ICICI Prudential Life Insurance Company Ltd (NSE: ICICIPRULI) Q4 2025 Earnings Call dated Apr. 15, 2025
Corporate Participants:
Anup Bagchi — Managing Director and Chief Executive Officer
Amit Palta — Chief Product & Distribution Officer
Dhiren Salian — Chief Financial Officer
Judhajit Das — Chief – Human Resources & Operations
Analysts:
Avinash Singh — Analyst
Swarnabha Mukherjee — Analyst
Shreya Shivani — Analyst
Unidentified Participant
Supratim Datta — Analyst
Prayesh Jain — Analyst
Aditi Joshi — Analyst
Umang Shah — Analyst
Nidhesh Jain — Analyst
Madhukar Ladha — Analyst
Rishi Jhunjhunwala — Analyst
Dipanjan Ghosh — Analyst
Raghvesh — Analyst
Prakhar Sharma — Analyst
Sanketh Godha — Analyst
Mohit Mangal — Analyst
Manas Agrawal — Analyst
Neeraj Toshniwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the ICICI Prudential Life Insurance Company Limited FY 2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
Thank you. I now hand the conference over to Mr. Anup Bagchi, MD and CEO of ICIC Prudential Life Insurance Company Limited. Thank you, and over to you, sir.
Anup Bagchi — Managing Director and Chief Executive Officer
Thank you. Thank you very much. Good evening, and welcome to the results call of ICICI Prudential Life Insurance Company for the financial year 2025. I have several of my senior colleagues with me on this call Amit Palta, Chief Products and Distribution Officer; Dhiren Salian, CFO; Chief Human Resources and Operations, Deepak Kinger; Chief Risk and Governance Officer, Manish Kumar; Chief Investment Officer, Souvik; Appointed Actuary 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. I’m pleased to inform you that Ms. Anuradha Bhatia has been appointed as an additional Independent Director effective March 12, 2025, subject to the approval of the shareholders. Ms. Bhatia is an ex member of National Company Law Tribunal, Mumbai and a retired Principal Chief Commissioner of Income Tax. Product innovation has been a core focus of our business strategy. We continue to build-on our legacy of innovation to meet the evolving needs of the customers with ICICI-approved GIFT Select, a non-PAR guaranteed income product being the latest addition to our portfolio. One of the key differentiators of the product is an increasing income feature, making it a quasi inflation hedge. Amit will subsequently cover it in detail.
Now let me take you through the performance highlights. APE grew 15% year-on-year to INR104.07 billion in FY ’25. We delivered a strong RWRP growth of 15.2% year-on-year in FY 2025. Our endeavor will be to continue delivering business growth. Our total premium grew by 13.2% year-on-year to INR489.51 billion in FY ’25. Retail new business sum assured grew by 37% year-on-year to INR3,324.49 billion. Our 13-month persistency stood at 89.1% and 49-month [Phonetic] persistency stood at 69.5%. We continue to deliver on our claims promise with claims settlement ratio of 99.3% for FY 2025 with an average turnover time of 1.2 days for non-investigated individual claims. Cost to premium ratio improved from 18.2% last year to 18.1% in FY 2025.
Cost to TWRP for savings line of business improved from 15.8% last year to 15.4% in FY 2025. VNB grew by 6.4% year-on-year to INR23.70 billion in FY 2025. With an APE of INR104.07 billion, the margin stood at 22.8%.
PAT grew by 39.6% year-on-year to INR11.89 billion in FY 2025. Embedded value grew by 13.3% year-on-year to INR479.51 billion on 31 March 2025. ROEV was 13.1% for FY 2025. Our AUM grew by 5.2% year-on-year to INR3,093.59 billion on 31 March 2025.
We have been conferred awards by various industry platforms. The company’s set of awards won is presented on Slides 58 and 59. We are particularly delighted with the outcome on the independent industry Net Promoter Score survey, where we were ranked the best life insurance provider in India for the third consecutive years in a row by Hansa Research.
To summarize, we will continue to offer the right product to the right customer and deliver it through the right channels. Our products, process and distribution are completely aligned with one goal, that is to deliver value proposition to our customers. Our 3C framework of customer centricity, competency and catalysts will help us deliver sustainable VNB growth by balancing business growth, profitability and risk and prudence.
Thank you, and I will now hand it over to Amit to take you through the business updates.
Amit Palta — Chief Product & Distribution Officer
Thank you, Anup. Good evening, everyone. Let me start by giving you an update on the product landscape. In a dynamic macroeconomic environment, there could be spells of market volatility like the one that we have seen over the last couple of months. In such situations, customer preference tends to shift to products that offer guaranteed returns while ensuring wealth preservation.
Through the addition of GIFT Select in quarter four, we strengthened our guaranteed portfolio to cater to this shift in customer preference. It offers the benefit of guaranteed income that customers can customize as per their life goals and cash flow requirements. This product witnessed strong traction within days of launch and helped us offset the impact of market volatility witnessed in the linked business in quarter four to a certain extent. The non-linked business grew by 13.8% year-on-year in quarter four FY ’25. The growth in the non-linked business reflects our capability to read the market sentiment swiftly, shift product mix between segments and also demonstrate the agility of our distribution channels to support us during such transition phases.
Further, within our linked segment, we have been increasing the proportion of products, which are not only aimed at wealth creation, but also offer gold protection, high sum assured and comprehensive benefits for employees, broadproud nominees. Such products are less impacted by market volatility, thereby insulating our linked portfolio to a certain extent. On a full year basis, linked business grew by 28.5% year-on-year and contributed 48.3% to APE in FY ’25. Non-linked savings business declined 5.6% year-on-year and contributed 21.2% to APE.
The annuity business grew sequentially by 41.5% in quarter four over quarter three, while on year-on-year, we witnessed a decline of 57.8% in quarter four FY ’25. As you may recollect, we launched a product offering 100% money back of premium in quarter four last year, ahead of the introduction of surrender value regulations. This product was well accepted by the market, resulting in annuity segment, delivering a year-on-year growth of more than 250% in quarter four last year. Thus the decline this year is due to the high base of the previous year. However, the contribution of annuity continues to be greater than 8% of overall APE. Retail protection grew strongly by 25.1% year-on-year in FY ’25. In the credit life business, the MFI segment was impacted due to continued challenges in the MFI industry. We expect some pressure to continue in the MFI segment in coming quarters as well.
Non-MFI segment continues to do well, and we have been able to sustain the overall credit life business at a similar level to previous year. Group term business was impacted due to increased competition. As a long time 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.
The overall protection APE grew by 7.4% year-on-year and contributed 15.7% to APE in this financial year. Group funds more than doubled over last year and contributed 6.4% to APE. This business involves managing funds for gratuity, leave encashment and superannuation and is typically lumpy in nature.
Moving on to channel-wise growth and contribution, agency business APE grew by 14.2% year-on-year and contributed to 28.9% of overall APE in FY ’25. Direct business grew by 17% year-on-year and contributed 14.4% to overall APE in FY ’25. Together, agency and direct, that is our proprietary channels, constitute more than 50% of the retail APE mix in FY ’25.
In quarter four, we saw a decline in proprietary business primarily because of two factors: one, the high base of annuity in the previous year and customer preference shifting away from ULIPs. High base of last year quarter four annuity business was primarily driven by proprietary channels, specifically agency.
Beginning FY ’25, the market sentiment shifted towards ULIP products. Agency channel was very agile to shift gears and grew faster than the company on the back of high ULIP sales up to nine months FY ’25. As markets became volatile in quarter four, customer preference started shifting away from ULIP products.
Moving to the high annuity base of the previous year and ULIP business declining in the current year, agency channel got impacted in quarter four, thereby registering a decline. It is also noteworthy that agency channel was quick to pick up the latest non-par product GIFT Select launched in quarter four. Historically also, if you look at the last five years since FY ’20, the channel has demonstrated the ability to shift its mix between ULIP and non-linked savings business depending on the prevailing macro environment. Therefore, we believe this decline is a short-term transition phase, and we will continue to invest in our proprietary channels to sustainably grow the business.
Bancassurance business APE grew by 18.2% year-on-year and contributed 29.4% to APE mix in FY ’25. Partnership distribution business declined by 3.2% and contributed 10.9% to APE mix. However, this business on a sustainable basis has delivered a four-year CAGR of 18%. As you are aware, a large proportion of business this year was from ULIP sales, while the partnership distribution business is non-linked dominated typically, and thus, they did not have the tailwind, which was available to the rest of the channels. Also, we continue to strengthen our partnership distribution channels and have added more than 200 partners in FY ’25.
Group business grew by 24.6% and contributed 16.4% to APE mix in FY ’25. As you can see on Slide 10, we have a well diversified distribution mix. We continue to build capacity and have more than 2 lakh agents spread across geography. We have partnerships with 48 banks and access to more than 23,000 bank branches and 1,300 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 FY ’25. Notably, we are also the first insurer to pay out commissions on the same day to our distributors.
With customer centricity at the core of everything that we do, we will continue to work on our strengths, that is product leadership, extensive distribution network and business excellence aided by building blocks of people, digitalization and analytics. All these initiatives together will help us achieve our core objective of increasing absolute VNB while delivering value to our customers.
I will now hand it over to Dhiren to talk you through the financial update for FY ’25.
Dhiren Salian — Chief Financial Officer
Thank you, Amit. Good evening. Let me start with VNB, which is shown on Slide 15. VNB grew by 6.4% year-on-year to INR23.70 billion in financial year 2025, and the VNB margin stood at 22.8%, which was at a similar level at nine months of financial year 2025.
From Slide 16, you can see that the movement in VNB margin from FY ’24 is primarily on account of the shift in the new business profile and assumption changes. In financial year 2025, the market buoyancy led to growth of the linked portfolio, which has a lower margin profile compared to the company average. Within the non-linked portfolio, we also witnessed a shift in product mix towards the PAR [Phonetic] business.
Further in the protection portfolio, the MFI segment of credit life business was impacted by the ongoing challenges faced by the MFI industry. As mentioned in our earlier calls, we have been working towards improving our profitability of each line of business through increasing policy term, sum assured multiples and ride attachment.
Our retail policy terms on savings line of business has increased from 19 years in FY 2024 to 26 years in FY 2025. And our retail sum assured has grown strongly by 37% in FY 2025. The impact of the shift in product mix, change in customer segments and the effects of re-pricing done during the year was a positive 2% as shown in the new business profile on Slide 16.
Now, the higher ULIP mix also results in a lower expense affordability. Along with other assumption changes, which I’ve explained in the EV section, it has resulted in a margin contraction of 3.3% and which is shown under the operating assumption changes. The balance 0.6% impact on margins was due to movements in yield curve.
As also shown on Slide 16, the EV grew by 13.3% year-on-year from INR423.37 billion at 31 March 2024 to INR479.51 billion at 31 March 2025. Our embedded value operating profit EVOP for FY 2025 is INR55.34 billion. The breakup of EVOP as shown on Slide 17 is as follows: the unwind contribution for FY 2025 is at 8% of opening EV. The VNB of INR23.70 billion is 5.6% of the opening EV. The unwind and VNB together constitute 13.6% of the opening EV. During the current year, we have strengthened our operating assumptions, which has led to a negative movement of INR2.54 billion.
As you may recollect, last year, we had shown a mortality variance due to higher expected claims incurred but were not reported in the group business. We continuously monitored this variance through the year, and we have now aligned our long-term mortality assumption here. We continue to see an improvement in the company-level persistency levels and our persistency variance is positive.
Consequently, the ROEV for FY 2025 stands at 13.1%. The total economic and investment variance is a negative INR0.24 billion due to the shift in the yield curve and equity market movements. However, the sensitivity details have been provided in Slide number 18. Our VNB and EV have been reviewed independently by Milliman Advisors LLP, and their opinion is available in the results pack submitted to the exchanges.
Now, back on Slide 13, our total premium grew by 13.2%, while our expenses increased by 12.6% for the full year. Notably, in Q4, our total premium grew by 11.1%, while our expenses decreased by 2.1%. Our cost to TWRP on the savings line of business improved from 15.8% in financial year 2024 to 15.4% in financial year 2025. I’d like to highlight that the cost ratios have been improving quarter-on-quarter, and we will continue to work towards aligning our cost structure commensurate with the product mix. The profit after tax for FY 2025 was INR11.89 billion. The AUM stood at INR3.1 trillion with a solvency ratio strong at 212.2% at 31 March 2025.
This concludes the financial performance section. Over to you, Ajit.
Judhajit Das — Chief – Human Resources & Operations
Thank you, Dhiren. I’ll be sharing the salient aspects of our ESG journey. We are pleased to share that we continue to retain the highest ranking in the Indian insurance industry as per two leading ESG rating agencies. We’re also delighted to share that during Q4 of this year, we received the Platinum Award for our ESG report for 2024 and the Vision Award organized by the League of American Communications Professionals.
I’ll now share the key highlights under each of the ESG focus areas, environment. As part of our overall efforts to reduce our carbon footprint, we have adopted green energy across various branches. We have also received the LEED platinum certificate, which is a green building rating for the company’s headquarters and IGBC Platinum green building certification for another branch, and we shall continue our efforts to reduce our carbon footprint.
On the responsible investing side, we are a signatory to the UN Principles for Responsible Investment, UNPRI. We have started annual reporting on responsible investing activities, and we shall continue to remain committed to promote ESG factors in our investment decisions.
On the employee side, our gender diversity ratio has improved from 27% to 30% of women employees in this year — calendar year. On the community aspect, our goal is to increase financial inclusion through specially designed micro-insurance products targeting socially and economically weaker sections and we have now covered 73.7 million lives as of 31 March 2025. Our 13-month persistency ratio is at 89.1% and is one of the highest in the industry. This year, we settled more than 3.7 lakh retail and group claims with the overall claim settlement ratio at 99.8%.
On the CSR front, through ICICI Foundation, we have trained 1,200 underprivileged youth for skill development and supported 50 cataract surgeries and 360 underprivileged cancer patients. Governance: our Board has a majority of independent directors, enabling the separation of the Board’s supervisory role from executive management and the representation of women directors on our Board has increased to 20%.
I’d like to reaffirm our commitment once again to create a culture that embraces sustainability and goes beyond goals and targets.
Thank you, and we are now happy to take any questions that you may have.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Avinash Singh from Emkay Global Financial Services Limited. Please go ahead.
Avinash Singh
Good evening. Thanks for the opportunity. A few questions. First one is on this operating assumption changes. If you can provide some more sort of color that are in terms of expenses, persistency, mortality, mobility, where sort of assumption has kind of changed that is leading to such sort of impactful numbers on particularly VNB margin, that particularly because if we see, I mean, in the variance experienced this year in most of the parameters, your operating variances are positive. So what has led to this kind of assumption changes going towards the conservative that is leading to this kind of a pressure on your margins, as well as embedded value ROEV is also 0.6% negative impact from this? That’s one.
Second is, coming to your capital and the strategy there, so one thing, of course, if I see in the embedded value, the required capital has declined. I mean, for a growth company or in a growth environment, of course, I mean, required capital would be a function of your product mix. But generally, I mean, it is kind of rare to see a reduction in required capital in a growth market. And on that front, I mean, your solvency is now, of course, was 192% beginning of the year. Now you have also this sub debt and all at 212%. So what is the strategy or idea behind raising the sub debt when your solvency is comfortable anyway without had you not raised this sub debt? Even — I mean, I’m mindful of the fact that okay, the carry cost would be very limited, not that great. But I mean, at the end of the day, you had enough solvency capital. So on — the second question basically is what is leading to the decline in required capital and with this sub debt?
And thirdly, I mean, if I may, again, on the partnership channel. So of course, you have a long tail of partners. But definitely, there will be a few meaningful ones. So what is leading to sort of this a bit of a growth struggle there particularly, is it something to do with the product environment? Or is it to do with something like the new surrender value or like AUM? what is that driving? Because the question becomes important to kind of forecast the growth particularly next year because this MFI side struggle on credit life will continue at left for H1 and if the partnership business does not fire, then of course, the growth is under question. So these are my three questions. Thanks.
Dhiren Salian
Thanks, Avinash. Let me take a couple of them, and then I can hand over to Amit. Your first question is on operating assumption changes. If you recall, last year, we had seen a large negative variance in mortality. That is one of the components that has gone into this operating assumption changes at this point. You see, our philosophy has been that if you start to see some variances and there are negative variances, and we’d like to correct them as quickly as we can. We hadn’t seen that through most of last year, but we saw that at the end of the year. And as I mentioned in the call, this is something that we have continuously monitored through the year and taken corrective actions in terms of strengthening of assumptions. So what you see now with the negative operating assumptions of $0.5 billion [Phonetic] roughly with the positive variances that you see across the other line items, we believe we have been able to cover for what we see at that point in time.
Coming to your second question, which is in terms of our capital strategy, yes, you’re right, we raised INR14 billion in quarter three. That roughly contributed about 18% to 20% on our solvency. And across the quarter, you have seen the solvency being broadly steady. Now you also have to keep in mind that about 4.5 years back, we had raised INR12 billion of sub debt as well, which has a call option coming up in November of 2025 — November 2025. So that is something that is in our minds as well, whether we need to call it at November. And then if we need to, we could re-raise it. The choices will depend upon how RBC gets implemented and the timeline for implementation of RBC, which you’re aware is a discussion that is there in the industry. We are not sure of the final contours of the RBC. And therefore, we’re not aware of any potential releases of capital that may come about. Once you’ve got some degree of certainty on it, we’ll be in a position to determine whether we need to re-raise it or we would let it lapse once the INR12 billion has been called back. So in anticipation of this is why we had raised the INR14 billion.
Coming to your question on partnership distribution…
Amit Palta
And I will take it from there. Thanks, Dhiren. See, on partnership distribution, first of all, let me share that it contributes to 11% of our overall APE — distribution APE. And while I understand that the growth is relatively muted in this channel, and largely, it is on account of them not participating enough in the tailwind, which was available in the first half of the year, which was, as you know, unit-linked business was supported with positive market sentiment. And typically, partnership distribution channel focuses more on non-linked side of business. But — so they could not capitalize on the tailwind, which was there in the ecosystem. That was one of the reasons why the overall growth for the year looks muted. Second, of course, there was a kind of adjustment subsequent to change in surrender guidelines, where the entire industry was adjusting to the change. And third, from our perspective, we were very happy to say that the business, which is of top focus to us, which is protection, their mix — our mix of protection in partnership distribution actually went up from 15-odd percent in the previous year to close to around 20% this year, which means that the business, which is of top priority to us, their partnership distribution significantly added- value for us.
So this is where I thought that I should also bring it in context that if you were to look at three to four-year period, this is one of the distribution channel, which has consistently delivered growth. And on a CAGR basis, if you see, they have contributed to around 17% to 18% growth over the last three to four years. So I believe that now with an environment which is more volatile and the demand for guaranteed products may come back again. And now with the strength that they have now on protection alongside, I think they will come back, and I would like to look at FY ’25 as only a transitionary phase.
Avinash Singh
Okay. Thanks for that. One, just, I mean, if — any discussions currently happening or talk on the banca or regulation regarding bancassurance or parent bank? I’m [Indecipherable] of the fact that for you, it’s not a big deal. But any discussion at the industry level, regulatory levels happening around the banca because there has been a lot of noise last year?
Amit Palta
No, Avinash, we are not aware.
Avinash Singh
Thank you.
Operator
Thank you. The next question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Swarnabha Mukherjee
Yes, hi, sir. Thank you so much for the opportunity. So my first question, again on the operating assumption part, I wanted to understand EV, as you highlighted, is led to mortality. I wanted to understand on the VNB part, what has been the reason. What I got was maybe due to the cost structure going to ULIP. But if you could give it a little bit more granular detail, that would be very helpful. That is the first question.
The second one is — if I were to think about the growth expectations for FY ’26. Now in FY ’25 for nine months, we have a very high base. We had very strong growth for the first nine months and also till January. So if I were to think about it, would we — should we expect the base effect playing out in FY ’26, at least in the first half, what would be your comments related to that? And also in terms of VNB growth, the absolute VNB growth, should we expect to grow it faster than the APE growth that we should see going forward? And if yes, sir, what would be the levers of those?
Dhiren Salian
Thanks, Swarnabha. On the operating assumption question that you raised, yes, part of it that we discussed in the EVOP has come through from some of the mortality changes that we had to do. Within the VNB also, there will be some element that comes from the expense affordability, which is what we discussed earlier in the comments as well, given the fact that there has been a shift towards unit-linked that does take a little bit of an expense affordability from a margin perspective. Coming to your second question in terms of the growth factor, yes, Amit explained in detail what happened in quarter three.
Now, one of the things that comes about from the market-linked product is that typically whenever there’s volatility, then you do have a little bit of a pipeline disruption. But I believe as there is some steadiness in the markets, we are able to build that pipeline back. The other thing that we have also on the unit-linked are a variety of other features and benefits that we’ve added. So it is not just a plain vanilla unit-linked product anymore. There are additional riders which provide benefits for customers, which we think can take away some of the market effects. Along with that, we do have higher sum assured unit-linked which also offer benefits that are different from a plain vanilla unit link.
So from that perspective, I do believe that we’ve got some degrees of levers that we have built within the unit-linked base itself. And most of this has started to come through over the second half of last year and more towards quarter four. So from that perspective, while, yes, the base does look steep when you compare Q1 to Q1 going forward. But our endeavor would be to continue to build upon the numbers that we have and build growth on top of that. On your third question on VNB. Of course, the endeavor is to be able to grow VNB ahead of the APE and that’s what we will continue to work towards.
Swarnabha Mukherjee
And sir, just one follow-up on the first question. So if I look at your overall cost structure, I think largely even in the savings line of business also we have improved as well as when I look at the cost to total premium, it is around 18.1% versus 18.3% last year. So in terms of the drag related to cost due to ULIP, I just wanted to understand, would there be any other parameter from which we can decipher that and — I mean, how to look into it? Because this was I think, it was slightly something that is difficult to estimate beforehand. So just wanted your help regarding that.
Dhiren Salian
No, you’re right, Swarnabha, difficult to estimate from the outside. But as we have given you some perspective, the unit-linked product does have lower affordability and the shift in the product mix does create stress if the expense growth is ahead of what was — what could be afforded within the product mix. The other thing is also, see some of — yes. So other thing also like to mention from a perspective of the underlying business that we have, there is a great deal of focus on driving the protection components within all product lines. You can see that number come through in our retail sum assured growth of about 37% for the year. So that is another area that we are focused on. So while we do have the core savings chassis, we are in a position to also increase the protection component within that.
Swarnabha Mukherjee
Right. Got it. Yes, very helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.
Shreya Shivani
Yes, thank you for the opportunity. I have two questions. First is on growth. I’m harping on this again and again, but we have challenges in the credit life segment. ULIP will remain challenged, a, because of high base and the markets being volatile. Even with the non-PAR product, we are in a declining rate environment where the attractiveness of a 6.5% IRR product versus a 6% or a 5.5% product IRR. We know the difference of that. So I wanted to understand on a high base of FY ’25, what would be a realistic number to look towards for growth for FY ’26? That’s my first question. And in that, if you can also answer, will group funds continue to be structurally higher for us? Because earlier you used to do about INR3 billion or so of group funds, now you’re doing about INR6 billion, INR7 billion. So will that continue to be higher? Or is it a one-off this year? That’s the first question.
Now, the second question is from your EV walk. There, you’ve given that the persistency and other variance, the number is INR0.17 billion. But in the footnote, it’s written that persistency was INR0.73 billion. So something in the other variance has been a big negative, right? Can you help us understand what has gone negative over there? And yes, any details on that, that would be useful. Thank you.
Dhiren Salian
So Shreya, let me just pick up the last one. You’re right. The persistent in other is positive of about INR17 crores. And there’s a negative that you see in others. Other is essentially a set of small items that are residual within the EV walk. In any case, it’s not a very large number at the end of it.
Shreya Shivani
Sure. But what is it usually? I mean, just for understanding, what are these line items basically, which are…
Dhiren Salian
These are the residual components that will be left after accounting for persistency, expense and mortality. So these will be some minor modeling elements that come through.
Shreya Shivani
Got it.
Amit Palta
So, on growth element, just a few facts I would like to share that you spoke about the linked business being challenged in last quarter and will remain volatile and also guaranteed products not remaining as attractive in a downward interest rate scenario. So let me just share with you some numbers on quarter four linked business, while from expected levels, it was lower, but against the correction that you saw in the market, our decline was a very low-single digit on the linked business, specifically in quarter four, despite markets being corrected so much. And it’s largely on account of investments that we have done over the entire last year in strengthening our unit-linked proposition beyond just an investment product. So today, it is powered with high sum assured. It is powered with good riders, rider choices that we have offered to the customer and a very strong and compelling nominee benefit propositions, which are very, very comprehensive in nature.
That share of ULIP is now close to around 10% to 12% of the overall ULIP that we witnessed in quarter four. So we are quite confident that this proportion within overall ULIP, which is isolated from market vagaries will hold us in good stead as we go and start this year. This is something which was not available last year. Two, some of the things that you spoke about on interest rate corrections that may happen. To start with, we’ll take it step by step because very difficult to envisage as to when the movements will happen at what point in time during the year. Our job is to keep manufacturing products, which are suitable for all varying and dynamic economic environment. So depending upon what customers decides to choose, we should have that available on the shelf.
So like a single premium annuity business, which was impacted last year — for a large part of last year because of fixed deposit rates being very attractive. I did see a pickup in February and March when this volatility happened and there was a flight to safety on the simpler guarantee kind of products during that phase. And third, there I’m very confident is that retail protection has remained very, very stable on growth perspective — from growth perspective. So the retail protection is quite steady which is more than almost 37%, 38% of our overall protection business. Non-MFI side of the credit life business also is very stable. In fact, it is growing at a good double-digit growth, close to around 20%. It’s only the non-MFI part, which is 40% of our credit life, which has got impacted, which we believe that a couple of quarters down the line.
Dhiren Salian
Sorry, Amit, that is MFI section.
Amit Palta
Okay. Non-MFI grew at a healthy rate, but MFI was challenged, which I believe a couple of quarters down the line, we’ll follow the trend, whatever is there in the industry to pick up. So I think we’ll take it step-by-step. We’ll see how economic environment emerges. I think we are very confident on the propositions available and our ability to serve our customers irrespective of any changes in the environment that we witness.
Shreya Shivani
Thank you. That’s very useful. Did you mention that in the credit life, the MFI segment is about 40%. Is that correct? Sorry, there was a disturbance, so I’m not sure.
Dhiren Salian
No. So MFI had not done too well over the quarter three and quarter four.
Shreya Shivani
Okay. But it is now at 40%, that reading is right?
Dhiren Salian
Yes, broadly.
Shreya Shivani
Okay. And just the last bit on group funds. Will we structurally keep it high at INR6.67 billion — or can it be very volatile? Just to — for our modeling purpose.
Dhiren Salian
Sorry, can you repeat the question again?
Shreya Shivani
The group funds business in your product mix, right? Historically, every year, you used to do between INR2 billion to INR3 billion of that, right? This time, it is much higher. It is about INR6 billion, INR6.6 billion or whatever. So going ahead…
Dhiren Salian
See, I tell you, we have fair coverage. We have invested in our institutional side of business for a very long time. So we are present everywhere across our employee benefit propositions as well as group fund. So this is lumpy. At times, we get large lumpy deals. At times it works out, at times it does not. So when it comes, we are happy to take it. And if it doesn’t, we won’t lose our sleep on that.
Shreya Shivani
Sure. Thank you.
Amit Palta
So Shreya, this is lumpy business, difficult to predict how that would — and forecast that into the future, but there’s money on the table, so we take it.
Shreya Shivani
Sure. Very useful. Thank you so much. Just one feedback. You guys used to give the VNB — absolute VNB by-product segment in your fourth quarter presentations. I’m not — I couldn’t find that in the PPT this time. It used to be very useful, so please do keep sharing that going ahead. Thank you.
Dhiren Salian
Sure.
Shreya Shivani
Thank you. The next question is from the line of Jishwan Gag from Sean Field. Please go ahead.
Unidentified Participant
Hey, thank you so much and congratulations on several results. So just a follow-up on the by segment. Do you mind? Do you have the? Do you mind share?
Dhiren Salian
We don’t have that in the deck. Okay. So there was we had introduced that split when we were largely Unit-linked and we were just growing our protection business. In the current context, as you have seen the product mix by and large stable across linked, non-linked annuity and protection, of course, year-to-year, there are some minor variances. We don’t see the relevance of the disclosure at this point. In any case, the market doesn’t play it in that form.
Unidentified Participant
Got it. And sorry to go back to the FY ’26 growth. I’m know things are very volatile, but if I look at your 4th-quarter is minus 5% and have those previous public spend or the next nine months. So because from a broad range wise, should we used to be expect single-digit kind of growth or any number that you can also?
Dhiren Salian
So Gav, very difficult to forecast growth. We don’t give a guidance, but our endeavor is to be able to grow given the fact that we’ve got a fairly diversified distribution mix and we have got a fairly diversified product mix. As Amit also explained in the opening comments, our channels have been able to nimbly switch between types of products depending upon the environment. We don’t impose any specific threshold in terms of how much of specific types of businesses can be done and we allow the channels to nimbly switch across from one-product line to another depending upon the environment. The whole idea being that you should be able to partic in any opportunity that comes across to you while delivering growth and that is going to be our endeavor.
Unidentified Participant
Thank you. Got it, sir. And just to go back to the EV walk of the operating assumption changes? First of all, you said that part of this mortality assumption changes. Can you mind to quantify how much is that? And also what other large items that is contributing to this?
Dhiren Salian
So we mentioned this earlier. We had seen that large mortality variance last year, which is one of the big things that we have taken into account as we have set-out our operating assumptions this year.
Unidentified Participant
Okay. Okay. The billion, how much of that is pertain FY ’25’s two just in share?
Dhiren Salian
So most of it, actually not split between FY ’24, ’25 mostly, primarily because this is from the group line-of-business, group trade line-of-business and good terms. So that is all that we’ve seen from a delay perspective.
Unidentified Participant
So I’ll just terms of — so the actual FY ’25 which is only 3.7 billion. So we have to deduct some of that. So from this 2.5 billion assumption changes because of —
Dhiren Salian
Yes, difficult to quantify how much of it. No, we’ve not quantified how much of that, but this is across multiple years.
Unidentified Participant
Okay, understood. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Supratim Datta from Ambit Capital. Please go ahead.
Supratim Datta
Thanks a lot for the opportunity. And now my first question is on the operating assumption bit. Just wanted to understand that given you had already made an adjustment last year, why didn’t you change the assumptions at that point itself? And why did you have to wait for FY ’25 to make that adjustment? If you could give us some color on how you think about this, this would be very helpful given we have been seeing some bit of — in negative either operating variants or operating assumption change over the last two years?
And my second question is on the cost bit. Now in the initial opening remarks, I think Amit mentioned that the investments will continue. But if growth is slowing down and you have already seen a fair bit of cost buildup over the last two years, then in that case, there could be significant operating deleverage if the cost growth remains at current levels going into next year. So how do you manage that you investment versus operating deleverage? And if you could give some color on that? And lastly, you had launched a zero surrender annuity product last year. Wanted to understand how has the experience there been till-date? Thank you.
Dhiren Salian
Hi. So the way we think about operating assumption changes is to understand what are the kinds of variances that we get and whether we have a view on these variances being sustainable at that level or they would tend to mitigate. So at the end of last year, we weren’t certain. We had seen delays in claim reporting in group lines of business, specifically on credit line and that is what we saw at the end-of-the year, which was at a negative of roughly INR2.88 billion. Now, as we monitor this experience through the year, we’ve been able to ascertain what are the kinds of strengthening that we need to do in our underlying assumptions and that is what you now see resulting in the overall negative INR2.54 billion.
Having taken those assumptions on-board, what you see are minor positives across the variances this year. So as I mentioned, we believe we’ve been able to capture most of it and actually almost all of it and that is the reason why we see these positive variances. Of course, the reason why I cannot give you a definite answer is because we will keep monitoring this as time goes by. And our philosophy on this is to be able to catch variances as early as we can and then take them into account as part of our assumption changes.
Supratim Datta
Okay. Got it. And, would this INR2.5 billion completely go to the FY ’25?
Dhiren Salian
No, I answered that question. It’s across the book, so little difficult to quantify what portion of which. Got it. Okay. Right. Coming to the question on cost, what you’ve been able to observe is that we’ve been able to manage our cost ratios sequentially over the last couple of quarters. And you’re right, it is for us to be quite calibrated as we look at growth into the coming year. That is going to be a fair big component because we wouldn’t want to get into an operating deleverage situation and that is going to be our endeavor very clearly.
Coming to your question on the benefit enhancer, see, one of the things that we have done with the benefit enhancer last year since that was commissions. So there is no real reason for customers to be able to or any customer to actually ask for the money back just because they are looking at some sort of a return because all they’re getting actually is just the money that they’ve paid. Of course, they’re going to lose the GST component top of it and the fact is the distributor also has got his commission deferred across so whatever we have we built it as part of our assumptions and it’s big at this point?
Supratim Datta
Got it. And, given you have highlighting the commission business. So there have been articles indicating that the regulator has been talking about or have expressed their unhappiness with how commissions have increased across both general and life insurance. So just wanted to understand how as the company is, i.e., is there the potential looking at it and how are you looking at normalizing commissions? Because there has been commission increases that Prudential has also seen in the last one and a half years. So wanted to understand how you’re looking at it as a company? And that’s my last question, thank you.
Dhiren Salian
Yeah. So, the idea is to actually look at overall costs. So while we’ve been able to respond to the market in terms of increasing commissions where relevant and do that in a step-wise fashion. What we’ve also done is take steps to be able to reduce our OpEx cost elements as well. So if you look at the overall cost base from FY ’24 to FY ’25, that overall cost has gone up by about 12% to 13%, where we’ve seen the top-line grow at 15%. So we’re quite cognizant that while there may be some expense increases along the commission line and we’ll calibrate that in-line with the market. We will have to ensure that our relative opex has got some sort of a decrease such that we’re able to keep our overall expenses under control.
Supratim Datta
Thank you. Thanks a lot. Thanks a lot of questions.
Operator
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi. Just a couple of questions. Firstly, on the VNB walk, you have given a positive impact of from product mix of about 200 basis-points, right? I mean, if you look at your product mix, it’s all real effects, real-estate has gone up, our production has gone down, group has gone up. So where has this benefit coming from? That would be my first question.
And second, last year, you had taken a 2.88 billion bit of mortality and mobility rate ramping are easing and that was again with respect to this business what we spoke about interruptions in this. Now again, we’ve taken about INR2.3 billion. We’re talking about almost a INR5.1 billion hit of this underwriting or mortality experience which is adverse? Is that — and so is it like everything is factored in or we can expect some more changes? Or how should we look at this point.
Dhiren Salian
Yeah, Prayesh, but just a quick correction on what you said. What you saw last year was a variance of negative 2.88%. What you see this year is a negative 2.5 of assumption changes, which essentially is multi-year variances built into it, right? So therefore, when you look at the current set of variances, it’s positive across other line items of persistency, mortality and variance and expenses. Seeing those positives, what we believe is we have been able to take into account all that we have been able to observe out of our portfolio so-far. Otherwise, you would not have ended-up with a positive variance. Right. That’s on your second question.
So on your first question, yes, so the business profile that you see as a positive factors, the shift in the product mix, which as you rightly pointed out would have been negative given the shift towards unit link and of course, a drop-in MFI. But as we’ve mentioned, we’ve been working towards improving the underlying profitability of our portfolio through increasing policy terms, sum assured multiples and ride attachment. Like I mentioned, the overall retail sum assured has grown very strongly by 37%. So what you now see is the impact of the shift in the product mix that’s again countered by the effects of repricing and the underlying profitability that we’ve built into it. And that has resulted in the positive 2%.
Prayesh Jain
And that’s where your VNB mix helps us to understand the profitability of each of the product segments. So it would be great if you could reshare that because that helps us understand your product profile even better. So that would be helpful if you could share that. Thanks.
Dhiren Salian
Okay. Thanks.
Operator
Thank you. The next question is from the line of Aditi Joshi from J.P. Morgan. Please go ahead.
Aditi Joshi
Yeah, thank you for the opportunity. Just a couple of questions. Firstly, in the VNB margin walk, we have this impact of economic assumption change of minus 0.6 basis-points. And I think we have already repriced some portion of the non-participating products in the last year. So just wanted to understand like the reason behind it. The reason I’m asking is that when you look at your EV sensitivity to reference rates, it is — it gives you a positive sensitivity. I understand that it’s mostly related to the discount rate as you are using the market consistent tempered value.
But just wanted to understand like when we take both of these two under consideration at the same time, it’s still a negative impact on the VNB margin so if you can help understand like what all factors are playing here? And second, on the persistency side, talk more on the longer-term cohorts, there seems to be somewhat decline. So is it mainly from the COVID years and going-forward, shall we expect that to improve? That’s helpful. Thank you.
Dhiren Salian
Yeah, this is the economic change that you see in the VNB walk is largely on effect of the yield curve. Now technically, we should be able to reprice every month. Unfortunately, that itself is a challenge that one cannot execute. So to the extent that we were unable to reprice and we have seen that in the first-half of the year, where because we had to make all the changes due to the calendar value guidelines, we were unable to reprice some of our interest-rate sensitive products through most of the year. But this element at the end-of-the day is small. It reached about 0.6%, which is a function of how the yield curves have moved through the years and the pricing of the product at various points in time.
Coming to your question on the persistency, I think we believe referring to the 61st month, a large portion of the portfolio that sits in the 61st month is Unit-linked, where we’ve been able to get our customers to continue staying in the product even though they’re not paying premiums. This is something called a cover continuous option, which allows the customer to continue to enjoy the benefits while they’re not making the premium payments. So that while it is value-accretive to the company because we do earn SNC of the funds that are lessen with us as well as the residual mortality elements, it does show-up as a minor negative in persistency.
Aditi Joshi
Okay, got it. Just one follow-up to my question — my first question. On the Slide 15, you have shared the reference rates and it has been more broadly in the shorter tenors going slightly downwards. So just wanted to understand that the NBV margins that we have reflected in the earlier slides, it’s basically existing these reference rates, right, post adjusting these reference rates and then economic consumption downward revisions, it’s a combination of both.
Dhiren Salian
Yeah, so the VNB margin does take into account the movements through the years. The sensitivities that you see are effectively built on the that you see at March 31st towards the end-of-the year, the reference rate that you see at the end-of-the year. One of the interesting parts that you see from the reference rate is that it’s become far more steeper than what you had seen at end of last year.
Aditi Joshi
Okay. Thank you.
Dhiren Salian
Thank you. The next question is from the line of Umang Shah from Banyan Tree Advisors. Please go ahead.
Umang Shah
Hello, am I audible?
Dhiren Salian
Yes, Umang you ask. Please go ahead.
Umang Shah
Hi, yeah, can you hear me?
Dhiren Salian
Yes. Please go ahead.
Umang Shah
Yeah. Oh, thank you. Thanks for the opportunity. One question was with respect to the annuity product that we launched in the Q4 of last year. Now I understand that this year Q4 would have a higher base. But could you explain why there was a decline on a year-on-year basis for full-year FY ’25?
Dhiren Salian
So Umang, last year when we had introduced the product, we actually had a lot of ATL support along with our new product trust. So actively, we had a very-high base. In fact, in quarter four, it was roughly about 20% of the business is coming in from the annuity. But as you look at the year, that has stabilized and it’s come more closer towards the 8% mark. So on an incremental basis, we still do in the range of 8% towards annuity. But when you compare it year-on-year, you do see this base effect come through.
Umang Shah
Yeah. Sure, sir. And sir, we have become quite active in the group fund space. Any reason why we picked it up in FY ’25? And if possible, what is the range of VNB margins that you earn here?
Dhiren Salian
So one, we have been very, very active in all group lines for many, many years now. And we have been picking-up group funds wherever available. As Amit also explained, this is the set of funds that are available in the market. This does have lower margins relatively, but there’s money on the table and we’re quite happy to take it.
Umang Shah
Okay, sure. And through which channel, is it the…
Operator
Mr. Umang. Could you please come back-in the question queue for further questions?
Umang Shah
Yes, sir. Thank you.
Operator
Thank you. The next question is from the line of Nidesh Jain from Investec. Please go ahead.
Nidhesh Jain
Thanks for the opportunity. Can you share the approximate share of ICICI Bank in your APE for FY ’25?
Dhiren Salian
Yeah, Nidesh, it’s roughly in the range of 14%. It’s been broadly steady for the year.
Nidhesh Jain
Okay. So it has now stabilized and is growing in-line with the company?
Dhiren Salian
Yeah, it’s broadly stable, through the year.
Nidhesh Jain
Sure. Second question is on VNB margin walk again. So the unaffordability because of ULIP, that should be a part of new business profile, right, because if share is going up, then that is a product mix change and not the assumption change or you have changed the unit cost assumption for ULIP for long — and non-ULIP, then that’s why you’re reflecting in operating expense change.
Dhiren Salian
Yeah, under the IEV, we are supposed to reflect all costs at the end-of-the year. So if there is update to the expense unit cost, then that gets reflated under the operating assumptions. So unlike other formats where you could work with the long-term cost and show an expense variance under the Indian value, you can’t do that. So you have to reflect all costs at the end-of-the year and through them up. So if there is a change in your unit cost, that is reflected in the assumption changes.
Nidhesh Jain
Okay. So — but you have not changed the long-term unit cost assumption. It is just that FY ’25 the costs are high. So that’s why for that…
Dhiren Salian
Technology under the IEV, there is no concept of long-term net cost.
Nidhesh Jain
Okay. So basically, the way to understand is that ULIP margin in FY ’25 is lower than ULIP margin of FY ’24 or ULIP, yeah, that’s the way to understand it or?
Dhiren Salian
No, no, no. No, that’s not. That’s not okay. That’s not the way to understand that. It is just that whatever expense rates that we have, we have reflected that within the VNV walk itself and under the operating assumption. Not all of it is expense, but yes, we reflect it.
Nidhesh Jain
But we have not changed any expense assumption, it’s just the experience of FY ’25 that’s a VNB walk.
Dhiren Salian
That is the fact that we have shifted towards.
Nidhesh Jain
Okay. And EVO consumption change is entirely because of mortality? So but this is largely explained by — the numbers largely explained by mortality.
Operator
Sorry to interrupt. Please come back in the question queue for further questions. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management Limited. Please go ahead.
Madhukar Ladha
Thank you for taking my question. Just two quick questions. Number-one, I think as an answer to one of the previous participants’ questions, you mentioned that in that operating assumption variance, there is some component of FY ’25 VNB as well. Is my understanding correct? And if that is the case, then you know, to some extent, would it be fair to say that 22.8% VNB margin is slightly overstated and hence, going into FY ’26, that should come off, just not taking into account any other change, but just on a like-to-like basis?
Second question would be just on an overall growth. I know we always aimed for VNB growth and we were sort of targeting about a 15% VNB growth in the beginning of the year, but we have ended-up just about 6% to 7% VNB growth. Retail APE growth has been around 11%. I mean, can we get some sort of realistic realistic expectations for retail AP growth going into FY ’26, that will be — that will be very useful. Yeah, those would be my two questions. Most of my other questions have been answered.
Dhiren Salian
So Madhukar, let me clarify for the other participants also on the call. When we take the operating assumption changes for the current year as part of the EV, this reflects all known experience that we have at this point. So when you look at the walk that you see currently, the VNB margin that at the end-of-the day accounts for all of these adjustments as well. Having made those adjustments, what you are seeing residual are small positives around persistency, mortality and expense. So to say at this point that we would see something negative coming through, I don’t think is correct. To the extent that we know and we have been able to see, we have reflected that as part of the assumptions. I hope that clarifies that point.
Madhukar Ladha
Understood. Yeah.
Dhiren Salian
The second bit around retail, for this year, we’ve seen retail book quite strongly. One of the challenges that came across — that we came across during the year was on the credit life and specifically on the MFI side, where we saw declines and we saw — this is something that is not within our control. This is what the environment is at. This has been well discussed in other forums. And to the extent that while the MFI business may be soft for the coming quarter or maybe further, we do not have any control over that. What we will do is we will work beyond that. So we will work beyond that and be able to build other lines of business.
Madhukar Ladha
Like given your retail APE growth is 11%, right? It’s the Group AP which has driven the total AP to 15% growth. So that’s where I’m coming from.
Dhiren Salian
No, actually if you look at the slide number nine, you can see that retail AP is at 13.3%. Okay. Along with group, it takes the overall AP at 15%. Yes. So you may be looking at an RWRP number, but if you look at the retail AP number, that’s at 13.3%. Okay. RWA does have an element of modal business in it, but this is the number that you compare when you look at.
Madhukar Ladha
Yeah, got it. Got it. Yeah. Okay. Thanks.
Operator
Thank you. The next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.
Rishi Jhunjhunwala
Yes, thanks for the opportunity. Couple of questions. One on VNB margins, right? So your report on embedded value results have given a breakup of VNB for savings and protection separately, so we can calculate the protection and savings of VNP margins. It seems like in the Protection segment, the margins have come down significantly this year despite not much change in the mix of protection that you have been able to record in terms of APE. So just wondering what is the reason for such a significant drop almost from a 75% to a 55% VNB margin on the protection side?
And the second question is your sensitivity to reference rates on VNB margin seem to be significantly higher than some of your peers as well. And as of last year, you were giving sensitivity to VNB. And it seems like almost 100 bps reference rate change — changes the VNB by-15 percentage point for you roughly. So what are the products that are driving that and are we doing something to reduce this sensitivity? Thank you.
Dhiren Salian
Yeah, Rishi, if you look at the ref rate change to VNB, frankly, this precludes any management action, right? So we discussed this earlier also on a different question. We would be in a position to reprice it. Sometimes you’re not in a position to reprice it every month, but the idea is to be able to catch-up and reprice this at every possible opportunity. So to the extent that we are able to catch this repricing, we are in a position to correct whatever gaps that we see in terms of the margin outflows, right? So while, yes, you are right, this number does look fairly steep. But in some form, this does get cut at every point. So some of the changes also to your other question in terms of the protection margins are largely around the updates that we have done on the mortality, which have flown through. But large portion of the business, again, from the group side, which will continue to look at pricing as time goes back.
Rishi Jhunjhunwala
So protection, these are the sustainable margins from here on?
Dhiren Salian
Sorry, can you repeat what you said?
Rishi Jhunjhunwala
Yeah, I was asking that the FY ’25 protection VNB margins, are these the sustainable margins going-forward?
Dhiren Salian
See, we expect for these margins to improve as time goes by and we’ve got an opportunity to correct these pricing actions that we have on-the-ground.
Rishi Jhunjhunwala
Okay. Thank you. All the best.
Operator
Thank you. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.
Dipanjan Ghosh
Hi, good evening, sir. A few questions from my side. First, if I look at your 13th and 14th lines persistency on the non-linked business, on a Y-o-Y basis, there seems to be a good amount of decline. So if you can shed some color on that. Second, on the non-PAR, you mentioned that while growth has recovered in the 4th-quarter, if I look, let’s say, on a two-year basis and compare with March ’23, even excluding the one-off, which you had mentioned at that time of around INR5 billion, there is actually like a decent high-single digit CAGR decline on a two-year basis also. So what gives you confidence that this segment should really pick-up on a low-base going into the next year? And at least going back to the question of the previous participant, if your protection margins, is it fair to assume that ex except the credit life business, the other segments also have seen some like retail protection and also maybe the credit life business, the margins have seen some amount of moderation both on a free-cash flow.
Dhiren Salian
So on your question on non-par, yes, through the year, this had declined. But what you’ve seen — what we’ve seen in quarter four is a resurgence of non-par primarily on the back of the select product that we had launched there. And given the current economic conditions where things are a little volatile, we believe this would be a product that would do well in this set of market conditions. With regard to your question on persistency, there have been some changes, yes, some minor drops that we’ve seen in terms of persistency, but that’s largely around certain segments, which we will look at correcting as we go through the year.
Dipanjan Ghosh
Sir, other question on protection margin sub-segment wise, have they been stable of kind of seen some change X of credit X of Group?
Dhiren Salian
No, so on the retail side, we’re holding margins. On the prices.
Dipanjan Ghosh
Sir, then one data question, would you like to specify the non-par mix? I mean, normally you give a broad range for the year?
Dhiren Salian
Yeah. Yeah. So roughly for the year, we are at about 50-50 thereabouts. There were 55-45 on the par side. Of course, quarter-four was roughly about, 30-70 on the par to non-par.
Dipanjan Ghosh
Got it. Thank you and all the best.
Operator
Thank you. The next question is from the line of Raghvesh from JM Financial. Please go ahead. Your line has been unmuted. Please go ahead with your question.
Raghvesh
Hi, congratulations on strong set of numbers. So broadly wanted to understand the margin bit. So of course, we have not given it out this year, but the assumption is that as the volume growth has been much stronger in this year, 15% growth, the margins should have come from the levels which we saw in the last two years. So if we assume something like a similar of growth for the next year, somewhere around 15%, do our margins further improve on the yield bit, if you can give that even qualitatively?
Dhiren Salian
So the margins on are slightly higher than where they were last year but a large portion of that does come about based on the features and guidance that we have attached as part of the products. So as we continue to attach more of them, we should be in a position to improve the underlying profitability of that line-of-business.
Raghvesh
And this attachment, you have actually started much towards the end of 3Q and beginning of 4Q, right? So the next year, we should see the full impact.
Dhiren Salian
If you’re able to sustain the momentum, it should help. And that will be our endeavor. Okay. Yes. Sorry, Deepanjan, I think I misspoke the quarter-four and this is to point it to as Dipanjan, quarter-four par non-par has been roughly half.
Raghvesh
Just a quick data keeping there…
Operator
Thank you. The next question is from the line of Prakhar Sharma from Jefferies. Please go ahead.
Prakhar Sharma
Thank you. Just two quick bits. One, is the steepening of yield curve positive from doing the business in the non-par side? Last year, practically everything was around 7.2 to 7.3, now it’s like 6.6% to 7.5%. So does it allow you better flexibility to do non-par at better margins? That’s first question.
Dhiren Salian
Yeah. So yeah, Prakar, it does allow flexibility, but of course, it’s depending upon the environment and we’ve been a position to correct our prices or update our prices based on how the market also evolves.
Prakhar Sharma
Okay. And any comments around the distribution-related regulations both on bancassurance and the amendments to the act on agency?
Dhiren Salian
None at this time.
Amit Palta
No, we have not heard anything on that front.
Prakhar Sharma
Got it. Thank you so much.
Operator
Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Dhiren Salian
Yeah. Thank you. Thank you for the opportunity. There is an observation. If you see the 4th-quarter, the non-commission cost has meaningfully come down compared to what you usually report in 4th-quarter compared to 3rd-quarter. See, we saw that kind of phenomenon probably in COVID year. So this significant cost-cutting, especially in the employee cost has also played a meaningful role for margins to hold-up to nine months number. I just wanted to check whether this cost, what you have reported in the 4th-quarter is a new normal or is it a sustainable number going ahead to look from a margin perspective? That’s my first question. And the second question was just maybe I wanted to check is that this assumption change which you have spoken about in — I don’t know whether I might have missed it, this is largely a reflection of non-retail protection business, right? So in the retail protection business, are there any meaningful assumption changes or it is largely related to non-retail production business? So let me take a second question first. Yes, the assumption changes can largely be explained by the group side of business, which is the non-retail side. Coming to your other question on cost ratio,, look at the split between commission and non-commission, the idea is to be able to manage the overall cost ratio put together. The idea — the endeavor that we will have is to keep our overall costs in-line with the product mix and therefore the affordability that we’re able to generate out of this. And we’d like to keep this as low as possible, while of course, continuing to invest in areas that we think give a strategic advantage such as IT digitization as well as the supplementing channels with feet on-street that required.
Sanketh Godha
Okay. But this cost is a sustainable cost, what you delivered in 4th-quarter?
Dhiren Salian
The idea is to be able to keep costs under control across the quarters as well.
Sanketh Godha
Okay. Okay. Got it. And lastly, then this non-park — new non-park product somehow has cannibalized due to your regular pay defer annuity zero commission product at zero front of product. So that’s the — probably one of the reasons, which led to a muted growth in annuity. So there is a bit of cannibalization among the products to some extent.
Dhiren Salian
No, we don’t believe so. These are two different lines of business. The annuity product is targeted more towards a person who is nearing retirement, the regular pay annuity, which would typically be of 55 plus. A single-pay annuity would be targeted at a 60 plus, whereas the gift select would be target at a much lower age.
Amit Palta
So also your question also this annuity product that we launched last year, prior to that, our annuity mix used to range between 4% to 5%. So even now, after having stabilized the momentum that we got last year quarter-four, we are still at 7% to 8%. In fact, 8% is what we delivered as an annuity mix. So annuity is holding on its own. Own and like what mentioned, it is more appealing to customers who is nearing retirement, whereas Gift Select is targeted for relatively younger customers and looking at that product for his own consumption needs. And hence he looked at liquidity as one of the features which appeal to him. So very, very different products.
Sanketh Godha
Got it. Got it. And sorry. One more thing. If your contribution of MFI or Group protection comes off because that’s where your assumptions have been little off. So if large part of the in subsequent years is driven by retail, then this 54%, 55% margin what you reported in the current year should go back to those 70s level or even irrespect of the product mix, the new normally somewhere around 55ish in the production business?
Dhiren Salian
No, as we’re able to correct some of the pricing actions on group as well, we should be able to bring this up.
Sanketh Godha
Okay. Okay, got it. That’s it from my side. Thank you. Thank you. The next question is from the line of Mohit Mangal from Centrum. Please go ahead.
Mohit Mangal
Yeah. Thanks for the opportunity. Sir, first question is on the agency counts. If I look on gross basis, we had about 60,000 agents that were higher. But on a net basis, if I look, it was just 20,000. And so basically 40,000 agents were out-of-the system this year. And even if I look at the last year, this number was around 35,000, 36,000. So is it rough — is it right to assume that 35,000 to 40,000 agents would not be a part of the system every year no matter how much we kind of hire?
Dhiren Salian
So Mohit, the idea is that we’d like to add productive agents, but the reality of the market is that most agents in India start-off being part-time and then they graduate full-time. So given the set of training architecture that we have deployed both for our frontline as well as for regions as well as the targeted approach that we have in terms of product training. We believe we should be able to get far more productive agents as time goes by and as these training programs become embedded within our systems.
Now this is in terms of how agents get added and the count of 60,000 that you pointed out is going to be going through these training programs through last year as well as into the coming years. Now the reduction of agent comes about from agents who have not really been performing and we take a fairly long view of it. Typically agents who have not generated any business for four years, five years, they are the ones who come on to the deletion criteria. Because we do believe that give enough — give agents sufficient amount of time to be able to be productive and add to the top-line of the company. There is no reason for us to be — because all of our agents are on a commission basis, there is no reason to be able to cut them off as quickly — as quickly as possibly a year or so, right? So some of the agent count dilution that you’ve seen are from agents who haven’t performed for the last few years. All right. Understood. My second question is in terms of repricing. So have we done any repricing on retail protection front over the last one year, say, for a sum assured greater than about EUR10 million or something or something that is some assured. So repricing does come about through the year whenever we see some segments that we’d like to update prices, both up as well as down, we do that through the year as well. So there isn’t a single-point where we take a big step-change, but we’d rather do this in segments and across the year.
Mohit Mangal
Understood. That’s very helpful. Thanks and wish you all the best. Thank you.
Operator
Thank you. The next question is from the line of Manas Agrawal from Sanford C. Bernstein. Please go ahead.
Manas Agrawal
Hi, can you hear me?
Dhiren Salian
Yes, Manas. Please go ahead.
Manas Agrawal
Two questions. One on the economic variance that we’ve reported. Can you split this into debt and equity? I assume debt could be positive and equity would be negative, but correct, I’m wrong. And the second question is, can you help understand ballpark what is the contribution of ATC to Q4 or March sales? Because if I just look at the numbers for March trend-line over-time, it does seem to be a non-trivial amount.
Dhiren Salian
So, ATC has not really been a big drive for us for many years now. Even when we had gone to IPO when we had a large number of cases that were coming on the Unit-linked side the ticket sizes of these products have been typically in the range of INR150,000 to INR200,000. Even now when you look at the breakup of ticket sizes that is part of our pack towards the end, you will see that with these sets of ticket sizes, the kind of, let’s say, the kind of reliance that customers would be taking towards ATC would be extremely small. I cannot rule out that people would not be taking advantages of this for ATC. But when you’re looking at 150,000 to 100,000 ticket sizes, the expectation is that they would have covered these up through other investments and they’re using this essentially to be able to save for the long-term and towards goals that they have set-out.
Manas Agrawal
Thank you. And on the first question on economic radiance.
Dhiren Salian
So this is split across both debt and equity let me just get back to you on that one.
Manas Agrawal
Sorry, come again.
Dhiren Salian
So I don’t have a breakup at this point, Manas.
Manas Agrawal
But directionally, when rates have gone down, debt should be up. I think you said that it’s not negative.
Dhiren Salian
No, it’s counted by both.
Manas Agrawal
Okay, I’ll await details maybe take it offline.
Dhiren Salian
Yeah. Okay. Thank you.
Manas Agrawal
Thank you. The next question is from the line of Neeraj Toshniwal from UBS Securities. Please go ahead.
Neeraj Toshniwal
Hey, hi. So if I unpack the assumption change assumption to your protection VNB, the normalized protection margin VNB will be 70%, still much lower than last year. So would it be right to say that overall protection margin have also gone down and what is the right number we should be working with? As you mentioned that there will be some pricing improvement, so it won’t share 55, but it won’t actually go to that.
Dhiren Salian
So Neeraj, we will work at bringing the protection margins up back to last year’s levels, that would be our endeavor.
Neeraj Toshniwal
Yeah, but even if I claw it back, it will be more than 70%, won’t go to 75-ish which we have seen earlier. So maybe you can look at the average of last three years because it includes variances of earlier years also. So that is about 67%. So that is a correct way to looking at it because it’s not just one year which is impacted your assumption change.
Dhiren Salian
Yeah, as a put together and it’s fair to look at 50% to 70%.
Neeraj Toshniwal
That is one thing. Second of the operating assumption in the margins 3.3%, can we call it out how much is from mortality and how much is from expenses?
Dhiren Salian
So we’ve not followed out. Like I said, the large portion of the operating assumption change can be explained by the update to the group side mortality.
Neeraj Toshniwal
Okay. So what is the normalized or maybe the fair question is what is the next year in terms of obviously we are seeing growth you probably looking at doing in EP, can we have some insight into how much APE growth can we actually build through over the next year?
Dhiren Salian
Neeraj, very difficult to call into next year given the current volatility and the environment conditions. However, I think if you were to look at a medium-term perspective, I think we should be able to build-in a range of 13% to 15% AP growth definitely as an industry and we’d like to outperform on that perspective. But over the shorter-term, quite difficult to call.
Neeraj Toshniwal
Yeah. That is helpful. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today’s conference call. I now hand the conference over to Mr. Anup Bagchi for closing comments. Thank you.
Anup Bagchi
Thank you everybody for joining, and have a great evening.
Operator
[Operator Closing Remarks]