ICICI Prudential Life Insurance Co Ltd (NSE:ICICIPRULI) Q2 FY22 Earnings Concall dated Oct. 19, 2021
Corporate Participants:
N. S. Kannan — Managing Director & Chief Executive Officer
Satyan Jambunathan — Chief Financial Officer
Amit Palta — Chief Distribution Officer
Analysts:
Arav Sangai — VT Capital — Analyst
Deepika Mundra — JPMorgan — Analyst
Prakash Kapadia — Anived Portfolio Managers — Analyst
Avinash Singh — Emkay Global — Analyst
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Mayank Gulgulia — Star Union Dai-ichi Life Insurance Co. Ltd. — Analyst
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Nitin Aggarwal — Motilal Oswal Securities Ltd. — Analyst
Shyam Srinivasan — Goldman Sachs (India) Securities Pvt Ltd. — Analyst
Rahul — Kotak Securities Ltd. — Analyst
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
Abhishek Saraf — Jefferies LLC — Analyst
Presentation:
Operator
Ladies and gentlemen. Good day and welcome to the ICICI Prudential Life Insurance Company Limited H1 FY 2022 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. N. S. Kannan, MD and CEO. Thank you, and over to you, sir.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you. Thank you, Stanford. I hope I’m audible.
Operator
Yes, you are, sir.
N. S. Kannan — Managing Director & Chief Executive Officer
Yes. Good evening to all of you and welcome to the results call of ICICI Prudential Life Insurance Company for the half-year ended September 30 of the current financial year 2022.
I have several of my senior colleagues with me on the call: Satyan Jambunathanthan, our CFO; Judhajit Das, who heads Human Resources, Customer Service and Operations; Amit Palta, who heads Distribution, Brand, Marketing and Products; Deepak Kinger, who is responsible for Audit, Legal Risk and Compliance; Manish Kumar, who manages Investments; Dhiren Salian, our Deputy CFO; and Mukesh Boobana from the Investor Relations team.
At the outset, post the intense second wave of COVID-19 infections during the first quarter of this financial year, we saw significant reduction in new infections during the quarter gone by. Alongside, we have seen a significant pickup in the vaccination drive with almost 1 billion doses administered in the country so far. As the country continues its battle to contain the spread, our thoughts continue to be with the families who are grappling with health issues, lost life as well as livelihood issues.
We continue to follow COVID-19 safety protocols at our branches and 96% of our employees have got at least one dose of vaccination done. For the safety of our customers, employees, as well as distributors, we continue to promote and adopt digital means for policy sales as well as servicing.
During the quarter, we introduced a convenient and easy document pickup services for our senior citizen customers. Satyan will talk us through the impact of COVID 19 on our mortality claims in the later part of the opening remarks.
Let me start by talking about a couple of developments during the quarter before moving on to our performance. I’m happy to inform you that we have won two awards at the Insurance Industry Awards 2021, organized by FICCI, Federation of Indian Chambers of Commerce & Industry. One is the Claims and Customer Service Excellence Award. And the other is for innovation during COVID 19.
The pandemic has been a challenging time for all, but with the state-of-the-art technology solutions, we have continued to innovate, empower and provide convenience to our customers and distributors. We believe these awards are testimony to our responsiveness to the environment, customer sensitivity in these testing times and ability to innovate and give us the confidence to set new benchmarks.
Moving on, during the last results call, we had highlighted various initiatives undertaken by us to incorporate ESG principles in our day-to-day business activities. Continuing on our initiatives, we have provided our customers an option to invest in an ESG-focused fund, which is named Sustainable Equity Fund within our Unit Linked portfolio. We have also launched an internal campaign, Green Calling. Employees are participating in activities like yoga sessions, walkathon challenges, plant a sapling, paperless work environment and usage of e-waste bins. As we speak today, about 1,400 employees have participated in various Green Calling activities instituted by us.
I’ll now move on to our performance for the quarter. Our 4P strategic elements, that is premium growth, Protection business growth, persistency enhancement and productivity improvement continue to guide us towards our objective of growing the absolute value of new business while ensuring that our customer is at the core of everything we do. I will talk through our performance on the 4Ps through Slides 5 to 10 of our presentation and then conclude with a commentary on value of new business.
Let me start with the first P of our strategic elements, which is premium growth. Our Annualized Premium Equivalent, APE, grew by 35% to INR19.77 billion in Q2 of FY 2022, resulting in a 40% year-on-year growth for the half year ended September 2021. With this, we have registered a strong year-on-year growth for three consecutive quarters now. Also, our APE for Q2 saw a strong sequential growth of 62% over first quarter. Based on total new business premiums, the growth was at 32% year-on-year for Q2 FY 2022 to INR39.02 billion, resulting in a 45% year-on-year growth for the half year ended September 2021. So our market share based on retail weighted received premium stood at 7.6% for the half year as against 7.2% in the previous years whole year. The strong growth in premium was driven by our diversified product mix as well as distribution mix.
As you can see in Slide 6, for the half year FY 2022, the contribution from linked saving product stood at 48%, non-linked savings at 30%, protection at 17% and the balance 5% from group savings. On the distribution front, our focus on acquisition of new partners and investment in creation of new sourcing channel helped us maintain the diversified distribution mix as you can see from here.
In our half-year APE, bancassurance channel share was 39%, agency share was 24%, direct business share was 13%, the share of other partnerships was 9% and the balance was contributed by the group business.
Moving onto the second P of protection business growth on Slide 7. As you know, protection products are available in retail, group term as well as credit life platforms. Given the continued pandemic environment, supply side constraints, including revised underwriting guidelines and general reluctance to visit medical centers continue to impact the retail protection business. While working on these challenges, we have also focused on opportunity in the group term business.
Despite an increase in prices on account of revised mortality assumptions, our group term business has registered a very strong growth. Also with pickup in credit demand and improved disbursements, we have seen higher growth in the Credit Life segment as well. As a result, our protection APE grew by 21% INR2.81 billion rupees in the second quarter of FY 2022, resulting in 23% year-on-year growth in the half year.
I would like to highlight that based on the total business sum assured, our market share has increased to 13.2% for the first half of this financial year from 12.5% for the whole of last financial year. With this, we continue to maintain private market leadership on sum assured. Our efforts and encouraging customers to complement their life insurance coverage with critical illness cover have also contributed to the increase in sum assured.
On the third P of persistency presented in Slide 8, we have revised the persistency definition in accordance with IRDA circular on Public Disclosures by Insurers, dated September 30, 2021, which you would all be aware of. And accordingly, we have restated the comparative period figures.
We saw improvements in 13-month and 61st month persistency ratios. Our 13-month persistency ratio has increased by 30 basis points to 85.1% at the end of September 2021 as compared to March 2021. Similarly, our 61st month persistency ratio has improved to 51.6% at the end of September 2021. For the ease of comparison, we have also disclosed the persistency ratios computed as per the old approach, considering that this is a transition period.
On the fourth P of productivity, which is reflected in cost ratios, presented on Slide 9. Our cost to TWRP ratio was higher at 17.8% for H1 FY 2022. For the Savings business, this ratio was 11.8%. While the absolute expenses are higher as compared to the same period last year, the new business growth is higher than the growth in expenses.
Our cost ratios continued to be one of the best in the industry and we leverage technology to improve our efficiencies further. Satyan will be talking about our technology initiatives during the quarter later in the presentation.
Alongside our 4P strategy framework, we continue to maintain a resilient balance sheet as you can see on Slide 10. On mortality risk, for the half year FY22, gross claims on account of COVID-19 stood at INR18.79 billion. And net of reinsurance, the claim amount was INR8.62 billion as presented in the slide. This net claim amount includes settled as well as notified and in process claims. Further, as of September 2021, we hold reserves of INR4.12 billion towards COVID-19 claims. Satyan will talk about this in much more detail.
Our solvency ratio close to 200%, 199.9% as of September 30, 2021 as compared to the required regulatory ratio of 150%. On credit risk, only 0.3% of our fixed income portfolio is invested in bonds rated below AA, and we continue to maintain our track record of not having a single NPA since our inception. Of total liabilities, non-par guaranteed return products comprised about 1.4%. We continue to closely monitor our liquidity and ALM positions, and we have no issues to report to you.
Moving on to Value of New Business, VNB. As a result of the above drivers, as you can see on Slide 11, VNB for half year financial year 2022 was INR8.73 billion, a significant growth of 45% over the first half of last financial year. Given our APE of INR31.96 billion, the resultant VNB margin was 27.3% for the half year as compared to 25.1% for the whole of last year. As we have always articulated in the past as well as in the last results call, we continue to focus on absolute VNB growth, which is our stated objective.
Before I hand over to Satyan to talk through some of the details, I would like to mention that we continue to maintain our objective of doubling our financial year 2019 VNB by financial year 2023, which requires a compounded annual growth rate of 28% over the current and the next financial year. With the VNB growth currently at 45% for the half year, we believe we are on-track to achieve this aspiration.
Thank you once again to you all, and over to you, Satyan.
Satyan Jambunathan — Chief Financial Officer
Thank you, Kannan. Good evening, everyone. Our primary focus continues to be to grow the absolute value of new business, that is VNB, through the 4P strategy of premium growth, Protection business growth, persistency improvement and productivity improvement.
The first element of premium growth. Our product range with propositions to suit different risk characteristics of customers has been a very important enabler of premium growth. In terms of our performance on Slide 15, we have registered a strong growth year-on-year across all segments. Our Annuity business grew by 97%, Linked Savings business grew by 45%, Non-Linked Savings business grew by 42%, and Protection grew by 23%, resulting in an APE growth of 40% year-on-year for the half year ended September 2021. More importantly, our APE for Q2 FY 2022 saw a strong sequential growth of 62% over Q1 2022.
In terms of new business received premium for H1 FY22, Annuity business contributions stood at 20%, significantly higher than 15% in the same period last year. With a premium amount of INR13.7 billion in H1 FY2022, we were one of the largest pension and annuity providers in the market. Our wholly-owned subsidiary, ICICI Prudential Pension Fund Management Company Limited distributes products under the National Pension System and is registered as a pension fund manager. This business is synergistic to our annuity offerings and is expected to support the growth of the Annuity business in the future. The AUM managed by the PFM has increased by 74% over September 2020 to INR97.48 billion at September 2021. In fact, as we speak, it has crossed INR100 billion as well.
The PFM has a market share of 15.7% in the private sector AUM at September 30, 2020. With this growth, protection and annuities now constitute 45% of the company’s new business premiums.
Moving on to distribution. We have continued to enhance our distribution network across channels. In the Agency channel, the approach has been to ringfence our highly productive agents. We also added more than 12,000 new agents in H1 FY22. Within the bancassurance channel, we now have a total of 23 bank partnerships.
On partnership distribution, we have added 53 partnerships during the half year and now have about 700 partnerships across traditional and non-traditional distributors such as web aggregators, payment banks, small finance banks and insurance marketing firms. For the direct channel, the strategy has been that of upsell to our existing customers, aided by analysts.
Coming to the performance of these distribution channels on Slide 18. We saw strong growth across distribution channels. Our bancassurance channel APE grew by 30% year-on-year to INR12.6 billion in H1 FY22. Within this, ICICI Bank channel continued with the growth momentum seen since March 2021. Specifically, the Annuity business from ICICI Bank channel more than doubled in H1 FY22.
Our new bank partnerships continued to contribute to a significant share of bancassurance APE. Our agency channel APE grew by 41% year-on-year to INR7.55 billion. Direct and partnership channels grew by 49% and 39%, respectively in H1 FY22 over the same period last year.
The second element of protection growth on Slide 20. With an APE of INR5.5 billion, the Protection segment saw growth of 23% over H1 FY21. Our total new business sum assured stood at INR3.37 trillion for H1 FY22, a growth of 35% year-on-year.
We continue to be the private sector market leader with a share of 13.2% for H1 FY22 as compared to 12.5% in H1 FY21. Recently, there has been a lot of discussion in the media on increase in reinsurance premiums for term policies as well as tightening of underwriting norms. Our reinsurer has intimated us about raising reinsurance rates. As we speak today, while discussions with the reinsurers are underway, we expect the final outcome to be a combination of price increase and applicable underwriting norms, in line with emerging experience. Also, as demonstrated in the past, we would like to maintain the profitability of the overall Protection segment intact.
In terms of business impact over the short term. we don’t expect it to be material, given that the pandemic situation is still live and the constraints in the environment continue. Over the medium term to long-term, given the significant under-penetration, we continue to believe that protection will be a multi-decade opportunity and specifically for a company like us, which has a strong customer proposition and a wide distribution network.
The third element of persistency on Slide 22. We continued to have strong focus on improving the quality of business and customer retention, which is reflected in our persistency ratios, specifically the early period persistency cohorts have shown significant improvement as compared to the same period last year.
The fourth element of productivity on Slide 25. Our overall cost to total weighted received premium ratio stood higher at 17.8% for H1 FY22 as against 14.3% for the same period last year. Similarly, our cost to TWRP ratio for the savings business stood higher at 11.8%. While the absolute expenses are higher as compared to last year, the new business growth is higher than the growth in expenses and we would therefore not expect margins to be adversely impacted.
I would like to reiterate that our cost ratios continue to be one of the best in the industry and we continue to leverage technology.
Some of our technology initiatives during the quarter include: building an ability to pre-fill forms by uploading an image of a KYC document, thereby improving policy issuance turnaround time; enabling video verification and KYC authentication services at the distribution partner end to have a unified experience for a customer; and building an end to end digital as well as modular journey for onboarding members in the group business.
The outcome of our focus on these 4Ps, as you may have seen on Slide 27, has resulted in a VNB of INR8.73 billion for H1 FY22, a growth of 45% over H1 FY21. Given our APE of INR31.96 billion, the resultant VNB margin was 27.3% for H1 FY22 compared to 25.1% in FY21. We continue to focus on absolute VNB growth, which is our stated objective.
Coming to some of the other financial metrics. First, on COVID-19 claims. As you can see from the chart on Slide 29, beginning June 2021, we saw a significant reduction in new COVID-19 infections in the country. However, continued to receive claims in Q2 FY22, most of which were claims pertaining to Q1 FY22, that is delayed intimations. We have also seen a significantly declining trend in these intimations across the months of this quarter. As a result, our COVID-19 claims net of reinsurance stood at INR8.62 billion for the half year of H1 FY22.
Each and every claim that has been notified at any of our touch points is accounted for in this number, even as they are being processed further. We have used preliminary information in the intimation of claims to classify them as COVID or otherwise.
Further, at September 2021, we hold reserves or liabilities of INR4.12 billion towards potential COVID-19 claims. These include provision for claims that have been incurred but not reported, as well as new claims over the balance six months of the financial year. With the provision of INR4.12 billion and net claims of INR8.62 billion for H1, unless COVID-19 claims in this year exceed INR12.74 billion, we would not expect any further negative impact.
As you can see on Slide 31, the daily average number of death in the country has come down sharply during Q2 FY22. Specifically for the month of September and October till-date, the daily average number of debts are significantly lower. This is also reflected in the significant slowdown in the intimations of claims in our portfolio that we were seeing in September and October.
Within the financial metrics, our profit before tax for H1 FY22 stood at INR2.59 billion, with a PAT of INR2.59 billion, solvency ratio of 199.9% at September 2021. Our AUM was more than INR2.37 trillion at September 2021, a growth of 31% from September 2020. Our value of in-force business grew by 26% year-on-year and stood at INR212.96 billion at September 2021. The growth in adjusted net worth was muted on account of COVID-19 claims and the dividend payout. With this, the embedded value grew by 17.5% and stood at INR302.03 billion at September 2021.
To summarize, we monitor ourselves on the 4P framework of premium growth, Protection business growth, persistency improvement and productivity improvement to improve expense ratios. Our performance of these dimensions is what we expect to feed into our VNB growth over time.
Thank you. And we are now happy to take any questions that you may have.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] We take our first question from the line of Arav Sangai from VT Capital. Please go ahead.
Arav Sangai — VT Capital — Analyst
Hi. Good evening, sir. Hope all well at your end. So I have two questions. My first question pertains to, if y’all could provide the breakup of protection into retail protection and group term for Q2?
Satyan Jambunathan — Chief Financial Officer
Can you hear me, Arav, now?
Arav Sangai — VT Capital — Analyst
Yes.
Satyan Jambunathan — Chief Financial Officer
Yes. My line was on mute. Thanks, Arav for joining and asking the question. We do that split only by the end of the year, Arav. During the year, we don’t give the breakup, and we will do it like always at the end of this financial year.
Arav Sangai — VT Capital — Analyst
Okay. No issues. Sir, the second question, again on the retail protection side. Since now the focus is shifting towards growth and we have been hearing about this reinsurance price increase. So is there any sense about what might be the quantum of increase that we might have to undertake in protection policies to maintain our profitability? Any sense, any ballpark number as well?
N. S. Kannan — Managing Director & Chief Executive Officer
Yes. See, the increase, as Satyan mentioned, yes, the increase proposal is being discussed with the reinsurers. I don’t think we are in a position today to really talk about increase, because still the discussions are on. But our endeavor or philosophy remains the same that whenever there is an increase, you would have seen based on our empirical evidence that we would tend to pass on that to the customer in order to maintain neutrality in terms of our profitability. I don’t see any reason that out any approach should change going forward as well. So I have sort of a color I can give you that in the short term, we don’t expect the impact to be material given that the pandemic situation is still live and the constraints in the environment continues. And also, you have seen the general decline we have seen in the retail, at some point in time base also will get reset. So we don’t get too concerned in the short term. But if you really look at the medium to long-term, given the significant under-penetration and also the fact that there is huge, sort of, a demand which is picking up on retail protection, we continue to believe this is a multi-decade opportunity. And specifically for a company like us, where we do believe we have a very strong proposition and a wide distribution network, this should not really bother us.
So what we have done as we go through this environment is that one side we continue to work on the challenges of retail protection, but, at the same time, we have been doing two other things. One is to focus on the group term segment. There, as Satyan mentioned, despite the price increase, to protect our margins, we’ve been able to grow the business in a very robust manner. That is something which we have been able to get the opportunity sized up much earlier, and also we have been increasing the attachment of riders. So that is why you have seen about 23% growth you have seen in protection is on account of these initiatives.
So the approach to summarize will be, in the short term, we will look at other mitigants. Even as we go through the pandemic, there is no point in suddenly increasing the growth in the retail business amidst the pandemic, so we will calibrate that business. As and when there is an increase, we will strive to pass it on to protect our margins. It’s the approach we have.
I think that is so far held us in good stead. And given our VNB aspiration also, this approach falls squarely within the kind of strategic objective we have. So we don’t see any problem, Arav. I mean, we strongly believe that there is no point in rushing into it given the pandemic situation and calibrate it as we move forward. And wherever there is an opportunity, we will take advantage of that.
Arav Sangai — VT Capital — Analyst
Right. Fair enough, sir. Just one follow-up question. Since we have been writing GTI for the last one year, how has the experience been in GTI? And like, are we still as aggressive as we were in half year FY21 like in GTI, will we be as aggressive as that going ahead also in GTI? Since the protection mix kind of moderated to 14%, so I just wanted to get a sense of what might be the mix we are looking at going ahead.
Satyan Jambunathan — Chief Financial Officer
Arav, my way of looking at it would be, it’s not as if we have been focusing on the segment only in the last 12 months. We have been focusing on this business for a very long time. In the last 12 months, we saw an enhanced opportunity I think out of this, which we chose to take from. And aggressiveness of pricing, I don’t think we have ever been aggressive in pricing. We have been aggressive in client engagement, we have been aggressive in pitching. But I don’t think we have been aggressive in pricing. Therefore, to that extent, all those policies that we sold before the second wave, of course, on those policies claims are more than what we priced for. But everything that we started pricing through the second wave, where we started reflecting expected COVID claims, from that, claims are within what we expected it to be.
So the schemes that we are renewing are on a profitable basis. We have no concerns as long as we are able to get that business on appropriate terms.
N. S. Kannan — Managing Director & Chief Executive Officer
And Arav, just to supplement what Satyan said, this growth we have seen in this segment is after calibrating the profitability and after losing lot of deals. We are very clear that we want to protect our margins. After increasing the pricing, after losing lot of deals, this is the growth we are seeing. So to that extent, we are quite confident and also, we believe that this is an opportunity for focusing on larger corporates, they are having COVID protocols for the employees. And based on our own claim experience also, we believe at least in the second wave, the worst is over and the worst is behind us. Given that, and also the fact that the Group employees, the extent of vaccination is much higher than the country average, we think that there is — it’s a good business to build and we’ll continue to calibrate, look at the profitability. But as of now, we are very comfortable to grow at these rates.
Arav Sangai — VT Capital — Analyst
Great. Understood, sir. That’s it from my end. Thank you so much and all the very best.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you, Arav.
Operator
Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead.
Deepika Mundra — JPMorgan — Analyst
Hi, sir. Good evening, and thanks for the opportunity. Sir, firstly, just in the Protection business again, on one hand, of course, we are seeing the claim cycle essentially come down quite sharply. So rather than being cautious on the protection growth, don’t you see an opportunity to ramp up somewhere down the line? Or are you concerned more about the longer-term impact of COVID on both mortality and morbidity? That’s my first question.
Secondly on the potential price increase that could come through in the business. Again, does that impact your the VNB doubling guidance at all, if you are likely to see any reduced growth because of competitive activity in the segment? Thanks.
N. S. Kannan — Managing Director & Chief Executive Officer
Yes. Thank you, Deepika. Let me answer, from my perspective, these two questions. I would like to have Satyan supplement.
First, we believe, as a company that the long-term mortality/morbidity is too early to take a call based on the COVID impact. I think a lot of studies are going on and will go on and we need some time before we judge the real long-term morbidity/mortality related to COVID directly. But to answer your question, we will continue to be having a strong presence in this segment. It is not that we are getting out of the segment or going slow on this segment. It is just that, while the demand is there, supply constraints are very high. We want to calibrate it so that we don’t do any missteps when writing a 40% to 50% business.
And as you know, when we say that the margins are something like 80%, 90%, they all are based on first year — one year premium. So to that extent, it’s more a mathematical number than having a enormous cushion in terms of ability to undercut. So we do not believe that we should be undercutting; at the same time, we do not believe that we should be getting out of the segment. All I’m saying is that it will be a very calibrated approach and some time, Deepika, you will see that the base effect will catch up. And already, we have seen weakness in this protection in the two quarters already. So at some point in time, it will stabilize and then start growing. We are seeing the signs already on a sequential basis. So to that extent, I want to assure you that we will very much be there in this business.
Second, on price increase, you asked the question, that we will pass on. That is our strategy, as I said in the past. We should be able to pass on. And given the huge under penetration, we do believe that there is enough appetite. Affordability will not become a big issue even at the increased pricing is what we believe. But we have done a few sort of sensitivities to see what kind of protection will impact our overall VNB aspiration.
And we are happy to confirm to you that given the way we have diversified our product mix today, compared to being just a 90% ULIP wealth management-oriented company, today, we are a much more diversified company into real insurance. So given that, we don’t see any issue when it comes to doubling our FY19 VNB irrespective of what happens in protection. That’s what I can confirm to you.
Satyan Jambunathan — Chief Financial Officer
So Deepika, if I may just add one more point here. I know we will be doing a lot of discussion on the Protection business through the whole of this call. But all I would say is this, in the second quarter, whereas you mentioned the protection mix was 14% is probably one of the lowest we have seen in a while. Yet, if you see the overall VNB trajectory, I don’t think it really challenged. So that is one of the factors which really gives us comfort that we are not a one trick pony anymore. I’ve said this before. We have four sources of profit: linked savings, non-linked savings, retail protection, group protection. We are getting to a stage where each of these is a very, very even balance in the overall VNB pool. And therefore, if one of those for a period of time has to take an impact because of environment, so be it. The others pretty much will step in to fill the gap as we go through the cycle. So I would say that we are far less concerned about any of these single element anymore than we would have been a couple of years back.
Deepika Mundra — JPMorgan — Analyst
Got it, sir. That’s very clear. And just one last housekeeping question. It seems, looking at the claim and pending reserves, there has been a minor top up in reserves. Is that correct, for COVID?
Satyan Jambunathan — Chief Financial Officer
Effectively, yes, Deepika. In absolute terms is a bit of a drawdown. Had INR5 billion of COVID provisions at the end of first quarter, we now have INR4.12 billion. But effectively, because one quarter is passed and my prospective claims provision for COVID is now for two quarters instead of three, yes, it is strengthening to that extent.
N. S. Kannan — Managing Director & Chief Executive Officer
And just so put them numbers, Deepika. INR5 billion was the actual intimated claims in first quarter on account of COVID, and another INR4.98 billion or I’ll just round it, another INR5 billion rupees we had to cover IBNR and the future debts. So that was what the situation was in Q1 — end of Q1.
End of Q2 — when I’m talking about Q2, in Q2 itself, we have taken a provision of INR3.6 billion. So that is what has gone through in terms of intimated claims. And we have left with INR4 billion of future reserves, but just to take care of only the next two quarters. So one way of looking at this, that the INR5 billion of reserves has become INR4 billion. So to that extent, you can say INR1 billion has been drawn from that. But again, as Satyan said, we have moved forward one quarter as well. So this is the full mathematics behind the reserving.
And given the trajectory of claims we have seen at this point in time, we can make a statement that INR4 billion is more than adequate. But we will see how it progresses as we move forward.
Deepika Mundra — JPMorgan — Analyst
Understood. Very clear, sir. Thank you so much.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. We take our next question from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Prakash Kapadia — Anived Portfolio Managers — Analyst
Yes, thanks for taking my question. Couple of questions from my end. On the ULIP, is it fair to say we’ll see a positive kind of growth after years of degrowth? And on the ULIP journey, where are we in the mass market target segment, whether you’re trying to get it from the HNI and the larger ticket side, if you could give some perspective on that.
And secondly on the claim processing side. Is there any backlog as yet or we managed to clear the backlog in terms of the operational hazards and claims coming in late and anything major pending at our end?
N. S. Kannan — Managing Director & Chief Executive Officer
Yes, let me just start off Prakash with ULIP. The first part I’ll answer, then I will hand it to Amit to talk about it.
Yes, ULIP growth is very much back. If you really look at the segmental numbers which Satyan talked about, we are seeing a ULIP growth at about 45% in the half-year compared to first half of last financial year. So to that extent, the growth has come back.
So we believe that some of the initiatives we have taken, such as the introduction of the Balance Advantage Fund has really helped us to get that growth. Even moving forward, from affluent customers perspective, we do believe that the recent launch we have done, in fact last week we have launched a new fund of ESG fund we talked about, which is called the Sustainable Equity Fund. We believe that that can also attract a new set of customers, including younger customers and affluent customers into the ULIP.
You talked about on the mass side, how do we want to play ULIP? I will ask Amit to answer on the mass and mass affluent side how to play the ULIP. And Satyan will take your question regarding the operational aspect you talked about. Amit?
Amit Palta — Chief Distribution Officer
Hi. Thanks. This is Amit. See, first of all, I would like to just bring about the point, three years back that the entire dominance or the large proportion of business that we used to do on unit-linked business was largely through affluent customer presence that we had at that point in time. And while we stated our objective to diversify and go beyond affluent customers, we were always sensitive of the fact that we were not to vacate that segment, which got us to where we were still three years back. And we had lot of regard and respect for the strategy that we had in the affluent segment. And we wanted to, as a conscious step, look at not being fixed about the product suiting a customer segment, but walk the diversification route to provide more options to the customer in the affluent customers.
So what we’ve seen over a period of last year and a half or so is that a lot of affluent customers have started exercising their choice on guaranteed range of products. And even while the market sentiment has turned positive, we’ve actually seen quite a few of our affluent customers looking at diversifying their portfolio into non-linked business as well. So we will continue to offer wherever the opportunity arises and offer multiplicity of products, whether it is linked or non-linked and not carry any bias about any specific product category. We take a lot of pride in making products available and leave it to the choice of the customer to decide what he thinks and feels is most appropriate given the macro environment.
And coming back to mass and mass affluent, like what we mentioned about affluent, we don’t want to pre-decide on what is the most relevant and appropriate product for mass and mass affluent. The rich customer, HNI customers has surprised us by moving into more conservative and traditional range of products over last few years. And hence, I will not carry notions about mass and mass affluent again making a choice, which could actually change as the environment changes.
So that’s how we want to stay flexible. We want to create products, make it available in the basket and allow customers to make a choice on what they want to go for.
Satyan Jambunathan — Chief Financial Officer
Prakash, on that claim settlement. I just want to say that the number of claims that we got in Q1 and through the early part of Q2 has been so overwhelming, we have not cleared the backlog. We have been able to ramp up capacity to 4 times what we used to do before. We are working hard at clearing it. Hopefully in the next month or so, we should get past most of them. But we still do have a backlog of claims, just given the sheer volume of what came through to.
N. S. Kannan — Managing Director & Chief Executive Officer
But just wanted to assure you that the financial liability arising out of all those whether settled or not has been fully provided, and the actuarial liability based on an estimate also has been taken into account. So that I want to assure.
Prakash Kapadia — Anived Portfolio Managers — Analyst
All right. That’s helpful color. And lastly, Satyan, is it fair to assume given the buoyancy, what we are seeing in terms of the APE growth are, cost to TWR ratios should trend lower in the second half?
Satyan Jambunathan — Chief Financial Officer
So Prakash, cost to TWR ratio will be elevated for a period of time, because the metric as a denominator has total premium, including renewal premium. So while the new business premium has been seeing growth, the renewal premium has not been seeing that much growth despite an improvement in persistency. But more important, what affects margin is the increase in cost in line with new business or not. And if you see the cost numbers for the half year, costs have gone up by 30%, new business has gone up by 40%. So we are quite comfortable. This will not take away from margin. If this productivity improvement that we are seeing of new business APE per employee increasing as it have, I would expect that to be a positive contributor to margin over a period of time.
Prakash Kapadia — Anived Portfolio Managers — Analyst
Okay. That’s helpful. Thank you. All the best.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you, Prakash.
Operator
Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead.
Avinash Singh — Emkay Global — Analyst
Yes, hi. Good evening. A couple of questions. The first one, if you can just provide some color on lapses and surrenders, because I see that data is not available in the presentation. And secondly, timing, because I have asked lapsed and surrender, because I mean on the renewal premium growth side, I still see some sort of weakness. I mean — and that is not just in quarter, for quite some time.
And secondly, related to this, I mean we have been doing fantastic on sort of forging new partnerships, media season, doing really good on digital. But if I go beyond premium and look at the number of new business retail policies, that is somewhat not going to last many years, I mean, considering that we are forging new partnerships, we are going to the small ticket protections, where we are seeing meaningful traction. I would have expected at least that reach in terms of policy count, that should have also grown over the last three, four years. So these are my two questions. Thank you.
N. S. Kannan — Managing Director & Chief Executive Officer
Yes. Good evening, Avinash. Let me start with the response to both the questions, then I will request Amit and Satyan to supplement. On the first issue of renewal premium growth being weak because of surrenders or other aspects, that is not really a big component, Avinash. The larger component is that after a couple of years, we have started growing only now. So to that extent, if you just model our growth of APE, it has been quite weak. If you look at FY18, for example, FY19, FY20, we have been declining in FY19 and FY20. So correspondingly, the renewal book, which is available itself, is lower compared to the previous year. So even if the persistency is holding up well, and in fact improving, it is not meaningfully adding to growth in the renewal premium. That is the primary reason, because if I look at the surrenders or persistency and everything, that is ultimately reflected in our assumptions in our VNB calculation.
So yes, of course, surrenders tend to be a little higher in times of market — the bull phase of the market or the robustness of the market, because people do get into a profit booking kind of a mode in ULIP policies. But other than that, we don’t have any adverse trends to report. It is primarily on account of the past years APE growth being — new business APE growth being weak rather than cost by surrender or anything. So I just wanted to assure you on that aspect.
Coming to the second question. I totally agree with you that this is something which is actually plaguing the industry in terms of not being able to grow in terms of the number of policies. It is not just with us. It has been generally with the industry. You would see the numbers put out by the regulator that overall number of policies or number of life, if you will, that has not been growing.
Here, I just wanted to tell you that we have been quite proactive in terms of taking steps. I would request Amit to quickly talk about A, the initiatives and B, the early results arising out of this initiative of focusing on the new customers. So Amit, if I can hand it over to you, then you can talk about the initiatives, as well as the early results on the number of policies initiative. Over to you.
Amit Palta — Chief Distribution Officer
Yes. Hi. So, first of all, you are right, in terms of number of policies, the challenges that were experienced in Q1, I would like to categorize it into two issues that industry was facing in Q1. One was of course the activity dropped drastically just before and during the wave-2, which led to lesser number of customer engagement opportunities, which means that more and more customers were getting engaged on a virtual platform and number of policies were getting impacted. Interface with distribution as well as with customers being engaged with distributors was coming down, so that impacted the number of policies, that was one.
Second impact that we saw was what we have experienced in overall protection as a space. As you know, almost 40% to 45% of the number of policies in the industry, specifically in private space, was contributed because of protection line of business. So protection number of policies coming down was another impact that we saw in Q1, and also in Q2. So these were the two things. Q1 impact on the business and two is on the front of protection business getting impacted for entire H1.
So these are the two things which adversely impacted number of policies in a large way to the overall industry.
For us, what we have done is that instead of getting bogged down by the impact that we saw because of wave-2, our entire focus was about building our activation process with new partners, new advisors, and getting them onboarded and be productive as early as possible to compensate for any drop in number of policies that we had from our existing distribution. Two, we ran through various initiatives to build an appreciation for being present right across mass, mass affluent and affluent customer segments, and we ran quite a few internal campaigns to build engagement on our digital platform to mass and mass affluent customers, which led to a number of policies growth.
In specific segments, if we were to look at the initiative where it was directed, we actually saw a growth of almost 35% to 40% in specifically later part of the second quarter through these initiatives where we got newer customer acquisition to be driven on the back of this campaign that we ran internally.
And second, of course, a new product category. We actually opened up a new customer segment, which was 50 to 58-year, which is typically a customer who is nearing retirement. That is by opening that new segment, which was earlier not buying life insurance, getting to get them to buy deferred annuity was another area in which we saw new customer acquisition really scale up over a period of last three to six months.
So this is specifically — these are the specific initiatives that we had to increase number of policies, but I guess that is now behind us with markets opening, economy opening and activities are now getting closer to the normal levels. We do expect customer engagements to come back to the regular normal levels and probably number of policies from here on will start growing.
Avinash Singh — Emkay Global — Analyst
Thank you.
Operator
Thank you. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Thanks for the opportunity, sir. Firstly on the VNB margins, if I look at full year, last year and this H1, VNB margin has expanded almost 200 basis point, but product mix on an overall basis has remained pretty stable. So what is the driver for VNB margin expansion in first half?
Satyan Jambunathan — Chief Financial Officer
Pretty much product mix Nidhesh. If you see full year last year we had a protection mix of 16% first half is about 17% give or take that is the big reason for the change in the margins.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Sure, sure. [Speech Overlap]
N. S. Kannan — Managing Director & Chief Executive Officer
At the margins, Nidhesh at the margin some of the businesses which have grown well like annuity and non-linked savings they have also helped because as you know their margins are higher than ULIP margins. So, that has also sort of helped, though it is not as high as perfection but it is better than some of the other segments of our business. Sorry, I interrupted your second question.
Satyan Jambunathan — Chief Financial Officer
So you are right Nidhesh, so retail protection there was a bit of a drop, group protection there was a bit of an increase as a negative positive coming from there. And also, like Kannan said the annuities and non-par mix became a little bit more. So that helped it. So overall, it’s still a product mix, some pluses, some minuses which is settling down to an overall number of 20% for the half year.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Sure. And then, so within bancassurance, how the ICICI Bank has turned if you can share that, what is the percentage of business, which has come from ICICI Bank in this, in this first half? That will give us some perspective how the ICICI Bank and non-ICICI Bank has done?
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah. So, I can answer it differently. If I really look at the bancassurance break up, I said that 39% came from bancassurance in the first half of this current financial year. So, roughly about 28% will be ICICI Bank and about 11%, 12% from other banks. Actually, it’s a little bit of rounding involved. It’s more like a 28% plus 12%. That is how that is shaping up. So, 28% has been holding steady for some time now. That means that definitely from a top line perspective, it is not a drag on the growth. And as we mentioned in our opening remarks, that ICICI Bank is on the growth path. And they are focusing a lot on annuity and protection lines of business. And of course, some of the savings lines are also doing well in the bank. So, we will, we are okay with that. I think we have found a equilibrium and a new base, so it’s fine.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Understood. Understood. And sir, lastly, in the non-ICICI Bank channel, I think the growth has been quite strong, probably more than 100% on a Y-o-Y basis. How should we see — how do we see the trends going forward in that segment because we have added three large banks, three decent sized banks last year but post that we have not added any large partner. So, going forward, specifically next year, how do we see growth from that channel? And what are the drivers for growth for non-ICICI Banker channel?
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah. So, first part, I will say, I mean the other, second part I will answer first such a big acquisition for now and then is not easy acquisition Nidhesh. We’ll have to keep scanning the market, keep attach, but these are all lumpy acquisitions in terms of distribution acquisition that can happen only for NCO whenever there is an opportunity. I can only say that we’ll be alive to all the opportunities, but it is will be very difficult to sort of speculate when we will get the next big one. But in the meantime, we will be scanning the environment and getting a lot of small ones you know that is something that has been happening.
I think Satyan mentioned in his opening remarks that we have added so many new partnerships in terms of smaller partnerships, so that will continue. So let me, you know of course the 100% plus growth you talked about, there’s a bit of base effect because some of those banks are not there in the base of the same period, but so to answer your question on trajectory going forward, I would request a Amit to talk about our strategy and what kind of a growth trajectory we expect in this new partnerships going forward, new bank partnerships going forward.
Amit Palta — Chief Distribution Officer
Yeah, so I will, I’ll just answer your question in two steps. One is, of course the bank partnerships beyond ICICI and other non-ICICI channels. So I just want to bring to light the fact that the investment in some of our existing channels has also yielded growth in excess of 40% for our channels like agency, our direct channels which includes our proprietary sales force, our online channels, almost every channel which is existing the operational now for more than a year now and for a very long time, we’ve actually seen growth right across all channels.
Coming to newer banks, as you know that we have — we tied up with four new big partners and all those four partners are at various stages of building up their business volumes. And we are quite happy with the way we have been choosing appropriate products which are most, most suitable for their customer segments. And we have been able to build a fair share. Good part is that large part of the growth of some of these banks is being contributed by us as an insurer partner for them. So to that extent, it has been very gratifying, but I always would like to believe that it is a WIP. It is a process which we have started and we’d only see building it from current levels.
But I’m drawing lot of confidence from the way our agency channel, our partnership distribution channel which includes our corporate agency and broker, some of our other 20 odd banker partners that we have beyond these four new partners, almost every channel has contributed and grown ex — in excess of 40%. So I think it is not just about new partners, it is also about what we are doing to our other existing channels. And in terms of newer partnerships on the corporate agency and broker side, we have added good 50 plus partners in first six months. As you know, they typically take some time before they settle into becoming significant in scale. We do expect over a period of like six months, they will also become significant in their contribution to our overall business.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Sure, sir. Sure. Thanks. And sir last, the P&L hit in this quarter because of COVID mortality is around INR3.6 billion or?
N. S. Kannan — Managing Director & Chief Executive Officer
About INR2.5 billion, Nidhesh.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
INR2.5 billion. Got it.
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah. We released the INR1 billion of the opening IBNR and then there were claims of INR3.6 billion, roughly INR2.5 billion impact for the quarter.
Nidhesh Jain — Investec Capital Services (India) Pvt Ltd. — Analyst
Sure, sir. Sure. Understood. That’s it from my side. Thank you.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Mayank Gulgulia from SUD Life. Please go ahead.
Mayank Gulgulia — Star Union Dai-ichi Life Insurance Co. Ltd. — Analyst
Yeah. Hi, sir. My question is like with, sort of on the reinsurance so like, what will be share of monitory within our reinsurance portfolio. That is first question. And second question is like, whether we have received increase in pricing from just one reinsurance So I think on this one way or it is more than one — more than one reinsurer?
N. S. Kannan — Managing Director & Chief Executive Officer
So, Mayank we actually spread our reinsurance across various providers, so there would be a different reinsurer for every product or product line. So it’s hard to say at an aggregate level what each of these share is. Nobody will have a dominant share in that sense. It is distributed but typically we distribute by product.
Mayank Gulgulia — Star Union Dai-ichi Life Insurance Co. Ltd. — Analyst
Okay. And you have received a price increase from more than one reinsurer?
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah, for the term life, which is what is the most spoken about. So you know Mayank we have already increased prices on group term. We’ve already increased prices on credit life in the past. Retail term was one where price increase has not yet happened and we had aid that we haven’t received anything yet at the last quarter that has no come. So retail protection is now possibly on the card for review. I’d spoken about in my opening remarks also that it’s not only going to be price, it’s going to be a combination of price and underwriting process eventually that is what will determine the outcome.
Mayank Gulgulia — Star Union Dai-ichi Life Insurance Co. Ltd. — Analyst
Okay, thank you.
Operator
Thank you. We take our next question from Sanketh Godha from Spark Capital. Please go ahead.
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Yeah, thanks for the opportunity. Satyan my question largely is that if I look at the Q1 to 1H margin, so margins have come off by almost 200 basis points and sir that is largely because of the product mix which means that on a sequential basis, the contribution of the [Indecipherable] has gone up that has resulted in the margin compression or is it a function of high opex which we are incurring which we are incurring, this is the business growth or new business acquisition cost is much higher than what we have anticipated?
Satyan Jambunathan — Chief Financial Officer
So, Sanketh, no cost-related aspects, purely product mix. We also spoke about it a little earlier in a conversation with it. Protection at 14% for the quarter has been one of the lowest we have seen. Yet in spite of that, VNB growth has been quite robust. Yet in spite of that, margin has been upwards of 27%. So, quite honestly, at this point of time, the current trajectory of protection or any of the product mix elements is not worrying us too much on our VNB post.
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah. Again, Sanketh, I would just add — I would just once again appeal that our focus would continue to be on the absolute VNB and the growth of absolute VNB. See, whatever comes as a margin is a derived number. That is the way we look at it. And we have also said at the time of our — the beginning of the year that we need to get to doubling of our VNB of FY 2019 in four years would mean that it would require 28% growth this year and next year on a annualized basis. And we said that that will predominantly driven by the top line in the initial phase of this two years period, that we were very clear.
So, I think we are following that path, yes. Depending on the product mix of a particular quarter, the margin sort of gets a little bit volatile. So, as long as we are tracking a same or better than the margin of the whole of last year and if a top line VNB growth of 45% is above the 28% trajectory we are targeting, we are very happy. That is what I wanted to tell you. That it’s more like a margin, once again, it’s more like a derived number than shooting for a particular number, but if it expands, we will take it, but our primary objective will be to expand the absolute VNB.
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Okay. Okay. Sir and next question was basically, given you have mentioned 28% of the contribution came from ICICI Bank. So, if I do a back calculation, it seems that ICICI Bank, which grew 6 percentage or 7 percentage in the current quarter Q2 and it just grew 11 percentage for first half. So, despite the base being so favorably — in favor of the channel, still growth seems to be very weak in that particular channel. So, is there reluctance to sell other than annuity and protection — retail protection being structurally weak for industry as a whole, we believe this — the channel growth from other products will remain muted and therefore contribution to the growth will be challenged only from the channel partners I mean to say.
N. S. Kannan — Managing Director & Chief Executive Officer
You’re right, Sanketh. The two strategic priorities that ICICI had decided to focus on which was annuity and protection, delivered very, very different results for a variety of reasons. For protection, the reason is common to what we have seen as an industry. The supply side constraint has impacted ICICI as much as it has impacted other companies. On annuities, they have done very well. They have virtually done double of what they did last year in H1. It is just that — annuity as you know internally, we weigh it by 10% when evaluating WRP.
So overall, it doesn’t show that quantum or the APE is only 10% of the annuity. So that number doesn’t show, but they have virtually doubled their annuity business 100% plus growth rate over last year H1 is what they’ve delivered on annuity. So — and last year also — last year, it was not about a low base last year. Last year itself again was a 100% growth for them. I believe that once the protection comes back to normal levels and once the industry is able to address the supply side constraints, I do believe ICICI is continuing to have a very, very dominant play in both this spaces, which is protection as well as annuity.
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Got it. Last one from me, and this just from a macro question point of view because we believe that if RBI suppress the liquidity from the system, the yield curve will become flatter than what it is right now. So, just wanted to understand the overall impact on EV because of the change in the shape of the curve, one thing? And second thing is that given, given how it will impact business in operations point of view, especially with non-par business because FRAs will not look as attractive as they were looking in the past. So, so do you think the non-par business, the GIFT kind of a product will get impacted because also with the change in the shape of the curve. This is the, this is the question I had. Okay.
Satyan Jambunathan — Chief Financial Officer
So, Sanketh. And as we’ve discussed this in the past as well, if the non-par yields become unattractive compared to other instruments such as fixed deposits, then from the past we have seen that participating business becomes more popular. So you may very well see a switching mix between the two overall non-linked savings, I wouldn’t be worried. We do look at it as a pool which may shift from one to the other.
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Got it.
Satyan Jambunathan — Chief Financial Officer
In response to a second question on, rather your first question on the impact of shift in yield curve on EV, I think that’s, that’s a very tough one to answer, Sanketh because at non-parallel shift what, what part of the curve will shift by how much is very hard to call. And effectively the impact on EV will come from my cash flows and which part of the yield curve, there is a greater rate of cash flows. So what we try to provide is a parallel shift sensitivity. Non-parallel shift is going to be very hard to estimate because, you see the flattening may happen because the long end becomes lower or flattening may happen because the short end becomes higher. I don’t quite know what the answer is going to be. So that’s something that we’ll have to wait and see how it plays out,
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Assuming at the short end it becomes more, more elevate, I mean leads should be flattening, and then likely impact the switch?
Satyan Jambunathan — Chief Financial Officer
Then I don’t think, then I don’t think it will impact the EV in any material fashion.
Sanketh Godha — Spark Capital Advisors (India) Pvt Ltd. — Analyst
Okay, perfect. Perfect. That’s it Satyan. Thanks, sir. Thanks.
Satyan Jambunathan — Chief Financial Officer
Thanks.
Operator
Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal Securities. Please go ahead.
Nitin Aggarwal — Motilal Oswal Securities Ltd. — Analyst
Yeah, Hi. Thanks for the opportunity. And a couple of questions like firstly, you have reported INR3.6 billion of COVID claims in the quarter, which is like 30% lower than the first quarter. However like — few insurers and our interaction suggested for elevated claims which can be potentially higher than the first quarter. So based on your assessment, has the outperformed the industry in terms of claims and or the — the decline that we have seen is going to be there for others as well?
Satyan Jambunathan — Chief Financial Officer
So Nitin the only thing that I can say is that if I provided fully for all notifications in Q1, Q2 cannot be higher than Q1. If I have not fully provided for notifications in Q1, I can assure you Q2 will be more than Q1.
Nitin Aggarwal — Motilal Oswal Securities Ltd. — Analyst
Okay. Sure, that helps. And the second is on the EV growth light we are embedded value growth over the first half as increase in 4%, and I understand higher provisioning and the losses that we put in the first quarter has brought this growth. So if you can provide some color as to how this trending over the second quarter as to, to form a better view is on the full year growth?
Satyan Jambunathan — Chief Financial Officer
So Nitin, I would suggest if you look at the VIF growth, because the net worth growth would be depressed by all of this, the VIF growth is more indicative of the way the longer term trajectory will be. VIF growth even in the half year was more like a 9% growth in this. If I were to look at VIF growth from over a 12-month period, the 12-month period VIF growth was more like 26%. So for the half year, my VIF growth was 8.7% close to 9%. If I have to annualize that, I think that’s quite a healthy growth rate of this. As net worth issue has got behind us from the COVID and COVID provision point of view that should stabilize.
Of course, there was also some positives from the market at this point of time, also you have to keep in mind that in the first quarter we paid out a dividend of INR2.87 billion and all of those will not be recurring into the second half of the year. As it is, you’ve seen profit for the second quarter, no dividend outgoing is expected in the next two quarters and if profit comes through in the next two quarters, even the net worth will see a reasonable growth. So, EV growth I’m quite happy about, I tend to look at it more from the point of view of VIP growth because that is what we’re going to feed into my future profitability.
Nitin Aggarwal — Motilal Oswal Securities Ltd. — Analyst
Sure. This helps, sir. Thanks so much.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead.
Shyam Srinivasan — Goldman Sachs (India) Securities Pvt Ltd. — Analyst
Hi, good evening and thank you for taking my question. Just the first one is on M&A, we’ve seen one of your peers actually announce one. So just want to understand how you’re looking at M&A what are the white spaces, if at all that you’re looking at where we would like to look at targets potential?
Satyan Jambunathan — Chief Financial Officer
The M&A is always on the card, Shyam. The key consideration for us or the key considerations rather are one, a lasting distribution advantage. There are certain channels which give you a short-term distribution advantage that may not be very valuable. A long-term lasting distribution advantage such as a bank or a corporate distributor is very valuable. Second is a reasonable price that it may come in. So these are two things that we are always looking for if it comes by we are happy to look at it
Shyam Srinivasan — Goldman Sachs (India) Securities Pvt Ltd. — Analyst
And if you’re And if you’re being looking at our other deals there out there you think or is that a valuation hurdle if you can give us some color on how the M&A market at least is?
Satyan Jambunathan — Chief Financial Officer
So right now, I don’t think there are any sustainable distribution opportunities that are on the — that are in play.
N. S. Kannan — Managing Director & Chief Executive Officer
Which will survive the M&A.
Satyan Jambunathan — Chief Financial Officer
Correct. So there are a few smaller ones which are there, but we’re not seeing any of those as giving a lasting distribution advantage.
Shyam Srinivasan — Goldman Sachs (India) Securities Pvt Ltd. — Analyst
Got it, that’s helpful. And my second question, I think in your opening remarks you talked about the synergies between the annuity business and the pension fund management business. Can you just outline us and help us understand how this can kind of propel growth for the annuity part?
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah, Amit do you want to take the question?
Amit Palta — Chief Distribution Officer
Yeah, I’ll take that, this is Amit. See we believe that our pension fund company right now is in the process ever since they have become a POP where they have started acquiring NPS account themselves. They have become a very, very significant player in getting more and more subscribers under NPS. What we believe is a synergy as an opportunity for us is when these NPS subscribers will start reaching the maturity where they will start looking at annuity as a proposition for them that is where close working with life insurance company both the teams can work together to convert and give a composite solutions to the customers who will probably do accumulation through NPS platform and will then culminate into an annuity product from a life company. As you know that annuity products are exclusively sold through life insurance companies only that is where the synergy lies.
N. S. Kannan — Managing Director & Chief Executive Officer
Including with ICICI Bank [Indecipherable].
Amit Palta — Chief Distribution Officer
Yeah. So we also see an opportunity that ICICI Bank which themselves also is in POP, can contribute to more and more number of NPA subscribers joining the fray. And we do believe that with the current under penetration and with only 2% of the pension assets being only 2%, 3% of the overall GDP, we do believe that this accumulation over a period of time will convert into a huge opportunity for the industry on what will open up as annuity opportunity offered by all life insurance companies.
Shyam Srinivasan — Goldman Sachs (India) Securities Pvt Ltd. — Analyst
Very helpful, yeah. Thank you and all the best.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you. Thank you so much.
Operator
Thank you. The next question is from the line of Rahul [Phonetic] from Kotak. Please go ahead.
Rahul — Kotak Securities Ltd. — Analyst
Hi, sir. My question was also on a similar line. So if you can throw some color on while you said the annuity business has grown in the bank environment, how does it shape up with the other environment like partnership distribution, ICICI other than agencies, our group business, superannuation fees? So while we have double the business, if you can give some color in terms of different flavors while Ibank has grown 100%, how the other forms of business kicks in into group, retail and into different channels?
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah, so [Indecipherable] this side, on the retail side our investment in annuity is actually quite well-rounded and is focused right across channels. And understand the start point of our focus on annuity was the time when we changed our target segment from only a retired customer to a customer who is nearing retirement. That is what opened a new customer segment for us, which is typically a customer in the range — in an age band of around 40 to 58 years. That is when the customer starts thinking of retirement.
And that is where we launched our new product offering last financial year which offered a deferred proposition for the customer where he could start planning for annuity well in advance and that opened opportunity. And this is one traction that we have seen building right across channels. So there’s no bias, ICICI is of course is growing at double the rate, but then there are other channels as well who are matching up with the growth rate that ICICI Bank is delivering. So our Agency business for instance, is also for last couple of quarters doubling their business on annuity.
Rahul — Kotak Securities Ltd. — Analyst
Alright, one, one last addition on.
N. S. Kannan — Managing Director & Chief Executive Officer
Just to give you a color today of the overall annuity that we sell, a good one third of our annuity actually comes from this customer segment which is 48 years, 50 years age band, which earlier was not considering annuity as a proposition.
Rahul — Kotak Securities Ltd. — Analyst
All right. In fact, you answered my next question. My next question was on the lines of what is the percentage of deferred annuities that you offer. Fair enough. Thank you. Thanks a lot. That gives me a perspective, sir.
N. S. Kannan — Managing Director & Chief Executive Officer
Yeah.
Operator
Thank you. The next question is from the line of Rishi Jhunjhunwala from IIFL. Please go ahead.
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
Yeah. Thanks for the opportunity. Just couple of clarifications. So on the prevention side between retail, GTI, and credit, you know since, early part last year, are we done with one round of wage hike, sorry one round of pricing hikes from the reinsurers or has any section seen dual hikes also?
Satyan Jambunathan — Chief Financial Officer
So, Rishi, retail protection saw a price hike, at least for us last July. Group Protection saw a hike from us during this financial year in May, June, July. We haven’t seen a second hike on any categories so far in the last 18 months.
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
But you will be doing one on the retail side, I guess now, right?.
Satyan Jambunathan — Chief Financial Officer
So like I said before, the reinsurer has given us notice of change in rates. Exactly how that will translate, we have to figure out. It may very well translate into a rate increase towards the later part of this financial year.
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
And when you mentioned Group, you were referring to both GTI and credit protect, right?
Satyan Jambunathan — Chief Financial Officer
That’s correct.
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
Okay. And second, can you give us some sense in terms of what would be the margin differential between say your GTI business versus credit protect or would it be roughly similar?
Satyan Jambunathan — Chief Financial Officer
We have not given that out publicly, Rishi.
Rishi Jhunjhunwala — IIFL Securities Ltd. — Analyst
Okay. Okay. All right. Thank you.
Operator
Thank you. The next question is from the line of Abhishek Saraf from Jefferies. Please go ahead.
Abhishek Saraf — Jefferies LLC — Analyst
Yeah. Hi. Good evening, everyone. Am I audible?
Satyan Jambunathan — Chief Financial Officer
Yes. Quite faint, Abhishek. It’ll be great if you could speak up a little.
Abhishek Saraf — Jefferies LLC — Analyst
Hello? Hello?
Operator
Sorry to interrupt, Mr. Saraf. We can’t hear you that well. May we request you to use your handset, please?
Satyan Jambunathan — Chief Financial Officer
Sure. Is this sounding better now?
N. S. Kannan — Managing Director & Chief Executive Officer
Perfect. Perfect. Perfect.
Abhishek Saraf — Jefferies LLC — Analyst
Yeah. Sorry for that. So, thanks for taking the question. So, sir, I just wanted to understand a bit more on the durability of price hike for reinsurance. So, of course, the higher claims could be driving that. But as we have seen that now the claims have started to come up, so in that light, how could one see on the durability of these price hikes? And pardon me if you had touched upon this on the sensitivity of, let’s say, there were a certain percentage hike in reinsurance. What could that mean in the final price hike for our product? And if you can just refresh our memories in terms of how it played out last year?
Satyan Jambunathan — Chief Financial Officer
Very hard, Abhishek, to really figure out how much of the price increase is, I’m getting feedback.
Operator
Sir, you may proceed now.
Satyan Jambunathan — Chief Financial Officer
Okay. So, it’s going to be hard to attribute how much of the price increase is coming from COVID or non-COVID. It’s really, it’s a composite increase. I don’t think anybody is going to be sharing with us what the mix, what the impact broken up by each will be. But my general sense is that you wouldn’t seek to recover one or a two-year COVID claim into long-term price. So, I would expect the pricing to substantially reflect a view on underlying mortality and not be oriented more towards COVID. In answer to your second question on what will be the impact of reinsurance price on customer price, again like I said too premature to even get into that conversation. It is still very early stage in the discussion. We have to work out what will be our combination of price sourcing and underwriting before we determine what will be the price increase.
Operator
Mr. Saraf, do you have any further questions?
Abhishek Saraf — Jefferies LLC — Analyst
Yeah. Sure. Thanks for the explanation, Satya. Just on the last year part, if you could help us refresh what was the reinsurance price hike that we got? And how much was, is the finally passed on in terms of price hike? And how much was, the finally passed on in terms of price hike. And second question apart from this, I had was on persistency. So persistency has been increasing since the first quarter of COVID last year, but this quarter I noticed that across over 13 month or in 61st month, the persistency have declined. So if you can just share some light on why that has happened?
Satyan Jambunathan — Chief Financial Officer
So, Abhishek last year, our price increases were anywhere between 10% to 25%, depending on sum assured, term, and all of that. And the insurance price hikes again were much higher than that, so more like 30% to 40%. So we’ll have to see how it translates now. Persistency, I’m not so sure. I don’t think persistency for us has declined compared to what we had earlier. In fact, it’s actually improved across more for most markets. Like Kannan mentioned early on, I don’t know, this time we have changed the persistency definitions and we are giving the additional data.
N. S. Kannan — Managing Director & Chief Executive Officer
As required by IRDA.
Satyan Jambunathan — Chief Financial Officer
As required by the new definitions of IRDA. Basically, they are telling us now separate out your persistency to regular pay and fully paid and fully paid include single premium. So to that extend, you will see the more relevant persistency measure come through now than you would see before.
N. S. Kannan — Managing Director & Chief Executive Officer
Across companies.
Satyan Jambunathan — Chief Financial Officer
Across companies.
N. S. Kannan — Managing Director & Chief Executive Officer
This is for slide 22.
Satyan Jambunathan — Chief Financial Officer
If you see slide 22, Abhishek, you will see the persistency numbers broken up between regular and limited pay during the premium payment term and fully paid in single premium, which is beyond the premium payment term.
Abhishek Saraf — Jefferies LLC — Analyst
Sure. Sure. Okay. Thanks a lot.
Satyan Jambunathan — Chief Financial Officer
Thanks, Abhishek.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.
N. S. Kannan — Managing Director & Chief Executive Officer
Thank you. Thank you, Stanford. And thank you all for joining us on this call. I do hope that the bulk of the questions have been answered. However, if you have any residual questions, my team and I are available to clarify to you. Thank you. Have a good evening. Bye.
Operator
[Operator Closing Remarks]