SBI LIFE INSURANCE CO LTD (NSE:SBILIFE) Q2 FY23 Earnings Concall dated Oct. 21, 2022
Corporate Participants:
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Analysts:
Swarnabha Mukherjee — B&K Securities — Analyst
Prithesh Chaubey — Appointed Actuary
Deepika Mundra — JPMorgan — Analyst
Avinash Singh — Emkay Global — Analyst
Neeraj Toshniwal — UBS — Analyst
Anirudh Shetty — Solidarity — Analyst
Dipanjan Ghosh — Citi — Analyst
Sanketh Godha — Spark Capital — Analyst
Madhukar Ladha — Elara Capital — Analyst
Nitin Aggarwal — Motilal Oswal — Analyst
Ansuman Deb — ICICI Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q2 FY 2023 Earnings Conference Call of SBI Life Insurance Company. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mahesh Kumar Sharma, Managing Director and CEO, SBI Life Insurance. Thank you, and over to you, sir.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. Thank you very much. Good evening, everyone. And we heartily welcome you all to the results update call of SBI Life Insurance for the half-year ended September 30, 2022. The update on our financial results can be accessed on our website as well as on the websites of both the stock exchanges.
I have along with me Sangramjit Sarangi, President and CFO; Ravi Krishnamurthy, President, Operations and IT; Abhijit Gulanikar, President, Business Strategy; Subhendu Bal, Chief Risk Officer; Prithesh Chaubey, Appointed Actuary; and Smita Verma, SVP, Finance and Investor Relations.
Now, let me give you some key highlights for this half year ended September 30, 2022. New business premium registered a growth of 27% Y-o-Y and stands at INR130.9 billion, leading to private market leadership. Individual New Business Premium stands at INR84.6 billion, is a strong growth of 31%, and private market share of 25.3%. Gross written premium stands at INR279.7 billion, a growth of 21%. Protection new business premium grew by 32% to INR16 billion.
Profit after tax stands at INR6.4 billion, 36% growth over corresponding same period last year. Value of New Business is INR21.2 billion, registering a strong growth of 53% over the INR13.8 billion in September 2021. VoNB margin is at 31% with an improvement of 630 basis points over 24.7% in September ’21. Embedded value of the company as on September 30, 2022 stands at INR424.1 billion. Assets under management grew by 16% to INR2.83 trillion. Robust solvency ratio of 2.19 as against the regulatory requirement of 1.5.
I would also like to highlight a few key initiatives taken by the company. Considering the various requirements of the customers, we have launched SBI Life Retire Smart Plus product, which is a unit-linked pension savings product. This product offers a comprehensive range of pension savings with varied fund option with an option to defer the vesting date as compared to our earlier version of Retire Smart, which didn’t have this feature. We have a view to broaden — with a view to broaden our reach, SBI Life has tied up with India Post Payment Bank Limited, a leading bank in rural markets. With this, we will be able to enable our customers, especially the section living in the underserved areas to become financially secure and empowered. We will update you on each of the key elements.
Let me start with the Premium. Individual New Business has grown to INR84.6 billion with a growth of 31% Y-o-Y. Single Premium contribution is 32% of Individual New Business Premium, which can be attributed to growth in our individual annuity product. The company gained private market share of 196 basis points to reach 25.3% market share. All individual rated new business premium will stand at INR60.5 billion with a growth of 21%, and private market leadership with a share of 23.7%. Also, new — Group new business figures stands at INR46.3 billion with a growth of 31%.
In all, we have collected total new business premium of INR130.9 billion, registering private market share of 22.6%. Renewal premium grew by 16% to INR148.8 billion, which accounts for 53% of the gross written premium. So, sum of GWB stands at INR279.7 billion with a growth of 21%. In APE terms, Premium stands at INR68.3 billion, registering a growth of 22%. Individual APE stands at INR61.2 billion with a growth of 22%.
During the half year ended September 30, 2022, 9.2 lakh new policies were issued, which registered a Y-o-Y growth of 21%. Individual new business sum assured registered a growth of 14% over the corresponding period last year, which was [Technical Issues] a growth of 7% at private industry level.
Considering our robust performance for H1 FY ’23, we continue to expect healthy growth in our performance in H2 FY ’23.
Let me give you details about the product mix. We are happy to report that the company has steadily moved towards a more balanced product mix. So, on the half-year basis, our guaranteed non-par savings products are contributing 20% of individual new business and, on APE basis, this constitutes 26% Non-par guaranteed new business has registered a growth of 221% — sorry — a growth of 221% Y-o-Y, mainly due to the new business contribution of Smart Platina Plus, which is a INR12.69 billion in the half-year ended September 30, 2022. This product was launched in March ’22 and have seen a strong traction in the new business premium, mainly due to the product features, which are having a high [Technical Issues] in the market.
ULIP has remained one of the flagship segments for the company, Individual ULIP premium is at INR43 billion, which now constitutes 51% of Individual New Business Premium. Individual Protection is at INR4.3 billion, registering a growth of 17%.
Group Protection stands at INR11.6 billion [Phonetic] with growth of 38%, Credit Life New Business Premium has grown by 36% and stands at INR9.1 billion. On a APE basis, Protection contributed 11% of the new business and has registered a growth of 23%. Annuity business is at INR19.8 billion and contributes 15% of New Business Premium. Under Annuity, the company is offering immediate as well as deferred annuities. Individual annuity business is growing at 136% over the same period last year. Total annuity and pension underwritten by the company is INR32.8 billion, registering a growth of 7% over the half-year ended September 30, 2021. Group Fund Management business is at INR31.1 billion with a growth of 39%.
On our distribution partners, with the strength of more than 54,000 CIS, SBI and its RRB Bancassurance business contributes 67% and grew by 38% in Individual New Business Premium. And on an individual APE basis, it stands at INR41.3 billion with a growth of 24.5%. Agency, our other major channel, registered a new business premium growth of 34% and contributes 18% in New Business Premium. Agency channel individual APE stands at INR17.1 billion with a growth of 12.5%. As on September 30, 2022, the total number of agents stands at 178,357. During the half year, the company added nearly net of 32,300 agents.
During the half year, other channels grew by 52%, which includes direct corporate agents, brokers, online web aggregates, etc, and 45% in individual APE. Protection new business premium through other channels registered a growth of 38%. Partnerships like Indian Bank, UCO Bank, South Indian Bank, Punjab & Sind Bank and Yes Bank registered a growth of 62%. These partnerships have started contributing 3% of Individual New Business Premium.
On profitability, the company’s PAT for the half-year ended September 30, 2022 stands at INR6.4 billion with 36% growth Y-o-Y. Our solvency remains strong at 219% as on September 30, 2022. Value of new business is at INR21.2 billion with growth of 53% Y-o-Y against INR13.8 billion in the corresponding period last year.
VNB margin is at 31% vis-a-vis 24.7% in H1 FY ’22, with an improvement of 630 basis points. We have aligned the value of new business and VNB margin for half year ended September 30, 2021, in line with March 30, 2022 disclosures. Growth in VNB and VNB margin is fueled by change in product mix, with predominantly non-par segment has contributed and, of course, the business volume. With our growth targets and the product mix shift, we expect to maintain a healthy VNB and VNB growth rates.
Coming to operational efficiency. Opex ratio reduced to 5.6% for the H1 FY ’23 from 5.8% for the similar period last year. Our total cost ratio stands at 10.2% for the first half compared to 9.5% for the last year same period. With respect to persistency, we have individual regular premium and limited premium paying policy, 13-month persistency stands at 85.2%. The company has registered a significant improvement in 49th month and 61st month persistency by 276 basis points and 363 basis points respectively. We have witnessed improvement in persistency ratios across all the cohorts.
As mentioned in my opening remarks, assets under management stands at INR2.8 trillion as on September 30, 2022, having grown 16% as compared to September 30, 2021. The company continues efficient use of technology for simplification of process. 99% of individual proposals are being submitted digitally, 43% of individual proposals are processed through automated underwriting.
To conclude, we continuously endeavor to maintain our leadership position and continue to further increase our market share by offering innovative products that meet the evolving needs of our customers with a widespread robust distribution network complemented by digital technology, our innovation strength and, above all, our people power. We are well placed to make the most of the abundant growth opportunities offered in India’s underpenetrated insurance sector. We will continue to leverage existing partnerships and explore new partners and launch new products to meet customers’ needs.
Thank you very much for your patient listening. 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 Swarnabha Mukherjee from B&K Securities. Please go ahead.
Swarnabha Mukherjee — B&K Securities — Analyst
Hi, sir. Thank you for the opportunity, and congrats on a good set of numbers. I have couple of questions. First one, I would like to have your comments on how do you see growth panning out in the second half, given that you have a focus on diversification now and what I think the expectation is that ULIP will now be slightly lower proportion of the mix than it used to be earlier. Given that these — generally the average ticket size would be higher than rest of the product segment, correct me if I’m wrong in case that is not correct. So, how do you see growth panning out in APE going ahead for the second half? That would be my first question.
Secondly, on the margin side. So, this particular quarter, sequentially there has been an increase in contribution for ULIPs. And that has been, I think, the major change in the product mix, along with non-par contribution also going down slightly. So despite that, have you seen an expansion of the margin, just wanted your thoughts on how to read into this. Is this again a function of the cost ratios being lower this quarter, how should I look into this? And what is your operating assumption change that has been shared in VNB? If you can throw some light on that. Those are my questions, sir.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, if you are looking at growth for the second half, our second half has always been very, very strong. So, if you see historically, Q3 and Q4 are extremely strong for SBI Life, and we don’t imagine that there is anything that should actually change all that. So, our own projections are based on our historical trend of Q3, Q4 being the strongest quarters for us. So, we look forward to a good robust growth there. ULIP, I have been maintaining earlier also. Sorry?
Swarnabha Mukherjee — B&K Securities — Analyst
Yeah, yeah. Sir, please go ahead. I just wanted — if you could quantify what would be a growth guidance for the year at least?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So I have already said earlier that we would like to grow at 20% to 25%, and that remains. And we are working towards that. I think directionally we are going right. And like I said, Q3, Q4 being strong quarters for us, we are very confident that we’ll be able to achieve our projections.
ULIP, I have said earlier also. I think I remember in my earlier calls I have said this that ULIP growth will be there. We see a lot of traction already happening for demand for ULIP, and ULIP will also continue to grow. Obviously, the non-par products that we have launched was a super hit with our customers. And as a result of that, it appears as if the focus is slightly off ULIP, but ULIP will continue to grow, because it’s a very — the products that we have are very customer-friendly products. You will also recollect that I just said about new products that we have launched, Retire Smart Plus, and that’s also ULIP-linked product and that is also expected to do very well going forward.
So, I think, the growth — and the whole idea about ticket sizes and all, you are right, the ticket sizes of non-ULIP products may be slightly lower, but then our idea — our own idea is that ULIP will also continue to grow according to its usual pace that we grow with, at least that is the minimum that you would expect it to grow. And therefore, we don’t see any major reduction in ticket sizes or in our ability to meet our targets.
Last question about the VNB margins, you were asking about margin, how come the margins are continued to be robust? Even though I think you said that non-par has gone down or something like that, no such thing has happened, non-par has grown.
Swarnabha Mukherjee — B&K Securities — Analyst
Sir, non-par in the mix, I was pointing towards the mix change, so non-par share in the mix has….
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
If the volume grows, obviously that thing is going to be there, the contribution is going to be there. So the volume has grown overall. So, if you see the growth, non-par has grown in this quarter.
Prithesh Chaubey — Appointed Actuary
Also, just to add what our MD sir mentioned that, you may see some slight reduction in this quarter-over-quarter in the non-par savings. But within the non-par saving, it also depends on communication because there are several non-par products which are having the higher margin. Even the new product last year we have launched, they are different option and each option has a different margin. So, there is a shift happening on that front, so we were able to optimize those margin within the non-par. And also, in case of annuity, we have deferred annuity on individual platform, which we launched subsequently. And that’s also helping us to enhance our margins. So, if you see, this contributes and help us to maintain the margin at current level.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So just to clarify, the product mix change is only 2% compared to the other product mix had moved from non-par to ULIP only by 2% in this quarter. So it’s not very material change. And Prithesh has answered the remaining part.
Swarnabha Mukherjee — B&K Securities — Analyst
Yeah, sure. That’s very helpful. Just a follow-up on the growth side, sir. The growth number guidance that you gave, is that on APE basis or NBP basis?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
You can take in on APE basis.
Swarnabha Mukherjee — B&K Securities — Analyst
Okay, sir. That’s very helpful. Thank you so much for your answer, sir. Wish you a Happy Diwali.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah, thank you. Wish you a Happy Diwali.
Operator
Thank you. The next question is from the line of Deepika Mundra from JPMorgan. Please go ahead.
Deepika Mundra — JPMorgan — Analyst
Hi, sir. Good evening. Sir, just I believe that on the VNB side on the base number, there has been some restatement, right, for 1H ’22?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Correct.
Deepika Mundra — JPMorgan — Analyst
Yeah. Sir, could you give us…
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
What we have done is, whatever we had projected in March ’22, that same methodology we have used on September ’22 — September ’21. So, you will remember that we had — we were stating on a different basis and we changed the methodology in March ’22. And so, to compare the September ’22 figures, we have done the same thing with September ’21 and come up with these figures. So, 24.7% that you are seeing, is as per the new methodology.
Deepika Mundra — JPMorgan — Analyst
Right. Sir, could you help us with this, you know that breakup for June ’21 and September ’21, or if you have it handy?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Breakup of what?
Deepika Mundra — JPMorgan — Analyst
Sorry. The other — the second quarter number, I think, for [Technical Issues] terms of the VNB margin, which equates to 31.5% under the same methodology.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
We don’t have the vis-a-vis, we can calculate and give it to you, but I don’t think we have it at — I don’t have it at this moment. Prithesh will answer, yeah.
Prithesh Chaubey — Appointed Actuary
Okay. So, see, earlier, what MD sir mentioned that, earlier we used to show the base number and then used to give some sensitivity and effective type of things that we have modeled subsequently in the month of March and model-wise reviewed at that point in time. So what we did that, just to be comparable number, we have rebased those numbers, and that’s the reason the 21% [Phonetic] rate becomes 24.7%. And hence, we are comparing our VNB margin growth from 24.7% to 31%.
If we look at to June as well, June — Q1 earning call,also we have rebased same approach. So, while June opening number was 21.2% and base we have reinstated to 23.7% and closing number for 2022 was 30.4%. So if you want to compare the comparative number for June ’21, the rebase number was 23.7% and, for September ’21, it is 24.7%.
Deepika Mundra — JPMorgan — Analyst
Okay, sir. Very clear. Sir, just a question on the EV sensitivity. It has gone up to 4% in the first half of this year versus, I think, 1.8%, which was in FY ’22. Any clarification on that, what is driving the higher sensitivity in EV for interest rate?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So this is basically on the base effect. So, if you see the year from March to September has gone up significantly. And when you do the sensitivity from current level, base has changed, and as a result, you see higher sensitivity coming from the interest rate side.
Deepika Mundra — JPMorgan — Analyst
Sir, sorry, would you mind elaborating a little bit on that?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So what I said is, suppose your yield is on March 31 was lower and when we do the sensitivity for 1% up, you do the sensitivity from that level. What happened from the March to September, yield has gone up and if you look into the shorter duration, yield has gone up more than 100 basis points. And as a result, there will be MTM losses coming from — as compared to the March 2022, and that will become your base. And when you do sensitivity, you’ll start with the lower MTM base. As a result, you see the base number will change.
The major contribution coming from those funds include particularly the shareholder fund where there is no corresponding liability. So, while other LOV [Phonetic] has the corresponding liabilities, will get offset on that basis in shareholder fund, there is more subsequent liabilities. So, all MTM will impact your sensitivity. Subsequently, if you also look into this discounting because EV run of business for future and initial year your base has increased. So, when you — it’s not a linear impact on the in-force business or EV. So, when you go, you start looking into the higher number, the impact will be different. And that’s the reason you see higher sensitivity is coming up.
Deepika Mundra — JPMorgan — Analyst
Okay, sir. Thank you very much.
Operator
Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead.
Avinash Singh — Emkay Global — Analyst
Yeah, hi. Good evening. So, the first question, I mean, of course, numbers are too good, but in terms of improvement, I mean, of course, you have hired a good amount of agency workforce over the last one, two years. Now, at this juncture, I mean, what kind of productivity improvement — I mean, how do you see the growth across agency channel comparing vis-a-vis bank that of course, has been firing? So that is like one that, okay, what are your sort of your plans around agency and how do you see this performance improving? That’s one.
And second, within Banca, I mean ex-SBI, what would be the contribution? Because some of the public sector banks, I think, we are already almost [Indecipherable] three years now, and they have — of course, largely quarterly [Phonetic]. So what if — overall, ex-SBI contributes in the Banca. These are the two questions. Thank you.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, agency, you are right that we have recruited. So what has happened is that, in the COVID, basically there were a lot of agents who were not able to perform and we are not actually removed any agents from our rosters in the last — last year only we started that process once again to rationalize the numbers. So — but what we have done is, we are going all out to get more and more agents and to increase the agency business. So, as you can see, we have the biggest agency in the private sector by a long margin.
And our productivity — per agent productivity is INR2.5 lakhs. I don’t think anybody else has got anything near that. And this is what we would like to grow, so — and it can go higher also. There has already been a growth of about 6%, 7% in productivity. But I think there is a lot of scope there. And plus the numbers, if you see the net number has gone up by 32,000, and this is not my target. We are targeting a much higher number. So, once these agents in the same proportion start getting productive, I’m sure agency will contribute much more in the future.
The other question regarding the non-SBI Banca. So, I can say that right now they’ve got — 3% of the business comes from these banks. And our idea is that this should go way up, because if you look at the way SBI has grown, if these public sector banks partnerships that we have, if they can only take — even take that same trajectory, I think the growth is going to be huge. But having said that, you will notice that these relationships have grown by much bigger amount, so almost 63% growth across the other partners. So that’s something which we have already achieved.
Avinash Singh — Emkay Global — Analyst
Okay. Thank you, sir. Wish you a Happy Diwali.
Operator
Thank you. The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead.
Neeraj Toshniwal — UBS — Analyst
Yes, sir. Wanted to understand our outlook. On last quarter, we spoke about we’ll be looking for passing on some benefits in terms of yield over the course of time. So, where are we and how much would that — due to if any effect on our margin expansion? That is the first question.
And second is, on the Bima Sugam, wanted to know that we are not too active on third-party aggregator platform, but was there any change of strategy with the opening of this online exchange by the regulator?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, see, global interest rates, it’s basically a thing that we keep calibrating. Now, if you look at the movement of the interest rates, you really don’t know whether there are going to be any more interest rate hikes. So, this is something which we are looking very closely. And the product itself has got a very good demand that we have the non-par guarantee, a guarantee that we are offering is finding very good offtake. Right now, we are evaluating, so we’ll see how it goes. Obviously if I increase the guarantee rates, the margin is going to go down by that much amount as there is no way, you can increase the interest rate paid to the customer and increase the margin. So that is not happening.
But having — we will keep close look on the interest rate movements and decide whether we want to do any such thing. Obviously, the customer is king, and if the customer will buy only if there is a higher guarantee, then obviously we will reprice and we will give better guarantee there.
Bima Sugam is a good initiative by the regulator. I think, IRDA is going in the right direction with that kind of a thing. I think we’ll have to see what the controls of the platform are going to look like. And you know what kind of business can happen out there, but prima facie, I think it’s a very good idea. And we were not on these earlier platforms because they were very expensive to be on, frankly speaking. So I don’t think it has got anything to do with our reluctance to be on a public platform. But we don’t like to be on fixed platforms, so platforms which are fixed by somebody else. So therefore we were reluctant to be on other platforms. But Bima Sugam coming from the regulator and having all the right credentials, I don’t think we will have any hesitation in being — going all out on that platform.
Neeraj Toshniwal — UBS — Analyst
Okay, sir. Got it. That’s really helpful. Thank you, and all the best, sir.
Operator
Thank you. The next question is from the line of Anirudh Shetty from Solidarity. Please go ahead.
Anirudh Shetty — Solidarity — Analyst
Yes. Hi, sir. Thanks for taking my question. Sir, my first question was on non-par book, and it’s grown quite well. I just wanted to get a sense of enough availability of heavy instruments to keep growing this book at the pace that you would look like to desire. And also typically what percentage of this book is hedged for us? And also, could you give a sense of what is the average tenure for this book and how much would be deferred and how much is immediate?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, the availability of hedging, obviously we would like to hedge any kind of such a guaranteed product. We can’t go ahead without hedging unless you have a crystal ball and you know exactly how the interest rates are going to behave. So, failing to do that, we would like to hedge and we will continue to hedge so long as the availability is there. So, right now we don’t see any problem with the availability. And we are able to hedge to the extent that we want to cover. And I wouldn’t like to give any percentage out here. It’s something which we do at our end. But suffice to say that we are well hedged to take care of the uncertainties of the nature of the product. It’s a long-term premium paying product. So, it goes from seven to 10 years. And therefore, we are properly hedged there, and we would like to continue to be hedged there. And right now, we are able to get what we want.
Anirudh Shetty — Solidarity — Analyst
Got it. And sir, there’s a lot of opportunity to grow within the SBI branch network. Can you just give a sense of what is the share of branches that are activated? What is the long-term number that we think we can kind of get there — get to at? And I see that….
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, almost all branches of SBI are generally active. So, it may vary from month to month. But on an average, all the branches of SBI would be active with some minimum number of policies being sold. So that is something which contributes to our growth in SBI, and that has been very steady, if you can see over the past.
Prithesh Chaubey — Appointed Actuary
And see, our number of just under INR40 lakhs per branch is what we have achieved, which is lower number than some of our leading private competitors. We hope to bridge that gap over the years.
Anirudh Shetty — Solidarity — Analyst
And what do you think is the right — sorry, that was very helpful. What do you think is the right, I mean, this productivity of INR40 lakhs, how do you see that trending over time, like, where do you — what is a more healthy number that you guys are fine with it?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
It can go up. See, what happens is, in India, it is not a question of the availability for people who need insurance. It is a limit of the people to understand that they need to buy insurance. So, you keep talking to people, and like any sale you talk to 100 people, you get two, three sales. So, in insurance, it is like — it is probably on the lower side there. So you have to talk to a lot of people. It is not a very easy conversation to have. So when you start the conversation, saying that suppose you die tomorrow who will take care of your family, it’s not a very easy conversation to start. So that is why insurance business in India is taking a little while to actually reach that penetration level, which is there in many advanced countries.
But having said that, there is huge scope, so there is a lot of scope. And if you ask me, I will tell you the global figures. Overall figures that you see, there is a 82% protection gap in India. So, the amount of protection that Indians need overall, only 18% of that is fulfilled. So, you know the kind of potential that exists out there. And that’s how SBI customers also.
Anirudh Shetty — Solidarity — Analyst
Absolutely, sir. And just one final question. Typically at these SBI branches, how many SBI Life employees would be stationed over there as a rule of thumb?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, I wouldn’t like to say, but every branch would have one person who sells — who should typically be able to sell insurance.
Prithesh Chaubey — Appointed Actuary
Sir, what happens is, we have support given to each and every branch of SBI. And unlike other players, we have multiple bank branches being handled by one BDM. Of course, there are some…
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
No, no, not our employees. He is asking about SBI employees.
Prithesh Chaubey — Appointed Actuary
Not our employees.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
He is asking about — no, no, SBI employees? You are asking about SBI employees, no?
Anirudh Shetty — Solidarity — Analyst
No, sir. SBI Life employees.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
No, no, no SBI Life — I’m sorry, I was talking about SBI employees. Typically there should be one per branch at least. That is the minimum that we need. And in bigger branches, there would be more. Our own employees, we have a very different kind of structure. So there would be about one employee per 10 on an average, per 10 branches on an average. So that can change depending on the distance and all. For example, Northeast, I can’t say that I’ll have 10 branches covered by one person, because the branches may themselves be 100 kilometers, 200 kilometers away.
Anirudh Shetty — Solidarity — Analyst
Do you see the need to add more there, because like you mentioned, protection is a tough product to sell. So, do you think by adding more [Speech Overlap].
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
See, the whole idea of our model and why our model is cheaper is because we are following the regulatory instructions of the bank people doing the sale and our people trading, handholding them, helping them in the sale process. So that is the model that we are following, and that is why we are the lowest cost. If I were to put one person per branch to sell from my side, then I would be defeating the requirements of regulation also and, at the same time, it would be a very, very high cost model.
Anirudh Shetty — Solidarity — Analyst
Got it, got it. So that was my last question. Thank you for answering.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah, yeah. Thank you.
Operator
Thank you. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.
Dipanjan Ghosh — Citi — Analyst
Hi. Good evening. Congratulations on good set of results. Two questions from my side. One is, you alluded to the change in product mix within the non-par segment, which kind of supported the margins during the quarter. So, do you like to throw some more color into the mix of the products in terms of policy term or customer age or tenure? And second, on credit life, last year you have been guiding that you’re focused on increasing the attachment rates at SBI’s counter. So, what is the kind of progress that you see out there on that particular segment?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, see, the non-par, I think, basically what Prithesh was trying to say is that, there are products and therefore you can’t really put a figure from outside on what it is. We do the exact calculation and then we arrive at the margins. So, the products — there are different products, there are different for tenure. For example, even the non-par guaranteed products, it would have a 10K product and there would be an 8K product and there would be a 9K product or a 7K product.
So, every one of these will be having different margins. So even a slight shift in those, that demand would change the margin. So — and really speaking, it’s not a very big deal. You know what, Abhijit said very clearly, there is only a shift of 2% in the overall mix towards ULIP. And on top of that, their credit life has grown very robustly. And also, if you look at the — so that can be explained by the inter product changes in margin, etc. I mean, it would be very difficult. We would have to sit with an Excel sheet and talk about how many of each of those products got sold and all that. We know that, but I don’t think we can — we need to do this on the call.
But the other thing is credit life, like you say, yes, we would like to increase our attachment rates. And we have increased attachment rates from 47% to 48% in the similar period. Last year, we ended with 50% attachment rate. And this year, we would want to take it much higher. I think SBI has also taken higher targets because they feel that this is a very good product for their customers to protect themselves and their families. And in fact, the product itself is called a Smart Family Protect. So, this is something, which I think we will try to increase the attachment rates.
Dipanjan Ghosh — Citi — Analyst
Sure. Thank you, and all the best.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.
Sanketh Godha — Spark Capital — Analyst
Thank you for the opportunity. Sir, a bit of higher base impacted the growth in second quarter, and we also have a higher base problem in third quarter of FY ’22. So, what makes you to tell you confidently that the growth of 20% or 25% can be achieved for the full year, because we had a decline in the second quarter and if you’re seeing [Indecipherable], even if you grow by 20 percentage out in the fourth quarter, still the guidance of 20%, 25% seems to be tough to achieve. Sir, if you can give a little more color on that thing would be helpful.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah, yeah, absolutely. You’ve got a very good question. But I think what you probably have ignored is that there was peculiar circumstance in the last year in which you had April, May being totally washed out. So, you know that pent-up demand spilled over into part of it. Of course, everything doesn’t get fulfilled because people forget, people don’t buy, people don’t fulfill, but part of it gets fulfilled in the next quarter. So that was the spike that I was talking about and not the normal spike.
Normally, we have a seasonality which we take for the first quarter, the second quarter, the third quarter and fourth quarter. The third and fourth quarters generally we take the highest seasonality because the numbers, the demand and the sale everything happens in the second and — third and fourth quarters. In fact, whole of India were on the basis of a busy second half rather than the first half. So, the Kharif season is always less busy than the Rabi season. Okay? So, that is where all the money comes. That is where all the harvesting takes place. That is where all the things happen.
And as a result of that, the money flow, the demand, and actually the year end demand, before the year end, people want to do a lot of things within their budget. So, as a result, naturally during the last two quarters, there is always more activity. And last year also, it’s not the question of the base, the base is only to explain the lack of — upper end lack of growth in the second quarter. If you look at the numbers, they are very robust numbers in the second quarter also.
Only thing is, when you compare it with the quarter of only last year, there is an issue out there where it is not showing a growth. But if you look at sequentially, it is a very good growth. So, going forward, every quarter three and quarter four has been stronger than quarter two always in the past for SBI Life. So that is where our confidence comes.
Sanketh Godha — Spark Capital — Analyst
Got it, sir. And last quarter, in Q1 quarter, you mentioned that income plans of non-par, this Platina, contributed almost 30% of the total business. If you can put a color how much it contributes either for 1H or second quarter, and I say, when you said that the product — within the product — product within the non-par design healthier margin expansion, sir, is it higher contribution of income plans or higher spreads you made in the current quarter contributed to the margin expansion?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, non-par, I think, yeah, Prithesh, go ahead.
Prithesh Chaubey — Appointed Actuary
So, yeah, so you are absolutely right that in non-par income plan has higher margin and that helps us to enhance the margin as well. And you’ll see this, depending on the premium paying term, we have the INR7,000, INR8,000 and INR10,000. So INR10,000 has higher margins. That’s really helped us.
Now, we have other non-par part, which is endowment. And if you compare to the endowment versus income plans, income has high demand and that’s the reason this year — this quarter particularly, Q2, while we see this slight decline in the non-par proportion overall, the proportion has increased more towards the Platina Plus income plans, and that’s really helped us to give this margin.
Sanketh Godha — Spark Capital — Analyst
Sir, what is that number, sir? Last quarter it was 30 percentage, if you have that number handy?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, 22% to 25%, I think somewhere around.
Prithesh Chaubey — Appointed Actuary
So if you see this quarter, it is around 25%.
Sanketh Godha — Spark Capital — Analyst
Okay. Got it, sir. And another question which I had was, sir, you restated VNB based on the revised methodology which you applied for FY ’22 full year numbers. Can you restate that EV, which you reported in 1H FY ’22, based on — not based on the methodology you used in FY ’23, because if I use that number of H1 FY ’22 what you have reported and look at EV growth, it looks muted 10%. So, naturally that the growth should be better than that 10%, because assumptions were probably not appropriate in 1H FY ’22 on tax. Sir, if you can restate that number would be very useful, sir. And related to it, wanted to understand how much EV got impacted in 1H FY ’23 because of MTM?
Prithesh Chaubey — Appointed Actuary
So, see, we have not published our AOM from EV. And since we have not published on AOM, we have not restated number publicly. We’re not quoting those numbers. End of the year for financial year, we will go and do that. So, you get a like comparison from March — next March number already in the new base. So, we have not done that. So, we don’t want to quote those number at this point in time.
Sanketh Godha — Spark Capital — Analyst
Okay.
Prithesh Chaubey — Appointed Actuary
And second question on your MTM as well, I think, because — again, this is economic variance coming from that. Since we have not publicly disclosed those numbers, we do not want to comment on MTM as much. But the moment you will see this, our MTM losses would be similar to the sensitivity that we have shown in March 31, not different than that. Second point is, if we look into the EV growth, which you might be seeing is muted. In the first six months of the year, EV growth of 10% is quite significant, because most of the business will keep coming in the second half. So, EV growth will be much higher, I believe.
Third point, I think, though we have not given the AOM, I can confirm that in operating variance, all the aspects including the mortality, expenses and persistency, we have very positive variance. We are expecting even better because we have quoted assumption as far as mortality is concerned and we have not diluted our COVID provisioning as on March 31, 2022 carry forward. So, by end of the year, we see more operating — positive operating variance and you might be seeing more robust ROEV. But at that point in time, I think we have to wait till our year end, in March ’23, we will do that.
Sanketh Godha — Spark Capital — Analyst
Got it, sir. And the last one from my side. See, we are seeing improvement in the cost ratio. We are seeing improvement in the persistency. Our VNB, which is 31% is for first half is still based on last year cost and persistency. We have not touched assumptions yet. Sir, even — just wanted to understand the lever itself is still available for you to reported margins even better than what you have reported in 1H, sir?
Prithesh Chaubey — Appointed Actuary
See, I think we can expect that margin would be better in same product mix, but if you see the product, which might be changing over the next six months. So, I think while margin will be more or less similar, I do see there will be some enhancements coming from. But I don’t see any risk downside margin from the current level. Current level is not just exactly 31%. We are looking for some range of 29% — 28% to 31% range.
But definitely in the March when we will revisit, we expect….
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yes, basically this is largely conjecture, because like I keep saying and I’ve said this, I know till — I have also bored of saying yes, that we are basically selling products which — that customer wants, and that doesn’t change. I’m not pushing anything down anybody’s throat because it has got higher margins. Obviously, the margin will depend a lot on the demand that is there. But we will continue to give meaningful products to our customers and they will find it useful. And as a result, we will grow our VNB, we will grow our EV. And margin, of course, will be a high — healthy margin.
Sanketh Godha — Spark Capital — Analyst
Got it, sir. Thanks. That’s it from my side. Thank you very much.
Operator
Thank you. The next question is from the line of Madhukar Ladha from Elara Capital. Please go ahead.
Madhukar Ladha — Elara Capital — Analyst
Hi, good evening. Congratulations on a great set of numbers. So, most of my questions have been answered. Just I wanted your comments on the new draft regulations on commission and expenses management. Are expenses management significantly lower than that 70%, they met, I believe, they are closer to 50%, 55%. So what I wanted to understand is, how can this impact us? And could it lead to a scenario where our largest distribution partner and parent then demands for higher commission payouts? Yeah, you sort of thoughts on this.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
I cannot speak for our distribution partners. But the whole idea is that, our business is good so long as it is sustainable. And so long as it — it’s like nobody would want to kill the golden goose, okay. So if you’re doing good business and you are getting good results out of it, good revenue out of it, I don’t think you will want to kill the business by saying that you give me everything and leave nothing for growth. So I don’t envy such a situation. First thing.
Secondly, I think what is being attempted is, that there are a lot of companies which have been constrained because of these regulations. And they would like to have more freedom in the way they spend expenses of management. So, I think that is where the regulator is looking at giving some higher degree of freedom. But I’m very, very confident that the regulator will still be looking very carefully at how it is being spent and how it is being managed so that there are no wrong practices coming in. So, I’m very confident that the regulator would think about all these things and there would be a good framework for that.
Having said that, we have never been challenged in terms of either EUM or commission payment. So we don’t think it is going to affect us directly. But like you are saying the scenario that you were thinking about, any such scenario looks like coming up, then we will see what we need to do.
Madhukar Ladha — Elara Capital — Analyst
Sir, while SBI may not take all of debtors commission, but there can definitely be a scenario where there is some sort of payout increase. Have there been any discussions, anything on that?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. I think this is all very conjectural. This is very, very conjectural. So I won’t like to comment on this. If there is something concrete that comes up, then we will discuss this.
Madhukar Ladha — Elara Capital — Analyst
Got it, sir. Thank you. All the best.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Thank you. Thank you very much.
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. Good evening, sir. I have two questions on the annuity products. So, first like, what is really driving such strong market share gains in this business? Like I want to understand how important pricing is behind the growth of this products? Like you have always said that ROP product, the customers are not so price sensitive and they want money back in return. So how competitive this product is when it comes to pricing? And if you can also provide some color on distribution mix in respect to this specialty line of business?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, annuity product, it is something which is very transparent, in the sense, everybody — a person can go and search for annuity products and he will know what kind of returns he’ll get. So, if I’m able to sell a product, it has to be competitive. So that’s what we have. We have a very competitive product and we are giving value for money, and that’s why it’s selling.
Prithesh Chaubey — Appointed Actuary
And all channels are selling.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
All channels, yeah.
Prithesh Chaubey — Appointed Actuary
Both are selling annuity products.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah, yeah. All channels are selling.
Nitin Aggarwal — Motilal Oswal — Analyst
Okay. And sir, how do you see the growth going further in this product as interest rate rises and banks are also increasing deposit rates, which can go up sharply?
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
So, see, I don’t think there is a direct connection between deposit rates and these products, because these products are totally different in structure. Deposit, you will get for three years or maximum 10 years. Today, you can get a deposit for 10 years, and you can lock in the rate of interest for 10 years max. In an annuity product, you are getting for life, okay. So that flavor is totally different. In the deposit, you get the money back and you have to deploy it again. So there are two things out here. One is liquidity that you have the money, but again, you will have to deploy it. And there is no guarantee what rate you will get it then.
So if it is like euro, if you see, in the last 30 years, the rates on interest have gone down to zero and minus also. So, if somebody imagine — after 10 years, he’ll put it in the FD and then he will put it again at a better rate or something like that after 10 years, he may not get interest at all, he’ll have to probably pay interest to do that. In an annuity product, I cannot afford to do that. I have to give him whatever I have committed today, I have to keep paying him till somebody certifies that he is no longer there. So there is a huge difference. I don’t think that this is driven only by interest rates. It is driven by the returns that are generated and the guarantee. So you are able to give a guarantee that 50 years down the line, if you’re alive, I will give you this much amount. So that is what is driving that business. And I think it’s a totally different demand and supply thing to fixed deposits or any other investments. You can compare it probably with a 40-year bond or something, but that’s about it.
Nitin Aggarwal — Motilal Oswal — Analyst
We do see a lot of growth in this annuity business and particularly we see…
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. Because most of India is not covered. Most of India is not…
Prithesh Chaubey — Appointed Actuary
It is maturing, so you will get a lot of NPAs, will convert into annuity products, and retirement is [Indecipherable] people will buy.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Most people don’t have any pension or protection.
Prithesh Chaubey — Appointed Actuary
Demographic, this is…
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah.
Prithesh Chaubey — Appointed Actuary
On a small base, but the fastest growing demography is here.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah.
Prithesh Chaubey — Appointed Actuary
People above 55, 60 years age.
Nitin Aggarwal — Motilal Oswal — Analyst
Right, right. Got it. Thanks so much, sir.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Thank you very much.
Operator
Thank you. The next question is from the line of Ansuman Deb from ICICI Securities. Please go ahead.
Ansuman Deb — ICICI Securities — Analyst
Yeah, hi. Thank you for the opportunity. I have two questions. One is that, you mentioned you had a tie-up with India Post Payment Bank, and so has been the case for another leading private life insurance. I just wanted to understand the competitive intensity around the Tier 2 distribution or Tier 2 kind of pieces. Has it increased? And how comfortable is SBI sharing an open architecture with — like a leading private life insurer? That is question number one.
And the question number two is, our sensitivity have increased — sensitivity interest rates. So, in terms of strategy, do we have a strategy to kind of lower it down by changing the — but you mentioned about product being decided by the consumer, but changing the product mix or changing other things to keep a control on the sensitivity to interest rates? These are the two questions.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Yeah. So, see, when you’re talking about open architecture with private insurers, you’re already in that kind of a situation with some of the banks. So, we are already in competition with other insurers in three public sector banks and two private sector banks, apart from this IPPB relationship that we have just started. So, there is no question about that. We are the leading insurer in all these relationships. So, we have the leading share in all these relationships. So, I don’t think we are bothered with open architecture per se. We have got us very strong brand name. We have got very strong products and we’ve got very good servicing, and we’ve got a very good company. So, I don’t think we are bothered about that too much. And of course, we will keep pace with whatever developments are there.
So, coming to India Post Payment Bank Limited, basically the idea is that these are — this would expand our reach into the interland — into the deep rural areas, into the unbanked areas, underserved areas. So, State Bank is one such medium. So, we have about 23,000 branches, then we have about 9,000 branches of, I think, RRBs. And so, this is another attempt on our side to cover all those dark spots that we would like to think where we don’t have our complete presence in rural, semi-urban areas, and this would help us to do that.
And also, in the urban areas also, then we could probably expand this whole thing. The idea is that there are more than 600 branches or 635 plus branches of IPPB, which are then connected to all the post offices. So we are trying to have a model which we can then scale up. And this is not going to happen overnight. We will work on it, but it’s a very — we think it’s a very exciting opportunity. And for a company like ours, we have two purposes out here. One is, of course, to grow the company and to make sustainable profits and all that, increase the customer base but very importantly to develop insurance in India. We would like to be known as a company that actually grew insurance in India. So that is something which we will take a lot of pride in, if we are able to achieve this objective of giving more and more Indians insurance cover.
Ansuman Deb — ICICI Securities — Analyst
Sure, sir.
Prithesh Chaubey — Appointed Actuary
And sensitivity is just to aid that we explained earlier as well. We see the sensitivity on account of the base effect. And particularly in the shift in the — it is not parallel shift because it has gone up [Indecipherable] and something happened on account of the fact because we are [Indecipherable] product. Having said that, I think we shouldn’t be worried about the sensitivity for interest rate because this investment that we’re making, we are making for held to maturity. And in case interest will go up subsequently, I think we will able to make more money on their side as far as EV growth is concerned. So there is no strategy that we’re going to change for product mix. I think basically we’ll be able to manage that.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
But you have said it yourself very clearly that the consumer is at the center, and therefore, even there is what — attempt to fix the whole product mix. What we would probably do is, we’ll try to introduce more products, which will find the better acceptability with the customers to try to influence their buying decision and not be other way around trying to push our existing products where they are not suitable. So, first, we find what is suitable for the customer, what he needs and then we’ll give it to him. And if his needs are slightly different, then we will develop a product and give it to him.
Ansuman Deb — ICICI Securities — Analyst
Right. I was just coming from the perspective that you also said, right, for example, in the first half, if I were to calculate the economic variance, you said you can use the sensitivity to calculate it, right? What I’m trying to say is that, let’s say, I’m projecting a two-year EV and I’m assuming, let’s say, hypothetically a 200 basis point increase in interest rates, then your sensitivity is the highest, right?
So I’m trying to say that on that perspective, as a business strategy, do we have a benchmark sensitivity that it should not go above that or something like that? Just wanted to understand.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Basically the sensitivities are concerned, so basically you use it to see what is likely — what could likely happen in the unlikeliest case. Like for example, the sensitivities are not, say, plus 2%, minus 2% and all that, and that is not something which we are anticipating to happen in the next, say, one year or so.
But if it does happen, what happens, so 4% sensitivity out there is, maybe higher than 2%, but it is still not something which will affect the company negatively in the long run.
Prithesh Chaubey — Appointed Actuary
That’s why, let’s see, there’s two points I think we’d like to mention here. One is that our sensitivity even 4% is similar to our other peers in the market, so not very high sensitivity. Second point, I think you need to look into that. If you look into our public disclosure in the past, we have been able to — successfully able to reduce our sensitivity gradually in last four to five years. This — as we mentioned earlier, this sensitivity is at this point of moment, and that also reflects some of your movement in the yield curve and how the safe yield curve has changed.
When anyone has to look into a longer-term, I think you can look into March and give a longer period, and we’re not going to change the strategy because six months back our strategy — six months we’re not seen a lot of things. In fact, something impact coming from the prior, but if we see other side, we can not saving or writing, we’re getting priority value. So I think we are — this sensitivity is in our mind while planning our strategy in the product, though we are — our first preference is to customer. At the same time, we always adopt a long-term view in each places that we mentioned. And hence we are not too worried about the start a movement in case of sensitivity and interest rate.
And that’s the reason I mentioned that we should not be more worried about this sensitivity, particularly for the interest rate scenario, because we are writing the product annuity with longer term. We were able to interest rate, able to lock in base thing, able to cope even the unhedged book, if you’re able to reinvest our coupons at higher yield, ultimately it’s going to help us in the economic parity in the future.
Ansuman Deb — ICICI Securities — Analyst
Thank you, sir. Thank you all and Happy Diwali to everybody. Thanks.
Operator
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Mahesh Kumar Sharma for closing comments.
Mahesh Kumar Sharma — Managing Director and Chief Executive Officer
Thank you very much, everyone, for all the questions. The questions that we get in the conference always keep us on our toes and it gives us an opportunity to understand our company even better than we ourselves could. So, thank you very much, once again. Wish you all a very Happy Diwali and hope that going forward we all keep ourselves insured and safe. Thank you.
Operator
[Operator Closing Remarks]