different protection products with different terms [ assurance ]. So all that leads us to a very diverse kind of a protection basket. And really speaking, at this point of time, we are the ones who are not very, very worried about reinsurance itself as per se. But then if it affects the industry, it also affects us to some extent. But we are relatively protected.

Okay. And sir, just on the following up, some of the peers have also hinted that they'll be tightening the standard when it comes to writing for protection?

So [indiscernible] loosen our standards. So there is no question of tightening. All those people who probably try to cut prices, try to gain market share by unethical practices of wrongly pricing, of increasing penetration by -- I mean, increasing protection business by undercutting and also by taking [indiscernible] assumptions on mortality, et cetera, they are having to look at all these things. So all those people who loosen their standards will have to tighten it. We are very, very sustainable. We are very boring as a company in that matter. We are very conservative. We are stable, steady. And there is no way we are going to come down from our high standards just because somebody else is undercutting or something. We lose market share sometimes, we gain market share sometimes, but not because we wanted to gain or lose at the cost of ethical principles and strong insurance principles.

Sir, [indiscernible] mortality experience or [indiscernible] for that matter? Has that undergone change after [ underwriting ] the protection business in the last [ 2 ] years? And [indiscernible]...

We embarked -- we did change our mortality assumptions. So March, we have changed our mortality assumptions. And like Prithesh has already told you that those were enough to take care of our claims for the quarter.

Sir, actually, I was referring to pre-COVID. That is FY '20, March '20...

Yes, so every year, we change our assumptions looking at the circumstances, and COVID itself is one of the factors. Because a pandemic or some sudden catastrophe cannot be the reason for changing assumptions -- volatility assumptions going forward, it has to have a more stable basis. So this will be one of the factors which has been taken into account, but definitely not based only on that. So Prithesh, would you like to add something on this?

Thank you, sir. Just to add, sir, you mentioned that each year, as a part of our annual exercise, we revisit our assumptions. We consider our past experience. We also look into our emerging trend, and accordingly, we set our long-term mortality assumption. So if you remember in the March, despite our actual claim while well within our expected assumption, that is what we set in March '20, despite that, as a company, we wanted to adopt a prudent approach. And hence, we went back and we revised our mortality assumption for [indiscernible] March 31, 2021. So -- and we [ can't tell what ] -- if you exclude the COVID, we don't see any adverse impact or worsening trend in our claim experience. It's very stable. And in fact, we see early sign of improvement on that side [indiscernible] COVID.

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

Sir, one -- first question on the persistency especially on the linked book. Just noticed the surrender ratio that you put on Slide 11 has gone up in Q1. Why, if we look at it? So just want to understand how the ULIP book is behaving. Are you seeing more surrenders now that markets have started [ trailing ]? How should one look at the overall persistency for your annual book?

Yes. Persistently will go up. We have -- are making efforts to increase -- improve our persistency. And persistency, as you know, is a factor of right selling and also on follow-up on renewals. So that is happening already. But then, obviously, when the markets are buoyant and people who have policies which can be surrendered or can be encashed upon, some of them will do that. So that trend we do see now in the increased surrender. But then it is also true that people then realize that continuing with this will also be a good thing. So we have enough people who continue with the schemes.

Sir, the -- if I look at the fifth year persistency for you, for your overall company, it's about 61%. But [ therefore, the ULIP savings will be ] lower, right?

Yes, ULIP would be lower. Like you said rightly, it will be -- it is a function of the product itself. So...

Sir, it is similar, sir. ULIP for persistency is good persistency. It is very close to company average. In fact, marginally better than company average.

Correct.

Sir, it seems to be contrary to some of the peers. So what are we doing different just in terms of keeping policies even beyond the fifth year?

There are 2 things. The differentiator between us and the industry is that, first, is our ticket size. We are -- second one is our spread across geography. And third is our fund performance of the [ EBIT ]. And the strategy which we have been following consistently about retention of the policyholder's renewal, that has been working very well for us. And that is what we have seen for the last 5 years. We have been consistently performing as far as our persistency is concerned. And specifically for [ EBIT ], which, in fact, [ gets of ] any eventualities in the market or in the economy, it has been consistent.

Got it, sir. Very helpful. Second question is on you mentioned in the start that non-par, you have done some revised pricing. So can you just walk us through how that is going to help the non-par growth for the remainder of the year?

See, the whole idea is that non-par, we keep repricing because it depends on the market circumstances. So when we see that there could be a hardening of yield, then we take a look at that because that is what the market expects, a higher return. So non-par, we would be -- we would keep aligning it with the realities.

Sir, so does that make it a less profitable kind of business given that? Are you comfortable repricing [indiscernible] from a reinsurance perspective? How should one look at even in the non-PAR product?

No, no. We have never -- we are actually -- what I would like to say is that the non-par product, the pricing is always sustainable. Like I said, it is [ sold ] with an intention to grab market share or anything. So we will do business only which is profitable to the company and which is beneficial to the customer. So that is the true fact, and this will be -- this will have sufficient margin for the company after the change also.

Just to add, what sir is saying that as a company, we follow very active pricing mechanism where we keep [indiscernible] guaranteed products, [ be it -- notably ] the savings, and we align our pricing along with the interest rate. So the moment we are saying that we are repricing this product, [ we reprice ], this is reflecting the upward [ yield ]. So you see there is an [ inherent yield ]. So we want to pass on to the -- benefit to the customer. At the same time, we wanted to enhance or protect our margins. So there's no question of compromising repricing on account of compromising margins. So we'll continue to do this activity regularly, and we'll ensure that our margin gets protected, if not enhanced.

Got it, sir. I missed the data point that was mentioned in the start about guaranteed as a percentage of the book. There was some data point that was given? Any help?

Correct. So non-par book is, at the moment, 7%. And balance sheet value will be significantly less because that book has started much later than our other book. So it is only 3% in individual business, non-par [indiscernible].

Got it, sir. Last data point, COVID claims net of reinsurance is INR 5.7 billion. What was the gross amount? And what is -- has the retention ratio relative to the past, has it changed?

Sorry, can you please repeat?

Sir, the COVID claims net of reinsurance was INR 5.7 billion. So I just want to know what the gross amount was. And as the retention respective to reinsurance, has it changed?

Correct. Correct. So the overall COVID gross claim was INR 713 crores. [indiscernible] was INR 572 crores.

Got it. So if I just do the ratio, it seems to be -- we are north of 70% looks like, right? Has that changed over time was the question I had.

No, no. So [ there are no changes ] as far as the reinsurance proportion is concerned. It really reflects the business, [ agree ]. So protection, we'll have the higher proportion coming from the reinsurance bucket. Savings might be lesser [ coming now ]. And thirdly, it will also depend on the average ticket size. So in reflection, we can confirm that we have not -- there is no change in the reinsurance [indiscernible] is concerned.

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

A few follow-on questions. Most of my questions have been touched upon earlier -- by earlier participants. So just looking at COVID claims plus reserving for this quarter, it comes to roughly around 1,000-odd crores. And if I see the net COVID claims what we had in FY '21, I believe that was around 350 or so, right, sir? Am I right on that [ or not ]?

Yes, yes, yes. 320 was the net COVID claims last year.

[ Thanks, sir, for confirming ] that.

Is that -- sorry, am I right?

What number [indiscernible] 1,000 crores? How did we arrive in that number?

No, no, no. I was asking about the net COVID claims last year.

Last year, full year.

Yes. Last year, full year was 320 crores. Net of...

[ 320 crores net ] COVID claims. Yes, go ahead. What was your question?

Sir, the multiple of the claims that we had last year and the claims we are reserving for this quarter. That's somewhere -- that's like -- it's like around 3x of last year's claims, and that somehow means it's a bit different from what our other peers have seen [indiscernible] the range of 4.5 to 5x of the provision plus expenses that our peers have seen. So would you -- do you think that these reserving [indiscernible] will be sufficient? Or...

So I don't know where you are getting your figures from because the calculation doesn't seem to be right. What is happening is that we have already said that we have increased our mortality assumptions last year around, okay, in March. And we have said that our claims have been taken care of largely by our increased assumptions. So now can you ask the same -- the question? I didn't understand.

[indiscernible] what I was trying to understand is the [indiscernible] claims or the multiple of claims that we could see this year versus last year. So last year, as we said, that was 320 crores. And right now, based on [indiscernible].

So Abhishek, just to add 2 points on this. One is that when you look into the claim provisions, you look into not only the COVID experience, you also look into the overall claim experience. So as a company, we first look into the overall claim experience, and accordingly, we make a provision on that. This is first part. Second part is that if we compare the last year claim experience versus this year's claim experience from COVID, I'm not very sure how we'll link into it. If you look into the wave one, it is longer, but curve is flat. If you look into the second wave, it is steeper. But if you see the decline, it's a sharp decline this is coming from, so difficult to correlate on that part. Third point, normally, as a company, we don't comment on the work of others, but I would like to add one point that the -- if your mortality -- overall mortality assumptions is well, prudent, you may not need to make additional -- significant additional provisions. If you're not having -- it's too strong on that side and you get a significant hit on the actual experience, there is a reason for a revisit of your assumptions. So as far as us is concerned, like we mentioned in the [indiscernible], despite our claim experience is closer to the estimate, we have strengthened our mortality assumption [ mark ]. On top of, we made the additional provision. If you look to the Q1, our actual claims total, including COVID claims, are well within the provision we made for the claims, despite we are not very sure how the COVID will behave, but we normally wanted to take a prudent approach. We have increased the provision from INR 183 crores to INR 445 crores. So this is [ some reason ] we wanted to make to you.

Just one follow-up and a small one, the -- this INR 445 crore will be mostly IBNR or you have also provided for something which has not yet [ put it ] and could materialize in future as well?

Abhishek, this is not totally IBNR. See, IBNR always be the part of our [ experience ] liability. That is a significant amount we keep on overall claim -- notification basis to that IBNR. And then we -- you have to make provision for the future. So this is a provision -- the additional provision we are making on top of [ actual ] provision we made under [ death ]. Okay?

Okay. Sir, I'll [indiscernible]. One last bit on the non-par savings side. So obviously, this has seen a decline this quarter. So is this mostly related to pricing part? Or are we seeing some happening in the market that you are probably [indiscernible].

So what I said about this was that the -- we have seen a lot of traction in ULIPs in the first quarter. And so going forward, we will definitely see increase in non-par savings still.

And sir, as you think that is pricing-driven -- pricing comes to you, so you just...

That will definitely be one of the factors. Yes, definitely.

Sir lastly, on the protection, this -- may I know how the different channels have behaved in terms of driving protection. Individual protection is 76% growth. Is it largely coming from [indiscernible]

It is across the board. It is across the board, if you see. So we have Banca, the growth is 55%. The agency, it is 57%.

It's like so other channel would have grown much, much faster, definitely right? Because overall protection has grown -- individual protection has grown by 76%. And when we say that the Banca and agency have grown like around 50% [indiscernible]

So individual, we'll -- I'll just check my figures once again. Individual -- Sangram, can you pull out the individual -- channel-wise?

Yes. So overall, for the other channels, the protection has grown by 73%.

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

Firstly, the increase in margins on effective tax rate and the other margin that you report is quite different on a Y-o-Y basis. So why, on the effective tax rate margin, increase is higher than the normal margin that you report?

So that is basically a function of calculation. It is just a function of calculation. So what we do is, our reporting is done on the actual tax rate basis. And then considering the product mix, there will be a difference in the tax rates applicable and therefore, this will change. So there is no correlation -- direct correlation. It will actually be a function of what is the final product mix that has been achieved.

Sure. Secondly, when we are seeing mortality experiences in line with assumptions, are we talking about non-COVID mortality experience or mortality experience including COVID?

No, no. We have said already that claim experience is claims experience. Death claims are death claims. COVID or non-COVID, they're death. So what we do is, when we make the assumption, we make the assumption for death only. We don't make the assumption for COVID death, road accident death or something like that. We make an assumption for death and then we provide for that. So COVID would be one of the factors which will be in our mind when we are actually making the assumptions. So because we know that there is COVID, COVID will be one of the factors which we will take into account.

Sir, does that mean that the mortality variance will not be negative when we look at the full year EV WACC. And that time, the mortality variance for us will not be negative?

Yes. So what we are expecting that if our current experience will continue, there would not be any negative mortality variance by end of the year.

Sure. Sure. That's quite useful. And lastly, how do we think about the SBI Bank channel? Please correct my understanding, I think the decent portion of our sales from SBI Bank is from branch walk-ins. And slowly, I believe that branch walk-ins will reduce as the economy moves more towards digitization. And over a period of time, not probably in one year, but over next 5 years, 10 years, the branch walk-ins that we are seeing today, they'll continue to reduce. So in that light, how do we plan to change our selling -- partner's selling strategy for life insurance products specifically for the SBI Bank?

We have already been doing that. And if you see last year, when there was this pandemic, and it was -- there was hardly any walk-in, and we have -- and the number of walk-ins throughout the year was much lesser than what was there earlier. We have still managed a net growth in business. So going forward, we have been developing strategies to market to customers to get -- have contact with customers, have relations programs with customers over various online means, and we have been doing very successfully. So we don't think that we see a challenge out there. It is a great opportunity. We will probably be able to get more people when we -- now that we are targeting people who are not walking in. So it would mean a lot of growth.

Sure. Sure, sir. And in terms of penetration, we have reached almost all the viable branches that we plan to reach or there is more scope to...

There is always scope. There is always scope. So the number of people selling, the number of customers sold to, the number of branches from which we are selling. So now activation last year end was around 85% of the branches had sold policies, approximately. Please correct me if I'm wrong. And so the idea is to get to 100%. So we want to come to a status where all the branches are selling policies to their customers and ideally to all their eligible customers, but that will take some time. So we see some growth going forward, a lot of growth over a number of years.

Sure, sir. And can you share the quantum of premium that we originated from channel last year?

Quantum of premium, yes, we have that. One second.

On the [ AP ] terms or [ NBP ] terms whichever [indiscernible].

Yes, yes, [indiscernible].

INR 30 crore was the for whole financial year, FY '21.

Is it sir, NBP or [ AP ]?

NBP.

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

What was total death claims in the first quarter, total death claims? Value and number ideally, if you can give both.

So total number of claims were 28,000 plus. And amount-wise, it was around -- we have disclosed, it is net of reinsurance is INR 1,315 crores.

INR 1,350 crores. So of the INR 1,350 crores, COVID was 570?

Manish, it is INR 1,315 crores.

Sorry, INR 1,315 crores. So off INR 1,315 crores, COVID was 570. Is that right?

Yes. Yes.

And what would the same number be for full year FY '21? If you have it.

June '20?

No, full year '21.

Full year '21 will be around INR 3,000 crores, death claim.

Death claims, okay.

Yes.

And number of claims would be?

Around 68,130.

Okay. Right. That's very clear. The other question which I had is on the incremental individual protection that you are selling, how does the mix there between metro and non-metro or, let's say, Tier 1 and non-Tier 1? Approximate split, if you can give us.

No. So it's spread well across the country. So say, roughly about 50%, 55% coming from Tier 1 cities and metros and the remaining coming from other places in India.

And Abhijit, how would this have changed over the last 2 or 3 years in terms of mix?

There has not been a significant change in that. It's roughly similar proportion.

Question really, what is the average [ ticket size for ] ULIP and non-par savings of individual business? How does the two compare? I mean, if you don't want to do absolute, I mean how does the 2 compare?

Average ticket size for ULIP is around INR 1 lakh, touching 1 lakh. And for non-par, it's around 50,000 to 60,000.

Okay. Let me just -- one of the potential reasons...

[Operator Instructions] The next question is from the line of Nischint Chawathe from Kotak Securities.

Just continuing from the previous conversation, what you said was that in this quarter, the total gross claim was around INR 1,315 crores. And the total number of cases were around [ 8,956 ]. Last year, for the full year, you have [ 3,000 ]...

No, no, 28,000.

Total number of claims were 28,756, amounting INR 1,315 crores net of reinsurance.

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

Sir, my question is on the claims, again with respect to COVID. Sir, so if you're saying that INR 570 crores [indiscernible] with respect to COVID is already part of your conservative mortality assumption, then the hit on the EV WACC should be the difference between INR 445 crores and INR 183 crores on the EV WACC. So gross of tax it is, [ INR 262 crores ] and net of tax, it should be close to [ INR 229 crores ]. That's the way I should be looking at the kind of mortality pricing assumption because price increase already part of your mortality assumption. Is my understanding right, sir?

I think it's difficult to comment on that part. I think -- what I can say is that when we look into, you look into the overall claims. So expected claims based on the assumption that we set on 31st March 2021. And against that, there is total claims. So this COVID claims of INR 570 crore net of the reinsurance is a part of that, agree? So once you look into the overall expected claim to the actual total claim, there in that, that will be negative, then we'll have some impact on the operating variance on the mortality.

Precisely, that is the question. That INR 570 crores, is any negative deviation you have -- what you expected in first quarter and you had a negative deviation significantly away from -- I mean because you paid additional claims of INR 570 crores COVID, so the deviation is positive delta from what you are assuming for the quarter?

No, no. So what we're saying that for the quarter, if you consider the total claims, including the COVID, it's well within the expected -- that we expected for the quarter.

Sir, then it is simple. I think that any additional provision which you have made is likely because that is over and above what you have assumed. So it is likely [ it becomes the EV ], right then sir?

Yes, that will have impact, that will have impact.

Okay. Okay, perfect. And I just wanted to understand, this INR 442 crores of provisioning, what is sitting on the balance sheet -- INR 445 crores, does it provide only for the claims which are reported -- which are likely -- which has already happened in the month of -- in the quarter 1? Or you have even provided for the likely claims coming in subsequent quarters, either for the third [ year ] or any other claims which are going to come in next 3 and 6, 9 months because of COVID?

No, this is additional claims towards the COVID. And I mentioned earlier as well, IBNR that we are referring to that has not been [ generated ] is a part of our external liability and that we always keep. And when we say the IBNR, we look into the overall claims. So this provision is on top of the overall claim that we're holding.

Got it. Understood, sir. Sir, finally, on -- this is again on -- harping on the non-par business part. Sir, so entire industry that business very aggressive in the current quarter. Every player has reported a very strong growth. Due to some reason that number is very weak for us, despite there is a strong demand for that kind of a product. Sir, just failing to understand, is it because our [ SaaS ] are not in place or [indiscernible] In the business have not exhausted. And therefore, we are not seeing -- we are really restricted to grow that piece or is reason something else in that sense?

No, we don't have any such constraints. We don't have any such constraints. And like I said, we have seen a lot of demand for ULIP products, maybe as a factor of the market is doing very well. And I think that is the major difference. And as I said, we are also repricing going forward. Our targets are to actually grow the book in non-par by the year-end. So given all those things together, I will not compare myself with any other peers in the market because they have their own policies and practices to do whatever they do. But from our side, our action plan is very clear that we will probably end up with a good non-par percentage at the end of the year. Yes, Abhijit, would you like to add something?

Just to compare, last year quarter 1 was higher than our average non-par book. Year-end, we ended up non-par being 9% of our individual [ APE ]. Currently, it is just above 7%. We do think that with the repricing and the other strategies we will have to play that our non-par book will be a double-digit number in the current year by year-end. So it will go above -- definitely above 9%, which we had last year. Exact number is something which we will [indiscernible].

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

Can you hear me?

Yes.

Okay. Sir, just one question on the renewal premium growth. It seems like last 2 quarters, renewal premium growth has slowed down. I understand some [indiscernible] in this renewal businesses, but still we are seeing quite a [indiscernible] impact in the quarter. Can you talk or walk us through what is driving that [indiscernible] and expected impact on cost ratios...

Deepika, sorry, we lost your audio in between. May I request you to please repeat your question once again.

I'll just repeat again. So basically, renewal premium growth has slowed last couple of quarters. So just want to understand what is driving that? And what would be the expected impact on cost ratios because of the same? And secondly, more in the Banca family and agency family, we've seen better protection numbers. Can you talk us to the incentive structure in both these channels to grow the protection?

Yes. So Abhijit, can you please answer?

Just the second part, we will not want to make any comment on the incentive structure. As we said that there are strategies in place to promote the right lines of business within our company. So there is something which we already have in place. We don't have any specific comment. Second, the way to look at renewal is to look at persistency number. So in certain cases, even the business had -- growth had slowed down a little in last -- especially last couple of years, that is why you are seeing renewal percentage go down slightly. Persistency has kept on increasing. So there is no challenge as far as renewal is concerned.

Just to add, renewals are -- been growing for us for last few years at double-digit rate, which is beyond 20%. And at this moment also, it is double-digit growth. And growth, I think we should set aside, rather you should see what is my renewal bucket. As Abhijit said, our persistency is the reflection of our renewal premium collection. And it is going in line as per our expectation, and we believe that it will continue on.

Okay. So just like this quarter, the renewal premium growth is about 10%, which is why I was asking what has driven this year? And my last question, sir, on [indiscernible].

Deepika, can't hear you. We can't hear you.

Hello?

Yes. Now I can hear you.

Sorry. So in this VNB WACC, are there assumption changes driven from mortality, minus 1%?

Yes. So just to say this is we have not made any changes in assumption around 30th June. Assumption sales have been done in the 31st March. So that is reflected in the VNB WACC. And this is mainly on account of mortality that we explained in the March.

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

Sir, so when you say we have not kind of taken any additional reserving in terms of -- or taking a hit from the assumptions, this additional [ 2.57 billion ] is the pass-through from P&L and sitting in the EV, part of the only net additional impact we have from the COVID. Is it right understanding in terms of [ 0.7% ] of the purchase [indiscernible] because ...

I didn't get your question. Could you please repeat?

The additional rate of [ 2.57 billion ], the difference between [ 4.45 ] and [ the 1.83 ], that is only pass-through we have from P&L on the additional basis because we are already prudent in terms of reserving. That is what [ we meant then ] you've not touched upon any change in assumptions?

You could possibly say that. I don't know, Prithesh, please elaborate.

Yes. So you're right, the incremental results that we provided for, along with the claim that we have paid, we will look at through the P&L and revenue performance...

And any top-up we might need to provide for in the subsequent quarter, do we think that this will suffice or given specific [indiscernible] mortality assumptions, what is sitting in the book plus the additional reserving we have? Or what's your thoughts on that?

Yes. I think Prithesh has already answered this in response to a question earlier. If everything goes according to how it is panning out now, and there is no sudden spike or there is no third wave hitting us, and there is no sudden spike in deaths or [ country ], then we will end up with -- within our -- whatever we have reserved.

Okay. And between this [ 28,756 ], any change in trends between the individual and group in terms of the claims in earlier quarters? And what would largely, if at all, if we have that handy?

I think it should be about the same, but can somebody check the figures.

That is the same. Actually, we do not have the -- separately, we don not do this way and this, and go to the claim. Overall, claim experience-wise, you do -- just make the provision.

Got it. And on reinsurance price hike in terms of group term and credit life, have you also kind of done -- have we -- first, we have got an increase on the insurance like years. And if at all, have we passed on the price increase to maintain the margins?

So if you see that as of now, our reinsurance rate is what we had. So March, we did some hike in the individual side that we accounted in the March range. So individual side, we don't see any challenge on the reinsurance side. Now coming back to group that you are particularly looking for. Looking to the experience -- as of now, though we have not seen, but looking at the overall claim experience for the current year and the group, there is a possibility that reinsurance may come back and hike the [indiscernible]. Only one [indiscernible] that we made particularly for the GTL product that you're referring to, is that it is the price on a case-to-case basis on a yearly basis. And whenever any new [indiscernible] come or any existing come for renewal, we look into the experience, consider the reinsurance support at that point in time, and accordingly, we price on that. So our individual rate, that should not have impact on the margin per se. So because we can -- appropriately we price, we go to the customer, customer like and like [indiscernible] said, I already mentioned that we wanted to do a profitable business without compromising any of the standard. So we don't credit life is a long term. As of now, we have not seen -- there might be a possibility, very difficult to comment on behalf of the reinsurers. As of now, we're holding our reinsurance rates. And as [indiscernible] has mentioned that our average ticket size is lower than the market as compared to the other peers. So even that will happen, the impact will be not significant in our book as compared to others.

The next question is from the line of Shashank Mundra from Reliance Nippon Life.

Sir, you have mentioned that your net claim for the quarter, INR 1,315 crores. Can you please state the number of gross claims?

One second.

1,576. INR 1,576 crores.

Okay. And what's the embedded value for June?

We don't calculate the embedded value in June. We calculate the embedded value only in March.

The next question is from the line of Prateek Poddar from Nippon India Mutual Funds.

Sir, so just one small clarification. This INR 440 crores is for wave 3, 4, 5 which will probably happen? Is that a fair understanding?

See, I don't think there is any question about all these assumptions of various waves. What happens is because we saw this pandemic -- before this pandemic, we didn't have a significant pandemic reserve. We used to have some small amount as a reserve. And last year was the first time that we actually saw there was this pandemic, and we had to make these additional reserves. Now these additional reserves are a matter of abundant prudence, and it really is more psychological than anything else because when you ask me whether I paid out of reserve or I just paid out of my profit or I paid out of anything, it is all the same. The net result is the same. But what we do is because we are reserving and because we are in an uncertain situation, we are making an extra reserve, additional reserve. And that is only for surprises. So that surprise can be in the form of the third wave, fourth wave, fifth wave, whatever you want to call it. So it can be any of those things. But really speaking, we can't predict the waves or anything. So because the COVID epidemic is still playing out, we have made this prudent reserve.

The next question is from the line of Manish Shukla from Citigroup.

So the question which I was trying to ask earlier is how do the ticket sizes for ULIP and non-par savings for individual business compared?

Yes. Within the lakh and 60,000 is what I think Sangram said. Sangram, go ahead.

Yes. So Manish, specific for ULIP and this non-par flatten up, it is kind of similar number, around 116,000 to 120,000.

Okay. So okay. Because I was going back to the point of interchangeability of the two. So is the customer segment who was buying the 2 products largely same? Because I would have thought that a ULIP customer would have slightly more risk appetite because there is some equity component. Whereas, non-par customers would want a short return. So interchangeability of the product for the customer is something which I was trying to understand.

Same customers, they will change. I mean, like for example, when they look at the pandemic kind of situation, the customers' appetite can also change. Abhijit, would you like to add on this?

So part of the -- I mean, broadly, it is affluent customer, but now we also have a pause -- non-par product, which we will start pushing from this quarter. So you would see ticket sizes as a portfolio may come down because there is a current product where minimum ticket size for both ULIP and non-par is roughly 50,000. And going forward, we will have a product where minimum ticket size is INR 12,000 for non-par. So you might see some change there, but current portfolio individual customer risk appetite as part of the portfolio in this overall portfolio, customer segment.

Right. So then incrementally when after adjusting the repricing of the non-par segment -- nonpar products, sorry, and the new pricing that you're coming, ticket sizes would go down. How does the profitability part [ tell ] you of the non-par product? I mean, in terms of in the margin?

So a profitable margin will be intact. So our objective is to -- because it has gone up, we wanted to pass on the benefit to the customer and that will give a better value in terms of the [indiscernible]. And we'll ensure that our margin will get impacted, if not enhanced.

The next question is from the line of Mitesh Gohil from Ambit Capital. [Operator Instructions]

Sir, am I audible?

Yes, go ahead.

My question has been answered. Just had one data-keeping question. So the annuity for the quarter is 0.7 billion APE. So I just wanted to know the breakup between individual and group annuity.

Individual annuity is around INR 224 crores, and group annuity is INR 425 crores in [ rupee terms ].

On AP basis?

[indiscernible] 110.

The next question is from the line of [ Mayank ] from Star Union Daiichi.

Sir, just wanted to confirm, for COVID claims, which we had INR 570 crores in net of reinsurance in this quarter, we have not utilized our existing COVID reserve of INR 183 crores, which you made in last quarter, meaning existing mortality assumptions that have taken place for INR 570 crores of claims. Is that right?

So [ Mayank ] just to tell you, that when you do the provision, you do the provision as on balance sheet date. So balance sheet date is 30th June. As on 30th June, we kept the provision towards COVID is [ INR 445 crores ]. And other things doesn't matter, I mean, what we're carrying forward and all because your liability will release and accordingly, you'll pay the claims.

Yes. So the difference being like if we have not touched INR 183 crores, then impact on EV WACC would be lower. And if we have utilized that, then impact on EV could be higher. So we were looking from that perspective.

So just to explain we don't look into the piecemeal minus. So if you look into this, we have to look into how much overall claims and how much we have paid for, right? That's the way we are looking into, not looking the -- COVID is one subset of the overall claim. So when looking the WACC and our overall claim experience, we are looking in totality rather than going and looking the COVID. COVID is just emerging. We don't have any understanding how COVID will behave. Who knows that 1 like infection will go to the 4 like infection per day. So that's the reason we are not looking specific to the COVID. We are looking overall. And to be prudent, we wanted to keep additional buffer like we mentioned. So March, we got INR 183 crores, today INR 445 crores.

Ladies and gentlemen, we will take the last question from the line of Manish Gupta from [ Solid Advisors ].

Sir, just wanted to check, would it be fair to assume that our mortality assumptions in our VNB margins are more conservative than our peers'?

See, when -- once the event has happened, you can say so many things. So what we would like to just say is that whatever we had reserved has served its purpose. So our reserving has been correct. So that's what I would like to put in that. Prithesh, would you like to add something?

Yes, sir. So just to add what [indiscernible] is saying that we don't say that we are keeping COVID assumption our liberal assumptions. What we say that [indiscernible] we said our assumption which is sustainable in long term. So that's the reason I am saying neither prudent neither weak. In our view, as of now, it is [indiscernible] and sustainable assumptions that we're playing with.

Sir, if I may just ask a follow-on question. If one has to understand what the mortality assumptions of different companies are, where can one find this data? Is this data in the public domain?

No. So it's not in the public domain. Public domain, you can see the industry data. So you can go and see the insurance history of India, if you want, we can help on that side. So insurance history of India published some standard mortality table that reflect the country insured mortality. So there is nothing available on the things. What you can look in -- it's difficult to compare things. You have to -- because it will depend on the mix of the product, whether say in protection, you're selling ULIP, you are selling saving, you are selling par. Then again, you look into the weak area you're selling. Then again, looking the right ticket size, you're saying what is your customer segment other part. So that's the reason it's extremely difficult to compare one company mortality assumption with the other company because it reflects their own portfolio experience.

I now hand the conference over to Mr. Mahesh Kumar Sharma for closing comments.

Yes. Thank you very much, Neerav, and thank you very much for all the -- to all the participants in this call for asking very relevant questions and keeping us on our toes. We propose to continue with our sustainable policies and our growth and hope to see you again with a very strong performance going forward. So thank you very much. Stay safe. Get vaccinated. Good night.

Thank you very much.