Life Insurance Corporation of India (LICI) Q3 FY23 Earnings Concall Transcript

Life Insurance Corporation of India (NSE:LICI) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

MR Kumar — Chairperson

Unidentified Speaker —

SUNIL AGRAWAL — Chief Financial Officer

Analysts:

Avinash Singh — Emkay Global — Analyst

Nitin Aggarwal — Motilal Oswal — Analyst

Shyam Srinivasan — Goldman — Analyst

Deepika Mundra — JPMorgan — Analyst

Dipanjan Ghosh — Citi — Analyst

Sanketh Godha — Avendus Spark — Analyst

Ajox Frederick — Sundaram Mutual — Analyst

Madhukar Ladha — Nuvama Wealth — Analyst

Presentation:

Operator

Ladies and gentlemen good morning and welcome to the LICs 9M FY 2023 Earnings Conference Call. We have senior management of LIC led by Shri MR Kumar Chairperson on this 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]

I now hand the conference to Mr. MR Kumar, Chairperson, LIC. Thank you and over to you sir.

MR Kumar — Chairperson

Thank you Aman. Good morning everyone. I am MR Kumar, Chairperson, LIC. On behalf of the senior management team I warmly welcome all of you to the results and performance update call of Life Insurance Corporation of India for the third-quarter and nine-months period ending December 31, 2022. The results in the presentation can be accessed on our website and on websites of both the stock exchanges of BSE and NSE.

Along with me, I have three, Managing Directors Mr. Siddhartha Mohanty, Ma’am, Mini Ipe and Mr. BC Patnaik, who is on the call. Senior officials of the corporation present on this call are Mr. Dinesh Pant, Appointed Actuary and Executive Director, Mr. KR Ashok, Executive Director heading the Actuarial team, Mr. Sunil Agrawal, CFO. Mr. P R Mishra Executive Director, Investment Front Office and Chief Investment Officer and Mr. RK Jha, Executive Director Investment Backoffice and Mr. Aditya Gupta Executive Director, Corporate Communications.

Mr. R. Sudhakar Executive Director Marketing from Marketing team. Ms. Rachna Khare, Executive Director CRM Policy Servicing. Mr. Thiruvenkatachari, Executive Director, CR and Claims from the CRM team. Ma’am, Manju Bagga, Executive Director President Group Schemes and Mr. Sanjay Bajaj, Head, Investor Relations.

Before I start to provide an overview and detailed highlights of our performance for the nine months ended December 31, 2022. I would like to briefly touch upon on two issues which may be on-top of the mind for some of you, that is one is LIC’s Adani Group exposure and the impact on LIC due to the proposed budgetary changes in taxation of our category of maturity claims for life insurance policies in cases of premium paid is more than INR5 lakhs per annum. You will appreciate that while both these topics are pertaining to a time period outside the nine-months period ended December the 31 quarter, for which we have gathered here today. Still we will mention our position and views upfront before starting the results explanation.

First on the Adani Group exposure, we have already provided many details on our investments in a press release on January 30, 2023, hope all of you have seen the same. I reiterate that our total exposure to Adani Group on a book-value basis is less than 1% of our total AUM at book-value as at December 31, 2022. Second is that as we have mentioned in some media interactions post-budget that the impact on us is minimal of the recent budgetary announcements or tax treatment of certain category of life insurance maturity claims in case of customers paying more than INR5 lakhs per annum. As you will appreciate, we are a very different and unique business both by average ticket sizes which are on the lower side and by-product category sales weightage.

Now, moving to the key business operational and financial highlights for the first-nine months of the financial year 2022 2023. For the nine months ended December 31, 2022 we have reported a total premium income of INR3,42,244 crores showing a growth of 20.65% over the total premium income of INR283,673 crore for the corresponding nine-month period of last year ending December 31, 2021. The individual new business premium income for the nine-month FY 2023 is INR38,828 crores and for comparable nine month FY 2022 it was INR35,910 crore. Renewal premium income individual business for nine-nonth FY 2023 is INR1,61,601 crore as compared to INR1,53,312 crores for nine months FY 22.

The group business premium income for nine months FY 23 is INR1,41,815 crores as compared to INR94,452 crore for the corresponding period of last year. Our market share by first year premium income is 65.38% as per IRDAI for the nine month period ended December 31, 2022 as compared to 61.4% for the similar nine months period ended December 31, 2021. I’m sure the market participants would have also noted that within these nine months of current year, we have recorded a high of 68.25% market-share during the six-months period ended September 30, 2022.

If we were to split the total premium for nine months FY 2023 by individual and group business it would translate to INR2.429 lakh crore for individual business and INR1,41,815 crores for group business. Therefore, we have a market-share of 40.93% in individual business and 78.6% of the group business for the nine months ending December 31, 2022. On a comparable basis for the nine months ended December 31, 2021 the respective market shares for individual and group business were 44.44% and 73.78%.

Therefore, we continue to retain the largest share on a total premium basis in both individual as well as group segments. See, on APE basis, the break up of business is as follows. Total annualized premium equivalent, that is APE, for nine months ended December 31, 2022 is INR37,545 crore which is comprised of individual APE of INR23,419 crores and group APE of INR14,123 crore. Therefore, on APE basis, the individual business accounts for 62.38% and group business accounts for 37.62%. Further on the individual APE the par business accounts for INR21,206 crores and non-par amounts to INR2,213. As you can see, our non-par share of individual APE is 9.45% and par is 90.55% for the nine months FY 2023.

You will recall that our non-par share for year ended March 31, 2022 on APE basis within the overall individual business was 7.12% and was 7.76% for quarter ended 30, June 22 and was 8.98% for the six-months period ended September 30, 2022. So you will agree that we are gradually and consistently changing the product mix over the last three quarters whereas the non-par share within the individual businesses is rising steadily. Within non-par individual segment, there is this dynamic customer demand and our sales processes. The product category contributions to volume of overall business may vary and in our business presentation post-results, we do provide the NBP breakup within the non-par, product categories.

Coming to the profit the profit-after-tax PAT for the nine months ended 31December 2022 was INR22,970crore as against INR1,672 crore for the nine months ended December 31, 2021. At this point I would like to mention that the current period profit has increased due to transfer of an amount of INR19,941.6 crore, net of tax pertaining to the accretions on the available solvency margin from non par to shareholders’ account. The amount of INR19,941.6 crore comprises of INR5669.79 crore for the quarter ended December 3, 2022 besides INR5580.72 crore, INR4148.78 crore and INR4542.31 crore for the preceding three quarters respectively. The gross value of new business, VNB is INR7187 crore and net VNB is INR5478 crore for the nine months ended December 31, 2022. Further, the net VNB margin for the nine-months FY 2023 is 14.6% as compared to the same 14.6% for the half year ended September 30, 2022 and 13.6% for the first-quarter of FY 23 and 15.1% for the full-year ended March 31, 2022. Assets under management as of 31, December 2022, grew by 10.54% year-on year to INR44,34,940 crore as compared to INR40,12,172 crore as on December 31, 2021.

I would like to inform you about the new product launches. In-line with our strategy of increasing the proportion of non-par business we launched six new non-par products during the first-nine months of FY 2022/2023 to cater to customer requirements, namely LIC’s Bima Ratna, Dhan Sanchay, New Pension Plus, Dhan Varsha, New Tech Term and New Jeevan Amar respectively. During the nine months ended December 31, 2022 we sold 1,28,90,843 new policies as compared to 1,26,48,184 policies in the nine months ended December 31, 2021, registering a growth of 1.92%, over the corresponding period of last year.

As on 31 December, the total number of agents was 13,22,586 as compared to 13,26,432 as at 31st March 2022 and 13,34,811 as at 30, September 2020. The market-share by number of agents as on December 31, 2022 stands at 52.3% as against 54.98% for December 31, 2021 when we had 13,29,448 agents. On number of policies sold basis, the agency force sold 1,24,12,134 policies during the nine months ended 31, December 22 as compared to 1,19,014,93 policies during the corresponding period of last year, registering an increase of 4.18%. Therefore, you can see that more than 96% of our policies for the first-nine months of FY 2023 was sold by agency force. Even on a premium basis, a little above 96% of new business premium came from our agency channel for the nine months FY 2023.

During the same-period the other channels, the banca and alternate channels contributed to 1.88% by number of policies and 3.5% by new business premium. And for the nine months ended 31, December 2021, the banca and alternate channels had contributed about 1.56% by policies and 2.56% by NB premium. Therefore, you can see that the channel is growing and started to increase its share in both policies and premium within the overall individual business. We are implementing multiple strategies to achieve larger-scale in these channels.

Our management expense ratio stands at 15.26% for the 9 months ended 31, December 22 as compared to 14.99% for the same-period of last year. The increase is 27 bps on a year to year basis. On premium basis the persistency for 13th, 25th, 37th, 49th and 61st month for the nine months FY 23 stands at 77.61%, 71.32%, 68.31%, 64.7% and 62.73% as compared to 76.84%, 71.7%, 67.84%, 64.97% and 61.91% for the nine months of FY 2022. Similarly, on the number of policies basis the persistency for those periods for 13, 25, 37, 49, 61st months for current FY 2023 for nine months stands at 64.99%, 59.06%, 55.32% 52.45% and 51.42% respectively as compared to 65.47%, 59%, 55.6%, 53.67% and 50.85% respectively for FY 22 nine months.

Operational efficiency and digital progress we continue to focus on making our process efficient. As you are aware that on the previous calls on November 24 — sorry November 14th I had mentioned to you about up print to post initiative. I am happy to report an update that we have completed dispatching of 1.66 crore policies to policyholders, since Jan 2022 till 31, December 2022, using this initiative.

In our digital initiative though the agent assisted Ananda app we have completed 5,31,792 policies using this app during the entire months — nine months ended December 31, 2022 as compared to 2,10,140 policies for the comparable period ended December 31, 2021, thereby registering a growth of 153% on Y-o-Y basis. For some of you who are customers of LIC would have noticed that we are now also on WhatsApp. Starting December 2022, we launched many services of LIC via WhatsApp and the response has been encouraging for us.

We are bringing, we are working to bring tech based ease into our customer interface. On the claims front, during nine-month FY 2023, we have processed 1,40,94,679 number of claims which include 1,34,21,706 maturity claims. On an amount basis, during nine-month FY 23 maturity claims were INR1,13,936 crores and the death claims were INR17,350 crore. On a comparable basis for nine months FY 22 the maturity claims were INR123,170 crores and death claims were INR29,271 crore. Therefore, the death claims are lower by 40.73% and the maturity claims are lower by 7.5% on a year-on year basis.

I would like to tell you that our feet on-street approach to business in intact while we develop the alternate channels such as banca under digital footprint. We have a committed and trained workforce of over 1 lakh as of December 31, 2022 out of which 95% are in branch and divisional business, enabling them to be in close proximity to our customers, reinforcing our feet-on-street approach. In summary. I would like to say that we continue to remain focused on creating a portfolio mix to optimize value for all stakeholders. In that context, we have increased the proportionate share of non-par business within our individual business as mentioned earlier.

Further, I would say that the relative growth of various products within the non-par bucket will vary with each quarter and we are well aware of the same. Finally, we like to keep customer requirement foremost in our sales process. Looking at the market growth, I think we have a robust market ahead for insurance in India and all forces shall join hands to make insurance accessible to all in the coming years. Thank you very much. And we are now happy to take any questions that you may have.

Questions and Answers:

Operator

[Operator Instructions] First question is from the line of Avinash from Emkay Global Financial Services, please go-ahead.

Avinash Singh — Emkay Global — Analyst

Yeah, hello, good morning sir. Couple of questions, the first one is [Technical Issues] impact on VNB margin that’s positive, is it largely the interest-rate changes or is there something else so that is the first one. Second one, if you can just explain the net impact of the tax simulated thing on your accounting PAT because if I see there kind of tax one, of course, there is some kind of a tax calculation led reversal in policyholder account and also the other one is that, you have got some kind of INR6,000 crore refund on — interest on refund of income tax. How much net-net has that gone to your PAT impact. And thirdly, if you can help me I saw your media sequencing 0.12% of policies, they were 5 lakh, so is it the count of policy you are talking or premium or APE you’re talking. Thank you. Three questions.

Unidentified Speaker —

Good morning. Regarding the VNB margin we have disclosed in the VNB margin, there are two impacts on the margin compared to the numbers we see for March. One is the change in business mix, that change in business mix has an impact of bringing down the margin by 130 bps and then there is a second one, which we have showed it as change in margins. The major impact on that is, from the movement of RFR.

Avinash Singh — Emkay Global — Analyst

Yes, sir. So, this assumption change, what are the changes. Is it largely the interest rate movement or something else?

Unidentified Speaker —

Yeah, it is largely interest-rate movement.

Avinash Singh — Emkay Global — Analyst

Thank you.

SUNIL AGRAWAL — Chief Financial Officer

Hi, good morning. This is really Sunil Agrawal, CFO. On your second query, on the tax related reversal I would like to tell that both the impacts last year and the participating segment of the business, so they will not impact the profitability of our operations. They were done on account of — basically, earlier you were following the practice of tax earner [Indecipherable] interim financial reporting business. The correction is for the previous quarter and there fore the reversal the current will happen.

If you look at from a annualized thing, it will not impact the overall scheme of things, in the current quarter reversal, because the adjustment of the previous two quarters, have also been taken place in this quarter, but it is largely in the far front, so there is no impact on our profitability. Secondly, the interest on the amount is INR6,626 crores, which again was paid out-of-the par front because this refund pertains to the earlier years where we had unified fund only and there was no segregation. So, because the tax at was that point of time [Indecipherable] participating front therefore the receipts have also been accounted for in the participating fund. And again, that has not impacted overall profitability of the.

Avinash Singh — Emkay Global — Analyst

Thank you sir and all the best.

Operator

Thank you. The next question is from the line of Nitin Aggarwal from Motilal Oswal. Please go-ahead.

Nitin Aggarwal — Motilal Oswal — Analyst

Yeah, hi, thanks a lot of opportunity. Sir, one question around the individual non-par margin you earlier talked about the due to the product pricing, which has affected the margin. But this quarter,, there has been a very sharp decline. So if you can talk about as to how are we seeing this. And where do you expect it to settle and. Maybe I’ll ask the second question later. So if you can ask answer this first.

Unidentified Speaker —

Yeah, if you look at the margin and this non-par growth extrude that non purposes grown, but weekends, the not but there are different segments of business that has different. Margin signatures and if our ULIP business have grown-up. More in the non and. There, margins are, the averages, thus bringing the keeping the margins at the same level.

Nitin Aggarwal — Motilal Oswal — Analyst

Okay sir. Within the annuity business now, if you can share some color as to what is the average ticket size and what was the mix of government and private sector professionals?

Unidentified Speaker —

Ticket size in annually is around 8.9 lakhs. What was second part [Multiple Speakers] We don’t have that right now, we can share it with you later.

Nitin Aggarwal — Motilal Oswal — Analyst

Okay sure, sir. And the other question I have is around the agent count, like agent count has been flat over nine months. And this is a prime distribution channels so are we looking at this, because private sectors have later really been ramping-up the agency channel.

Unidentified Speaker —

In our agency channel, we have a constant method of recruiting agents and every year we recruit approximately [Technical Issues].

Nitin Aggarwal — Motilal Oswal — Analyst

Right sir, and lastly on the banca channel, the mix has been improving Y-o-Y and so if you can share more color as to which banks are you seeing the most traction with and how do you see this evolving in the next two years?

Unidentified Speaker —

This is giving us the maximum volume in banca. We’re also looking at documenting the number of questions serving in that particular segment and we are seeing good traction happening there so we are seeing a positive growth on back of even in the coming year.

Nitin Aggarwal — Motilal Oswal — Analyst

Sure sir, thank you so much.

Operator

Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go-ahead.

Shyam Srinivasan — Goldman — Analyst

Good morning, and thank you for taking my question. Just the first one on quarterly AP or NBP development, right. So we have seen a slowdown in growth. I know maybe last year quarter ago that was disclosed during the RSP timeframe, may not be. Like-for-like. So, but just wanted to understand why there has been a sequential slowdown in Q3 versus Q2 on Y-o-Y basis. Maybe I’m not comparing right. But that’s the first questionI had.

MR Kumar — Chairperson

QoQ? The question is I think I don’t let me respond market. We I don’t think that. We are very much worried about this is it’s basically, as you. This is all explaining turning the agency force happened. We have new products almost 16 products and non-par, we are getting people to get trained on all these products, that part is taking a little bit of time.

So this could be one reason, people have been active in the market. So the more agents who get rain on all these products and they started working now, we’ve seen a good traction, lots of couple of months, so. I think going-forward the February and March. All these agents licenses that the Fed will be back on the streets with renewed vigor with all this new inputs from the new products, and. I think we should be able to work on whatever that slowdown was there. What did you previously from between September to December.

And the individual business, the premium has increased from around 30,097 to 40 for the 96 is a growth of over 502% largely because if you would have been seeing in the terms of AP advisory because the PHS business last Q3 has been this. So that has impacted and something more to do also with the annuity growth in this particular quarter we already. Revised the rates and that will be more than covered, but even in this Q4.

Shyam Srinivasan — Goldman — Analyst

Sir if you’re saying group business, there is seasonality and if we were to look at individual maybe there is still there is growth, even on a sequential basis?

Unidentified Speaker —

Yes, group has done tremendously well in overall basis. So certainly, you know changes over from quarter-to-quarter can always be expected, because the cash-flow timing can vary depending upon the plan of action and all those things. But group as overall then very well if you consider the nine month period.

Shyam Srinivasan — Goldman — Analyst

Sir, just some clarity around group, if you could split into what are the key constituents. I know we gave disclosure on NBP, but. If you could disaggregate what does the savings component, if there is any protection or credit life, that will be helpful. I don’t know whether you can do it now, but I’m just saying maybe a request.

Unidentified Speaker —

Yeah, if we just wanted to see in terms for the Group, we are not totally happy. For the nine months period is something around 14,126. And. All the savings schemes including annuities right and fund-based business schemes superannuation schemes. In particular, they have been the large contributor here. So, Credit Life will be very small. You’re seeing Credit Life Group terminal group down. It’s not very small, but yet the saving portion in the Group is significant.

Shyam Srinivasan — Goldman — Analyst

Got it sir, my last question is just on margins again so, I think the previous participant asked this as well. So ULIP has been growing faster and that’s the reason why we have non-par, I’m just using the cumulative disclosure, you will see on gross margins from 104% has come down to. I think 73.5% when I calculate it for the Nine-Month period now. So, is there other than ULIP mix change, is there anything else in terms of repricing your non-par, on the savings side that has also led to this?

Unidentified Speaker —

[Technical Issues] in fact, you would have seen that already that the growth rate in ULIP. It’s not that the growth in non-par saving is less accurate is significantly high 77% or so. Our unit has grown more, and we all know ULIP VNB margins are less.

So, and recently some more products have been launched also other than ULIP. So there it will take, and let’s also because the annuity rates have been re weight. So anytime when the revision in annual rate, you have to do it in terms for the purpose of competitive reasons, whenever that would be done VNB margins will come down. What we as a corporation as insurer would have to look into what is the first step is to look towards the VNB striking the right balance of VNB margins and the growth in AP. So the VNB. In terms of the ultimate volume should result into that should go into the required direction. So anytime when the revisions in annuity rates would happen, but on the other side, for example, in-town products, we have increased the rates also. So there we would have tried to capture the in fact forget the VNB margin is going the right direction. So this what we’re rebalancing is a continuous process.

Shyam Srinivasan — Goldman — Analyst

Would you say the larger impact is for the annuity rate increase or it’s still the ULIP increase in mix?

Unidentified Speaker —

No, it is mainly because the ULIP, growing more than the non-par saving — actually as a contribution to the overall portfolio contribution has gone from 7% to almost two questions and then margins are less, but that’s very much frequency we should always take note of the fact that in license contribution was the industry will be very small. So. Without units to the whatever happens the margin. We have a reason to keep on growing in ULIP, also because customer need-based selling and all those units suffering Ventas all the baskets of the products that mix, have to be taken care of. So, ULIP has to continue to grow unit will bring down margins slightly. Which will be taken care of, from other segments like annuity.

Shyam Srinivasan — Goldman — Analyst

Got it. Last question. Slide eight, if you could talk about the two new. The products that we launched in say November or even October, Denver, how has been the pickup. Any numbers. What’s been exciting, thank you.

MR Kumar — Chairperson

Actually, Dhan Varsha has been doing quite well and we expect a lot of business to come that because that product is available-for-sale. In this quarter to up the Q4 only. It’s a very well-balanced and. Good as well as you know, it covers large segment of the society, from very young engaged NPAs, three years or so, so we expect a lot of good performance in this particular product in that quarter.

Dhan Varsha is around two 60,000 and. It also flows and it’s. It is to as much 31st March. So we are expecting those numbers for up. What’s the rates are indicative. We. The return, yeah. I say typically in the 13th is. The written, also it change from but for younger ages generally trends would be higher depending the duration and is returns would be different. The second business can be plastics also.

Shyam Srinivasan — Goldman — Analyst

Got it, sir, thank you and all the best.

Operator

Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go-ahead.

Deepika Mundra — JPMorgan — Analyst

Hi sir, thank you for taking my question. Sir, can you tell us broadly across the individual business, what percentage of policies would be coming in the HPC category for your customers. So, how many would you have any sense on that?

Unidentified Speaker —

Minuscule that’s all I can say.

Deepika Mundra — JPMorgan — Analyst

Okay and just one more question on the Adani Group exposure on the equity side, could you split it up between the par non-par, as well as our shareholders fund?

Unidentified Speaker —

I don’t think we’ll be able to disclose it, at least as of now.

Deepika Mundra — JPMorgan — Analyst

Okay, thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Dipanjan Ghosh from Citi. Please go-ahead.

Dipanjan Ghosh — Citi — Analyst

Hi, good morning. Just a few questions from my side. First is on the individual annuities. If you can kind of put some color on how much of compression in the margins incrementally in 4Q. I understand you recalibrate your strategy, but in terms of what incremental repricing has happened in 4Q and what can be the drag on margins going ahead. Second, there seems to be some decline in Group VNB margins between one and two and 3Q. Is it just because of the mix between savings and Superannuation and gratuity and so want to thanks within the group. Or is there something else on the pricing side also. Lastly, you mentioned on your on your on your strategy is in the bank and alternate channels, so. I just wanted to get some color on whether there are some discussions on incremental partners and especially within the PSU path. Is there any captive player that has been discussing anything on incremental tie-up. Okay, sir, just one more question, if you can give some color on the qualitative aspects on the margins between the non-par savings business and the individual annuities business in terms of margin, which one would be higher or lower and anything on the delta between the two?

Unidentified Speaker —

Looking at the annuity portfolio on the analytic portfolios repriced in August 22 and. Then these to make it more competitive. And since the returns to policyholder and the profitability. I’ve got more to be balanced. There is indeed reduction in the margin. In the energy portfolio. That you have been. Business England’s VNB disclose the entity.

Our non-business. The reduction is so within what we have estimated, and we are very comfortable with. The amount of reduction that is happening because still the annuity parts set-out the margins have a high-level compared to the other businesses. Coming to the group margins within the Group. We have the different lines of business and different lines to like we have funded schemes and they have protection. And I’ll OT’s and these have different signatures of margin, sir. Well, once again, the entities are also having. Comfortable margins come back to the portfolio. So the variations you the notice is because of within the group. There has been some changes in the just mix or that has resulted in the changes sir at the rupees.

I think on the banca channel now that the tie ups because new basket of new brands have come into the horizon that, something we haven’t exploring. Different tie-ups, both at the pattern also at FinTechs also and there we see a lot of growth on that and that’s why I said earlier also that we are adding more manpower to that particular. Yes, sir, can I ask one follow. Please go-ahead.

Dipanjan Ghosh — Citi — Analyst

So one is that on this entire non-par business and you mentioned the individual annuity market quite comfortable and within range, the repricing because in August, so. I just wanted to understand, if. Has there been any other round of repricing, if. I heard correctly, there was one more round of repricing during the quarter. So will that have an impact. And second is. What will be to enter in terms of relatively within the business, what would be the margins of individual annuity purchase the core non-par regular pay products.

Unidentified Speaker —

Yes, we recently had a revision in our deferred annuity rates. And but that is well within the. However, you know what. I would call as VNB margin appetite or VNB appetite. Because you would have seen most of the insurers have also done it, but selectively we not done in particular segment. We have done in particular for desktop, where we start.

There is a lot of scope for growth and the needs of the customers are there. So it has been done. But that we are not expecting to have any significant you know. You adverse impact on the VNB margin. It will have, but what our strategy is that the growth in AEP here will more than make-up for the VNB. So the ultimate idea price or reduction in VNB margin would only happen when we see the potential for AP growth to our compensate or actually overcompensate for that, because ultimately beyond VNB margin, as a corporate, we are looking towards. Actually, as I said earlier also, total VNB trajectory to be achieved.

Dipanjan Ghosh — Citi — Analyst

Sure, and some color on the. The margins between the core regular pin on per product and annuities, which one would be higher and any color on the..?

Unidentified Speaker —

Typical ones you would know that you know as we said there were supportive of VNB margin is 40.6, which is in public domain. And we understand that it’s 92% business, individual coming for participating. Right. And in-part is the profit-sharing is around just 10% in non-participating and that person. So one can you might extrapolate from there. We would not like to comment upon your strategic margin at these kind of things. Because these margins can change from time-to-time depending upon suppose the revision in benefits take place depending upon. In fact, also the interest-rate scenarios, the IFRS rate change. I those things changed.

But we are sure about one thing. Reported to see that annuity is very important component for or our non-fund business as a driver for the that VNB margin also and we are continuously working on that and also [Techical Issues] important in that context.

Dipanjan Ghosh — Citi — Analyst

One follow-up on one of the questions asked by a previous participant, I understand you don’t intend to break-up the Adani exposure between your par and non-par and. And the funds, but. Could you give some color on where the bulk of the simplicity, just qualitatively, do you want to?

Unidentified Speaker —

We can only say in this context is that it does not have significant impact on the shareholder. And our policyholders are well-protected. You can rest assured.

Dipanjan Ghosh — Citi — Analyst

Thank you sir and all the best.

Operator

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

Sanketh Godha — Avendus Spark — Analyst

Yeah, thank you for the opportunity, sir. I just wanted to understand your other Bank strategy in future, so, are we are looking to hire new setup produced development officers to exclusively managed Banca channel or existing agency divisional offices will demand come Banca channel and then also wanted to understand whether to approve students, with the change in rules, because now there is nothing called commission so to remain competitive versus the private payers in the banca channel, the commission could go up to drive high-margin products like non-par the Banca. Just wanted to understand, let’s say, low-hanging fruit, which is available to you, how you want to exploit the growth by adding manpower?

Unidentified Speaker —

And there may be playing with the commission cut it. One thing is that when we said manpower. That does not mean that the development of, excellent offices in that sense that we are also going to add technology already. The bulk of policies are being completed various therefore it was method. Also, we have what is known as Ananda. App, which enables the whole process of. Proposal two policy to happen, that have been hearing green that and the policy number being issue. And the positive in this poster the customer as well as taking. PDF copy of the policy on, one is, Mumbai. So it’s different. My are being explored by us. The other parties, where we require more people to be impacting events.

Sanketh Godha — Avendus Spark — Analyst

So that is where we see. More offices. We added. So that can also add?.

Unidentified Speaker —

We have mentioned using technology, how can we help them to the business is what we are working on. But at this. Just executing on this point. So just wanted to know-how many people are deployed across the bank calculation we have and how much we want to increase. So because we all know, for the fact that despite technology, it’s people on this call on the branches, which drives the growth. So just trying to understand how do you want to. Redeploy or deployed people around the channel to get the maximum out of it.

So all is going, share with you right now is that, you know, last year we tried to open experiment on trying to look at some of the bigger branches of the banks. Where we have maybe they have their own structure when they have more mortgage clients and things like that. So we are working to find out whether we can focus on what we call, some of these, we call them power outbreaks and whether we can work closely with those power outlets. So to that extent, the manpower, ramping-up in terms of business like Sudhakar said, would we utilized to wrap-up the business in these power. And going-forward, we will try to expand that to other branches.

Sanketh Godha — Avendus Spark — Analyst

Okay, got it, sir, and. Second question. I would say. I had was on the likelihood of composite license coming through. Your stated strategy on how you will approach the health insurance business. If it goes through and given we all know that if your agency which is being used by the general industry to drive the health insurance growth for themselves, how we want to do it and also. I want to understand the extent of management goals again whether you. If you have any thoughts, how you will drive or how we’ll make sure that your own agents will come back to LHC and sell health insurance for you. No we are quite excited about the prospect of selling liability insurance, and you may recall that we have learned in the past as well. The regulatory allowed. The life insurers to sell level insurance and it does withdraw.

Unidentified Speaker —

So if it comes back, we will lead to happy to get back to that space and as you rightly said to involve our agents. We’re selling these kind of for other companies, I’m sure they’ll come back to sell our product business.

Sanketh Godha — Avendus Spark — Analyst

Okay sir, and given we have revised over a term insurance rates on the higher side. I think when we bidding the previous regime when there was no segregation of funds, we our dependence on the reinsurance, very limited. So now with the segregation of the funds have we increased our exposure, we have started is ensuring more to drive the individual protection business are any, because that’s the question. I had, and second, in absolute rupees crores. If you can tell, in nine months how much individual Protection APE credit life and detail you have done?

Unidentified Speaker —

As far as ratios goes. You know at Insurance. Outflow is very small. It’s just used to be around less than 0.1% as product premium. It’s just around 0.1% of the total period at this point of time. Yeah, of course, yes, but when we have. One double on these specific products like in our town product protection Bradesco. Anyway we have come out with has are critical writers, which are specialized morbidity modulating it being involved. We have taken special care and. We have Triton insurance larger portion of it. We all are aware, in the recent times.

There have been challenges around ratio and support. We have been trying to discuss the opportunities with our reinsurers, also one of the larger regions for us to increase the rate was also driven by an insurance, the revision in rates which are anyways has happened for other insurers, they had done two-three times already. So it was in-line to protect the VNB margins and to be aligned with the claim experience in that context, unfortunately not two years. We’re very special in that regard because it was dominated by COVID related issues. Also as we go-forward, we expect. The game. It goes to settle down, two more. SG&A levels and then. I think. The it rests on the reinsurance will possibly also come back, and then we can drive towards growth in this prediction business.

Sanketh Godha — Avendus Spark — Analyst

Got it, but if you can share the absolute rupees crores for nine months individual protection credit life and detail in APE count will be useful sir.

Unidentified Speaker —

Credit life is not there any individual business credit life currently. You know, is being offered to P&G isn’t there a very-very small portion there. Unfortunately, on the credit life. We have worked a lot on this slide, but as of now, we are still awaiting you know here. So there is nothing. There and production business. Look, now with by volume is not a big. Contributor to though repeat. So that’s an area. We have the coefficient is it really working.

Sanketh Godha — Avendus Spark — Analyst

Got it sir and finally on insurance repository because it gives a lot of information on data, we are planning to do it in-house or they intend to outsource it to insurance repository, companies like CDSL camps and history a lot Karvy which had before these took on STENDRA. And any thoughts there.

MR Kumar — Chairperson

We are looking. I mean to find out whether they can with one or multiple of the. So that work is in-progress as of now I can I said everything will.

Sanketh Godha — Avendus Spark — Analyst

Okay thank you, sir. That’s it from my side.

Operator

Thank you. The next question is from the line of Ajox Frederick from Sundaram Mutual Fund. Please go-ahead.

Ajox Frederick — Sundaram Mutual — Analyst

Good morning sir and thank you for the opportunity, sir. My question is more on industrial trend perspective given. Hello. Yeah, even if there is. Given the. Current regulations. The industry could shift towards. More rural and more low ticket size, I’m talking about the private sector. Both of these are all 40. So with that background, where do you see new avenues of.

Unidentified Speaker —

Okay. I think. Even the rural and other markets like Sudhakar sometime back mentioned that there’s a lot of potential still left. It’s not that as if it’s over. We have our penetration is pretty low. And you know that. So whether it is two or the rural markets and there is there a potential to grow insurance business. So we continue to be strong, one real cutting to be strong on the territory of the rural markets, but we are picking-up some speed in the metros as well. Now, with the focus on non-par and the single-premium annuities and all those products.

So I don’t see any challenge, of course, it’s quite obvious that. The private sector. We’ll try to move into the smaller markets, but we are quite strong there already. So we don’t see any change.

Ajox Frederick — Sundaram Mutual — Analyst

And sir, again, a broader question, since we have over INR20 crore customers. I’m just trying to understand the target market is. I assume that it was more to do with incremental ticket size rather than the incremental number of policies here or in the medium-term, it would be on the line. But do you see your. Incremental number of policies also going-forward. Let’s take a Five-Year view and from where we are right now. Rough guesstimate the policies that would be helpful.

Unidentified Speaker —

I do see a growth in numbers because numbers have to grow if we have to increase the penetration and the coverage across the Indian population, but we very difficult to. Estimate get Me yes, we’ll do here. Yeah, sure, it’s actually a similar. The other hand, on the agent productivity, you have in having the best of the agents out there. And I’m assuming they are selling over 15 policies, but year. Is there scope for increasing productivity is there taking any steps, it can probably increase.

Ajox Frederick — Sundaram Mutual — Analyst

Thanks.

Operator

Thank you. We’ll take the last question from the line of Madhukar Ladha from Nuvama Wealth. Please go-ahead.

Madhukar Ladha — Nuvama Wealth — Analyst

Hi, thank you for taking my question. So most of my questions have been answered. I just wanted to understand one thing, if the new draft regulations, our sort of put in-force are adopted. Then how comfortable are we with the UN limits so some numbers in terms of. You know. The limits would be expert centers and we those limits would why would be helpful. So can you help me with that?

Unidentified Speaker —

And so, as you mentioned about new draft regulations, we are aware, there are different draft this point of time, the larger focus is the. Is to improve the ease of business a goal towards principal based regulations. And you know. And the market penetration and less, these are larger projects which because which all the regulations. I mean there. Also looking towards empowering the of the insurance companies.

For better, go in effect. It is to be adopted. Yes, this expense management regulations have been there, they’ve been brought in. That also is in the same direction. We have done our preliminary estimates based on that, actually the situation will improve for us. From where we have been operating at around 84 of our lower expense limits. In the under this new provisions, a situation will improve from here. So it is going to be more. Within limits. It’s sort of situation. And this the able the regulation is also to allow insurance companies to decide. How they want to a portion of that expenses towards this segment so it’s more enabling sort of a provision.

Madhukar Ladha — Nuvama Wealth — Analyst

Got it, thank you sir. Thank you.

Operator

Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. MR Kumar Chairperson LIC for closing comments. Thank you and over to you sir.

MR Kumar — Chairperson

Thank you very much for all those who joined and I hope we answered all your questions as probably some of you couldn’t ask the questions — I’m sorry for that there is a long queue, but maybe next time, but thanks once again for being part of the call. All the best to all of you.

Operator

[Operator Closing Remarks]