ICICI Prudential Life Insurance Company Ltd (NSE: ICICIPRULI) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Anup Bagchi — Managing Director & Chief Executive Officer
Amit Palta — Chief Products and Distribution Officer
Dhiren Salian — Chief Financial Officer
Analysts:
Ankita Srivastava — Analyst
Avinash Singh — Analyst
Nischint Chawathe — Analyst
Shreya Shivani — Analyst
Supratim Datta — Analyst
Manas Agrawal — Analyst
Prayesh Jain — Analyst
Aditi Joshi — Analyst
Madhukar Ladha — Analyst
Dipanjan Ghosh — Analyst
Nishant Shah — Analyst
Sanketh Godha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the ICICI Prudential Life Insurance Company Limited Q3 FY 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anup Bagchi, MD and CEO. Thank you, and over to you, sir.
Anup Bagchi — Managing Director & Chief Executive Officer
Thank you. Thanks. Good evening, and welcome to the results call of ICICI Prudential Life Insurance Company for the nine months ended 31st December 2024. I have several of my senior colleagues with me on this call; Amit, Chief Product and Distribution Officer; Lien Salian, CFO; Judhajit, Chief Human Resources and Operations; Deepak Kingar, Chief Risk and Governance Officer; Manish Kumar, Chief Investment Officer; Souvik, appointed Actuary; and Dhiraj Chugha, Chief Investor Relations Officer.
Let me take you through the key developments during the quarter before moving on to discuss the company’s performance. Our Independent Director, Mr. Dileep Choksi has retired effective December 26, 2024, having completed his second term of appointment. I would like to express our gratitude for his guidance during his tenure.
During the quarter, we raised subordinated debt of INR14 billion, thereby strengthening our solvency to 211.8% at December 31st, 2024. Recently, the company has approved the proposal to invest up to INR100 million, not exceeding 10% of the share capital in Bima Sugam India Federation. Bima Sugam is one of Idea’s initiatives to achieve the objective of insurance for all by 2047. Bima Sugam aims to create and operate a centralized marketplace of insurance products and services. Customer-focused products continue to be at the core of our business strategy. During the quarter, we launched industry-first women’s health plan, ICICI Wish and an increasing annuity variant of GPP. Amit will subsequently cover the new product launches in detail.
Now let me talk about the key performance highlights. We delivered RWRP growth of 31.4% year-on-year in nine months 2025, outperforming both the private and overall industry over the last five quarters. Our endeavor is to continuously create an Elphon business growth over the industry. AP grew by 27.2% to INR69.05 billion in nine months 2025. The number of policies increased by 14.4% year-on-year in nine months 2025, outperforming the private industry growth of 8.7%. Our focus segments, annuity AP and Retail Protection AP grew by 81.7% and 24.2% year-on-year respectively in nine months 2025, in-line with our focus on proprietary channels, agency and direct together have delivered 37.9% APA growth year-on-year in nine months 2025 and contributes approximately 55% to our retail APA. Our 13-month persistency stood at 89.8% and 49th month persistency stood at 69.2%, a testimony to our customers’ continued trust in us.
We continue to deliver on our claims promise with claims settlement ratio of 99.3% for nine months 2025, settled with an average turnaround time of 1.2 days for non-investigative individual claims. VNB grew by 8.5% year-on-year to INR15.75 billion in nine months 2025 with an AP of INR69.05 billion, the margin stood at 22.8%. Our business growth and profitability has been delivered with risk and prudence and is exhibited in a strong and resilient balance sheet. We continue to be the highest rated Indian insurer as per two leading global ESG agencies by virtue of our AA ESG rating from MACI and low risk rating from Sustain analytics.
Our customer-centric initiatives have also been recognized by awards in the area of digitalization, customer experience, learning and development and clearance management by various industry platforms. A complete list of awards won during Q3 2025 is presented on slides 52 and 53. To summarize, we will continue to offer the right product to the right customer and deliver it through the right channel. Our 3C framework of customer centricity, competency and catalyst will help us deliver sustainable VNB growth by balancing business growth, profitability and risk included.
Thank you, and I’ll now hand it over to Amit to take you through the business updates.
Amit Palta — Chief Products and Distribution Officer
Thank you, Anup. Good evening, everyone. We continue to improve our product propositions to cater to the evolving needs of the customers. There is a growing need of women-centric protection products and to cater to the same, we have launched an industry-first women’s health plan, ICICI Pru Wish offering fixed lumpsum for critical illness and surgeries. This plan ensures adequate financial support during treatment and recovery period and creates a safety net for the family. Moreover, the premium is also fixed throughout the coverage term, which could range up to 30 years.
In Protection segment, we launched iProtect Super, a term plan which offers a unique feature of premium break whereby a customer can choose to defer payment or premium by 12 months while keeping active life cover. This feature is a beneficial option for the customers with fluctuating income, who may want to take a break from premium payment due to other financial commitments for a certain period.
We also launched an industry-first variant of GPP Flexi, which offers increasing annuity income every year, thereby safeguarding retirement income against inflation. In Unit segment, we launched ICICI approved Signature Assure, which offers gold-based savings through waiver of premium, family income support in case of uncertainty and maturity benefit, thereby safeguarding the investment objective of the customer.
Let me talk about the business performance now for nine months FY ’25. AP grew by 27.2% year-on-year to INR69.05 billion and retail AP grew by 28.5% year-on-year to INR57.53 billion for nine months period. Linked business grew by 49.8% year-on-year and its contribution to overall AP increased from 43.1% in nine month FY ’24 to 50.8% in nine month FY ’25 on account of customer preference shifting towards unit products given the market buy and sell. Non-linked savings business, excluding annuity declined 17.4% year-on-year and its contribution also declined from 26.8% to 17.5% in the corresponding nine months this year.
Group fund business grew by 102.5% year-on-year in nine month FY ’25. Contribution from group fund business increased from 3.7% last year to 6% in nine month FY ’25. This business is typically lumpy in nature. Protection AP grew by 6.9% year-on-year and contributed 16.9% to AP in nine month period. Retail protection business grew by 40% in quarter three and 24.2% in nine month FY ’25 on a year-on-year basis. In credit life business, we have witnessed some slowdown due to ongoing challenges in NFI industry. Non-NFI business continued to do well. In this segment, we continue to add partners and introduce propositions aligned to the various lines of businesses of our partners.
Group term business, as we have highlighted previously as well, continues to be impacted due to increased competition. However, we have been able to increase our depth of market coverage as seen in the growth in number of deals, lives covered and some assured during the quarter. As a longtime player in the industry, we have a deep understanding of this market and our underwriting strategy remains focused on selecting businesses which meet our defined risk-reward expectations.
Annuity business grew by 50% in quarter three and 81% in nine month FY ’25 on a year-on-year basis. Its contribution increased from 6.2% in nine months last year to 8.9% of AP in nine months this year. Protection and annuity are our focus segments, which together constitute approximately 42% of the new business premium and we expect it to continue doing well.
We have a well-diversified distribution mix. Agency business APE grew by 41.3% year-on-year and contributed 30.2% to overall AP and 36.2% to retail AP in nine months period. To improve productivity of our advisors, we had launched ICICI Pru Edge, a comprehensive advisor stack, which enables them to focus on revenue-generating tasks instead of administrative activities. Advisers using IPRU EDGE have exhibited an increase in productivity.
Direct business APE grew by 31.6% year-on-year and contributed 15.3% to overall AP and 18.4% to retail APE in nine month period. We will continue to invest in our proprietary channels to drive business growth further. Bancassurance business AP grew by 26.3% year-on-year and contributed 27.7% to AP mix in nine months FY ’25. Even within banca channel, our business is well-diversified amongst various partners. Partnership distribution business grew by 2% and contributed 10.1%, while group business grew by 20.9% and contributed 16.7% to AP mix in nine month FY ’25. We continue to build capacity and have more than 2 lakh agents spread across geography. We have partnerships with 46 banks and access to more than 22,500 bank branches and 1,250 non-bank partnerships. We will continue to focus on improving customer experience through tech and digital integration in our day-to-day processes. Approximately 50% of policies were issued on the same day for the savings line of business in nine month FY ’25. Notably, we are also the first insurer to pay out commissions on the same day-to our distributors. Our product, process and distribution are completely aligned with one goal that is to deliver value proposition to our customers. All these initiatives together will help us achieve our core objective of increasing the absolute VNB while delivering value to our customers.
I will now hand it over to Dhiren to talk to you through the financial update for nine months FY ’25.
Dhiren Salian — Chief Financial Officer
Thank you, Amit. Good evening. Now let me take you through the financial metrics. APE for Q3 FY 2025 grew by 27.8% Y-o-Y, while the expenses increased by 10.7% Y-o-Y. AP for nine months FY 2025 grew by 27.2% year-on-year, while the expenses increased by 19.8% year-on-year. Our cost to premium stood at 19.8% and cost to TWRP stood at 27.8% in nine months FY 2025. Our cost to TWRP on the savings line of business stood at 16.8% in nine months FY 2025. Our objective is to bring efficiency and savings line of business while we continue to focus on growth in the protection business. We have been investing in our capabilities that is people, technology and process improvements, which will help us deliver operating leverage into the coming years.
The VNB for nine months FY 2025 grew by 8.5% year-on-year to INR15.75 billion. As you’re aware, our focus has always been on growing absolute VNB and margins are primarily an outcome of the product mix. The margin for nine months FY 2025 stood at 22.8%. The movement in margins is primarily on account of a shift in the underlying product mix.
The company’s PAT for quarter three FY 2025 grew by 43.6% year-on-year to INR3.26 billion and PAT for nine months 2025 grew by 18.3% to INR8.03 billion. Our assets under management stood at INR3.1 trillion and our solvency continued to be strong at 211.8% at December 31st, 2024 aided by the INR14 billion fundraise that we had done.
Thank you, and we’re now happy to take any questions that you may have.
Questions and Answers:
Operator
Thank you thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen, we will wait for aa moment while the question queue assembles. The first question comes from Ankita Srivastava from Aditya Birla Capital. Please go ahead.
Ankita Srivastava
Hi, team. I can see a sudden spike in the group numbers. So if you could just shed some light on the reasoning for the same?
Anup Bagchi
Ankita, can you just repeat the question again? We didn’t catch the first part.
Ankita Srivastava
Yeah. So I was asking that there has been a sudden spike in the Group Fund numbers. So if you can shed some light on the reasoning for the same?
Anup Bagchi
Yes, we had a spike in Group Fund numbers in this quarter. Group Fund is typically lumpy in nature and it is — it’s a good business. We do make money off it and be happy to pick it up.
Ankita Srivastava
Okay. Thank you. And just one additional question. What has been the business for credit life?
Amit Palta
So credit life business for us actually has grown by 8% and this contributes close to 38% of our overall protection business. Our protection is close to 16.5% of our overall AP and 38% of that is credit life. And within credit life, 45% of our business is FFI and remaining is non-MFI. So I’ll give you the exact numbers.
Anup Bagchi
Okay. Anything else, Ankita?
Ankita Srivastava
No, no, no. Thank you. Thank you so much.
Anup Bagchi
Thanks.
Operator
Thank you. The next question comes from Avinash Singh from Emkay Global. Please go ahead.
Avinash Singh
Good evening. So a couple of questions. The first one again regarding the product composition and margin. I do understand, I mean the buoyant equity market or demand but I mean, do you have any sort of a product mix in mind? I mean, given that last year, this non-linked product has already seen a kind of a retake from the high base of FY ’23 and yet it continues to decline in the mix and given the cost structure, the ULIP is not really the profitable one. And that is why the margin continues to sort of work. And if my understanding, of course, you choose not to disclose, but typically having an idea about composition of non-linked in par and non-par also gives us idea around margin. And that is where, again, if I see correctly, it looks like that the non-par side has rather, again, a slowdown sharply versus par and that all contributing to this margin. So if you can just help us understand the product strategy and if you can just sort of provide some color between this, that par — non-par and also the kind of idea, but on the kind of a Group Fund business, why to do it, particularly it is not sort of — it is coming at such a vapor thin margin at it appears? So that’s one.
The second part is that — the second part is around product. So you launched this 100% kind of zero cylinder value product even before this new revolution came. So how has been the experience so far? And has there been kind of again related to that, any changes in assumption or something that has led to kind of a margin of resetting — as resetting this quarter? I’m asking this question in the backdrop of what has happened last year quarter because you had to kind of adjust certain that led to margin drop. So these are my two questions.
Dhiren Salian
Hi, Avinash. Dhiren here. So let me pick up some of your questions before I hand over to Amit. So one, if you look at the trajectory of the product mix across the quarters and I think we should call this out also, a large portion of the Group Funds also needs to be clubbed along with the unit link when you look at the overall margin profile. So when you look at that, you’ll see that for the quarter, you’ve got nearly 60% of the business that comes in from unit linked plus Group Funds. Now when you overlay the overall margins, you will find that you’re broadly in-line with the number that we have reported for the nine month period. So that should explain how the margins have moved broadly in that direction.
Yes, we discussed what the split between par and non-par numbers are. They are roughly in the range of about 60-40. We discussed this last time as well. It ranges somewhere between 60-40 to 66-33 in that range. So that should give you a sense of how the numbers have been moving. Very clear that we don’t want to put any artificial set as to how much business we want to do from a particular line because as we have reiterated over and over again, our focus is not on the margin. The focus is to grow absolute BNV. And what we are very clear on is we want to offer products that customers demand.
Now in this current environment, customers have chosen the unit linked product and we have a variety of offerings within the unit linked product, which customers have picked up even in this quarter as well. Clearly, we are not ones who are going to say more towards a particular product line. What we need to be very cognizant of is we have to build our cost structures to be able to support products that customers demand. Now what you’ll also notice that when you look at the trajectory of costs from quarter two to quarter three, there is a sequential downward movement. It’s part of the work in progress that we have been doing even while we continue to make investments in technology, people and brands. So you’re putting all of this together and that’s why we’re looking at how the VNB movement is for the nine month period.
Avinash Singh
And there is no sort of assumption changes. I mean that has happened this quarter.
Dhiren Salian
Can you repeat that what?
Avinash Singh
No operating assumption changes or anything that. I mean it is just a product mix, no assumption changes that is kind of having any bearing on margins.
Dhiren Salian
No, we haven’t taken any assumption changes. Typically, we’ll do that at the end of the year, we’ll review all assumptions at one shot. Of course, we’ve updated some of the expense forecast that we see for the full-year.
Avinash Singh
Yeah. Look, now quickly just a follow-up. I mean, again, I understand on the retail side, but that, okay, what customer you want to sell the product. But why do this Group Fund business if it is like a, because group is not — Group Fund is not loyalty, I mean, so that’s one. And the second also on the cost because you raised the point, if I look at the saving 4% cost to at TWRP, Y-o-Y again, it’s a very marginal increase, but given the kind of a volume growth coming and also product mix shifting towards ULIP more even this year, one had expected some bit of a decline here. So what’s going on?
Dhiren Salian
Yeah. So let me take that second question first. Let me just close that group thing. I think you are asking this question for the second time. See, group business is part of our proposition that we give to our institutional clients and it goes as a composite package both for what you do to the funds which are managed by the corporate for their employees, which we categorize as Group Funds. And in the same breadth, we look at group term as another proposition that goes as part of the overall employee benefit solutions. So it is not a separate effort being made for us a category of product. It is an institutional set of customers where we are catering to what they need as a composite offering from Group Fund as well as group term perspective.
And by the way, for the same set of team members and for the same cost structure, group actually adds to the incremental profits. As you know that we don’t go by really a margin percentage, but with the same effort, with the same coverage, if we are able to get Group fund alongside group term, we absolutely don’t mind. And margin is not the consideration. The absolute profit is what Group Fund adds and we are very happy to take that.
Anup Bagchi
Yeah, just to reiterate that, Avinash, we are not seeking to get a margin outcome. We’re looking to grow absolute VNB. And to that extent that Group Funds brings profits on the table, we’re happy to take that. To get your other question on cost, actually, if you look at the differential between H1 between what was the cost ratio last year and the cost ratio this year. And if you look at the differential between the cost ratios at nine months last year to this year, you will find that the gap has reduced. And that’s also part of the point that I spoke of earlier in terms of the sequential decline in cost, which is roughly about 10%. Amit, you want to pick up the annuity?
Amit Palta
Yeah. So you also spoke about the non-par and guaranteed range of products. See, when we look at non-par products, we either want to look at it as non-par and annuity together because both are guaranteed propositions for the customers or we look at overall non-linked savings business together in one bucket and we don’t really differentiate between a participating and a non-participating product. We do understand that with current interest rates prevailing and what is available in the market on fixed deposits from banking systems are quite attractive. So naturally, we did not find anything as an aberration when the demand we saw slowing down on a non-participating products.
At the same time, what we really saw was cash flow as a benefit being really taking president customers really valuing liquidity in the long-term insurance products. And we offered that liquidity feature in one of our part guarantee products. So our part guarantee products, the flagship product within our part guarantee range, which is gold has been doing very successfully. So from that perspective, there is no bias towards non-participating products. Overall, as a base, we are very happy to take care of the liquidity demand which we are seeing in the market. And annuity, as you know, from 6% mix to 9% mix this year, it means that we are catering to that demand in our aid segment, which is relatively 50 plus where a customer is closing towards its retirement. So that way is I think on an overall portfolio basis, liquidity demand is taken care of and customers nearing retirement is taken care of through annuity. So I don’t think we are missing out any demand which exists and which is not being catered to.
Anup Bagchi
In fact, Avinash, we had seen this challenge even over the last year where single premium really wasn’t growing well from an annuity perspective, which is why we had introduced the regular pay annuity, which is the product that you just referred to. And that has done quite well since the time that we introduced this in January last year. That has been a big driver of this demand on the annuity side and that’s an opportunity that we saw and we took advantage of it.
Avinash Singh
Yeah. Thank you. Thank you.
Operator
Thank you. The next question comes from Nischint Chawathe from Kotak Institutional Equities. Please go ahead.
Nischint Chawathe
Hi. Just curious, if I have to sort of look at your VNB ex of the group business, the group points business. How would that look like and if there is some pointer to this, if you could help us. And if I really try to look at your cost to WRP for the savings business, again, ex of the group business, looks like the ratio has gone up over the nine month period.
Anup Bagchi
So I don’t want to call out the margin on the Group Funds business. There is rupees on the table and we’re quite happy to take that. Obviously, it’s going to be smaller, but we are quite happy to put that on the table. But even otherwise, when you look at the cost and look at the ratios, you will still see a decline from a quarter-to-quarter perspective. And we keep working at this and as I mentioned earlier, the idea is to be able to reset cost structures based on the products that we’re selling and which is again based on the customer demand.
Nischint Chawathe
No, I understand that. Obviously, we discussed that the share of ULIP has gone up. And despite that, I think when we just discussed saying that the cost ratio has probably not gone down as much. And you know, so if I kind of don’t try to adjust that with the Group Funds business, which practically comes in at negligible cost, probably the ratio looks a little adverse. I think that’s the point I’m trying to make.
Anup Bagchi
Not really, Nischint. See, I think one also has to recognize that one of the biggest components of opex is going to be employees and we are not a higher and fire company. So we will adjust our cost structure and we will keep working at it systematically. And therefore, which is why you’re seeing this cost — overall cost number move down some quarter two to quarter three.
Nischint Chawathe
Sure. And on the first question, if you could give some texture on how should we think about the VNB at a product level ex of group savings?
Anup Bagchi
Broadly similar. Broadly similar to what we had closed earlier.
Nischint Chawathe
Okay. Got it. Thank you very much.
Operator
Thank you. The next question comes from Shreya Shivani from CLSA. Please go ahead.
Shreya Shivani
Thank you for the opportunity. So I have questions on the —
Operator
Really sorry to interrupt, ma’am, your line is not clear.
Shreya Shivani
Can you hear me?
Operator
There is a lot of breakage in your voice.
Shreya Shivani
Okay, let me get back in the queue. Try again.
Operator
This is sounding clear right now.
Shreya Shivani
Okay, I have two questions most channel. So I wanted to understand the agency channels for most of the year gone quite well in terms of the growth that’s been coming through? Even if I look at the third quarter or if I look at the nine months, that channel has been doing quite well in terms of matching up with how the bank channel has been growing. So how many agents have we added in the quarter or in the nine month? What are some of the key changes are we making over here? As this channel becomes open architecture, which is proposed in the insurance amendment bill, how do we — how will we manage with those changes that will come through? That would be my first question.
And second is on Banca channel. So there was a lot of noise around the misselling bit in the Banca channel, et cetera. Have you seen any change in the way our Banca partners were behaving? Were there any processing that were going on? Any color that you can give to us on that would be useful. Thank you.
Anup Bagchi
See, I’ll start from agency. Sorry, your voice was not very clear. So I’m just assuming what you asked. So correct me in case you want me to answer anything implemented.
Shreya Shivani
Sorry. Yeah, sure. Okay.
Anup Bagchi
I heard you ask about what is working in agency. See, agency has been asked — has been chosen as one of the key focus areas for us over a period of last few years. And we have spent time in building capacity, both physically as well as on our processes, on skill building and that is something that is now starting to play out. And over a period of last nine months or so, we have been able to see a growth on the new advisor licensing, which is quite a quite reasonable at 50% plus growth. And then as you know, apart from new advisor licensing, which anyways contributes meaningfully to the overall top-line, it happens over a period of time.
A lot of time has been spent in looking at building skill on the retail side of our advisors. I’m very happy to state that almost close to — more than 25% to 30% of our advisors activation is what we have witnessed over a period of last nine months and that is largely on account of digital enablement that we have done for our advisor. We launched advisor stack through an app called IPRU EDGE, which has been adopted very well with our value set of advisers and the productivity enhancement that we have seen specifically on value advisors has gone up to the extent of 37% over what it was when they were not using the app or even in comparison to advisers who are not currently using those that app. So I think that has really held us in good stead.
Yeah, apart from that, I think the learning academy right from our own employees to the advisors is something that is again working well for us. Overall productivity increase the entire agency base has gone up by almost 10% to 12%. And all this is by, of course, doing a lot of ground up activity and breaking down the entire process beyond relationship management to having a very strong digital sales process of tracking skill levels and then monitoring and certifying over a period of time. So it sounds all very logical and very simple, but this is something that will rigger over a period of last 1.5 years to two years is what we have been able to eventually achieve.
And of course, I want to speak about the fact that segmenting our advisors basis on the access that they have on the customer segments that they are catering to has actually held us again positively. We today have a fair hang of which set of advisers have access to what profile of customers, which allows us to build skills specifically for product propositions which are most meaningful for the advisers, which is drawn from the access that he has from his natural ecosystem. So it’s not that everybody has been asked to do everything, it is all aligned to the customer access that they bring in to ICICI Prudential. So I do very segmented capability building, skill building and not doing anything — everything to everyone has been the fundamental reason why we have been able to see this result. So we are quite confident that we’ll continue to add capacity. We’ll continue to add depth in leadership and depth in frontline management with people who have spent enough time in agency and build it over a period of next 6 to 12 months timeframe.
Shreya Shivani
That is useful. And also when the open architecture comes to do things — do you see that as net positive or do you think more disruption would come in the agency channel once they are open to right now at a very…
Anup Bagchi
See, first of all, it is not something which is entirely in our control, right? It is a decision best left to the regulator to decide. But if you want to ask us today intuitively and with the experience that we have in agency, it’s a business which is really different in comparison to what you would typically see in a mutual fund kind of business where also there is a multi manufacturer distribution existing. It’s a very high intensity business, lot of training, capability building, skill building is required and also advisors tend to gain a lot when they enhance productivity with a particular manufacturer. So that exercise means that even if the multi-insurer architecture was to come, how many will exercise the choice of trying that out with multiple manufacturers is something that is yet to be experienced and seen. I believe that category of products are available with almost any insurance company. Today, products are copyable, everybody can manufacture anything. So from that perspective, or a differentiation from company to company doesn’t exist. It is all about the capability of how you manage advisors, how you build skills. I think from that perspective, I truly believe that advisers in this time to gain aligned to one set of people in the organization to really accelerate their overall productivity. But anyway, it’s too early to comment right now. We’ll wait and watch and see how it pans out.
Shreya Shivani
Sure. And sir, my second question was on the bank. Any changes you’ve seen after the regulators’ comments, et cetera., and is ICICI Bank still doing INR1 billion per month — sorry, per quarter kind of number?
Anup Bagchi
Okay. So I understood the ICICI Bank question. So ICICI Bank has been stable like what we have been maintaining every quarter. The focus is in protection line of business, they are doing fairly well on protection. And the numbers are stable. The Y-o-Y growth keeps differing depending upon what was there in the base. But I think we’re very happy with the overall focus on protection, overall focus on sum assured. And I think there the growth from ICICI Bank channel has been quite good.
From other bank perspective, I could not understand your question. If you could just repeat that?
Shreya Shivani
So basically, there was some comments made by the regulator and the finance minister are misselling in channel. So have we seen any changes happening at the distributor and in terms of tightening of services to make the — to curb misselling.
Anup Bagchi
See, see, first of all, misselling is not something that we have ignored ever. We always want to focus on misselling and improving it all the time, irrespective of what the guidelines come eventually. So persistency, I believe is a good fair measure of the quality of sale that you do. And there, I think we are improving very regularly and every year, we are actually showing an improvement in persistency and that is the best outcome that you can expect from a quality of sale. Otherwise, our effort on improving quality all the time, not just with Banca, but with every channel will always be there, right? So to that extent, specific to Banca, I don’t see trends any different from what we see at an overall country level. So I don’t have to any please comment on specifics about Banca on that front.
Shreya Shivani
So this is it, sir. Thank you, sir.
Operator
Thank you. The next question comes from from Supratim Datta. Please go ahead.
Supratim Datta
Thanks for the opportunity. So my question is, I understand that you have a VND growth target. But looking ahead into the fourth quarter or FY ’26, you already have a high APE base after the growth that we have seen over the first three quarters of FY ’25. So could you help us understand that how would you going-forward drive this VNB growth because would it be driven by you getting into more products like Group Fund and expanding those and hence the margin could be lower, but the top-line would continue to grow at a similar rate. Would that be the strategy?
Also on the VNB side, while we have been growing the VNB now, if we see, yes, still — if I look at it on a two-year basis, you are still below where we were in FY ’23. So by when do we plan to go back to those levels or what would be the pathway back to that level? Because what is happening is we are growing the top-line, but the margins are still weaker than what we used to post and weaker than what the competitor — your competition is also posting. So just if you could give us some clarity on these two things that could be helpful.
And on the third bit, what I wanted to understand is on the zero surrender product. Now you launched it in Jan, so there is around three weeks of data. So what are you seeing in terms of surrenders? Are you seeing anything different from what you have already budgeted for? If you could give some color on that? And for this product, are you anyways building in higher surrenders in your assumptions or other surrender assumptions similar to your regular product annuity products? So if you could help me with these points, that could be very helpful.
Dhiren Salian
Hi, Supratim, Dhiren here. So let me go one-by-one. With regard to our annuity product, yes, it’s a little about three weeks since the time that over a year since we launched. And frankly, we have not seen any adverse trends at this point. Because again, our belief is that this product has been bought from the perspective that the customer wants to take an annuity and that is the way it has been sold with our distribution as well. So for the customer to walk away with just the premium at this point is really not a win-win situation for him, because in any case, there is going to be an opportunity loss that the customer has — would be taking as of course, the GST loss that he would be pairing. So clearly, it would be a little out of pocket for the customer to walk away now, right?
The objective of the plan that we had brought out was to be able to build a corpus such that an annuity can be taken. And we believe that’s how it is being sold at this point. Nonetheless, we have our eyes and years open and we’ll keep watching also any trends if as we can pick it up. But at this point, we have nothing to report. The surrender number — surrender expectations built-in are anyway quite minuscule in-line with our other products as well.
Anup Bagchi
I just want to add here, Dhiren. Supratim, when we launched this product, it was based on the insights that we picked where customers had large sums, but they were not willing to commit for a long-term commitment on premiums, believing that if there was to be a crisis, then the principal may get lost. So this product has actually taken away that anxiety, taken away that anxiety of losing principle in case prices was to hit. So if that was the process and if we were to route this product through distribution, who was aligned because we did a level commission with our distributors, then I think this product was meant to manage and take the fear away from the customer’s mind, which was crisis. And that doesn’t give the reason for a customer to surrender just because the feature is available.
And liquidity diamond at this point in time, so liquidity is something which we don’t see has emerged as a big requirement and hence surrender experience has been not something which is conspicuous at this point in time. So there is no change in the assumption that we have taken and customers have welcomed that and it has helped us build our annuity franchise.
Dhiren Salian
Coming to your earlier question, Supratim, on what are we looking at for quarter four. Frankly, as we had mentioned you in last quarter four, there are a series of multiple items that we have on the table. And that, of course is a natural consequence of the fact that we’ve got a very well-diversified distribution network. So there is not going to be one big lever that I can pull. There are going to be multiple levers that we have on the table that we have set out. And like we have done for every quarter, these are the elements that we are putting in place and we will see some of them will work, some of them may not work, but we believe on balance, we should be able to deliver some alpha on the market and that is what our endeavor would be. For the last five quarters, we’ve got some alpha us to be able to continue the alpha of the market into the coming quarters as well. And again, the focus very clearly is on absolute BNP that we want to drive. Margin is an outcome for us.
Supratim Datta
But meantime, what is the path back to the FY ’23 level VNBs because we are still below that in two years out, we are still below that. So how do we go back to those levels? That’s what I’m trying to understand both in the different context.
Anup Bagchi
The context was very different and what you were experiencing as a demand from customers during FY ’23 was very different in comparison to what you see today. So comparing it in a — comparing it with an environment which is not relevant today is a difficult question to answer to be very honest. Dhiren, you want to add?
Dhiren Salian
Yeah. So very clearly, we took a hit last time. We did not have the growth and that actually impacted the overall margins and therefore the VNB. Now we’ve worked beyond that from the first and second quarter of last year to start to deliver growth slowly but steadily from quarter three onwards. And that is what our endeavor will be. Because at the end of the day, when you have to look at delivery of VNB, it has to come from delivery of AP. And as you can see for the past few quarters, we have been working at it and we’ve been able to deliver some bit of alpha the market. Slowly and steadily, we’ll bring this back, no doubt about that.
Supratim Datta
Thank you.
Operator
Thank you. [Operator Instructions] The next question comes from Manas Agarwal from Sanford C. Bernstein. Please go ahead.
Manas Agrawal
Hi, can you hear me?
Anup Bagchi
Yes, Manas. Please go ahead.
Manas Agrawal
Sure. Sorry to go back to margins. Just wanted to understand and confirm, you said product level margins were stable. This is slightly contrary to what we are seeing with peers where they are seeing better rider uptake and therefore better margins on the ULIP side and they repriced to adjust for interest rate movements and therefore, non-par/par pricing margins have also improved. So if the product margins are stable, why this delta relative to peers? And if you’re saying product margins are stable, then the entire movement in margins on a sequential basis or Y-o-Y basis coming only from mix. Is that the right way to think about it? I’ll also squeeze in on margins. Is there any impact from surrender value? Those are the questions.
Anup Bagchi
So very, very limited impact on surrender value. We really don’t have that kind of a book as our peers. As you can — as I spoke of earlier, a large portion of our non-linked savings is in our participating business and not in the non-par space. That’s where the larger impact would have been seen. On product level margins, they are broadly the same as where we’ve seen from the previous peers. We, of course, are working at improving product level margins in terms of additions as well as elongating terms and some of the actions that we’ve spoken of are starting to bear fruit at this time.
Manas Agrawal
So we’ve not cut our customer IRRs in-line with interest rates. Is that accurate?
Anup Bagchi
No, we have repriced our non-par plans in-line with the yields at October. The last time that we had made these changes was at April. So in the intervening quarter, we did not have the chance to do that because we had to update it for surrender value regulations as well. But in October, we did update the IRRs in-line with the yields. But in any case, the share of non-par for us is quite small in our overall mix.
Manas Agrawal
Understood. Thank you.
Operator
Thank you. The next question comes from Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi. And just a structural question as to how do you think or what would be the factors that will kind of shift the product mix for the industry, the way it has been shaping towards ULIPS and reducing share of non-par. What will kind of drive this mix back towards something like a non-par and lower from Europe? The markets have been weak in the last few months, but has — is there any evidence that impact is visible in terms of ULIP demand. So any thoughts there where you know, how do we see this — what would be the factors that — macro factors that can drive this shift in mix?
Anup Bagchi
So Prayesh, if your question is what can drive the demand up in non-par, I think we’ll have to look at the shape of the yield curve and favorable movement of the yield curve will be the one that will create an opportunity to be able to provide this product and get the demand up over there. What we are seeing in the market is that ULIP has got a great appeal and we continue to provide products in that space, which are favorable for both the customer as well as the company. And very clearly, we are not one to throttle demand and we want to work at improving the quantum that comes through on that.
Prayesh Jain
Okay. And just a clarification. The Group Fund business, what is the — would there be any element of protection there? No, zero, right.
Anup Bagchi
Sorry, we lost you there. Group Fund business.
Prayesh Jain
Is there any protection element there?
Anup Bagchi
No, it’s savings. No, Group Fund is purely savings. It’s managing is only for fund is for the client.
Prayesh Jain
So basically, it will have a lower margin compared to your general ULIP product, right?
Anup Bagchi
Yeah, it will have a lower margin in general.
Prayesh Jain
Okay. Got it. Thank you.
Operator
Thank you. The next question comes from Aditi Joshi from J.P. Morgan. Please go ahead.
Aditi Joshi
Yes, thanks for taking my question. Just a follow-up question regarding the NED product, which is growing rapidly. So can you please confirm sub-margin of this product as in, was there any repricing being done for this NED product as well in the October, as we did for your. And just on this commercial structure, again, if I can ask the distributed commission structures in — especially in the broker and NFI channels. So is it more like a trail based commission structure? Any restructuring being done there? These are not? Thank you so much.
Amit Palta
Coming to the commission structure changed subsequent to 1st October, surrender guidelines, changes that have been executed. I think our options — that we — the options that we have worked with our partners is either deferring commissions or drawback of commissions or reducing commissions. So different partners have agreed for different structures, different models. It also had to be in aligned with what their opex requirement was, what their business models are. So we have almost closed more than 95% of our partners. We have closed the arrangement, the revised structures and whatever is spending is something very small. I think also will get over next couple of weeks’ time. So from that perspective, the commission structures have been completely aligned with the change in guidelines.
Anup Bagchi
Amit, just to reiterate the way that we’re approaching the surrender value guidelines is that to ensure that the impact to customers is minimal. What we have passed on in terms of price changes has been largely in-line with the change in the yields on the market. With our distribution, we have offered these three mechanisms that Amit just described, which is a reduced commission or a clawback or a deferral of commission. And as you pointed out, most of these conversations have now started to come to a close.
Amit Palta
We didn’t get your first question that you had raised. Your line was a little patchy if you can repeat.
Aditi Joshi
Yeah, yeah. The first question is related to the repricing of the NED products. So just wanted to confirm that similar to non-par repricing, did you also take a IRF cuts, let’s say, in the NAD product as well around the October month.
Anup Bagchi
Yeah, the pricing of non-par annuity, all those products linked to were all corrected effective 1st October. Something that we could not do in quarter two was corrected as we got into this quarter.
Aditi Joshi
Okay, got it. That’s very clear. Thank you so much.
Operator
Thank you. The next question comes from Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Madhukar Ladha
Hi, thank you for taking my question. So just again coming back on VNB growth actually. So this year, we are seeing like so far a 27% growth year-over-year on EP. Despite that, the VNB growth has just been about 8.5%. We’ve been investing in the business and are still — I would have expected slightly better operating leverage to play out and the VMD growth to be stronger than this. And especially also, we had also been guiding earlier in the year that sort of mid-double-digits is that the VNB growth that we are targeting. So in that context, our VNB growth is significantly lower than our target. And so I mean, the first question is why — what is happening then? Is the cost just the variable cost of acquiring the business so high, the commission element in total cost is so high. That’s what is keeping contribution levels down and not helping VNB grow? And two, then for the year, how much VNB can we grow? And then over the medium-term, what sort of VNB growth should we be looking at? When should — when do you think operating leverage will start playing out for you?
Anup Bagchi
So one Madhukar, from a VNB growth of about 4% for half year, we are now at about 8.5% for nine months. So clearly, we’re seeing an upward trend in that. But you’re right, the top line growth was 27%, but what you also note is that the mix-shift has also happened more towards Unit Link, which has got a lower margin. So that explains how we are working at 8% to 9% VNB growth for nine months. The view that we want to take from a medium-term perspective is to work towards the mid-teens, no doubt about that. And we are working at it for quarter-to-quarter. As you can see from H1 to nine months, there has been a positive improvement.
Madhukar Ladha
Right. And — but then is that the right way to think about operating leverage is the other thing that I had in my mind, like when you look at cost to TWRP, that going up, is it that the commission cost or the variable cost of acquisition has — it’s just been very high.
Anup Bagchi
So if you look at the opex, Madhukar, you are starting to see this come down and more so when you look at the overall cost, they are also down quarter-to-quarter. So we are actively working at containing costs and making sure that we are working to the products that we are selling and the suitability of the cost structure to those sets of products. So this is obviously work in progress. We continue to work at it while we continue our investment in specific areas such as technology as well as people and brands. So this is work in progress that we are working at this point, and I’m sure the results are going to come through.
Madhukar Ladha
Got it. And finally, just in one of the questions, you mentioned that 38% of the total protection was group protection. So I just — and that has grown about 8%, that would mean that the credit protect is down about 12% year-over-year. Is that correct?
Anup Bagchi
Yeah. So group protection being down like is quite well known for the stress that we see on MFI business and largely it is because of disbursements getting lower, which has impacted credit life side of the business of taking — will be taking a hit in quarter three. So to that extent, yes, the share of credit life business in the overall protection actually has come down on account of challenges which are well-known in the industry.
Madhukar Ladha
And that’s mainly the MFI industry. No other sort of change of that.
Anup Bagchi
That’s the — on non-MFI business, it has been happening quite good. So I think the slowdown that you see is not a stress that we believe. So I think it is something which is well factored and we are aware of why it has happened. So from that perspective, we don’t see that as a challenge. Once the cycle reverses, we are quite happy that we will get a positive momentum. So I think we are well-aligned to get adjusted to the changing cycle all the time. So there is a positivity. Recently, we have seen some numbers reversing. There is a positivity on non-MFI business already visible. Hopefully with the outlook expected to get positive over the next couple of quarters. We are well present across all our NFI partners to come back — come back — come back to the original share of credit life once the business reverses.
Madhukar Ladha
Understood. Thank you and all the best.
Anup Bagchi
Thank you.
Operator
Thank you. The next question comes from Dipanjan Ghosh from Citi. Please go ahead.
Dipanjan Ghosh
Hi, good evening. Just going back to one of the previous questions. If I just look at the margins and you mentioned that on a sequential basis, adjusted for the Group Funds business, the margins are almost stable. So if I do a sensitivity and let’s say, assuming that there is no change in margins of Group Funds business between 1H and 3Q. Even if we assume, let’s 0% margin on that business, it seems that the other segments, there has been at least a 60, 70 basis point decline between 3Q and 1H. Firstly, is that a fair assumption? And to start with that, the Group Funds margins were similar across quarters? And the second is —
Anup Bagchi
I don’t think that bares out.
Dipanjan Ghosh
Okay. And second, on your ULIP segment, would it be fair to assume that the momentum is holding on even during the current quarter?
Anup Bagchi
Yes, that’s right.
Dipanjan Ghosh
Got it.
Anup Bagchi
At least early days of this quarter.
Dipanjan Ghosh
Sure. Thank you and all the best.
Operator
Thank you. The next question comes from Nishant Shah from MLP. Please go ahead.
Nishant Shah
Sorry, my questions have been answered. Thank you.
Anup Bagchi
Thanks, Nishant.
Operator
Thank you. The next question comes from Sanketh Godha from Avendus Spark. Please go ahead.
Sanketh Godha
Yeah. Thank you. Thank you for the opportunity. Amit, you launched a new variance of every product, whether it is annuity, health or protection and features to the customers look to be better compared to the existing plane, one — what you have. So is it fair to say that given the benefits are little better to end customer, will these products will have on cumulative basis a margin better than the existing or it will be lower? And just want to understand, given since the launches, whether the contribution of these products have — I don’t know when exactly they were launched. So from the perspective, just wanted to understand how the trends are in this particular product and whether it will support the growth in fourth quarter, which invariably to some extent is higher for you. That’s the first question I have. And second is a data keeping question.
Amit Palta
Before you move on to second question, which products are you talking about in this?
Sanketh Godha
Well, I’m referring to the new annuity product which you launched, which is inflation linked or protection plan where you have a premium break and a health plan. So these products typically are more customer friendly compared to the current versions what you have. So I’m asking from that perspective, given you are giving more benefits to the customer, whether the margin profile of these products will be better than the existing ones or broadly similar.
Amit Palta
So Sanketh, in short, we are not looking at any margin drop, we are pricing them to be margin neutral.
Sanketh Godha
Okay, perfect. And secondly, just a datakeeping question. You typically disclose ROP protection EP. This time I don’t see it in the PPT. If you can quantify the number, it will be useful.
Anup Bagchi
It’s small. I think for the nine months, it’s roughly in range of 15% to 20%. It’s broadly been there.
Sanketh Godha
Okay. It was INR63 crores last year. So it’s broadly there or it’s 15% growth on that front.
Anup Bagchi
I’ll come back. I don’t have the number right now with me.
Sanketh Godha
Okay, perfect. Yeah, that’s it from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the Chairman and Managing Director, Mr. Kannan for closing comments.
Anup Bagchi
Thank you very much for joining the call. Have a great evening.
Operator
[Operator Closing Remarks]