SBI LIFE INSURANCE CO LTD (SBILIFE) Q4 2022 Earnings Call Transcript

SBI LIFE INSURANCE CO LTD (NSE: SBILIFE) Q4 2022 earnings call dated Apr. 28, 2022

Corporate Participants:

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Abhijit Gulanikar — President – Business Strategy

Prithesh Chaubey — Appointed Actuary

Bharat Shah — Executive Director

Analysts:

Deepika Mundra — JPMorgan — Analyst

Nitin Agarwal — Motilal Oswal Securities — Analyst

Adarsh Parasrampuria — CLSA — Analyst

Unidentified Participant — — Analyst

Arav Sangai — BT Capital — Analyst

Jayant Kharote — Credit Suisse — Analyst

Abhishek Saraf — Jefferies — Analyst

Prateek Poddar — Investment Equity

Sanketh Godha — Spark Capital — Analyst

Niraj — UBS — Analyst

Adit Jain — Citigroup — Analyst

Hitesh Gulati — Haitong — Analyst

Dhaval Gada — DSP — Analyst

Avinash Singh — Emkay Global — Analyst

Nishant Chawathe — Kotak Securities — Analyst

Madhukar Ladha — Elara Capital — Analyst

Manish Gupta — Solidarity — Analyst

Rohan Advant — Multi-Act — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day, and welcome to the SBI Life Insurance Company Q4 Results Call for the financial year ending 31st March 2022. [Operator Instructions] [Operator Instructions]

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

Yes. Thank you very much. Good evening, everyone, and we heartily welcome you all to the annual results update call of SBI Life Insurance for the year ended March 31, 2022. We hope you and your families are safe and well. Update on our financial results can be accessed on our website as well as well as on the website of both the stock exchanges. So along with me on this call, I have Sangramjit Sarangi, President; Ravi Krishnamurthy, President, Operations and IT; Abhijit Gulanikar, President, Business Strategy; Subhendu Bal,Chief Actuary and CRO; Prithesh Chaubey appointed Actuary; and Smita Verma, SVP, Finance and Investor Relations.

We are pleased to inform you that we have successfully maintained the new business thrust and have again delivered enduring performance in this year as well. This diverse is the company’s strength of distribution and expansive outreach to customers in a cost-efficient manner. Our commitment is to deliver sustainable long-term returns to the stakeholders. This would not have been possible without the efforts of all our employees, distribution partners and business associates for their uninterpreted support, which helped to service our customers during this challenging environment.

As mentioned in the last earnings call, we have aligned our value of new business, UMG margin and Indian embedded value as per industry standards and reported figures will be comparable with peer companies. Now let me give some key highlights for this year ended 31st March 2022. New business premium is at INR254.6 billion with a growth of 23% over the previous year. Individual new business premium stands at INR165 billion, a strong growth of 32%.

Gross written premium stands at INR587.6 billion with a growth of 17%. Protection new business premium grew by 24% to INR30.5 billion. Individual protection new business premium grew by 26% over the previous year to INR9.4 billion. Annuity business stands at INR34.7 billion, registering a growth of 15% over the previous year. Profit after tax stands at INR15.1 billion. Value of new business is INR37 billion, registering a strong growth of 39% over the previous year. And the new given margin is at 25.9%, with an improvement of 217 basis points.

Indian embedded value stands at INR396.3 billion. M&A value opening profit — operating profit stands at INR68.9 billion. Operating return on embedded value stands at 20.6%. Assets under management grew by 21% to INR2,674.1 billion. Let me update you on each of these elements in detail. We’ll start with the premium. Individual business, one of the focus areas of the company has grown by INR165 billion, a growth of 32% — sorry, it has grown to INR161 million, growth of 32%. Single premium contribution is 24% of the individual new business premium.

It is mainly attributed to growth in individual annuity product. The company gained a private market share by 166 basis points to 23.4%. Individual retail new business premium stands at INR128.7 billion, a growth of 26%, which is leading to private market leadership with a share of 23.4%, an improvement of 75 basis points over the previous year. Maintaining private market leadership portion in new business premium, we collected INR254.6 billion new business premium and marked private market share of 32%.

Group new business premium stands at INR89.6 billion with a growth of 10%. Renewal premium grew by 12% to INR333 billion, which accounts for 57% of the GWP. Our gross written premium stands at INR587.6 billion with a growth of 17%. Total APE stands at INR143 billion, registering a growth of 25%. Out of these individual APE stands at INR129.6 billion with a growth of 26%. During the year ended 31st March 2022, total 19.2 lac new policies were issued and registered a growth of 16%.

Some are sure the individual products registered growth of 16% over the previous year as compared to a growth of 3% at private industry line. Now about the product mix. Individual production is at INR9.4 billion, registering a growth of 26%. Group protection stands at INR21.1 billion with a growth of 23%. Creditalize new business premium has grown 21% and stands at INR16.8 billion. On APE basis, protection contributes 11% of new business and registered a growth of 38%.

We are confident that over a period, we will be able to reinstall an uptick in share of individual pure production. Annuity business is at INR34.7 billion and contributes 14% of new business premium. Total annuity and pension underwritten by the company INR72.3 billion, registered a growth of 15% over the previous year ended 31st March 2021. Guaranteed on par sealing product is contributing 10% of individual new business, and on total APE basis, this contributes 12%.

Non-par guaranteed product new business has registered a growth of 62% over the previous year. Individual unit business is at INR13.2 billion, which consumes 69% of the individual new business premium and has showed a growth of 32%. Fund Management business is at INR51.5 billion with of 13%. During the year, the company has launched SBI Life Smart PLUS, which provides security, flexibility and reliability through a regular guaranteed long-term income, flexibility to suit like goals and financial protection along with tax benefits.

The response to this product is very positive and received record inflows in very short period of time. The company offers comprehensive fleet of participating, nonparticipating guaranteed annuity pension and link solutions, which are designed to enable our customers live life to the fullest across a wide demographic range and income levels. Now look at the distribution partners, we had strength of more than 53,000 CIFs. Bancassurance business marks a share of 65% and grew by 31% in individual new business premium.

Bancassurance channel individual APE stands at INR87.4 billion with a growth of 27%. Agency, our strongest channel registered our strong solid channel after Banca registered new business premium growth of 30% and contributes 18% in new business premium. Agency channel individual APE stands at INR36.8 billion with a growth of 32%. As of March 31, 2022, the number of agents stands at 146,057. There is improvement of 21% in Asians productivity levels as compared to previous year. and greater use of technology is assist in better engagement in the entire value chain for recruitment and training through to lead generation, seal and customer service.

During the year, other channels that is direct corporate even brokers, online gadget, etc, grew by 61% in terms of individual new business premium and 45% in individual APE. Production new business premium through other channels registered a growth of 41%. Partnerships like Indian bank, JugoBank, South Indian Bank, Panjaved Sin Bank and Nesbak registered a growth of 49% overall. These relationships contribute almost 4% of individual APE as on March ’22.

Now our profitability during the year. COVID claims net of reinsurance feed as well as outstanding stands at INR15.9 billion, covering maleic businesses. The company has kept additional reserve amounting to INR2.9 billion for COVID-19 and the mix over and above the policy liabilities. The company’s PAT for the year ended 31 March 2020 stands at INR15.1 billion. Our solvency remains strong at 205% as on March 31, 2022. Value of new business is INR37 billion with a growth of 39% over the previous year.

New business margin is at 35.9%. — with an improvement of 270 basis points, sorry. Embedded value stands at INR96.3 billion, with a growth of 8.9% over the previous year. Embedded value operating profit stands at INR68.9 billion, operating return on embedded value is 20.6%. Our operational efficiency, cost efficiencies continue to be maintained with total cost ratio at 8.8%, and opex ratio at 5.1% for the year ended 31st March 2022.

13-month persistency ratio of all policies that is regular as well as single and limited premium stands at 88.4% as compared to 87.9% of previous year. In accordance with recent regulatory requirements with respect to persistency of digital regular premium and limited premium paying policy, 13-month persistency stands at 85.2%. The company has registered a strong growth in 26 months and 29 month persistency by 221 basis points and 423 basis points, respectively.

As mentioned in my opening remarks, Assets under management stands at INR2.6 trillion as of March 31, 2022, having grown 21% compared to last March. The company continues efficient use of technology for simplification of processes with 99% of the individual processes being — or proposal being submitted digitally, 44% of individual proposals are processed through automated underwriting. Customer satisfaction is a key focus area.

Grievance ratio that is a number of grievance per 10,000 new business policies is 16 and grievance with respect to unfair trade practice stands at 0.07%, one of lowest in the industry. Individual debt claim settlement ratio stands at 97%. The macro drivers for the life insurance sector remain well in place. The vision of the regulator for enhancing the insurance penetration and development of the sector is crystal clear and very positive for the industry growth.

We strongly believe that our wide distribution network, along with customer-centric product portfolio are well positioned to capitalize on the emerging opportunities in order to increase the insurance penetration in line with the vision of the regulator. These opportunities include expanding and prospering models significantly higher under penetration of life incidents in India, a favorable regulatory environment, rapid digitalization among others. To conclude, we will continue to focus on long-term sustainable profitable growth, enhance automation and digitalization will ensure customer satisfaction in the long run, along with great value to all our stakeholders.

Thank you very much, and we are now happy to take any questions that you may have.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Deepika Mundra from JPMorgan.

Deepika Mundra — JPMorgan — Analyst

Sir, just first and foremost, on the effective tax rate change. It seems that if you compare the VoNB last year based on effective tax rate, fourth quarter seems flattish at about INR11 billion. whereas on the old methodology, there seems to be a substantial increase. Can you just describe the differences between the rate of change on the old versus the new methodology?

Unidentified Speaker —

As we have mentioned earlier, earlier, we need to complete our unbiased on the extra tax basis, and we need to show a sensitivity and effective base. Now we mentioned earlier, we have aligned that and we have aligned in the term of — to reflect our [Indecipherable] current currency position that basis we aligned that. Now if your question is compared to the last quarter only, is a flattish not because of any change in the [Indecipherable], it is flattish because of the business mix and what kind of product mix we showed this quarter versus last year, last quarter.

So you see that we have made — started major in the last time pricing terms. This quarter, in August, we have repriced some of the products where our objective to get the number [Indecipherable] and getting the margin and some of the [Indecipherable] pass onto the customer. I think that we see the flattish.

Abhijit Gulanikar — President – Business Strategy

Just to Deepika, what we need to see is that our growth business growth is 4% for the quarter. Last quarter, as you are aware, have been slightly subdued for us. And second thing taking the year VoNB and subtracting nine months is not strictly correct because year-end, we changed our admissions and so many other parameters. So I wouldn’t want to call at 1% growth and strictly speaking, comparable numbers because the December numbers have been valued on a slightly different basis than March numbers.

Deepika Mundra — JPMorgan — Analyst

On the EV sensitivity. Again, the EV sensitivity to interest rate seems to have come down from half year level. Can you just walk us through the change that has taken place over there?

Prithesh Chaubey — Appointed Actuary

If you see, Deepika, our EV sensitivities are interested, we disclosed the last year on a year basis. We — as you know, we are writing member part and we have done a lot of [Indecipherable] as well. So [Indecipherable] is helping us to reduce the interest sensitivity. [Indecipherable] the and parting with the guarantee product, you need to immunize your economic balance sheet in terms of the industry standard movement, and that’s really paying out.

Operator

[Operator Instructions] We take our next question is from the line of Nitin Agarwal from Motilal Oswal Securities.

Nitin Agarwal — Motilal Oswal Securities — Analyst

Sir, a couple of questions. One is like, if you can comment on the earnings growth, which for this quarter has been quite strong, probably due to lower strength. So some color on this? And how are we looking at the shareholder earnings to grow over the coming fiscal?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

The profit growth, basically, if you look at the growth of our overall business, you will find that there is a very strong growth. So that is one of the things. And in any case in the last quarter, we always have a boost because of our, what you call it, the policyholders share of our — the power product. So shareholders’ share of the power products. So that is generally taken in the last quarter. So there is always a strong last quarter. And plus, we have done a huge amount of business and in various products we have done. So as a result of that, there is a strong growth.

Nitin Agarwal — Motilal Oswal Securities — Analyst

Okay. And sir, second question is around the APE growth. While you explained on the VoNB that we need to look at the full year number. But if I just look at the AP for 4Q, it is like down 10% on a quarter-on-quarter. And of course, the base effect is there, which has dragged us growth. But now again, in FY ’23, the base will remain high for the coming quarters. So will the growth trends like likely pick up in the coming year? Or will it again be a back-ended growth?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

See, it will grow. What I’m saying is that I don’t really think we track the APE so whether the IRP growth. So — and the total business growth. So basically, we will grow — and if you look at the trend throughout in January and February, there was a fresh wave due to which there were some lockdowns, etc and that has actually affected our performance a little bit. March, we have started coming back to see March, we have grown.

So overall, if you see the trends are very encouraging. In spite of having all these problems, like for example, we had hardly started business this year when there were stringent lockdowns in April, May, etc, and then again in January, February. So having faced all those problems, we have come out with a 25% growth in APE. So I think that itself shows that our strength. And this is on the back of a very good base last year also. If you look at last year, our base was not very small. We had grown over the previous year with a very bad COVID year. So taking all that into consideration, we are poised to grow.

Operator

Our next question is from the line of Adarsh Parasrampuria from CLSA.

Adarsh Parasrampuria — CLSA — Analyst

Congrats on good numbers. A couple of questions. If you can just walk us through the EV changes, right? So your EV has moved and there is a like-to-like adjustment, which is why you show a 9% growth. Can you walk through the adjustment because the that you’ve shown in the chart moves from INR33,000 crores to INR39,600 crores, and then you show a 9% EV growth I think that the adjustment that’s there for the change, so if you can just walk us through the difference between the 2?

Unidentified Participant — — Analyst

Yes. I think what you need to do probably look at the [Indecipherable]. Do you have the presentation, this is slide — slide number 32 now. Yes. Slide number 32, you see the whole breakup is given very, very nicely. Just go to that. And if you will see the opening EVs given ii is given. And here if you see, we have given the operating experience variances, others. So that is where you’ll find the change in our, what you call it, the methodology has been taken into account. So taking that into account, you’ll see you have the kind of picture there.

Adarsh Parasrampuria — CLSA — Analyst

So basically, the EV impact of that is about INR1,200 crores positive?

Unidentified Speaker —

Not at all.

Prithesh Chaubey — Appointed Actuary

Not at all. Because there are certain other changes in [Indecipherable] a tax bit there are some of our others, and there will be some offsetting impact as well.

Adarsh Parasrampuria — CLSA — Analyst

Got it. Got it. Sir, just wanted to check, we’ve been running fairly large variances on the positive side for a few years now. So what’s our view about that last year, INR450 crores this year, persistency and expense is about INR320 crores and then there would be sitting in others as well, so what’s our view? Do you want to keep maintaining this? Or would you kind of change assumptions at some point to get it in VoNB?

Prithesh Chaubey — Appointed Actuary

So just the other like we maintain our position that when we set our resumption, our assumption is set in line with the long term is would be sustainable. So we don’t make frequent changes unless. And that’s the reason, if you look into the — our own operating variances is coming positive. Last year, we have taken some measures in terms of, we are not making segment mortality losses, but we strengthened the models.

Our objective is to ensure that what number we’re disclosing and what we are looking into that will remain sustainable in the future. To that aspect, we’re continuing this surpluses. If you look into the mortality as well in COVID scenarios, if you explore this COVID claims, we are have parity ready [Indecipherable]. So we continue to do that. And at the same time, we will also keep mentioning that this year, we revisit our assumptions as and when required, we will redefine that way. But we do expect our operating variance will continue to grow from the current label.

Bharat Shah — Executive Director

And sir, slide 12, right, just a follow-up on the EV. The hedging sales EV grew by 9% from three 64 and the chart has three 33, I was asking, can you explain this INR3,000 crore gap?

Prithesh Chaubey — Appointed Actuary

So as if you see we used to report number on a tax basis. And we for the competitive purposes, we give the sensitivity as effective tax rate. Now we found like effective tax rate is no longer relevant, and we remove that. So that to give a comparable to you and all others that because earlier, our walk on the EV was on base to base basis. that we started in that basis. So you can look into EV component, it’s easier to comparable to the previous year.

Adarsh Parasrampuria — CLSA — Analyst

I understand, sir, my only question was like you showed me in that slide saying that the impact of the accounting change was about that INR1,200 crores, it was within the INR1,200 crore number. And the opening EV gap between the two accounting methodologies is about INR3,000 crores. So I’m not able to add up these numbers.

Prithesh Chaubey — Appointed Actuary

So what’s happened there we need to reflect a sensitivity. Now we look into this [Indecipherable] into that, and we consider our current pricing provision. We also consider the future tax position of the company, and we have appropriately model that, and that’s a reason coming from. And secondly, your business mix will sometimes will keep changing from that.

And that extent, you might be seeing some not like-to-like companies like to look into the difference was effect on this. Because there’s some other — and what I mentioned earlier risen, there is some other adjustment also done in terms of [Indecipherable] of that. So there are some settings in there. So that number are referring to that not only on account of our taxation. So that’s why you are not able to like-for-like comparable.

Operator

The next question is from the line of Arav Sangai from BT Capital.

Arav Sangai — BT Capital — Analyst

So I just have a follow-up on the question that the first participant asked regarding the VNB margins on a, say, Q4 basis of this year to the Q4 basis of last year. So as you mentioned that the margins are like near to flattish only, but if I just compare the product mix, the product mix might have changed quite a bit in favor of a higher margin. So I’m just not able to understand why there wasn’t some kind of margin improvement? That’s the first part.

And the second question is that if we look at the industry and the wear peers reported the number, there seems to be a lot of demand for high-margin products, and that was very much visible in the in margins for the fourth quarter, but that is not the case with [Indecipherable]. So just wanted to get your thoughts on how will the product mix look like, say, in the next couple of years? And what are the products we might look to guide, so two — those are the two questions.

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Yes. So basically, what we have done is — we — I — in my opening was you would have heard that I talked about our smart product. So we have introduced that product, which guaranteed products, which gives income over a period of time. So that has been a very successful product, and we see that in March, there was a huge uptake of that. And going forward, I think there will be a huge demand for that. So you point is valid, that there is demand for high-margin products.

If it is rightly placed as rightly produced. So we have this beautiful product and we are confident that we’ll be able to do a good volume of those products going forward. Now as far as the VoNB margins being flattish and the change in composition and all, we have to say that there have been some — there has been a little — one other — one of the other participants said remark that the APE has degrown, so that is one of the components.

The other component that we had repriced a couple of products, and so we had passed on more benefit to the customers, especially in the noncore segment, so all — and annuity also. So all those things put together, I think it has been slightly flattish. But if you look at it, it’s not a small number. It is a good margin to have 35.9% is not a bad margin to have. So to that extent, I don’t think there is any cause for concern there. Going forward, we will get the benefit of having all these good products, which have higher margins.

Arav Sangai — BT Capital — Analyst

Just one follow-up, if I may ask. So you mentioned that we have passed on a little extra benefit on our non-par products to the customers. So the benefits that we are passing on, is it very different from the industry that we had to take this lever. I just wanted to understand the logic behind parking more benefits in the nonpar category is it because LIC might also get very active in the state and we want to maintain our ground there? Or like what might be the reason?

Prithesh Chaubey — Appointed Actuary

No, no. Let me explain this like we always intend that we do adopt a very active price economic as well. Now our objective is to grow the VoNB and not much margin. So we don’t believe that our margin is extraordinary, but we later, we’ll achieve our [Indecipherable] number. So to that extent, what we mentioned that if yield has gone up significantly over the period, and we wanted — enhance our margin is going up, we wanted to give some benefit to the customer in terms of the higher return.

And so rationale or margin but margin is much higher than the we’re looking to. So that’s the reason we mentioned that we reprice and do that. We want to be fair to the customer as well, that what to offering is renewable to the customer. At the same time, you make the reasonable profit to the — in terms of the margins for the company. And I’m sorry, [Indecipherable] a reasonable sustainable and that will ultimately pass it to the company in terms of amortization of expenses, etc.

Operator

The next question is from the line of Jayant Kharote from Credit Suisse.

Jayant Kharote — Credit Suisse — Analyst

I have two questions. One is the following up on the previous question on the repricing. Was it done only in guaranteed products or protection products as well?

Abhishek Saraf — Jefferies — Analyst

We are done in the guaranteed products.

Jayant Kharote — Credit Suisse — Analyst

Okay. So basically, what — after the repricing, it’s visible that the margin accretion is not there despite the sort of pickup. So going ahead, do you expect that margins may not gain as much even if guaranteed production moves up?

Prithesh Chaubey — Appointed Actuary

No, in fact, margins will — we are expecting the margin to further go up from the current level. What happened that we introduced the product last time we reprice in the month of May. Over the period six months, the [Indecipherable] has gone up. we are holding up the pricing on account of our distribution. August we have pass on.

And if you look into the August til today, our yield has further gone up, and we are holding up this pricing will not pass on to that basis. So eventually, we are going to gain more and more margin under perspective.. Second part is we come out with another part of what our [Indecipherable] portfolio, which further going to at the margins. So just to convert our non-par portfolio is going to be — help us to create our margin from the current level.

Jayant Kharote — Credit Suisse — Analyst

Sir, if I — and secondly, on the IFRS, what is the pricing for IFRS based on currently? And do you feel there is adequate supply, I mean are there supply-side constraints?

Abhijit Gulanikar — President – Business Strategy

So currently, we are — at least for Life, we are not seeing any challenge in hedging. And as far as are being — we are able to do [Indecipherable] within the pricing that we are doing. So whatever guarantee we are able to easily cover under the FR rates we are getting in the market right now.

Jayant Kharote — Credit Suisse — Analyst

Sir, what is the pricing based on?

Prateek Poddar — Investment Equity

Meaning? So we have an assumption that what are the FRA expected rates also.

Jayant Kharote — Credit Suisse — Analyst

Okay. Sir, and the MTM hit because of FRA to our shareholders’ funds on the debt side so…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

There is no hit on the shareholders’ fund..

Prithesh Chaubey — Appointed Actuary

So there is no. We do the hedge accounting. So a gain as will look it through the hedge position. So there is not a hit on the shareholder side.

Jayant Kharote — Credit Suisse — Analyst

And what will be the total exposure to FRA as of closing March?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

We’ll come back to you. The [Indecipherable] down the number

Operator

Our next question is from the line of Sanketh Godha from Spark Capital.

Sanketh Godha — Spark Capital — Analyst

The VoNB walk, you clearly mentioned that the methodology change improved VNB by INR410 crores or 2.9 percentage. So on similar lines, if because of the only methodology change, how much has EV got boosted either in rupees crores or in percentage, if you can explain that really very useful, sir?

Prithesh Chaubey — Appointed Actuary

No, Sanketh, you mentioned that. We have done other changes. So if you look at the slide 32, we have given the other operating variance that include that — and we are not having an exact number on that because what we did, we have done refinement in our model, considering all our [Indecipherable]. and there are some other minor refinement in the model as well. So we’re not having that exact number on the prospect.

Sanketh Godha — Spark Capital — Analyst

Okay. Okay. And second point is that in the operating variance number, other, other than mortality and expense and persistency, which is INR12.2 billion or INR120 crores. Do we have even factored in that Supreme Court related payback given to the statement — of the policyholders where we lost the case that INR116 crores to be done in the current year? And probably second one is around INR350 crores to be done in the next year if you lose it? So that number is also getting reflected in that particular number, sir?

Prithesh Chaubey — Appointed Actuary

Yes. This has already been allowed for.

Sanketh Godha — Spark Capital — Analyst

Sir, you have allowed for both the products or you just allowed for — provided only for one product, sir INR116 crores?

Prithesh Chaubey — Appointed Actuary

One.

Sanketh Godha — Spark Capital — Analyst

So the other INR116 crores for the…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

The matter is sub judice. So there is no way that we have made a contingent liability for that in the balance sheet, and that’s it.

Sanketh Godha — Spark Capital — Analyst

Sir, my question is how much you provided in the current year for that?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

INR116 crores.

Sanketh Godha — Spark Capital — Analyst

Okay. Perfect, sir. And sir, the other part is that I mean two data-keeping questions. One is what is your credit life protection business in the year or quarter? And second thing is that annuity business, just if you see the numbers in the third quarter, it’s moderated to INR900 crores. It’s just — in APE terms, it is INR90 crores, which is 13% growth year-on-year. So is this moderation is largely because you slowed down your business on group annuity or you have seen the moderation in the growth in individual annuity? And then if you can break down that annuity business into group and individual also will be useful, sir?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

See, for the quarter, credit life business, if I will answer the first one first. Credit life for the quarter, we did almost INR540 crores. And for the whole year, we have done approximately INR1,700 crores, okay?

Sanketh Godha — Spark Capital — Analyst

Okay. And on the annuity side, sir?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Annuity total, we have done both, I will give you some numbers. Individual annuity, we have done INR1,780 crores, and group annuity, we did INR1,690 crores.

Sanketh Godha — Spark Capital — Analyst

Okay. And sir, sir, the slowdown was largely in the group business, sir?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Individual annuity is growing more than 40%. And group annuity, we are doing in a flattish money. Whatever we have assessed for ourselves in the budget for FY ’22, we have done.

Sanketh Godha — Spark Capital — Analyst

And can you just tell individual annuity growth for the quarter, sir, for the quarter past year?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

For the quarter, it was a total 40% plus.

Sanketh Godha — Spark Capital — Analyst

Okay. Okay. Perfect. And finally…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Sorry. Sorry. Sorry, Sanketh, for the quarter, it is 25% — 58%.

Sanketh Godha — Spark Capital — Analyst

Individual annuity, right?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Individual annuity.

Sanketh Godha — Spark Capital — Analyst

Okay. Okay. And finally, sir, this — the non-par annuity business, which we did INR630 crores in the current quarter. Can you said that we launched a income version of [Indecipherable], so out of the INR630 crores, what we have done in the quarter, can you break it down into income plan and endowment plan? I just wanted to understand I’m under the belief that income will have a superior margin compared to endowment?

Unidentified Speaker —

Income plan was launched only in last week of March. So in terms of to start, but you will see the numbers actually in this financial year. Yes.

Sanketh Godha — Spark Capital — Analyst

Okay. And is it safe to assume so that income plan has a superior margin compared to endowment version?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

I think there is no such [Indecipherable] and it’s approximately similar.

Operator

Our next question is from the line of Niraj [Indecipherable] from UBS.

Niraj — UBS — Analyst

Hopping on the same question, the INR13.1 million different. If you can give more color on that will be helpful as an what lead to…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

I’m sorry, we can’t hear you properly. Can you repeat the question?

Niraj — UBS — Analyst

See, same question, again on the individual on the EV chain INR1,311 billion, if you can elaborate more on where the difference is coming in because this looks a little on the higher side? I think It should have been maintained given we are already reporting effective tax rate numbers from a long time. So what offsetting change we are doing, that is not very clear?

Prithesh Chaubey — Appointed Actuary

As you mentioned earlier as well, and I don’t want to repeat, but again, I’m repeating the same thing here again. So what happened, we, as a company report the based number that we believe at that point in time. And for comparison purpose, we do the effective type sensitivity. Now we have done the appropriate modeling in our model to reflect the current company current tax positions.

And also consider the future tax position of the company. Accordingly, we have done that. And there are other minor refinement in the model, we’ve done the comprehensive review of the model. In some places, we required to make some changes. We did that. And unfortunately, we don’t have that number to do that because all together in one moment. And not…

Niraj — UBS — Analyst

So would this number be setting in operating assumption change, I mean, the offsetting impact, not in the assumption change, right?

Prithesh Chaubey — Appointed Actuary

Yes. So [Indecipherable], if you look at the slide 32, that number is sitting in the operating variance, other operating extreme variance.

Niraj — UBS — Analyst

So operating variance is you have explained the effective tax, but the difference largely sitting into evidence or operating assumptions because we have moved from gross to effective tax rate? So how to look at it? I mean operating ROE actually getting to operating ROE would that be lower and low optimal for this quarter? I mean I also want to read into that?

Prithesh Chaubey — Appointed Actuary

So operating assumption change is not reflected there.

Niraj — UBS — Analyst

Okay. And what is the if you can just give the economic variance movement that can we and because change in yield, how should we think about it for the [Indecipherable] throughout the split?

Prithesh Chaubey — Appointed Actuary

No. So basically, we look into what is the reference rate on the discount year-over-year and then you look into the what is expected real borrower getting in difference. So basically, unwinding well done on the real return basis.

Niraj — UBS — Analyst

No, no, I’m not talking about.

Prithesh Chaubey — Appointed Actuary

Is it exactly the [Indecipherable] interest rate. sorry.

Niraj — UBS — Analyst

Okay. Okay. And on the new product, which we just launched in give more color? I mean to similar margin, but what is the strategy going in in terms of growth? What we can expect in terms of the EP? In the environment and be looking to change all the mix with the lower unit and a additional? And within the protection, the good has been quite good. But have we able to manage to improve ROP and term mix or make it does remain largely stable?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

See, the first thing is that the product mix, we foresee that we will have more nonpar products being sold. Protection, as you can already see is very strong. We have grown production by about 26% this year. So which is very much in line with all the other growth of all the products. So production also has also grown by 36%. I think this trend is sustainable. And like I said, on part, we have now a good portfolio with 3, four strong products. And that will also grow.

So obviously, margins are going to grow and the product mix, we think will shift — it’s not a cautious effort on our part to reduced sale of ULIP something, but these products are seeing good demand. And we will definitely — the higher-margin products are selling very well. as we have said repeatedly that our July products are positive margin products. So we are not losing and looking out there. And we will continue to sell if there is demand.

So as long as there is customer demand, we will continue to sell the ULIP products also. And I think the persistency in ear excellent and they are likely to continue that way. It gives a lot of liquidity and flexibility to the customers. So we don’t see ULIP being discussed by us. It will depend a lot on the customer demand. But like I said, the trends are that we will have more nonpar guaranteed business in the mix and also more protection.

And as far as the question of improving to pure production, I don’t thing that is the right question because TROP is a very good product for the customers, and it gives the similar value and good protection. So I don’t think we are consciously trying to shift [Indecipherable] customers to pure protection or anything like that. But pure protection has its own challenges today with a lot of reinsurance and all issues coming up. And as things ease out, I’m sure that pure protection will also be sold more.

But then not because I want to sell more of pure protection. But because the demand is there, and we will be able to sell more pure protection. Having said that, I don’t think we are going to discourage sale of [Indecipherable]. It is a very good product. And I think it is an excellent product for people, especially the not very educated people and the people in the towns, etc, and also the let’s say, the middle class people also, it is a very, very, very good attractive product.

Niraj — UBS — Analyst

That is helpful. Only if you have the split handy between the — within the pure protection in the RP and the terms?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

It will be about the same, every time you say is the same in 85, 15 approximately. Maybe…

Niraj — UBS — Analyst

And on the credit protect attachment rate, are we seeing improvement?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Yes, it has improved from 46% last year to 50% this year. And we can see trends that it will go further up.

Operator

Next question is from the line of Adit Jain from Citigroup.

Adit Jain — Citigroup — Analyst

I’m sorry. On the VoNB bridge, so the various components there, there is no specific component which talks about benefit of operating leverage because of the size increase, there might be some margin expansion. So is it that we are not seeing that? Or is it that it is built into some other components?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Which slide are you talking about?

Unidentified Speaker —

No, no, — when we do our resumption competition, both initial accretion expenses as we maintained is concerned, that truly reflects our current [Indecipherable]. So we realigned each year, and that already built in this process. This is not that we use some long-term assumption, which is not affecting our actual positions. So already being in that.

Adit Jain — Citigroup — Analyst

Okay. So what is the right operating ROE to look at going forward? The 20.6% number, does it apply going forward as well, I mean, roughly?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

If you see the — historically, our operating ROE in the range of 20%. So we’ll continue to look into that. And as we mentioned in the [Indecipherable] different question, that your assumption is at and we’re getting [Indecipherable] vary will play out, I think there is a scope for further improvement from the current year.

Adit Jain — Citigroup — Analyst

Correct. The full year margin of 25.9% right, VNB margin. Would this be lower in the new pricing method? So the new pricing, as I understand, came into effect in more recent quarters on the non-par side. This 25.9 to a large extent, is reflecting oil pricing, therefore.

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

No, it’s a part of — see, what we said was that there are a lot of factors, including a little bit of pricing, not directly contributed entirely by that. And going forward, like we have said that this is a higher-margin product. So it is going to contribute to the growth of the NB margin.

Adit Jain — Citigroup — Analyst

But as a starting point, it number exactly 25.9% is the right number to look into this?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

25.9 is the right number to look into. There is no different two numbers. There’s only one number, 25.9 is the right number. And you can look into the margin equation will happen from the current level. So going forward, you expect because the region that we’re going to sell more and more nonpar product. I always got the demand, and we introduced new products. We are also coming with the annuity on the individual products. So there will be most booking of the nonpar product in our portfolio, and that will help us to increase the proportion of nonpar, and that will ultimately help us improve the margin from the current level.

Adit Jain — Citigroup — Analyst

And just lastly, from about the change in margin because of the pricing change specific to the non-par product. If it was — in the non-par product, how much change from mix, so what is the delta?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

We are not basically, we are not disclosing details of margins, etc. There is a lot of — there are a lot of products, there are a lot of versions where the pricing is all different and the margins are different. So we are not giving any figures out. But suffice to say that these are higher-margin products than the company’s margin today. So obviously, it increases in percentage terms, it will contribute to the increase in margin.

Operator

[Operator Instructions] We’ll take our next question from the line of Hitesh Gulati from Haitong.

Hitesh Gulati — Haitong — Analyst

Sir operating assumption change, is there a negative mortality assumption change also included there? And also, sir, could you give me the exact COVID claims impact before tax for this year? So the INR300 crores most tax would be around INR1,350 crore, the impact is INR1,080 crore, so there is a delta there?

Unidentified Speaker —

Sorry, I didn’t get the question.

Hitesh Gulati — Haitong — Analyst

The INR1,500 crores is COVID claims, post tax, that will be about INR1,350 crores?

Unidentified Speaker —

We should look into that. Then what is the expected trend that you’re looking for and how much you paid for. And then tax rate applicable only on the — if there is any positive variance coming on that perspective. So claims should not look into the net of taxes. We rather look into a net of taxes.

Hitesh Gulati — Haitong — Analyst

Okay. And just mortality assumption change is only INR10 crores? Or is this a bigger number offset by a positive number?

Unidentified Speaker —

No, no. It’s only this number nothing — no other changes. So this is purely on the mortality and [Indecipherable] side. Making moderate profits on no point of extending [Indecipherable].

Operator

Our next question is from the line of Abhishek Saraf from Jefferies.

Abhishek Saraf — Jefferies — Analyst

Most of my questions have been answered, sir. Just one follow-up on the unit side, so one of our peers had mentioned that in unit, there is some changes happening in terms of the products that are being demanded. So more still towards debt ULIP rather than equity given the volatility in the market. So are we also seeing that kind of change in customer behavior?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

So right now, we have not witnessed any drastic change. But what does happen is that I think somebody is for [Indecipherable]. Yes, okay. we don’t see — we have not seen any drastic changes there. However, in the past also, when markets have been down or have been too volatile or something, customers have opted to switch to more debt than more equity. So that kind of thing, we also expect that can happen if there is a sudden drop in the market or something like that sudden changes up there. Similarly, when markets are going up, there is a demand for equity also. So that is there, but we have not seen any significant shift right now.

Hitesh Gulati — Haitong — Analyst

Just on this, so if you can help me understand what could be the margin difference between a standard debt heavy ULIP versus equity ULIP?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Very difficult. We we may have those figures somewhere, but I don’t think we want to share those.

Hitesh Gulati — Haitong — Analyst

And lastly, on non-purpose guarantees. So given that core is kind of flattening — can you help us understand the spread that we would be like locking in the current product versus the earlier products, given that we have also had repricing for our customers?

Unidentified Speaker —

So just to tell you, currently, we are still able to get FRA rates, which are better than what we have budgeted when we are paying the product. If that changes, we’ll refine the product.

Hitesh Gulati — Haitong — Analyst

Then is it fair to assume that the spread would have been largely been retained?

Unidentified Speaker —

Yes.

Hitesh Gulati — Haitong — Analyst

Sure. If I can slip one last question, sir, if you can help us understand, given the trying to change the [Indecipherable]?

Unidentified Speaker —

Your voice is cracking. Can you…

Operator

Please use the handset.

Hitesh Gulati — Haitong — Analyst

Am I — is it better now?

Unidentified Speaker —

Yes.

Hitesh Gulati — Haitong — Analyst

So sir, I was just asking that on the impact of LIC changing the way it does business have been aggressive in the non-par guarantee side. And also kind of pushing the other products which have not been present into ULIP or protection. And so are we kind of witnessing any of these at the ground level is the competition changing?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

We have a huge distribution network which is not dependent on LIC doing well or otherwise. So we have the banks with us we have SGI, we have many other banks, almost 75 banks of various sizes we have. And apart from that, we have 146,000 plus agents. And then we have many other partners, brokers, corporate partners.

So given that distribution strength, I don’t think we are looking at any other player getting more or becoming more aggressive or anything because we have our strength, we have our good products and we have been able to grow ear after year even in the pandemic, even in bad situation. So I don’t think that we are worried about that or that it is going to affect our business.

Operator

Our next question is from the Dhaval Gada from DSP.

Dhaval Gada — DSP — Analyst

I had two questions. Sir, if you look at the difference between the EV on statutory tax rate and effective tax rate in FY ’21 that was close to INR3,000 crores. If you look at that same number in 1H ’22, that was INR3,200 crores. I understand that you’ve given an explanation for INR1,220 crores, INR20 crores on the operating variance others. And then within that, there is also one more adjustment of INR116 crores.

So if I add that, it adds to about INR1,336 crores. I’m just not able to reconcile the balance. What are the adjustments because the number — residual number is quite material. So if you could just break down what are the major buffer or provision that you’ve created to reconcile the number? So that’s the first question.

Unidentified Speaker —

Let me give to respond question and the way that you’re looking for. One is that we should not look into the September effective tax perspective because the tax will look into the entire year and longer-term prospect. Now as I mentioned that, that we are looking to in the current number that we have disclosed and we’re going to disclose this way in future as well. We have looked at our current financial tax position. We also projected our basic and make some tide do the modeling.

There are other elements because we are, as I mentioned, we have done the comprehensive view in some of the models. So there will be some offsetting impact to our guide. And unfortunately, we mitigate exact numbers are at because you have done only for the sales in the tax, we do that. If you have anything we can take off-line as well. But as of now, since we have done several other changing the model, along with the predominantly in tax, we are not having that number separately. If we have done only the taxes, the for me to give that number to you. So that will be…

Dhaval Gada — DSP — Analyst

If you could just qualitatively help us understand what are the areas where major changes have been made? That would also give comfort in terms of like where the residual amount has gone. Because I mean, even if I look at FY ’21, the difference between the two methods were INR3,000 crores. And that’s the reason. So I’m not looking at September ’21 — September number, but just the March number last year?

Unidentified Speaker —

So can we take this off-line. It does not having that number, we can take it offline.

Dhaval Gada — DSP — Analyst

Okay. We’ll do that. And sir, the second question is on the mortality side. So the INR1,080 crores, if you could just help us understand. So at the start of the year, in 1Q, we had created about INR445 crores of extra reserve on top of March number in terms of mortality reserve for COVID. And in September, I think we were comfortable with the level of reserve. December also, we were comfortable. So this INR1,080, should I understand that this was largely created at the end of the year to sort of see the past experience as well as what we are likely to see in future? So just trying to understand the initial sort of guidance of INR445 crore to INR1,080 how the reconciliation is. So that’s the second question?

Unidentified Speaker —

No, no, let me explain this, this INR1,080 is the actual that have been paid over and above the provision that we made at the beginning of the year. If you remember begining of the year, we make a year INR183 and our COVID INR150 crore rate of the insurance. So this is Sara coming from that perspective. And on top of, we made some normal operating profit. So that’s the number. This number is not about the COVID that we have carry power for this user.

Operator

Our next question is from the line of Avinash Singh from Emkay Global.

Avinash Singh — Emkay Global — Analyst

And we have the slide 32 walk from 364 to 396. Now 364 plus 27 plus 27. These are like unwind and VNB. That’s a very, very clear number. Now from 428 to 396. This INR32 million out of that, again, around INR seven million in economic variance and other INR25 billion number has to come from operating variance. And now because not uncertainty of variance. So this has to be explained? And there is, of course, a big hole and that to basically was what you experience was different than you had inserted the previous year. So that’s a big number. I mean, so what this is? I mean this is not sort of adding up..

Unidentified Speaker —

I think we have explained quite a few times in this — in detail, I mentioned that all other, if you look 3, we explain other we put this this method change and other changes are together INR12.2 crores. So there is some other offsetting impact on that perspective. So that’s now able to reconcile that number. If required, we can take this question off-line. We that each state level number available that we can.

Avinash Singh — Emkay Global — Analyst

It’s various like one year experience versus [Indecipherable] and it’s a big number, so I mean you’ve put on mortality, you have put a smaller number, but this bigger number is not — I mean adding. So how do you sort of go about it? I mean INR364 crore to INR396 crore, what are asking for?

Unidentified Participant — — Analyst

See, we’re not making any change in the taxation or any other methodology. Methodology impact is not only for one year. It will be for the future year as well. So if I look into the impact of any changes because when you project your future profit, and even at area to apply you take the apply for each feature here and is counted back. So point of time to make it this impact is not only for one year that this happen. I’m not sure we able to come — if there is a question, I can take offline in under perspective. I more than happy to explain to you.

Operator

Our next question is from the line of Nishant Chawathe from Kotak Securities.

Nishant Chawathe — Kotak Securities — Analyst

And just looking at slide number 13, and this is on change in operating assumptions and economic assumptions. If you could kind of help us understand what is this on account of?

Unidentified Speaker —

So these are you see this economic variance probably the economic variance, [Indecipherable] income impact, nothing else. And other operating variance is 0.8% that is so INR119 crores. This is predominantly the mortality and mobility adjacencies.

Operator

Our next question is from the line of Madhukar Ladha from Elara Capital.

Madhukar Ladha — Elara Capital — Analyst

Sir, can you give us some sense of your margins in different segments. So let’s say, protection, non-linked savings, savings what could the broad sort of margins be there?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

So we have not been actually — we are not we are not disclosing the margins in absolute terms. We can see that term production has got the highest margins and then terms with some of premium and non-par guaranteed and then — so that would be the way to look at it.

Madhukar Ladha — Elara Capital — Analyst

And okay. So can I get some sense on what are the linked margins now? So in the linked business, how different would we be from the company?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Yes. So linked, I think it will be around 15%, let’s say.

Madhukar Ladha — Elara Capital — Analyst

Okay. Got it. And sir, what — I don’t know whether this was asked earlier, but it seems in Q4, the growth is slowing down and…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

So I’ve already explained, Q4 growth, especially January, February was affected because January, there were some severe lockdowns in some places, and that did affect the business. And then February also, it didn’t really bounce back, but we did almost what we did last year. And then in March, we again started seeing the growing trend.

Madhukar Ladha — Elara Capital — Analyst

What do you do you think — What do you think now we are at a pretty high base. So looking into FY ’23, ’24, what sort of growth do you think we can aim for? Or do you think growth will be down?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

We are targeting numbers which we have done before. So similar numbers we are targeting this year also. This effect, yes, I know that there could be a base effect normally. But then with the potential that is available, we are targeting for the kind of growth that we have witnessed in this year. So that is the way that we are going to go.

Madhukar Ladha — Elara Capital — Analyst

And last question, sir, you increase the guarantee return on the guaranteed product sometime in August, you mentioned. And again, obviously, interest rates have gone up, so the margins are getting better. What drove that decision? Do you think it’s competitive intensity like competitors have started passing that on. Is that what is driving us also to do that? And are we seeing that sort of behavior again play out right now?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

No, see, when the rate of interest go up in the market, obviously, the expectations will also go up. So we have to keep a fine balance between making margins for ourselves and also giving the customer a good product. Now whether that is driven by competition or not is a moot point. So what happens is everybody is driven by the same considerations.

So if there is a an increase in the interest rates in the market and you don’t reprice, then obviously, your product is not going to be very attractive. The second thing is that we are banking on volumes. Like you will see that our growth has been huge. So we have had 26% growth last year in APE. So 36% growth means that with a constant margin also, I keep making more and more money for the stakeholders.

Operator

The next question is from the line of Manish Gupta from Solidarity.

Manish Gupta — Solidarity — Analyst

Sir, what I wanted to understand is that on a long-term basis, — what — there are so many accounting adjustments that for a lay person, it’s difficult to understand the economics of this business. So when we look at banking, we’d say banking is like a 15% to 18% ROE kind of business. how do we think about on a say, normalized product mix basis? What is the ROE of life insurance?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

See, let me tell you, it’s not a very simple question to answer because different companies are good different products that they sell. I suppose I was a company selling only term like insurance, I may have a much higher return, okay? And if I were a company selling only I may have a different return which will be lower. And the product mix is generally dynamic. The margins of products also change. So today, what the margin is that I’m receiving on a power product may not be what I get tomorrow.

So every quarter, I’ll have to look at that. So it is not really easy to say life insurance as such. So every year, we take targets, and we take this is based on our business expectations. So what we do is we first start with what is the demand that we are seeing for various products? And then what are our competitive strengths in those products. And then we decide that this is the amount that we will be able to sell.

And then once we budget for that, after that, he worked back and get all these things, your ROA, ROE and all those things come out of our guess assumptions. So every time it’s going to change. It’s not that if I make business assumptions in March, I’m going to stick on to that, hang on to that for June quarter or for I mean the next quarter, September quarter or December quarter because I keep analyzing. So it’s not very easy to say that. So I will not venture into that. It is very dynamic.

Manish Gupta — Solidarity — Analyst

Sir, I’m sorry, I don’t understand you. My question is that let’s assume that you are only selling term protection, it’s a hypothetical scenario. But if you’re only selling term protection, over, say, the next five to 10 years, right, what would have been the return on equity of a well-run life insurance company that is only selling term protection?

Unidentified Speaker —

No. So this is a slightly hypothetical question. So let me go one by one. So first thing I want to ask you — tell you is that unlike some of the other financial services business, I know that our AUM has gone up from INR10,000 crores of policyholder liability, whichever way you want to know to almost like INR265,000 crores without single of dilution of equity, correct.

Our only equity dilution has come from ESOC.So completely internally funded growth, which is not true for a banking or MV. So now when you don’t can compare it on the very first basis because if you see, when we have been growing fairly well across the years, AUM growth will be 18%, 20% every year when you take a 10-year CAGR. Now our accounting because it’s a long-term product and you have to have that new business trend, there are some challenges around how you look at it.

So once the new business strain eases and our growth comes down to take, I don’t know when that will happen, five, 10, 15 years down the line, 5% type of it, then the accounting profit that you will see will be very similar based on year-on-year number because of the past from books that we — and I would not expect it is a well-run company, why should we make less money than other financial services business.

Manish Gupta — Solidarity — Analyst

Okay. So Okay. My second question, sir, is that if one has to again vary as a broad, I assume that the accounting policy was such that one could amortize the customer acquisition cost through the life of the policy rather than the first year new business trend, then how much would say, your reported PAT roughly increased by?

Unidentified Speaker —

You had for a question. I think which is not allowed in terms of the amortizing the equation expenses. As far as Indian regulator, the accounting environment, you have to do this execution. So we have done that of course in India to see that what we do that…

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

So there are two things, not only acquisition equity authorization, but that margin for adverse deviation also has to be kept. So there are two factors which depress the profit when you are doing accounting. That number would be significantly higher than the accounting number that you are seeing, INR1,500 crores of profit that we have declared that you can be quite. And now to say that our net worth is, let us say, INR11,000 cores, INR12,000 crores. And if our profit is whatever, I will not give you a number, is some number higher than INR1,500, then you can do your own ROE calculation.

Operator

Our next question is from the line of Rohan Advant from Multi-Act.

Rohan Advant — Multi-Act — Analyst

Sir, if you look at our APE mix, Q4 FY ’21 versus Q4 FY ’22, our ULIP share has gone down from 70 to 63, individual non-par has gone up from eight to 15 and protection Blues individual has gone up from six to 9. So we had a very favorable product mix from a margin perspective. Even then margins have gone down from 27.7% to 26.9% using effective tax rate for both years.

So could you explain what has happened here? And was there any one-off possibly in the base quarter of Q4 FY ’21 because those margins seem very high, and those were possibly not comparable to the natural trend that we have. So can you just throw some more light on this? Because in a context of a very favorable product mix from a margin perspective or margins seem to have dropped?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

So our APE has gone down, like I said, one of the factors is the APE has gone down quarter-to-quarter, if you see by 4%, so that is one of the reasons there. The other thing, like I said, the the repricing of the non-par product also. So that was one of the things which even though the nonpar percentage went up because we had repriced it very — looking to the increases in rates that we were anticipating and the interest rates have behaved exactly like that. And so as a result of those, I think all these factors have gone into this being flat.

Rohan Advant — Multi-Act — Analyst

Okay. Sir, and going forward, do you expect our absolute VoNB growth to track APE growth? Or there should be some margin expansion kicker in the future?

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Margin expansion will be there. Margin expansion will be there. That is what we feel. I can’t predict what will happen exactly. But then we feel that margins will go up because right now, like we say, last year also when we changed the pricing in August, before that, we had a very healthy margin on that. And that is why we thought that looking at the market and the way the interest rates were looking likely to go up, we wanted to reprice the product and get volumes out there.

We have been able to start getting volumes there. And we have introduced another product that. So that has proved to be quite popular in the end of March. We saw in the first seven days, 10 days of launch itself, we had a good number. So going forward, we think that these products will continue to find traction. The other thing is, of course, our focus on protection. So when protection grows at the same rate as the entire business or higher, then the margins will go up. So looking at all those things, our margins are likely to go.

Operator

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

Mahesh Kumar Sharma — Managing Director and Chief Executive Officer

Yes. Thank you very much. It was great spending the evening talking to you and getting your feedback and also your questions. Some of you who — whose questions have not been answered in full. I’m sure Pritesh will be very glad to sit with you and talk to you about all those assumptions and all the changes that we have so that all these dots can be cleared. Thank you very much for participating in the call. And I wish that all of you stay safe and healthy, and have a very nice evening. Thank you.

Operator

[Operator Closing Remarks]