Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Avinash Singh from Emkay Global.

A couple of questi ons. The first one is more around what will be your strategy around protection, encompassing both the retail protection and credit life? Because I mean on the credit life side you have a large bank like SBI as a partner and also on the retail side you have a big reach. But since last almost more than a year , protection somehow seems to be losing momentum, at least on a relative basis to savings. So, what is going to be the strategy to sort of improve our protection share in the product mix, particularly the retail protection and credit life , GTI separating for the moment ? So that ’s first question and the second question if you can sort of outline on your strategy or plans around product design or the commission tweaking post September 30th.Once this new product has to be sort of filed where you have this enhanced special surrender value . So, what are your thoughts on sort of our impact in terms of how we are going to deal with the you know balancing the margin or payout to the persistent customers at the same time the commission payout?

So, taking your protection question first, there was a slight blip during the quarter in the protection sales as we saw in the result. And that was basically I think was being driven by more demand of ULIP products in the market depending on the returns that are being generated through ULIPs and our natural attraction of the customer segment for these higher returns. But having said that being in the insurance industry, protection remains very important and this is on top of our mind also. To improve the protection business, we have gone into a huddle with our main Banca partner SBI and depending on the data analytics of SBI on its database, we are going to offer a product very soon on the digital platform of State Bank of India, that is YONO, and this will be a simpler product with three click kind of issuance based on the data analytics and pre-approved kind of sum assured with very competitive rates and being on the digital platform , the journey will be very easy for the customer , the rates will be very competitive and we expect a very good response through this particular product. In addition to that , we are also designing a product for th e ultra HNI kind of segment where higher sum assured is needed. This product should also be launched sometime during the month of August, and we expect to garner a good business out of this higher sum assured product also. Of course , underwriting offering higher non-medical limits and simplified medical procedures also are being introduced to improve the individual protection business. The group protection of course has shown some growth and we expect that with the property market in boom , the group protect ion business especially with the Banca partner will definitely show further growth during the year. Coming to your second question about the strategy and plans, we have maintained that the new customer centric approach of the IRDA, the better surrender value and also the customers, SBI Life being the lowest cost operator and also because of the kind of product mix that we have at SBI Life, we will be the least affected Company. As of now we are not planning any commission structure change for our corporate agents or for our individual agents and the rate structure will continue to be the same.

On first part on credit life, do you have any plans to sort of meaningfully improve traction beyond home loans? Bec ause now SBI of course is pretty big in auto loan , even in personal loan their reasonably big. Are you looking to sort of increase penetration of credit life in auto loan customer or personal loan customer or is the home loan going to be the core area?

Home loan continues to be the largest portfolio for the bank also and we see good value increasing penetration there. In addition to that with these new protection products also, on individual basis as well as on the group term basis, we will be targeting the education loan customers. So, for these young customers the protection will be priority and we will try to cover them through group or through individual products.

The next question is from the line of Nishch int Chawathe from Kotak Institutional Equities.

I’m not sure if I really understood the reason for year -on-year decline in margins. As I understand, your margins in ULIPs at least in the past you ’ve had kind of highlighted are higher than margins in the PAR book. So , what has driven the compression in margins?

Nishchint the main thing is our protection has not grown to the extent we wanted. That is one of the key reasons why our margin has gone down. And in opening remarks MD also stated for that for a short while the drop in interest rate was not passed on to the customer. That is also there , of course non-PAR remains high margin product. But within non-PAR our margins have gone down comparatively slightly compared to last year because we did not pass on the drop in interest rate to customer. So , it’s combination of product mix, slightly higher ULIP sell and these two factors which have caused decrease in margin.

Slightly higher ULIP sales should have actually lifted your margins and you are saying that these two components probably more than offset that and which is the reason why your margin have margins have dropped.

Correct.

If I just look at purely the savings vertical versus protection vertical margins , is the savings vertical margin kind of almost stable or gone up or how should one think of?

They are almost stable.

So then practically it ’s only the protection swing in which you probably have around maybe 60 %-70% margin on individual protection which is practically driving all the difference in numbers this quarter.

I mean directionally correct. We will not comment on the amount I mean the numbers.

And just one more thing is you know on the regulatory side, there have been you know quite a few changes. Anything else that we are now really envisaging at this stage?

So, we have always stood by the changes that the regulator brings in because we firmly believe that whatever is being done by the regulator is to ultimately benefit all the stakeholders in the industry , be it customer , be it the insurance companies or the distributors. So, whatever comes in we are ready to implement that and in fact we have gone ahead. If you notice during my comments , we said that some of the customer centric approach like the introduction of internal Ombudsman in the Company, that is for the first-time insurance industry that we are doing that. So, all the customer favoring decisions of regulator we fully stand by that.

Not much. As you know our product mix is not towards the Unit Linked , less than the non-PAR. Secondly , we always used to be very prude nt in terms of setting our assumptions. Our surrender value is higher than the regulatory required. So , we don’t penalize the customers. Our approach in the pricing the product is to ensure consistency and continuity in terms of what return we offer to the continued policyholder and things. We’re not banking our return based on the surrender penalty coming from that. So, to that extent there is very less impact. Only impact will come on the year one and year one our assumptions, our experience is also very low. So, we don’t see much impact will come on that perspective.

And just finally any guidance that you would want to give for the growth for the financial year?

So, we stand by the guidance that we gave during the end of the last financial year results. Our top line growth will be in higher teens to 20% and regarding the margin also, we will be in the same range of plus/ minus 28% kind of.

The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services.

A couple of questions. Firstly, on commission costs that have gone up , what could be the reason for that? Secondly there is a slowdown in annuities as well. Could you highlight the reason for that? What is the outlook there?

For the commission part, as you know we have provided as required under the expense of management guideline, which was not there in the last year’s first quarter. That is the reason there is a little spike shown in the current quarter. And as f ar as the annuity is concerned, we have been very focused on the individual annuity . For group annuity, this is coming based on the transactions which you do over a period of time, so which are in pipeline. So, we expect that annuity will also pick up overall for the financial year in the next few quarters.

And just lastly in the surrender charges, you are saying that if your product mix remains the same and the new products are launched from October, your margins would not be impacted. Is that a fair assumption to go with?

We are saying that there will be very minimal impact. We can ’t say there will be no impact. But looking into our product mix and the surrender value that we are currently offering, there will be much minimal impact will come on our margins, on overall margin for the Company.

So, we are saying that product mix will improve and that will compensate for the loss in margin that you are seeing in the first quarter.

The next question is from the line of Shreya Shivani from CLSA.

I have two questions. First is on the Banca channel, SBI Channel, I know in last quarter also they were slow. But in general, the trend for this channel last year through the fourth quarter it didn’t decline but the growth sort of slowed down. So , has there been any SBI stance over insurance or anything that you can share on that? Second is on the competitive landscape, a fter last year ’s taxation change had entered Tier-III-IV geographies which is your home turf in a way. So , are we seeing any increased competition in your geographies, any color you can give around that?

If you are following Company’s result, you would have noticed that there is very strong seasonality, especially in the Banca channel. After a very robust December quarter our growth in March quarter for the Banca channel was flat, in fact a little negative. But if you notice the numbers for June, we are back on the growth path. Although it is in the lower double digit, but the growth is back and second and 3rd Quarter usually are stronger for Ban ca and we expect that we will be back on the same growth path in Banca again.

The second one I think you referred about the Tier-II, Tier-III cities for change in that. So, as you know we have been very strong on the Tier-II, Tier-III cities, almost kind of 48% to 50% of our business comes from these regions. And the presence of SBI across geographies in these particular regions are very high. So, we don ’t see much competition per se from any quarter. And we will try to enhance our penetration more on these regions to take the target which we have planned for the Company.

So even incrementally right now you’re not seeing any increased competition or is that what you’re trying to indicate?

You can see that the industry is having very robust growth , so there is enough in the market for all the players to take in. We won ’t say that we are being affected by the competition in any major way.

The next question is from the line of Supratim Datta from Ambit Capital.

My first question is on the agency channel. Now the agency channel has been growing fairly strongly and one of the key drivers be hind that has been the number of agents that you have been adding over the last 2 years. Just wanted to understand that you know how sustainable is this agent addition and do you have a n annual target about how many agents you would like to add every year? So that would be my first question before I come to my second question.

So, as you would have noticed in my address , I talked about our agency strategic initiative of Agency 2.0 what we are calling it internally in the Company. As you yourself said that you have been noticing the agent accretion during last few quarters in the Company. And the first quarter, growth in agency business is the result of the addition of these agents over previous quarte rs. As we recruit the agent it takes s ome time to mature and increase the productivity. And we are now noticing that increase in productivity of our agents and the consequent growth in agency number. Agency almost grew by 43% on IRP basis. And that is the kind of growth we are looking for in t he current year so that our overall distribution m ix, the contribution of agency is slated to go up.

And could you give us a breakdown of how the margins across the different channels , typically would the agency be higher, or a lower margin channel as compared to Banca and the other channel? Could you give us some sense around that?

So, we don’t divulge the distribution channel wise margins for the products as such. So that is the Company strategy and that is how we want to continue in the current year also.

And lastly, I understand that you have indicated that in the second and 3rd Quarter, the growth typically picks up. But if I see that in the second and 3rd Quarter, you’re citing fairly strong growth over the last 2 years. If I see on a 2-year basis in both quarters you’re citing steady strong growth. So , could you give us a sense that will this growth that you are targeting going to come from new product launches or ar e there other strategies in cue that you will focus on in the 2nd and 3rd Quarter which will result in the growth acceleration?

So, we will have some segment specific product launches to drive growth in protection which we mentioned earlier. And we do believe that certain initiatives on digital platform of the bank that are underway will fructify in this quarter that is Quarter 2 of Financial Year and our normal activity level in bank, all three of them will result in higher sales in Banca channel.

The next question is from the line of Dipanjan Ghosh from Citibank.

Just a few questions. First if you can give some color on the business growth in the others channel which is non-agency, non-SBI. What are the underlying constituents in terms of both product, and which is the fastest growing subsegment within that particular segment in terms of the channel mix? Second you mentioned on the protection product pipeline but is there any other products that is expected to be launched in the next few quarters? Also, will you be re-filing your products before 1st of October and if so, what would be the new contour? Are you planning for any changes? And you mentioned you won’t be tweaking the commission structure but is there going to be any other product structure tweaking that you kind of would be doing? And lastly, we have seen some dichotomy in the non-PAR growth that we have seen across all the players have reported till now and you have reported a (+20%) sort of YOY growth. We just wanted to get some color on the policy growth versus the ticket size growth or the quality of customers who are really buying this policy.

I will take the question on the other channels and Prithesh will answer on the product. So, on the other channels it ’s a mix of PSU bank partners we have , non-PSU bank partners we have , brokers, online channel and direct channel , all everything. So, we have seen good growth in the online channel and good growth in some of the partners that we have. There has been a subdued growth in some of the bank partners we have. So, net it is there is what w e expect is the bank partners which have shown subdued growth will come back in Quarter 2, Quarter 3, Quarter 4 and we will continue to show robust growth in our online channel, that is our expectation and this channel depending upon the partner, the product mix keeps varying. So, in some partner the share of, some channels share of protection and PAR, non-PAR is very high. In some other channel we are offering only NP S like products, so there is a different color partner by partner analysis will have to be done in terms of product mix for this channel . On the product structure and Prithesh will mention on the launch.

On the product side what MD has also mentioned that we will be launching some plan for the ultra HNI customer also for the bank . What we are doing that we also looking into revamp our PAR portfolio, so you see few products we are working on the PAR business. We are also coming out of the PAR, on the non-PAR and as you mentioned that we are adopting the segment -wise approach, so we ha ve a different geography , different kind of customers, try to understand their need and come up with the product with them, suitable to their profile , demographic profile and their income profile . What we identified another on the child segment is the growing segment for the country , so we will be revamping the product and child segment, and you will see the planning to introduce the child product in all three major segments, PAR, non-PAR and Unit linked platform and in addition to that we are revamping our rider portfolio . So, this month, month of August we’ll be launching the extender rider and there is other few protection rider in pipelines . Objective is to give the complete solution to the customer, and we hope that will help us not only to meet the need of the customer but also help us to improve the growth and along with the improvement in our margin.

On the unexpected re-filing of products prior to the 1st October?

Yes, we will. S o, we have planned, and we are going to reprice and refile all this products in the phased manner, not limited to filing on the 30th September, so in gradual manner we will file these products.

Credit protect APE is around Rs.47 crores.

The next question is from the line of Aditi Joshi from JP Morgan.

So, two questions from my side. Firstly , on the composite licensing thing. So , are you still expecting that this compos ite licensing might come into play and then if it actually takes into effect then what sort of benefits can you reap out of it? And from a channel perspective again from a composite licensing perspective which will be a key focus of channel in terms of distribution? And second on this agency side , do you have any particular product mix on that particular distribution channel in terms of what products you would like your agency to sell? Because in this quarter we saw that the ULIP growth was pretty much higher even in the agency side. But going forward do you think that we might see some higher share of protection products coming in from that side? And just lastly on these new high net worth , higher sum assured products that you mentioned , which distribution channel are you focusing on for this product segment?

So composite licensing is in the talk for almost last more than a year or so and regulator has and government have to take a call on that. But having said so the contours of business in life and general insurance are very different but have some synergies also. The risk, the asset liability management, everything is quite different. But the distribution channel and certain other things there are synergies. So, it has its pros, it has its cons. As far as SBI Life is concerned , our parent bank has Company in life insurance and there is a separate subsidiary which looks after the general business. So as and when the composite licensing is introduced , the parent will take a call depending on the market condition and we will be guided by the parent bank in this regard. Regarding agency channel , we do not offer differentiated product from agency and Banca channel. Their products are common, and the other features are also common to both the channels. The current growth in agency channel is basically being driven by our increased focus , improving infrastructure , opening more number of branches , employing more agent and focusing on the per agent productivity which happens to one of the highest in the private sector industry. So going forward we will continue to focus on the agency channel. Your third question about the ultra HNI product, we will be focusing on our direct channel as well as Banca and agency channel both because we are simplifying the underwriting processes. We are going to give higher non-medical kind of facility also in pro tection business and these will be uniform across the channels.

And can I just make a quick follow up question, on your comment that going forward we will be focusing on riders a s well. So, is it going to be higher rider attachment on the ULIP products as well? So, what sort of products will we have this increased attachment in the rider?

So, our objective is to make this rider available to all line of business. So , it will be available to the PAR, non-PAR as well as ULIP linked products. So , this is for all products. And we expect that the more and more offering we’ll have in the rider side, it will give opportunity to customer to fulfill their need and hence there will be a lot of expectation that our rider attachment will go up.

The last question is from the line of Sanketh Godha from Avendus Spark.

It’s the same question on Bancassurance channel. See our APE growth is just 12% in that Banca, that is SBI channel. So, if you are guiding for 18% to 20% kind of a growth for the full year , then the expected growth from the Banca channel should be at least 15% to 16% for the full year , if the momentum in the agency remains at the current level. So just wondering whether if it is 12% in the next 9 months you are expecting a growth of around maybe 18 %-19% in the Banca channel. Are you fairly confident that 18% to 19% kind of a growth will happen to deliver that high teen to 20% kind of a growth what you have guided for AP E that’s the thing and what will lead to it ? I understand the seasonality part but just want to understand that part little better. And second is that you said there is a marginal impact you did not quantify the number. But assuming this current product mix remains true for the entire year , maybe how much that impact would be maybe less than a percentage or 50 -60 basis point means if you can give a ballpark number assuming the current product mix will remain true what will be the likely impact on the margins because of the surrender norms? Those were my questions.

So, you yourself answered what you asked for that the 12% growth rate is based on the seasonality in the Banca channel. The March quarter growth rate was almost nil. It came back to 12%. Second and 3rd Quarter are usually strong for Banca. And in addition, we are expecting good business in the protection segment. The digital product that we are going to offer on the Yono channel , we have very high hopes because it is a much- simplified product with a lesser premium and we expect very good growth in this also. The strong growth in ULIP is continuing so that also in second-3rd Quarter will provide us good growth opportunities and pushing it from 12% to the number, you yourself said around 15%-16%. That is not much of a difference. We are very sure , very sanguine that the kind of 18%-20% growth guidance that we are giving we will be able to stick to that.

And if you can quantify the bps impact on the margins with the current product mix?

We will not exactly quantify but this will be definitely much lesser than the 1% number that you quoted.

And lastly if I can squeeze in one , see even your group protection has slowed down I understand. Group annuity has slowed down I understand which could be tactical based on when the corporates will do it. But even individual number, individual annuity seems to have declined 10% year-on-year. So, anything to read there? Is it because of the IRR pressure, competitive pressure or the competition has launched more customer friendly products and that is leading to bit of slowdown individual annuity?

Sanketh, there are two things to it. Credit life as of today it is growing at 5%. But as MD has already mentioned that there is a big uptake on the housing loan side because of the various things going on in the economy. So , we expect that the credit life will grow better than what we have seen in the first quarter. Second as far as the GTI businesses are concerned, it is a business which is getting negotiated during the course of the year and we expect that some transactions will fructify during the next two-three quarters and will definitely get as desired for us in the current financial year. As far as the annuity is concerned, it is a bulky business, and we don ’t have much pressure as far as the pricing is concerned. But we will see what is the beneficial for us as far as the VoNB attrition is concerned. If it is a positive VoNB definitely we will be going forward for the larger deals in the coming quarter. So ov erall we expect that the group from the credit life as well as from the group annuity will go up in the coming quarters.

My question was on individual annuity which has also declined by 10%. Is there any pressure there in that sense?

No, it has subdued this quarter. But our rates are quite competitive and we expect that this will bounce back in the coming quarters to come.

Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to Mr. Amit Jhingran – Managing Director and CEO for closing comments.

Thank you very much everybody , ladies and gentlemen for the time and the queries and the interest shown by all of you . You may get in touch with o ur investor relations team in case you have any follow up question at any point of time. Thank you. God bless.

On behalf of SBI Life Insurance Company, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Safe harbour: Please note that this transcript has been slightly edited for the purpose of clarity. Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indic ating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These statements by the Company and its management are based only on our current beliefs, expectations and assumptions regard ing the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are not guarantees of future performance. Because forward - looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those presented in the forward-looking statements.