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

Ladies and gentlemen, good day, and welcome to SBI Life Insurance Q3 FY '22 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Kumar Sharma, Managing Director and CEO. Thank you, and over to you, sir.

Thank you very much. Good evening, everyone, and we heartily welcome you all to the results update call of SBI Life Insurance for the period ended December 31, 2021. We hope you and your families are safe and well. Update on our 9 months financial results can be accessed on our website as well and on the websites of both the stock exchanges. Along with me, I have Saraji Sarangi, President and CFO; Ravi Krishnamurthy, 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. We are pleased to inform you that we have successfully maintained the new business thrust and have again delivered enduring performance in this quarter as well. This would not have been possible without the efforts of all our employees, distribution partners and business associates for their uninterrupted support, which helped us to satisfactorily service our customers during this challenging environment. Now let me give you some key highlights for this period ended 31st December 2021. New business premium is at INR 187.9 billion with a growth of 30% over the corresponding period last year. Individual new business premium stands at INR 116.1 billion, with a strong growth of 43%. Gross written premium stands at INR 412.5 billion, a growth of 19%. Protection new business premium grew by 26% to INR 20.4 billion. Individual protection new business premium grew by 27% over the period ended December 31, 2020 to INR 6.2 billion. Annuity business stands at INR 26.4 billion, registering a growth of 20% over the corresponding period last year. Profit after tax stands at INR 8.3 billion. On effective tax basis, value of new business is INR [ 25.9 ] billion, registering a strong growth of 66% over the period ended December 31, 2020, and the new business margin is at 25.5% with an improvement of 470 basis points. Assets under management grew by 23% to INR 2,569 billion, that is INR 2.569 trillion. Let me update you on each of these elements in detail. I'll start with the premium. Individual business has always been a focus area of the company. Individual new business premium has grown to INR 116.1 billion with a growth of 43% Single premium contribution is 24% of individual new business premium, which is maintained and mainly attributed to growth in individual annuity products. Individual rated new business premium stands at INR 90.7 billion, with a strong growth of 38%, which is leading to private market leadership with a share of 24.8%, an improvement of 143 basis points over the same period last year. Achieving private market leadership portion in new business premium, we collected INR [ 107.9 ] billion and marked a private market share of 23.7%. Group new business premium stands at INR 71.8 billion with a growth of 14%. Renewal premium grew by 11% to INR 224.6 billion, which account for 54% of the gross written premium. Our gross written premium stands at INR 412.5 billion, a growth of 19%. Total APE stands at INR 101.7 billion, registering a growth of 36%. Out of this, individual AP stands at INR 91.4 billion, growth of 38%. During the period ended 31st December, 2021, total [ 13.1 ] lakh new policies were issued and -- which registered a growth of 20%. Sum assured and individual products registered a growth of 22% over the corresponding period last year as compared to growth of 3% at private industry level. So let us go to the product mix. Individual protection is at INR 6.2 billion, registering a growth of 27%. Group protection stands at INR 14.2 billion with a growth of 26%. On APE basis, protection contributes 10% of new business and has registered a growth of 27%. Credit Life new business premium has grown by 31% and stands at INR 11.4 billion. The company is well-positioned to handle the current supply side constraints and have developed the protection portfolio of pure term protection through group credit life and return of premium book in individual business. We are confident that, over the period, we will be able to comfortably maneuver the individual protection basket towards pure protection. Annuity business is at INR 26.4 billion and contributes 14% of the new business premium. Total annuity and pension underwritten by the company is INR 55 billion, registering a growth of 28% over the corresponding period ended 31st December, 2020, that is last year. On account of buoyant capital markets, individual unit business is at INR 81.7 billion, which constitutes 70% of individual new business premium and has showed a growth of 50%. Guaranteed non-par savings product is contributing 9% of individual new business and on total APE basis, this contributes 11%. Non-par guaranteed product new business has registered a growth of 30% in Q3 FY '22 over Q2 FY '22. We believe that by year-end, this product will contribute around 12% to 13% of the total APE. Fund Management business is at INR 43.2 billion with growth of 13%. The company offers comprehensive suite of participating, nonparticipating, guaranteed, annuity, pension and unit led solutions, which are designed to enable our customers to live their life to the fullest across a wide demographic range and income levels. During the quarter, we launched ROG Shield in collaboration with SBI General Insurance to combine best of the 2 individual plans, SBI Life Saral Jeevan Bima and SBI General Arogya Plus to provide customers with Arogya Shield, a solution that serves the dual purpose of providing both health and life cover, which simplifies the entire journey of the consumer by eliminating the process of searching for 2 separate policies, purchasing and maintaining them. We also offered a deferred option in group annuity products, and soon, we will be offering deferred option in individual annuity, too. So I look at the distribution partners, with a strength of more than 50,000 CIS, that is specified persons, Bancassurance business marks a share of 66% and grew by 40% in the individual new business premium. Bancassurance channel individual APE stands at INR 62.4 billion with a growth of 36%. Instant protection policy issuance through YONO app of SBI has covered more than 1.7 lakh lives. Agency, another very strong channel, registered new business premium growth of 46% and contribute 17% in new business premium. Agency channel individual APE stands at INR 25.6 billion with a growth of 42%. As on 31st December, 2021, the total number of agents stands at 135,902. There is a significant improvement in agents productivity levels as compared to previous periods and greater use of technology assisting in better engagement in the entire value chain from recruitment and training through to lead generation, sales and customer service. During the period, other channels, direct, corporate agents, brokers, online and web aggregators, grew by 69% in terms of individual new business premium and 50% in individual APE. Protection new business premium through other channels registered a growth of 61%. New partnerships like Indian Bank, Uco Bank, South Indian Bank, Yes Bank, Punjab and Sind Bank registered growth of 48%. These relationships contribute almost 3% of the individual APE as on December 21. We are confident that all these partnerships will start contributing significantly in the coming periods. Updates on profitability. During the period, COVID claims, net of reinsurance paid as well as outstanding, stands at INR 15.3 billion, covering various lines of business. The company has kept additional reserves amounting to INR 2.7 billion for COVID-19 pandemic over and above the policy liabilities. Our mortality assumptions are well within our estimates. The company's profit after tax for the period December 31, 2021, stands at INR 8.3 billion. Our solvency remains strong at 209% as of December 31, 2021. As mentioned in my opening remarks, the value of new business is at INR 25.9 billion on effective tax rate basis, with a growth of 66%. On actual tax rate basis, it is INR 22.3 billion, with a growth of 54%. The margin -- VoNB margin is at 21.9% on actual tax rate basis, an improvement of 260 basis points. And on effective tax rate basis, which compares with what is allowed by our peers, stands at 25.5%, an improvement of 470 basis points. Cost efficiencies continue to be maintained with a total cost ratio at 8.7%, OpEx ratio at 5.1% for the period ended 31st December, 2021. 13-month persistency ratio of all policies that is regular as well as single and limited pay premium stands at 87.2% as compared to 86.2% of the corresponding period last year. In accordance with recent regulatory requirements with respect to persistency or individual regular premium and limited premium paying policies, 13-month persistency stands at 83.9% versus 83.4% in the corresponding period last year. As mentioned in my opening remarks, assets under management has crossed INR 2.5 trillion as of 31st December, 2021, having a growth of 23% as compared to the last year. The company continues efficient use of technology for simplification of processes, with 99% of the individual proposals being submitted digitally, 55% of individual proposals are processed through our automated underwriting. Customer satisfaction is a key focus area. Our grievances with respect to unfair trade practice stands at 0.07%, 1 of the lowest in the industry. In the third quarter, we reimagined our brand identity as a unique expression of our core believe, independence in thinking. The new brand line, Apne liye, Apno ke liye reflects the conviction that SBI Life enables individuals to explore their own wants, while securing the needs of their loved one. Our new branded entity is anchored to our core values of transparency, humanity, integrity, innovation and sustainability, which are being adopted across the ecosystem. Recently, we also unveiled yet another comprehensive consumer study, The Financial Immunity Survey 2.0, providing deep insights into consumers evolving behavior towards financial preparedness in the post-COVID world. The pandemic has had a profound impact on consumer behavior. The attitude of Indians towards financial immunity has seen a considerable positive shift. The primary concern after having witnessed the second wave of the pandemic is to be financially prepared and immune and a majority of the Indians believe that insurance plays a key role in helping them tackle this concern. Also, the macro drivers for the life insurance sector remained well in place. These include an expanding and prospering middle class, significantly higher under penetration of life insurance in India, a favorable regulatory environment, rapid digitalization among others. To conclude, we will continue to maintain sustainable and consistent product mix with increased focus on automation and digitalization for enhancing customer satisfaction. Protection business has been a key focus area along with other lines of profitable business. We are confident in our ability to keep providing great value to all our stakeholders. Thank you, and we are now happy to take any questions that you may have.

[Operator Instructions] We have the first question from the line of Sanketh Godha from Spark Capital.

Sir, my first question is on the protection reinsurance strategy. Probably, we are largely RP heavy. So anything got changed significantly? And the new term insurance plan, which we launched in previous quarter, there also, are we -- I think, in the previous quarter, you said that the reinsurance rates will not change for us for that particular product. So, sir, just wanted to understand, it is the status quo for us, nothing changes from pricing or reinsurance strategy as such for the protection business? That's my first question.

Yes. So to answer you, the status quo, as you say, remains on that product, and we don't have anything to say on that.

Okay. Perfect. And just if you can break down the annuity business into individual annuity and group annuity, that would be useful, sir. And second, again, on similar lines, if you can break down the group protection business into credit life and the GPL business would be useful.

Yes, once again, just give me a moment. Yes. So annuity, individual annuity is INR 1,201 crores in yes, INR 1,201 crores, that is INR 12 billion, INR 12.01 billion and group annuity is INR 14.43 billion.

INR 14.33 billion, right? INR 14.33 million?

This is for the YTD December '21.

Yes, yes. Got it. Got it. And if you can give it for the group protection business, too?

One second, credit life and you wanted for credit life and group credit life is INR 11.4 billion and GTI is INR 2.8 billion.

INR 2.8 billion. Okay, sir. And finally, just on the margin thing. So we have seen a consistent improvement in the margin. So sir, if I compare with the 9 months of FY '21 and 9 months of FY '22, actually, the products which are margin drivers like non-par and UT individual protection and group protection contribution has come down from 24-odd percentage to 23.5 percentage and ULIP contribution has gone up. Still, we see an expansion in the margin. Sir, just wanted to understand what is leading to this expansion? Is it largely explained by the improvement in the cost ratios or within the products you are now experiencing superior margins than what you have experienced in the last year?

Yes. So you have answered your question. Within the products basically, we are having better margins in some of the products. And that is why it can't be exactly laid out and quantified in that kind of way. But then you have hit the nail on the head when you say that the overall basket is now going towards side where higher-margin products within the groups are selling a little more than the lower margin products in the same groups.

Okay. No, no, sir, my question is that the mix -- the higher margin products like non-par annuity protection are almost same.

No, I'm telling you within the products themselves. So in fact, if we look at the ULIP products, the products with higher margins are selling more than the products with lower margin within the ULIP space. Similarly, for others also.

Okay, sir. Last one, the non-par business, which we -- which is now almost 11% contribution in the APE terms, any limit we have there to grow? And second thing, we are still hedging this particular product using partly paid debentures. Are we -- how we are doing something more than the partly paid debentures? And finally, is it -- is this entire growth is driven by Platina? Or do you have any other new product launched in this non-par business?

Yes. So our hedging, basically, we have been talking about this since last year. So we have been using FRAs also, also for hedging now apart from our favorite partially paid bonds. So those remain to be an [ instrument ] of choice for hedging for us, but we are writing FRAs also to hedge this. As far as the products are there, we are focusing on Platina mainly. And of course, we have the non-par protection and the annuity. So that is also there. But most important driver for us right now will be Platina. We don't have any limits for that. We would be looking at it in a way that we look at all our business, what the customer wants? And then we will decide whether we want to sell more of it, less of it. Of course, it will depend a lot on whether we are able to do it to the customer satisfaction and profitably. So that will be 1 of the major things that we look at. Right now, we are not looking at the limits.

Got it, sir. Sir, sir, in protection, ROP still remains 80% of the total business?

Yes. Maybe even slightly more.

We have the next question from the line of Abhishek Sara from Jefferies.

Sir, I just had a few questions pertaining to protection. So correct me, if I'm wrong. So it appears that our protection growth while has remained positive, but it has been now tapering out on a Y-o-Y basis. And even on an absolute number, if I see on a Q-o-Q also, the growth has not been that high and that on top of launching a new pure term protection in the last quarter. So could you just take me through why that's happening in this quarter? Are we seeing that other players have now also starting to focus a bit on protection and they also kind of reported some growth. So are we seeing some bit of higher intensity of competition there?

See, it's not a question of competition at all. We are looking at our basket, our customers, our prospects. So basically, if you look at Q3 over Q2, we find 14% growth. But if you look at the 9-month period last year, then we have grown at 27% and -- which is a very, very decent rate of growth. I hope, I have answered your question.

Yes, sir, that I understand means on a 9-month basis, definitely, we have grown pretty well because it appears that on an absolute number also, it is kind of now stable. So is it fair to kind of assume it probably this could be the run rate going forward of around to INR 240 crores to INR 250 crores per quarter kind of retail protect APE?

I don't think, we look at that kind of thing. We are not looking at any kind of absolute number, which we will be pursuing or anything. Internally, we may have some targets and all. But then, largely, the ecosystem will be driving the business. And we find that there is very good take -- offtake for this -- for protection, both pure protection and the term with return of premium, which I don't know how many people understand these terms. But TROP is as much protection as with our return of premium. And the -- sum assured that you get for the premium that you pay is a very decent multiple. So it's a very good product for people to choose to get protected. TROP is in no way less than what is called pure protection, there is no card difference out here. It's only that some people choose this, some people choose that.

Sure. And after the launch of the short-term, what has been the trajectory of the mix of pure term or ROP versus non-ROP in this quarter versus what it was last quarter?

We always had the pure term product. We have many other pure term products also. So right now, we don't -- we have not seen a dramatic shift out there. But going forward, I definitely see a lot of more traction for our pure term product.

That's helpful.

It's only recently launched.

We have the next question from the line of Mr. Nischint Chawathe from Kotak Securities Limited.

Am I audible?

Yes, yes.

You reported very impressive expansion in margins this year. And the top-line growth has also been -- the premium growth has also been fairly strong. If you could kind of give us maybe a medium-term 2, 3-year kind of a guidance or where you really see going ahead in terms of market shares? Or where do you really see margin tracking as well?

See, margins, we can only say that in the last 3, 4 years, we have been growing the margins continuously. It's an effort in the sense that we are giving -- delivering better products, better services, lowering the cost. So many things go into that. So basically, it's a mix of all that. Some efficiencies have increased a lot because of digitalization. A lot of other changes have also happened, which have made us more -- sell more efficiently. So that kind of improvement, we will keep aiming at. And, plus, the overall -- so there is a limit to which your margins can keep increasing. You can't have a situation where you keep growing up to 100% margin. So there is always going to be the value that you're going to create for the customers and deliver, and the value that you create for the business and for the company and other stakeholders. So there, we find that we are at a very good -- we are growing at a very good pace. And I think that if we keep on with the improvements that we are doing and more and more technology use and more analytics, et cetera, which we are already doing, adoption of robotics, and then also, the operational efficiencies that we already have, which we are fine-tuning and ensuring that it may remain so. So, finally, I think we will keep improving our margins but I can't put a definite number to it because as I said, I have to look at all the stakeholders, including the customers.

And to your point on new business, our endeavor is to grow faster than the market. So we do think we will be able to gain market share in the next 2, 3 years?

Yes.

[Operator Instructions] We have the next question from the line of Ajox Frederick from Unifi Capital.

Sir, just a follow-up to the discussed points. One is what gives us the confidence in claiming that pure term will eventually form a bigger portion of the protection mix going forward?

Yes. So we have a very good product. And I think this is a unique product that we have brought out. We have -- the product actually addresses the life stages of a person. So if somebody buys a policy, and once he -- when he gets married, when he buys a house, when he has children or adopts a child, at all those points of time, he can increase the cover and with the same rate and without a new underwriting being done. So this is something which is, I think, revolutionary. It has not been -- I don't think, I've seen this product in the market. So that is something which a very unique product. I'm sure people will realize the value of this product going forward. As I said, we are not making us [ flag ] about it. But then our word about way of selling and our large reach, huge reach of SBI branches of non-SBI branches of banks, and all the partners that we have and also the very, very good agents that we have. I'm sure that this product will be shown to more and more people, and it will definitely command a very good market because I think it is 1 of the best products that is available today in the protection space.

Understood, sir. Sir, again, just to harp on the outlook of growth because this year has been very good, obviously. Next year, where are the growth drivers going to come from? If you can give some color product-wise or channel-wise that will be helpful.

Yes. So I would like to take you to the general statistic being bandied around. India is hugely underpenetrated in terms of insurance. So 1 of the things is very huge potential. It is only a question of reaching all the people, explaining to the people that these are the products that are available and selling a suitable product to them. And this is part of nation building also, but apart from that, it is a very profitable business. And that is exactly what we have started tapping into this year. So next year also, we will continue to do more of that. We are identifying -- so we have all the bank partners that we have, have a huge number of customers, who have these needs and whose needs can be catered to. Then the agent free channel that we have, very strong agency channel, we have 947 offices across the country, in every place in the country. And all these people, we are increasing the number of agents also. So our -- 1 of our strategies is to double the number of agents in the coming couple of years as far as possible. So this would be 1 of our -- 1 of the ways in which we increase the reach out to the people who don't have insurance. And I'm sure that all this will open up the true potential that we have. I think we have enough potential to grow at this or similar or even higher rates for another 2 to 3 years, at least as of now when compared to peers around the world. So India has got a huge scope, and I think we will tap into that. And if you ask me segment, like I said, protection is going to be very good flavor going forward. And obviously, all the other products that we are selling, we offer some kind of protection or the other, like, for example, even if you look at ULIP products, which generally are mistermed as investment products, they are also insurance products. Because you buy -- you pay a premium, you start getting a life cover on that. And it is a multiple of the premium that you have paid. And so it is as good effective insurance as anything else. So insurance is a need, and we will cater to this need. Similarly, our annuity products, they give protection towards the old people from being destitute after having spent their life savings. So anybody who puts money in annuities and in the pension scheme, he keeps getting a monthly income or an annual income so that he can continue to live in peace. So whatever it is, it is all a question of insurance and protection. I don't think that scope we will be able to satisfy very shortly with this kind of growth. So maybe higher growth can also be predicted.

No, sir, I understand the macro story. I was more referring to your stock process. For example, you mentioned about non-par mix going up, and that did happen. And you said that it will go up to 11%, 12%, and quarter-on-quarter, we did well on that portion. So I was thinking from a more internal discussion point which you had or strategic goal post which you have, which can give us a better clarity. Because, right now, yes, we are doing very well. Right now, it's all favorable, but like the other participant was also asking, the protection run rate seems to be tapering, and we need slightly better color, quantifiable color, if possible.

I would like to correct you here. I do not think the protection run rate is dipping or anything. We are growing at 27% if you see over last year. And even quarter-on-quarter, we have grown at 14%.

Right. I was referring to the absolute number, but any which ways, but if you can give me some direction on the mix side?

I have very clearly said that we have got more than 50,000 bank branches where we are selling these products. And they have got adequate number of customers who are not covered. And similarly, our agency channel, we are expanding, we will have more agents selling and all our products. I mean, I'm not going to state a particular number that's saying that we will be selling to 10,000 Platina or 20,000 protection or something. The product mix we have seen, I tell you that, going forward, we would like to have something like, say, 12% to 15% protection, maybe go to 15% to 18% or even 20% in non-par Platina or similar products. And then the annuities would be something like 10% or something of the business that we do. ULIP will form the remaining part of it. But then you can never say which of these businesses is going to grow more next year. So once we do all these things, address all these constituencies who are -- who can be catered to in terms of insurance, that is where my confidence of growing comes. And I think that, instead of giving a particular segment or a product that we are going to be selling, I am sure that we will be selling all the products but to more people.

Understood, sir. Just a final question from my end is on the margin. Currently, we are doing -- even within ULIPs you said that you're doing higher-margin products. And I'm assuming that we're doing the same thing for other categories as well. But eventually, we'll have to move up the ladder in the income stream. So currently, probably we're getting to customers where the competitive intensity is lower. And eventually, we'll have to get into slightly higher up the ladder where competitive industry is going to be pretty high. If that scenario plays out, our strategy of selling high-margin products even within each category. How does that shape up in the [indiscernible]?

I don't get it, Frederick?

Yes, sir.

Yes. So I don't get the question because we are going to be selling more and more. And I'm not aiming at any particular number on the margin front, like I said, because what will happen is that, finally, the margins can be slightly higher or lower. There are products which are lower margins, which are higher margins. But if I'm selling more of everything, then my overall earnings and my overall business is going to grow. If you look at our value of new business, you will see what I mean to say. We have grown at 66%. Whatever be the margins that anybody else may have, there may be a company which has got very high margins, like 70% margin in a product and sells only that product, but they will be selling a miniscule amount. We are looking at expanding the market. We are creating new markets, and we are selling to more and more people. And I'm sure that, that business model is working for us. our valuation has gone up. Our EVs are constantly rising. We have the highest EV. We have the highest value of new business. I think we are going in the right direction.

[Operator Instructions] We have the next question from the line of from Pulia from CLSA.

Congrats on the good set of numbers. So this question of margin, right? So one of the things which strikes me is because the majority of the OpEx is usually for new business. Our OpEx growth has been materially lower than the growth this year, which should by itself imply that each product, everything else equal, should be more profitable vis-a-vis last year or what you've done in FY '21. So is that 1 of the reasons apart from changes in product, if you could have made some that makes your overall profitability as better? I think your OpEx to individual APE is down by about 200 to 300 basis points. So if you can clarify on that in [indiscernible]?

My cost ratios are always going to be a strength and will contribute to my profits. So that there is no question about it. And we have brought in a lot of operational efficiencies. So that definitely improves that. But having said that, part of it comes from the product mix as well, a substantial part in fact, I should say. Because whatever you say the reduction in the OpEx -- overall, OpEx will increase because of the huge increase in business overall, OpEx will increase. Our percentages will remain somewhere around the same. This year, in fact, compared to last year, there was more travel, there were more conferences. There were more meetings and physical stuff like that. So there would be a little more expenditure than we saw in the last year on those items.

Others, I think Pritesh would explain. We have not changed our 31st March assumption as of now. We will change only in the last quarter.

What I'm trying to ask here is so that -- so given the improvement in the large business, Ideally, your experience now will be way better than assumptions, right? So there is a possibility that you have some improvement in that assumption, right? Is that a fair?

That is very hypothetical. But then, yes, you are right. Our expectations and assumptions and experience have been like positive for us. And going towards March, and if everything improves, then obviously that we'll take a look at that.

Sir, the second question I had was to do with the agency. Apart from the bank firing, the agency also has had very strong growth across products, but also in [indiscernible]. Can you talk about a little bit because if it's been a strength and is it -- it looks like it's just not the bank, right? So even across channels, things have been very strong. So if you can just talk about what is -- what you're driving in agency [indiscernible]?

Yes. So like I said very clearly, our idea is to increase the number of agents and also to increase the productivity of the agents. We have 1 of the most best productive agencies in the private sector. So our agent productivity is INR 2.67 lakhs per agent. Similarly, our agent activation, it is at 16%. Ideally, we should aim at around 20% to 25%. So that is 1 of the things that we are aiming at. But already, we have increased the productivity, agent productivity by 41%. Part of it, of course, comes from the number of agents, nonperforming agents that we have removed. But even after that, if you look at all the other parameters, like ticket size has increased 24%, and then protection has increased by 41%. So in the agency, each and everything, the number of policies [ show ] 16% growth. Everything has -- we have worked on each and every element in each and every line of business. So not only agency, but also in the other banks business, if you see, we have -- Indian Bank has grown by 13%, UCO by 105%, South Indian Bank by 81%, Punjab and Sind Bank 64%. So we are instead of looking at targeted or budgeted numbers or something like we would think of some growth of 10%, 20% or something. We are looking at the potential that is available in the ecosystem and trying to tap that and we're trying to build on our strengths there.

We have the next question from the line of Shyam Srinivasan from Goldman Sachs.

Just the first 1 on -- again on distribution. You were a little late to this online game, but your presentation now talks about good growth in the online NBP 50%, even web aggregators. So sir, what has been the experience? What is the kind of contribution either on AP or NBP? What are the products that you are selling online?

See, online lends itself to selling pure protection products best and then very simple products. It doesn't -- it is not a medium where you can sell complex products or products where -- which need a lot of explanation. So basically, it's protection. And if you look at the numbers, even though there is a huge growth, some of the numbers are -- the base is very small. So that is there. But having said that, we have improved our -- so what we are doing is we are improving the website that we have the user experience on the website on the app that we have, we have a customer app for customer service. We have easy access, we call it. And then we have got the customer service portal. And then on SBI channel, we have got the YONO. So on YONO, you can buy a protection policy on 3 clicks. So all these things we are doing. And not only that, internally also, we are now working a lot on, a lot of technologies that will all come together in the coming period, let's say, 1 year, 1.5 years. And then we will be able to actually get a handle on selling more products online. So that is how we are looking at this business. But as you said rightly, this already started showing traction.

Sir, 1 follow-up here. And if you look at Policybazar, which is the largest web aggregator, so we are not -- if you look at some of the numbers, obviously, private peers are much higher, other private peers. So just -- is there a conscious strategy? Or you think this is just 1 of the channels because we have the products utilized like you said, why shouldn't we be getting similar share even online from some of these aggregators?

So we are already on the policy. I mean, on Policybazar, we on the web aggregator. But there are certain challenges there. Sometimes the costing doesn't work out for us. So it's a very cost-intensive kind of business. And we have got a -- we have developed a parallel channel on our website. And we will shortly be having an even better user experience. Like I said, we are working on the user experience. And that -- once you have a better [ UIUX ], then obviously, you're going to have more business coming in. So if you look at, today, my website traffic has gone up by 5x. So that is the number of policies that have sold has gone up 5x. Similarly, on the -- so in terms of amount also, it has gone up 89%. It's almost doubled. So these things are very -- what you call it, I'm very optimistic that we will be able to take this route and still be able to be effective. We will definitely look at all possible partners, including the web aggregators, and we are trying to work out something there also. And hopefully, you'll see more of SBI Life being sold across. But our focus will be on our proprietary channel.

Got it, sir. And last question, just in terms of your renewal premium, it's kind of lagged wherever NBP growth has been. So anything to keep in mind? It was 11% for the 9 months, 14% for this quarter. But should this -- shouldn't this be higher?

Yes, it will be higher. And like, typically, we see in most of the years, except probably last, we saw steady growth throughout the year in renewal premium. But this year, we will see -- in the fourth quarter, we will see a jump in the renewal premiums. We have targeted for better growth in renewal premiums. As you can see, our persistencies have gone up over the similar period last year. And so, if you continue to extrapolate that, by March, we should be having better persistency than last year. And if we do that, then we would be having a huge renewal premium growth also.

[Operator Instructions] The next question is from the line of Nidhesh Jain from Investec.

Just 2 data points. First is what is the ULIP AUM mix in terms of debt to equity on an incremental basis as well as on the book that we have? And second is, what is the movement of COVID provisions, COVID mortality provisions as of March '21 versus December '21?

So ULIP, I think it's debt to -- I mean, debt to equity will be 46% to 54%. Okay. And what were you asking about the next one?

The COVID provision is? we have kept the same.

Yes, INR 266 crores, which we kept last quarter, we have carried that forward.

Sure, sir. So on an incremental basis, also debt to equity is same, sir, INR 46 to INR 54 crores? The policies that we have sold it?

No, it will change.

It's is 60-40 yes. So the incremental whatever reel.

More and more equity and less debt.

We have the next question from the line of Swarna Mukherjee from B&K Securities.

Congratulations on a good set of numbers. Two quick questions, sir. So if I look at your growth on the basis of the product side, I think it has been a fairly broad-based growth. Most of the categories growing only with the exception of par, while off-late in the industry, we have seen that this product has kind of again started to pick up. So I wanted to know what is the experience you are seeing in your case why this category is not growing? And also, any kind of new product development plans on this category or in other categories, if you could throw some light on? That would be the first question.

Yes. So par, we have some very good products. And it's par, par is something which we think that going forward, we will -- like I said, we would like to have around at least 5% to 7% in par. Today, we have 3%. We would like to have more of par. And we have very good products there. And I'm sure that with the markets be more volatile, there will be a tendency to shift towards par and non-par and par, we are -- we have some very good products. We launched a new product last year called -- this year only, the smart future choices, which has got, again, a very good element of cash bonus, et cetera, which can be enchased every year. So that -- those products are there, then there is a children's protection plant, which is very, very suited for people who have very small children and to have an endowment at the age when they would like to go for higher education or something like that. So I think, going forward, that will also be in focus in our plans.

Okay. Sir, just to understand this a little bit better, I would like to follow up with a question that is, is by any chance your success in the, say, the Platina side, cannibalizing any kind of sales of the Par product?

Yes, it is possible actually because both are traditional products. So it is quite possible that when these products are fixed. If a guaranteed product, which actually shows a particular rate of interest like the past product would be having bonuses. But then that you have to rely on the past performance, and then there is always a disclaimer that future performance may not be the same as past. So there could be a tendency to do that. But I think with the good products that we have, -- And by training our sales force to pitch for those products with the correct kind of target group, I think we will be able to succeed.

Sure. That's very helpful, sir. If I may squeeze in 1 quick question. Is there any difference in the retention levels for your previous protection products and the new eShield Next product that you have launched after taking input from the reinsurers?

No, no, it's the same.

Could you please share how much you retain on a maybe a per-policy basis or on the percentage of book?

I don't think we would like to comment on that. But I can say that it is the same proportion that we have kept earlier on.

We have the next question from the line of Avinash Singh from Emkay Global.

A couple of questions. First on that if we see the reinsurance premiums period had gone down materially Y-o-Y, so is it that something in terms of reinsurance has changed particularly on the GTI or Credit Life side? And related to this also, if you see this year, I mean, the credit offtake has been Y-o-Y have been far better and the [ GTI ] prices have gone up materially. In that context, kind of 25%, 27% growth in group protection APE is a bit looks muted. So yes, so these are 2 questions.

The group term insurance, it's a question of the kind of marketing that we do and a lot of work goes into that. And sometimes something crystallizes and there is a lot of rate competition out there, and we may not be really seriously interested in doing business, which brings us a loss. So that -- it would be like that. But I think 26%, 27% is a very good growth rate to have in that kind of a product. So I don't think there is any change there? I forgot the first question, the first part of the question?

Avinash, Credit Life has grown 32% on a 9-month basis. This was in line with the growth in the credit. So there is no Credit Life we are not having any.

And in fact, we are probably growing faster going forward.

Yes. On the reissuance premium because the premium seeded this year is materially lower. That means have you sort of taken more risk on your own book in terms of GTI and group credit life?

[indiscernible]

Continuing the same. Sorry, Prithesh, go ahead.

Yes. So there is no change, like our MD has been that there is no change in our reinsurance strategy as our retention is concerned, so we are saving the similar proportion that we need to do that. If you look at the GTI reinsurance and prices done on the scheme-to-scheme basis. So there is a possibility that some of the bigger schemes where you so much so would be much higher might be.

We booked a lot of business last year in the first quarter. So I think that would be the reason why there is a degrowth.

Yes. So that's the reason some of the schemes that may not be renewed, which have been supported by more reinsurance, whereas we get more business where the reinsurance proportion is lower. So it's a combination of the mix of the scheme and nothing specific to the -- our reinsurance strategy, Avinash.

Okay. And just a quick one. Okay. In terms of great improvement in margins. But if we look at the sort of margin improvement on the tender tax rate and effective tax rate, the divergence is quite wide. So what sort of product this year you have sold where sort of effective tax rate is leading to even a higher margin? I mean because, I mean, on a standard tax rate basis, sort of a margin improvement is kind of close to 90% or something. Otherwise, it's like 4% to 5% impact on effective tax rate.

So I would request Prithesh to finish this thing off and only announce in noneffective tax rate basis.

That will be based, I mean that will bring that parity and make our life easier.

Really speaking, it is very clearly you will have to probably sit with our people and look at the calculations or something, so it doesn't make any kind of sense. But whatever we are doing the effective tax rate basis that we have showed you, it is basically to bring ourselves at par with what the peer group of companies is showing. And because it is materially different and the numbers look much lower, we had to -- we were sort of forced to start showing this figure.

Yes, yes. Just then I wanted to sort of understand that the gaps are even widened this year. I'm just understanding that which are the sort of a product that you have sold more where sort of you have more tax breaks? Because on looking at the gap.

I think if you compare with the previous quarter, YTD September to YTD December, the gap between the effective actual tax basis and effective tax basis is not much -- is a 10 basis point difference. So 10 basis points, we don't see that, that is a very great diverse happening. It is more or less is in particular, LOB might have some of the competition keeps changing from the quarter-to-quarter. That's the impact. Otherwise, there is no change in methodology and no other change on there.

We have the next question from the line of Jayant Kharote from Credit Suisse.

Sir, first of all, just a data keeping question on YONO, what would be the number now last quarter, we had done INR 10 crores?.

Just a second.

And also the number of lives?

Number of lives.

Number of lives is INR 1.74 lakhs and the amount is INR 130 crores.

Okay. And sir, what is the average sum assured that we are doing otherwise on protection and on YONO, I mean is there 2 different significantly?

YONO, right now, we are doing up to INR 20 lakhs.

And what is our overall book average sum assured?

For protection, it will be around INR 45 lakhs to INR 50 lakhs.

Okay. And sir, lastly, I'm sorry, I'm bringing this up again, and correct me, if I'm taking the numbers wrong, but this quarter, we did individual protection of INR 250 crores. And if I compare that on a quarterly number to 3Q '21, which was INR 220 crores, the growth is 14%, 1-4. So there is some moderation, right, from 80 to 20 to 14.

What happens is that it is not a question of percentages at all. It is a question of what are the numbers that were sold at protection last year. So last year, during the pandemic, there was a sudden surge. So if you look at what the growth was last year over the previous year same quarter it would be much higher, okay? And on an increased base, we have still grown by 14%. But if you look at -- like I would like to see a longer another quarter. So if you look at the 9 months period, we have grown at 26%. I think that is a very fair measure of how we are growing. So 27%, 26% is what we are growing at. There will be spud in certain times. In fact, during the first quarter, when almost low interaction was happening last year in 2020, April to June, at that time, a lot of production and a lot of other group products and all group term insurance at all got sold to the exclusive of everything else because nothing else was possible at that point of time immediately after the announcement of the lockdown. So that sort of skews the whole day.

Sir, if I may put it this way, you feel last year was slightly a normal base. And now this year number should be the correct base number for us on which you are comfortable going in this 25% plus/minus range?

Yes, not really like that, but it will depend a lot on the circumstances. But having said that, a 25% to 27% growth in any business line is very good.

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

I wanted to check on the pricing on the trade product portfolio. Have you been in the division over there with reinsurer because that was probably left to be done?

I can't hear you clearly. Can you repeat?

[indiscernible] rates in credit protect portfolio that was due, does that happened already? Hello?

There is -- there is no repricing in credit protect.

But we were under discussion, I think, for [ original price ].

No, I am not aware of any discussions.

Okay. But the attachment rate, as it remains similar or [indiscernible] rated because the growth looks.

Quite similar to last year. So we are at around 47% or 48% and we would like to take this higher. And probably this quarter, we can -- we'll see some improvement.

There have been no retirees.

Last year and this year, credit protect rates are same.

Sorry?

Last year and current year, credit protect rates are same though as in premium rates.

Sure, that I got it. Other than that on the pure term we were expensive, but now with the competition increasing the pricing, how do you think the growth trajectory we can achieve over the next few quarters now given it's more competitive we are sitting on some [indiscernible] competition against that. So any strategy over there will be helpful.

I couldn't follow. You are asking about the competition?

So competition has increased pricing. And while we are having similar price and we were expensive earlier, so how do you think about the growth trajectory going forward?

See, like we also see the same things. So our pricing does not depend on the competition or on anything else. It is clearly a question of we look at sustainable pricing of our products depending on the factors like the reinsurance, the mortality, so many things that we see for every product. Our pricing is also on that. So we've been doing that, and we've been following that. Now when -- obviously, when the competition reprices higher, there could be some followed effects, but I strongly believe that we have a very strong market. So we have not seen any reduction in our market even when competition has reduced their rates. So I don't think that works so quickly. It's more like notional, I think.

If all this happened, if it's completed will increase in the premium, our premium rate will be more competitive. And then we may expect some uplift coming in our peer protection. So that will really help In fact, it will help with the consumer to get a better product, and then we see some offering on the protection side.

Yes. But in many of the cases, I don't see people actually comparing -- sitting and comparing all the prices. There are people who will do it on web aggregator sites, et cetera. But really speaking, it is not as transparent as that the market.

We have the next question from the line of Jignesh Shial from InCred Capital.

Most of my questions have been answered. Just 1 thing that our solvency ratio is somewhere around 200 plus, right? So we are not planning to raise any bond or any capital or something? Just wanted to reconfirm.

No, no. We are adequately capitalized. And I think going forward also, our revenues and our income stream will be sufficient to keep us capitalized for some time to come.

We have the next question from the line of Madhukar Ladha from Elara Capital.

Congratulations on a great quarter. And just a couple of questions from my side. First, so I know that you changed assumptions only at the end of the year. But looking at the higher mortality and the creation of extra-COVID and whatever that has gone down in this year, do you think you need to tighten your mortality assumptions and that could lead to some sort of downward revision in your margins? That's my first question. Second is on growth. So you've done really very well in 3Q and the way this quarter has shaped up in this year or a shape up. What do you expect for the fourth quarter and probably a couple of years, what sort of growth numbers do you think we should be looking at?

So to answer your first question, we saw last time also when the claims were very, very high, at that time also, we found that the changes in assumptions that we have made in last year were serving us very well, and we were very close to the -- our expected values. So this thing, we will again look at in March, after March 31, and we will see where it goes because we really don't know what's going to happen to the mortalities in the next quarter. It's all a guess. We are hoping that it will taper off. And because the new wave also is milder and probably brings with it less mortalities. And we are also -- we don't expect too many of the earlier claims to come in all of a sudden. So having said that, I think we will revisit them in March. If, as you say, things are like this going forward, we will probably be able to slightly reduce the expectation -- I mean, the...

Mortality assumptions.

Mortality assumptions, yes. There is no need for us to tighten it because we are very close to the -- in the worst period also, we were very close to our assumptions.

Understood. And on the growth?

Yes, on the growth that I think I already said that we would like to continue. We see a good scope in the, around the country in all the business lines that we do. We see a robust demand going forward. It's only that you need to tap into it and you need to reach out to the people. And with our distribution, I think we are able to do that now. And we have been successfully -- we have started to successfully tap into the existing demand, and we will continue to do that. So I think we can expect similar rates of growth for some time to come.

Understood. Sir, just 1 thing quickly. Any thinking on sort of increasing the -- or reducing the dependence on ULIP and increasing traditional in the mix, is there any thought process because your competitors have been able to do that, and it would probably be better if we have a sort of wider range of products or the spread is -- or our concentration is a little lower than that.

I would only like to say 1 thing -- I would only like to say 1 thing. We have the highest EV. We have the highest VoNB. We have very good margins, we have a very good product model. I don't know why I would want to actually commit to doing something which somebody else is doing. Having said that, because there is a very good demand coming in for guaranteed products and some other traditional products, I think we will eventually end up with a higher percentage in those products. And as a result, the ULIP percentage will definitely come down slightly. ULIP, even in the worst of years, our ULIP performances over 3 years and 5 years have been -- fund performances have been excellent. And that is because the customer can switch from debt to equity -- I mean within the product. And we have got very good performance in both debt and equity funds. So as a result of that, our ULIP products are very, very beneficial to our customers. And, like I said earlier also, a person who pays a premium for 1 year or 2 years in ULIP and gets 5x or whatever as sum assured, he is also getting insured as well as a person who's buying protection product or anything. And it is also fulfilling his desire for a market related return -- all this investment. So I don't think we want to do away with ULIP or to consciously reduce it too much. But yes, looking at the demand that is coming in for more protection products, more guaranteed products, I'm sure that these products will increase in volume, and therefore, ULIP percentages may go down slightly.

We have the next question from the line of Sanket Godha from Spark Capital.

Sir, you said that average sum assured for our term insurance policy is INR 45 lakhs to INR 50 lakhs -- just wanted to know if this INR 45 lakhs to INR 50 lakhs, if I compare it with the ROP and pure term life, what is the difference? Just wanted to understand. And even with respect to the Credit Life, what is the difference in 3 products average sum assured numbers?

So we have products -- we will start from our Saral Swadhan, which would be up to INR 5 lakhs -- INR 20 lakhs sum assured something like that. I'll -- let me...

No, we will not want to share the product level -- sorry, sum assured detail. Having said that, ROP has...

I'm not talking about the average sum assured. I'm talking about the level -- the protection the range of the product. So what I'm trying to say is that starting from INR 5 lakhs to, let's say, going up to more than INR 1 crore. We have products in all the ranges, okay? So the average would come to somewhere, somewhere maybe INR 45 lakhs, INR 50 lakhs or something because the number at the higher end will be lesser and the numbers at the lower end will be more, and therefore, that INR 1 crores, INR 2 crores cover, which we have given those get averaged out to this kind of a number. So that is how we have. So I don't think we will be able to actually generalize the same because this is very, very just...

Yes, sir. But is it safe to assume that ROP sum assureds are even if you're not disclosing the numbers, -- But is it safe to assume that ROP sum assureds are substantially lower compared to pure term, and then therefore, for most of the policy, only small portion gets -- reinsurance gets triggered. So that's why our dependence on reinsurance is relatively lower. This is -- actually, that's the reason I was asking that question, sir.

Yes. So no. We will -- we see no impact of the reinsurance.

But ROP sum assureds are substantially lower than pure term, sir?

Yes, yes. Definitely.

Definitely.

Okay. Okay, sir. And finally, just on branch activation level, if you can give a bit of color there. So that will be so useful.

So the branch activation level as of now is a, yes, 49 -- sorry, 61%, 61% as of December '21. So 61%.

Is this on revised definition on 25,000 which we have been.

So this is revised higher -- And on INR 25,000 earlier what we used to declare, it would be more than 85%.

Okay. So what is the revised definition, sir?

Yes, we have -- so basically, it is much higher. Let me tell you, once again, we got already. Yes, it depends on the scale of the brand so it's up to INR 3 lakhs. So INR 50,000 to INR 3 lakhs depending on the size of the branch.

So the brands which are doing at least minimum INR 50,000, the activation level is 61%. That's the way I need to take it, right?

No, no. Each level of branch. So there are certain branches. So it depends on the size of the branch. For smaller branches, INR 50,000 and for larger branches, 3 lakhs, the largest ones. So it's -- that is the definition.

Just based on INR 50,000 to INR 3 lakh definition, you're saying activation level is 61 percentage based on the old definition, it is 85%, right, sir?

Yes, more than 85%, probably, I don't know, we stopped tracking that because this is more relevant to us because we think that if there are more customers, then there should be more business in that branch.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Mahesh Kumar Sharma for closing comments.

Yes. So thank you very much for patient hearing and for all your questions, which keeps us alert to the kind of business that we do plan to -- and to forces us to analyze the way we do our business much better and improve quarter after quarter. So thank you very much. I wish you all a very, very safe and healthy future. We hope that the pandemic goes off soon, and we will all be back to doing business as usual like before. And so thank you once again for joining us and giving us this opportunity to present our figures to you. Thanks and have a nice evening.

Ladies and gentlemen, on behalf of SBI Life Insurance, that concludes this conference. Thank you for joining us. You may now disconnect your lines.