ICICI Prudential Life Insurance Company Ltd

On the regulatory front, as a step towards moving to RBC regime, IRDAI has directed insurers to undertake a quantitative impact study to assess the impact of the proposed framework for quantification of capital and solvency requirements following a risk-based approach. Additionally, with the objective of aligning India with global accounting standards, the Regulator has notified the phased implementation of IFRS/IndAS in the insurance sector starting April 2025.

A recent development in the fixed income market is the introduction of 50-year GSec in the H2-FY2024 borrowing calendar of the Government, a long-standing demand, particularly by life insurance companies. The introduction of these ultra-long-term bonds is a positive move for the entire industry.

We had our 23rd AGM through the video conference on July 28, 2023.

I would also like to share that ICRA and CRISIL domestic rating agencies have reaffirmed the long-standing rating of our subordinated debt program as [ICRA] AAA (Stable) and CRISIL AAA/Stable respectively. The outlook on the long-term rating is given as stable by both these agencies.

➢ Our Profit After Tax grew by 27% year-on-year from ₹ 3.55 billion in H1-FY2023 to ₹ 4.51 billion in H1-FY2024. ➢ As presented on Slide #22, the adjusted net worth grew by 21.8% year-on-year to ₹ 95.66 billion and the Value of Inforce business grew by 16.8% year-on-year and stood at ₹ 289.63 billion on September 30, 2023. ➢ With this, our Embedded Value grew by 18% year-on-year and stood at ₹ 385.29 billion at September 30th, 2023. ➢ Assets under management stood at ₹ 2.7 trillion and our solvency ratio continues to be strong at 199.4% at the end of this quarter.

We will now begin the question-and-answer session. The first question is from the line of Avinash Singh from Emkay Global. Please go ahead.

A couple of questions. First one is on your shareholders account. If I see for the quarter close to ₹ 420, 425 crores of investment income and for the first half is more than ₹750 crores. I mean annualized yield of close to 15%-odd on shareholder investment. So, I mean why such high kind of probably investment gain booking, what is driving this, is it coming from some equity or fixed income and why sort of the trend is very unusual when you park? Second one on the margin profile, I do acknowledge that there is shift from I mean towards ULIP and probably within non-ULIP maybe some kind of a lowering of non-par guarantee towards par. But at the same time if I see the most profitable retail or protection has gained for the first half YoY, it has gained material share there, so somewhat, it should have sort of offset. Is it also the margin also a fact of your cost because the growth is not coming, but if you look at the commissions and OPEX also both sort of gone up, is it also coming because of the kind of an issue with cost absorption? And as far as OPEX is concerned, you kept saying the capacity building for future growth, but that is what, I mean, we have done for last few years that we have been creating capacity to grow, but the growth has not been coming. So, I mean what

Thanks, Avinash. So, on your first question of shareholder, yes, we've been able to use the markets to be able to realize some yields. The holding in the shareholder fund is not typically in line with what we hold for the policyholder portfolio, and so in this period we saw an opportunity to book some gains. That explains the heightened outcome of that line that we have. With respect to the margin question that you have, there has been a shift of the underlying product mix. Unit-linked has grown.

If you can just help me that your ex-ICICI Bank APE of ₹ 5.2 billion for the first half, what would be the contribution for say the top three in that?

So by and large across our entire APE, we really don't have channels that contribute beyond 5% if I take out ICICI Bank from a Banca perspective or I take out agency. No single distributor typically contributes more than the 5%, 6% range. This would be the largest distributor outside of ICICI Bank. If you look at the distribution, we set out in slide #10, the mix is fairly clear; you've got agency at 25% for H1, you've got direct at about 14%, Banca net of ICICI Bank is at 15%, partnership distribution at 14%.

Yes, yes, I just gather that, within that 14.8%, if at all there is some kind of an indication around top three you will have, you have a pretty deep Banca partnership, but the banks are of different sizes and scale. So that's why –

You would also note that we've got close to 40 banks that still gives us a quite large enough spread.

Avinash, if I could just add here, the protection impact you spoke about while there is a very decent 70%-plus growth on retail protection, but in absolutes, if you see, of the overall ₹ 35 billion in H1 APE that we have, in absolutes, it still remains ₹ 2.38 billion, which is a very small percentage, so a very high margin on a low absolutes will have its reservation about compensating for a big shift that you may have on savings business. So that is just one point that I wanted to add and leave it there.

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

I have two, three questions. So, I'll start first on the channel side.

So, on channel front, let me just take the question. So, you spoke about the fabric of our performance across channels. So first of all, let me just share with you. On proprietary business that comprises our agency and direct, constitutes close to 50%, 51% of our overall retail business. And on this direct business, which is showing a growth of 20%-odd for Q2 and almost 23% for entire H1, is largely led by the upselling efforts that we make continually on our existing base. This is one channel which has really invested a lot on digital platform over a period of time and is one of the largest upsell channels in the industry. And this is not something which has happened now, but yes, the market sentiment, the buoyancy that happened on unit-link has contributed to growth coming from unit-linked business across channels and direct channel was no different. But, also this channel is really backed with a lot of analytics on the next best product that can be positioned to our existing clients and is approached very systematically through our distribution team to offer most appropriate wealth solutions to our existing customers because of the changing life stage that we experience with our existing customers based on data that we have. One part of our direct business also is what we do through the traffic that we have of our customers on our website. So, there is a lot of effort that has been taken in improving customer experience and also navigating and recalibrating our customer journeys based on insights that we pick up on our online channels. So, that is also something which in line with the overall ecosystem support that we have on retail protection has contributed to the overall growth in direct business. In partnership distribution, which is a combination of very, very diverse kind of partners on corporate agency and brokers, has an overall net impact which is positive. The overall business in this segment we have experienced has not grown at the partner level, but by virtue of our focus individually with our partners, and by institutionalizing ICICI Pru Stack, which is a seven-layer support program that we have for our diverse partnerships, we have been able to work towards increasing our share over a period of last six months. And that increase in share has led to what you see here as a growth of 17.9% in partnership

Just a follow up on the partnership distribution, what I understand is that you are saying that it is basically a function of increasing counter share and not like any kind of additional inorganic growth that is coming through new partner additions which maybe we have done over the last six months which is now kind of becoming more productive.

We continue to add 70 to 80 partners almost every year. This year in fact we have added hundred-odd partners. But as you know there is always a gestation of new partners from getting onboarded and getting to start business. So, it is very difficult to figure out and single out only those 100 additions as to how much they have contributed. It happens over a period of time. So, what you added last year has contributed to business this year and what you probably added two years back has contributed relatively in a higher proportion. So, if you ask me, is it because of new partners added this year, which has contributed to growth, answer is at this point in time, no, but it will pan out over a period of time.

On your question on margins, through this year, we have not seen any movement on margins on the non-par portfolio. So that continues the way it is. With respect to your question on economic variances, we have not broken the EV walk at half year. We will do that at the full year.

Can you give some colour whether it is a positive or a negative?

Yes, it's quite positive given the way the markets have moved.

How is the pickup on the GIFT Pro product, how should we think about this mix between par and non-par moving going ahead with new product launches?

See, what we observed going into Q2 and while exiting H1 is that large proportion of guaranteed products have started gravitating towards part guarantee which has potentially higher upside if we were to deliver a good investment management performance on the participating products and on unit-linked products. So, what we have seen is that high mix of non-participating has moved some part into part guarantee as well as some part in unit-linked products. So, to that extent within non-participating

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

I have two questions, Sir, first is on the Group Protection side. You spoke about how the GTI, specifically within Group Protection has seen challenges. Can you help us understand, given that GTI is like 50% of the entire protection which is about 20% of your APE, whether this is an incremental drag on our APE target that we've been speaking about that we will be able to deliver industry level growth in the second-half, will this be a negative or will this be a drag? My second question is on the performance in the month of September. While I understand that you guys are trying to understand the performance of agency channel better in September, but can you give us some colour on whether this could be because of higher drag from high ticket policies, some of your peers have spoken about certain channels seeing more drag from high ticket policies, etc., if you can give us some colour on how much drag you guys are seeing on high ticket policies and which are the channels which are getting more impacted and could that be one of the reasons why September was weaker?

On your question on September performance, while yes, on a YoY perspective it seems low. But if I look at it sequentially, I think we're quite at divergence to the market; we've actually grown quite well compared to some of our larger peers and actually had positive growth, which is not what most of the other companies have been at. So, it's a little mixed bag when you look at September, but by and large, I think our clear focus is that we continue to work at it granularly and keep growing this business from month-to-month, quarter-to-quarter. In fact, our market share has been continuously increasing; it was actually 6.3% for the month of September on RWRP basis, higher than what it did in the previous period.

Just coming back to the last question that I had asked, so our guidance on APE growth in second half at industry level that gets challenged, right, because of Group Protection, that thesis is correct or am I reading it wrong?

We have not given guidance on APE growth. I think what we have mentioned in our previous calls is that from a phase wise perspective, step one would be to move the total APE growth in line with the market. We've not given a timeline to that.

The next question is from the line of Supratim Datta from Ambit Capital. Please go ahead.

I have three questions. The first one is we have a thousand partners now on the partnership distribution channel. So just wanted to understand the partners of scale are there, still which you could add, then continue growing this channel. The next question that I had was on product innovation. In the first half we did not see a lot of new products. So, going forward and on the second half, do we expect to see more product launches happening and which segments would those product launches be targeting? And lastly, recently there was an article in the press talking about capping commissions for credit life policies at 30%. Just wanted to understand your views about what kind of discussions are you having with your partners on the commission structure post this new guideline which has been applicable from 1st April?

Let me start with your question on partnership distribution with the 1,000- odd partners. See, first of all, let me confess here, the natural advantage that we have with our partnership distribution is the diversity of partners that we have. So, we have partners of very, very different, diverse types, someone who's cross selling to a captive customer base/ multiple financial products/ large partners, that is one cohort. Then there is a cohort, which is essentially working on a POS model, looking at secondary distribution to reach out simpler propositions to their customers coupled with some of the other general insurance products that they are selling. Then there are partners which are largely equity and mutual fund distributors, who are also looking at life insurance as an upsell product. So what happens is this diversity allows us to play out in varying or a dynamic economic environment. So at any point in time, any environment favoring any specific type of distributor helps us being at a natural advantage to take benefit of the positive tailwind there. And at the same time, we may have a disadvantage depending upon the kind of environment which may be impacting certain kind. Good part is that we have been net positive because there are some category of partners doing better in the given environment while some other partners are getting impacted. But net positive is what we continuously keep working upon. If the environment favours, we get positive and if not, then we work towards working deeper with our partners through our ICICI Pru Stack, work on seven layers of development and work on increasing share. If the overall environment constrains growth, then we look at increasing share to keep ourselves on a growth path. So, that is how the partnership distribution outlook is and that is what has kept us with the sustained growth over the period of last four to five years. If you were to trace back the performance of partnership distribution, this is one channel which has consistently grown at 25%-plus over a period of the last four to five years just because of the kind of diversity that we have in our partnerships.

Your question on product innovation. I think we've got this detailed out on Slide 37 as well. If I could just take a minute to refer back to slide 36, what you can see very clearly is that we've got products for every lifestage across each of those opportunity segments. And the objective is to deliver value proposition to all of our customer pools. But specifically, if you look at innovation, there are four items that we have called out. One, of course, is the GIFT Pro that that was launched this year. iShield is another product that we have launched. Protect N Gain is the third product that we launched, and in fact we've got a new fund in the form of a Constant Maturity Fund that was launched during the year as well. So, if you want to look at innovation, I think you've got enough examples of innovation on the product side that we've been able to demonstrate.

I was more interested in what is going to come in the second half. If you could give some colour on that?

That is competitive information. I can't divulge it. So, of course we are at it, we keep picking customer insights and there is always something which is WIP and we're working on it. So, we'll let you know as soon as we launch those products.

On your other question on credit life, the way we're looking at commissions, of course, with the relaxation in commission levels that have been enabled by regulation, we'll keep working with our distributor to see what is the appropriate and sustainable level of commission through the year. That’s what we had to add to this.

Just one follow up. So, are you seeing pressure from distribution partners for higher commissions or is it still at a negotiation stage?

This will always be in WIP stage, but you’ve seen some evidence of increased commissions across all lines of business. It's not unique to us, it's across the industry as well. So yes, after the relaxation in commission levels, commission rates have gone up. Have they settled to a final equilibrium? I think not, it's still a bit of a flux at this point.

The next question is from the line of Raj Saya from Agam Capital. Please go

I just wanted to know your strategy in terms of Tier-2 and Tier-3 distribution and business contribution. Where do you stand currently and what's the strategy because this is the competitors stress on this asset, so just wanted to know?

Tier-2, Tier-3 strategy actually dovetails into our multi-distribution structure.

Thank you. Another thing on annuity, just wanted to know, do you divulge information on the split between corporate and retail annuity and what coming from NPS at this stage?

Raj, no, we've not broken that split out.

Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead.

First on the GTI bit again, you mentioned that one-third is, so the total protection, one-third is from GTI, one-third is Credit Protection, and then one-third is a Retail Protection. For what period is this? Is this for FY ’23? Or is it for the first half of FY ’24? I understand that these are rough numbers. And given the pressures that we are seeing in GTI in terms of pricing, how much do we really see this business to grow this year, if you could help us just get a sense of what sort of growth we could get here? And given the pressure in pricing, are we seeing also margins come off substantially over here is another question that comes to my mind.

So, at one level, the first question that you had is what is the period - broadly for this current year, it is one-third, one-third, one-third. Your second question on GTI and the outlook on growth. I think we called this out earlier as well. Given the set of challenges in the market, given the increased competition, we are not looking at a growth out of this particular line of business and we continue to seek to defend whatever business that we have and ensure that we deliver adequate profitability out of that business. That's something that we kept very clear.

Just one thing Dhiren, can you give me the GTI number for FY2023?

GTI numbers for FY ’23 is slightly higher than this broad split that we had given out. What Amit was also referring to earlier when he spoke of the more than ` 5 lakh ticket size migration, one level of migration was towards unit-linked plans. The second migration is towards participating plans. I think that was your question that you had asked.

Yes. And if you could give us some sense on what is the split between first half and second half of last year and how much are we doing in more than ` 5 lakh rupees ticket size in the first half of this year?

Yes, Madhukar, we haven’t called that split out, but I think the way we look at it, we do understand where the segments are at and what are the relative advantages of each of the proposition that we have got for below ` 5 lakhs and more than ` 5 lakhs and we continue to build out those propositions through a variety of our new product launches for them. Let us see how that particular segment emerges through the year, but I think we are fairly clear that irrespective of whether it be a more than or

See, Madhukar, this H1, Amit this side, H1 has been a story of two halves.

Thank you. The next question is from the line of Nischint Chawathe from Kotak Securities Limited. Please go ahead.

Just one or two points. Any sense that you could give in terms of the business trajectory at ICICI Bank? And how do you see the second half playing out here?

Amit this side once again. So, ICICI Bank as they have articulated their priority on focusing on protection and annuity range of business, on protection ICICI is showing a growth of close to around 45% over last year for the first half. So, to that extent, in alignment with what they have stated as their preferred approach, we are seeing a growth on that side.

And if I look at the overall VNB growth for the Company, I guess, obviously, we discussed the challenges in the first quarter or for the quarter in the first half. In the third quarter when I really look at the margin base for nine months, I think it's still kind of a slightly demanding base. So, in the backdrop of that, how do we really look at VNB growth for the year? I know you have a sort of a plan for doubling VNB in a four- year period but how do you really look at this year?

So, Nischint, we don't, we haven't put out a plan of doubling VNB. I think we are fairly clear that we want to build on absolute VNB as we go through this

See, Nischint, also let me give you a context. If you were to look at overall distribution composition of ours, while all other businesses, whether it is partnership distribution, our direct business, our Bancassurance business other than ICICI, they seem to be on growth path and the large path part of investment that we have done over a period of last year and a half or so is about creating enablement for our new partnerships, one, and two, about scaling up agency. And as you know, that agency scale up is a little longer and has a gestation period which we need to be patient and watch out for. Close to 4,200 odd frontline managers that we have who manage close to 200,000 agents, we still believe is a smaller number and this is one area which has reached to this level only after having hired people over a period of last year and a half or so.

On the partnership side and as well as on the agency side, in terms of product profile, I believe the initial thought was that you probably focus more on traditional products through these channels, but is there a change in the strategy? And are you kind of also kind of looking at doing ULIPs through these channels?

No, let me clarify, Nischint, we don't have a product to channel strategy just by based on what we want. Actually, we allow our partners to choose based on the kind of customer segments that they have. So, we have not mandated our agency channel to sell only traditional and not ULIP because ULIP is low margin for us. It depends on the customer segment they are serving. So, the approach that we have is simple. We decide on what customer segments we believe are priority segments, are the growth segments for us, where the quantum is, and then we identify which kind of distribution channel has the ability to take the right product and reach out to that customer segment.

So, Nischint, as Amit also explained earlier when we had a question on partnership distribution, he explained about the various types of partners that we have as part of this pool and you would have understood that there are different strategies that would follow for each and every one of these segments. So, an equity broker segment, for instance, would have a slightly different approach than a more traditional broker that we have. So, clearly, the idea is to be able to marry the product with the customer segment and the distribution and create that product market fit that's appropriate for that particular segment there.

Actually, it is reflective of the fact that different distribution partners and within distribution partners, different cohorts and geographies and channels within channels actually have very, very different product mix, and in fact none of the distribution partners have a product mix which is similar to what ICICI Prudential’s overall product mix is. So the colour of product mix is drawn from the customer segments of our partners.

Thank you very much. We will take the next question from the line of Nidhesh from Investec. Please go ahead.

The retail protection growth has been reasonably strong. So, can you speak about what is driving back? You mentioned that ICICI Bank growth is around 25%, which means that non-ICICI Bank protection, retail protection growth maybe upwards of 100%, and what is driving that in sustainability of that? And also post-COVID, we have changed the reinsurance strategy where we were retaining up to 1 crore of risk on our balance sheet. Has there been any change in that strategy now?

So, Nidhesh, let me take the second one first. No, we have not made a change in our reinsurance strategy post what we discussed last. We continue to monitor the experience and it's all within our expectation at this point. Growth within retail protection across channels has been quite strong. Overall, as you saw, for the period was about 84% for Quarter 2. Of course, this is on the fact that last year's base was quite benign. As we go through into the coming quarters, specifically when you get to Quarter 4 onwards, this should start to normalize back to more lower levels, but we will continue to record growth across channels and keep it broad-based through the period.

So, is there any specific channel which has shown such high growth? Is it an online channel etc., if you can give some color on that?

Yes, so some of our online channels have done quite well, but we are seeing strong momentum across all our offline channels as well.

And just one follow-up is on the product level margins. How are the trends on product level margins on a Y-o-Y basis?

So, the shift that you saw in the overall margin has been obviously because of the product mix. That’s been the large contributor towards movement in the margin. By and large, at a segment level, we have not seen too much of a change.

Thank you. The next question is from the line of Vivek Khanjode from Aditya Birla Sun Life. Please go ahead.

So, I wanted to know, you discussed about group term and group credit life. I wanted to know what is the growth story on the group funds for H1-FY’23 versus H1-FY24?

Group fund for us is flattish, but we are fairly confident because these are lumpy businesses. We have done close to what, 550 odd deals have contributed to our group fund business this year and a few large deals have got deferred and we are not losing our sleep there at all, because we are quite confident of what we have put as a plan for group fund business, it will pan out eventually in the remaining six months. So, the number of deals, number of customers that we are engaging in is almost showing a 25% growth over the number of customers that we got our group fund participation last year. So, to that extent, our distribution has been fairly strong, very vintage and not just in group fund but even on group term, we are fairly present right across and our participation is among the highest when it comes to group fund and group term opportunity across the corporate sector.

Also and on the annuity front group, annuity front, so the pressure from the fixed deposit, do you have growth on the group annuity funds from H1-FY2023 versus H1-FY2024?

So, Vivek, this would all be part of the single premium annuity pool. Quite clearly, as we called out, a lot of folks are looking to defer single premium annuity given that bank FD rates are quite high at this point and competing rates at this point.

Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Most of the questions have been answered. Just on the protection bit, what would be the share of ROP products? And could you highlight whether ROP products are margin dilutive for you with regards to the entire protection margin and also, how is the ROP kind of moving, say, this year versus last year?

So, the return of premium variant of the product is roughly about 15% to 20% of the Retail Protection business.

And from profitability perspective, is it any different from the pure term?

It depends upon the tenure that you choose. So, longer tenure gives you higher margins. Shorter tenure gives you lower margins.

See, let me just share the fundamental that propositions are not changing from non-ROP products to ROP products. It is only the customer behavior that decides whether he is okay to let go of a premium as an expense or he would like to take his premiums back. Otherwise, the underlying profile of the customer really doesn't change.

Thank you. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.

Just one question. Are you seeing any change in payouts to any of your distribution partners or any of the segments for this for any particular partner out there post the guideline changes?

Dipanjan, yes, we discussed this earlier. We have seen commission rates rise for us and understanding is this is not just specific to us. It's for the industry as well.

Thank you. The next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.

Just one question. I mean, even apart from commissions, if I look at other OPEX has gone up substantially for us on a H1 over H1 basis as well, whereas the premium growth, of course, has not been that strong. So, just trying to understand what is driving that ex of commissions also and in the backdrop of that, do you think that given that seems like a lot of these commission increase are going to stay here for a while, do you think that VNB growth in this year will be possible?

So, Rishi, outside of commission, some of the larger expense items are, of course, employee costs. Part of it is the capacity creation that we have invested in and we continue to invest in given some of the newer channels that we have added on. There are, of course, some of the advertising and sales-related costs that are elevated at this point. Given that commissions are going up, we would seek to kind of keep the overall expenses broadly where they are. This year, of course, will be a bit of a flux. So, we will have to manage it through this coming quarters to see how we can keep that stable at this point.

Also, I just want to clarify that while there has been a question on commission increase, but let me share with you that we are well within the guard rails and the direction given to us by the regulator in ensuring that we align our commission structures to promote long-term business, protection business, renewal business and not at the cost of customer proposition. so, since we have not let the customer proposition get impacted, for a short period of time, you are actually seeing that OPEX swelling up.

And so, views on VNB growth this year?

I think let it emerge, Rishi.

Just on the commission part, right, so wanted to understand you mentioned about the industry is witnessing an increase in commissions. What are your thoughts in terms of how does that dynamic play out given that even for us agency's proprietary ICICI Bank is exclusive and we have direct and group businesses as well which are possibly within our control. So, what kind of pressure is there for commissions to be increased across the board? And what is the risk in case that wouldn't have gone up? Do you really think that the premiums would have severely gotten impacted or the growth around that?

So, Rishi, the way we manage each channel is to look at the overall cost of the channel for which commission is only one aspect of it. So, yes, this year is a bit of a flux. We have got other operating expenses that are slightly elevated, but on the steady state, the way we seek to manage each channel is to see whether for a product line that it finally delivers, whether the overall cost that it incurs is in line with what we would want to deliver from a VNB perspective. So, it's a balance that comes through. I don't think this has impacted growth at all and commission is essentially only one aspect of the overall spend that each channel does.

Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.

Just one on the margin. If I want to draw a waterfall, the margin compression, how much you would attribute to product mix change and to the cost ratio?

Mostly product mix.

And second on cost, just wanted to understand, EOM was expected to move the cost line items between commissions and advertisement, but it was expected to remain on the similar lines, but still our OPEX ratio has moved up, but just wanted to understand that EOM is structurally increasing the commission cost and other expenses are not going to cut and therefore, going ahead, we are going to see an elevated cost ratios which could have an impact on the margins?

So, Sanketh, like we mentioned earlier, this is a bit of a flux year. So, at that level, we are managing across these multiple line items. We are well aware that we will have to keep overall costs in control to be able to deliver on margins.

Thank you. The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead.

Wanted to understand that this quarter looks like ULIP heavy for everyone. So, what are the early trends you are picking up for the Q3 and going ahead, what we can expect? And are we okay to increase the ULIP share again back to a certain

Neeraj, I think we have spoken about this earlier as well. We are not guiding each channel to a product mix. If ULIP is the flavour of the season, we are quite happy to take that on board. Of course, we are quite cognizant that we are looking at delivering absolute VNB and to that extent, we will have to deliver additionally on APE as well.

On that only, what are the trends you are picking up in other segments apart from ULIP? Can we see because one of you called out that non-PAR savings is possibly return back or might see a uptake from now? Are you also in a similar camp or it's too early to call out?

It's a little too early to call out with this last 15, 16 days, but as we mentioned earlier, we constantly are looking for proposition that could work with the various customer segments even in the non-linked space.

So, let me add here. Like I have articulated earlier as well, within affluent customer segments, we have seen a trend of wealth preservation story which has been running so well over a period of last couple of years giving way to unit-linked and part guarantee products towards the second half of this H1 which is a clear trend that is visible. Of course, it varies from partner to partner and the composition of these customers at a partner level decides the mix of what kind of products are selling there, but if you were to look at these set of customers eventually on an overall household that you look at the urban centers, these are only 10% to 15% of the overall number of households that you have. Almost 80% of the households actually are ranging between an income segment closer to around ` 3 lakhs to ` 25 lakhs means that there the simplicity of the product and simplicity of the proposition actually takes precedence over any complexity or differentiation that you want to create. There the demand for simpler propositions continues and as you know, it is about our ability to reach out to these customer segments, identify which distributors have access to these customer segments.

And how does digital stack will help us to achieve this growth? Can you elaborate more on that which you have created a seven-layer stack which will help you?

Yes, so seven-layer stack is our thought process, our enablement framework for our partners. Over years we have spent lot of time in analyzing our own data as well as the data which is available in the ecosystem on understanding customers, on geography, on demographics, on income, on life stage and we have fairly been able to segment customers which are there in the market and customers which are part of the partner ecosystem and based on the natural advantages of the customer segments of our partners, we have actually worked together and co-created value propositions which are most meaningful to the customer segments and then convert those value

Thank you. The next question is from the line of Yash Jain from CNBC. Please go ahead.

So, most of the questions which I had have been answered. One thing that I wanted to understand, and this is with respect to distributions, especially ICICI Bank. We have a setup where, I mean, your peers, the closest peers, HDFC, Max get about 50%, 60% of their APE from their main banking partner that is Axis Bank and HDFC Bank. For us, it's come down significantly. It's kept coming down over the quarters. It's about 13.5%. Just last year same period, it was about 20%. I have three very specific questions on this one. One thing at ICICI Pru Life, do you have an intention to sort of increase your sales across product categories through ICICI Bank? If yes, then my second question is, are you doing something about it, looking at ways in which this can be done? This will help growth come back as well for the Company. Just wanted the perspective from the management on this one.

So, Amit this side, Yash. So, one principal partner philosophy that we follow across the new potential partners that we meet and the way we take up our partner stack to other partners both with banks as well as non-banks is to give the decision of what to do and what to propose to their customers, leaving that question entirely with our partners. We do believe that their brand is supreme, and we are subservient to provide services in terms of manpower, technology, product to our partners.

One final question. I mean, since earlier you had one guidance on the VNB side which was doubling VNB in four years. Under the new leadership, I just want to understand, is there one large guiding ambition in terms of quantification that you have, let's say for the next two to three years for a slightly longer period that you would want the markets to look at and you would want to work towards?

So, Yash, Dhiren here. No, we have not put out a target as we have done earlier. I think what we are very clear on is that our objective is to work within each of our partners, look at it granularly, look at their customer segments that they operate in and ensure that we have got appropriate products that can be delivered to those customer segments. And so to that extent, we would go deeper into each of those partnerships and as Amit articulated, help them grow those particular segments using the partner stack that we just discussed. The idea is that if we are able to sustainably grow each and every one of the diversified channels that we have at this point, then we should be able to look at sustainable growth into the coming years. The fact that we don't have any large distributor outside of ICICI Bank in our distribution mix gives us the confidence that we are able to sustainably build out this particular pool of business by looking at it very, very granularly and looking at it with a deep lens of analytics as well.

See, an overarching theme which has been articulated over a period of last six months is a customer to product to right distribution channel who has access to that customer and taking the appropriate product. So, customer to product to distribution is the overarching theme and to support this theme is these 4D framework that we have created which is power of analytics, data analytics, diversified propositions on product and taking it to diverse geographies and diverse partners, digitalization by making an experience which is differentiated for the customers and eventually converting it into a depth of partnership becoming an inspiration for us to come up with this seven layer ICICI Pru Stack to enable our partners. Eventually, the strategic direction is to become the most partnerable insurer in the industry.

Thank you. The next question is from Aditi Joshi from JP Morgan. Please go

So, my question is on the agency side, and I actually wanted to understand if we are targeting a further increase in the head count of the agents in the second half of this year, and I'm sorry if I missed it previously. I just wanted to understand, what portion of this new agents are split between Tier-1 or Tier-2 and Tier-3? And just one more question, if I may, on the rider side, we have a pretty good, impressive suit of rider available to us. So, just wondering how much is the push from the management or what is the strategy across the channel on moving the rider attachment?

Amit this side. On the distribution side, an agency, like I mentioned earlier as well, we are fairly spread out across all types of geographies, whether it is top cities, Tier-1, Tier-2, Tier-3, the way we spell it out internally. So, we have fairly distributed representation of advisers as well as our business. The outcome as well as our advisor count is quite spread out across type of geographies and on new acquisition as well, new advisor licensing also is fairly in line with our spread of business.

Thank you. The next question is from the line of Prateek Poddar from Nippon Asset Management. Please go ahead.

Sir, I have just one question. You called out about the kind of mix shifting, right, in the ` 5 lakhs plus policy ticket sizes from entirely non-par to par or ULIP and then you also called out higher investments as well as higher commissions. In that backdrop, how should we think about VNB margins for the full year? Is it fair to say that that given the mix shift we are seeing towards ULIP/non-par and the higher investments which you need to do because of growing your agency/other channels, margins would be under pressure this year and next year is where APE growth as you have alluded earlier?

So, Prateek, Dhiren here. A little difficult to call. I think, let it emerge through the year. There are of course product mix shifts that can emerge and that can drive where the margin would be. That would be one of the core components within which, of course, we will look at some of the expenses and see how we could manage them through this year as well. A little difficult to call. I think we will look at the way the product mix evolves over the second half of the year. You anyway know that the larger portion of the business happens in the second half. So, that can kind of dictate where we end up.

And you also talked about wallet share gains across other co-op agencies, I mean, partnership distribution side and Banca side in ICICI Bank. How much more potential is there for you to gain further wallet share or bulk of the wallet share whatever we could have done have been done this year?

No, I don't think there is an end to wallet share as such. I think the key point is while we look at wallet share as an outcome; I think the one clear thing is we are looking at how we are able to deliver value to our partners and that's where some of the partner stack elements that Amit spoke of come into frame. The idea is that if we are the most partnerable insurer, then naturally we should have bulk of the business flowing to us and that ends up as a higher wallet share. Because very clearly, as we spoke of earlier, we are looking at the product, we are looking at the customer, we are looking at the distribution channel and each of those subs segments are the ones where we have to ensure that we have got the highest, the best fit in and that naturally will give you the move towards our sets of products and our set of distribution rather than some of the other partners that may be there in the short term.

Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.

See, I have two questions. One, yesterday in ICICI Securities call, they also said that they are focusing on protection and annuity which is very similar to what ICICI Bank is thinking of. So, just wanted to understand how big is ISEC as a channel for us and if they continue to follow the way ICICI Bank follows, what likely impact in near term will we have on the growth? That's point number one. And the second, honestly, the question still remains for me is on non-ICICI Bank channel because the growth for H1, if I look, seems to be around 7 odd percentage seems to be very weak. Is it largely driven because of the macro factors because people are deploying, making or putting money in deposits? It's macro related or something somewhere we are struggling with market share in the existing channels and that is leading to some muted growth in the banking channel, non-ICICI banking channel?

Sanketh, Amit this side. First of all, let me answer the question on ICICI Securities. You are right. ICICI Securities also is looking at augmenting their proposition to their clients on protection and annuity. However, unlike ICICI, they are a very small part of our overall pie. They contribute close to around 2.5% to 3% of our business and as I mentioned earlier as well, we allow our partners to choose what they think is most appropriate for their customers. I think we will be more than happy. Even if the top line is lesser and the protection is higher, it is value neutral for us. To that extent, that is fine.

Thank you very much. That was the last question in the queue. I would now like to hand the conference back to Mr. Anup Bagchi – MD and CEO of ICICI Prudential Life Insurance for closing comments.

Thank you for staying back late evening. Thank you very much. Bye.

Please note that this transcript has been lightly edited for the purpose of clarity. Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'.