HDFC Life Insurance Company Ltd
NSE:HDFCLIFE
Earnings Call Analysis
Q1-2024 Analysis
HDFC Life Insurance Company Ltd
HDFC Bank has witnessed a notable increase in the sale of protection products, indicating a successful push in inroads and collaboration on selling the right products. This aligns with previous statements indicating the potential to increase protection levels at HDFC Bank, which the company has achieved and plans to sustain.
In the face of significant industry challenges, including tax changes that led many to anticipate flat best-case scenario growth, HDFC Life has achieved 13% growth. This undermines the notion that tax changes would be the sole growth driver, as HDFC Life demonstrated consistent monthly growth with each month outperforming the last. Moreover, the company is confident about Q2 outperforming Q1 and sees H2 of the year faring better than H1, with overall growth at 1.5 times the industry rate. Additionally, while margin neutrality has not been fully achieved, mainly due to tax reasons, a growth rate of 17-18% as opposed to the 13% APE growth suggests the potential for increased margins as the company compensates for the shortfall.
HDFC Life maintains a strategic balance between expanding market share and margin growth. Despite the opportunity to achieve a 30% margin, the company has opted not to sacrifice market share for the sake of margin expansion. Instead, HDFC Life's market share has actually grown by 90 basis points, reinforcing the company's commitment to remaining relevant and securing its top ranking among the three leading life insurance companies, including LIC. This approach of strategic growth has led to expanding its share from 12.5% in FY '19 to 16.5% in FY '23.
While protection policy sales have increased, there was a corresponding decline in non-par savings, introducing a trade-off in the overall product mix. However, the slight uptick in Unit Linked products—rising by 200 basis points from 23% in Q1 FY '23 to 25% in the current quarter—reflects a temporary market-driven adjustment which is expected to correct over time. This demonstrates HDFC Life's ability to navigate shifts in product demand while prioritizing customer interest, suggesting an agile response to market conditions and strategic product management.
HDFC Life has observed a growing and sustainable uptrend in the demand for protection products. Robust data analytics, targeted product mix strategies, and increased brand visibility, exemplified by campaigns like the Rishabh Pant endorsement, are driving this growth. By calibrating sales activation and diversifying protection offerings, including return of premium products in Tier 2 and Tier 3 cities and improved product mixes in larger markets, HDFC Life aims to continually enhance its overall retail protection, maintaining market share not just in retail protection, but also broadening its value penetration across various verticals.
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of HDFC Life Insurance Company Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Vibha Padalkar, MD and CEO of HDFC Life. Thank you, and over to you, ma'am.
Thank you, Michelle. Good evening, everyone. Thank you for participating in this conference call to discuss the financial highlights of the quarter ended June 30, 2023. Our results, which include the investor presentation, press release and regulatory disclosures have already been made available on both our website and the stock exchanges. Accompanying me are Suresh Badami, Deputy Managing Director; Niraj Shah, ED and CFO; Eshwari Murugan are appointed Actuary; and Kunal Jain representing Investor Relations.
I will provide an overview of our Q1 FY '24 results, and we'll be happy to respond to any queries thereafter. We are happy to report that the merger of HDFC Limited with HDFC Bank has been successfully completed and that we are now a subsidiary of HDFC Bank. As you may know, HDFC Limited recently has increased its stake in HDFC Life to more than 50%. And as a result, HDFC Bank now holds 50.4% in HDFC Life. Our focus is on strengthening our partnerships with HDFC Bank, enhancing collaboration and maximizing customer engagement within our group.
Moving on to our operating performance for the quarter. For ease of comparison, all previous year numbers in our disclosures are on a merged basis, i.e., after including the performance of our BIM subsidiary Exide Life Insurance. We closed the quarter with a robust growth of 12% in individual WRP, which was 1.5x of private industry despite coming off a strong March. Our quarter 1 FY '24 market share was 16.4% and 10.6% in the private and overall sector, clocking an expansion of 60 and 90 basis points, respectively.
Over the last 4 years, despite facing open architecture and intense competition from unlisted insurers, our market share has steadily increased from 12.5% in FY '19 to 16.5% in FY '23 in the private sector and 7.2% to 10.8% at an overall industry level. We anticipate that growth will progressively accelerate as the year progresses, with quarter 2 expected to outpace quarter 1 and H2 showing stronger growth compared to H1 after adjusting for the onetime excess demand in the month of March.
We have also been able to grow the number of individual policies sold by 9% in quarter 1 FY '24, in line with our stated objective of broadening our customer base. We expect our efforts to enhance our distribution capability to reflect in the growth of policy count during the course of the year. We covered more than 2 lakh lives in retail policies and 1.6 crores lives overall in quarter 1 FY '24, a growth of 8% and 34%, respectively, over quarter 1 FY '23.
Retail sum assured recorded an increase of 55% and overall sum assured 73% and our overall market share in quarter 1 FY '24 was 16.9%. We feel privileged to have led the way in helping bridge the protection gap in our country by being the market leader in terms of total sum assured. Our overall product mix remains balanced. Amongst the savings products, nonpar savings stood at 33%, participating products at 26%, ULIP at 25% of individual APE.
Other categories, which include annuity and protection were 9% and 6%, respectively. This quarter witnessed product launches in the pension and ULIP categories, which have been specifically tailored to meet previously unaddressed customer requirements and paving the way for new product subcategories. Overall protection has grown by 35% in quarter 1 FY '24 on a new business premium basis.
Retail protection trends remain encouraging with year-on-year growth of 45% in quarter 1 FY '24. While the growth is accentuated by a favorable base, we do believe that the pickup in protection is sustainable and growth is likely to be healthy for the year. In quarter 1 FY '24, our annuity business contributed to 19% of the new business premium with APE growth of 51% mainly driven by increased demand for our limited pay annuity product systematic retirement plan.
Moving on to key financial and operating metrics. On a like-for-like consolidated basis, i.e., including our erstwhile subsidiary Exide Life, our new business margin for the quarter was 26.2% as against 25.1% in quarter 1 FY '23. This has enabled us to deliver value of new business of INR 610 crores, which is a growth of 18%. We had achieved margin neutrality in FY '23 and would have continued to do so in quarter 1 FY '24, had the demand upfronting in March due to the sunsetting of tax benefits, not happens. We are capacitized for higher growth with upfront investments in manpower, distribution infrastructure and technology.
Having said that, with new business APE growth expected to be better in H2, we expect our full year FY '24 margins to be similar to FY '23 NBM by the end of the year. As indicated by us earlier, we expect VNB expansion in FY '24 to be led by APE growth rather than any significant margin expansion. Our embedded value stood at INR 41,843 crores as on June 30, 2023, with an operating return on embedded value of 16% for the quarter.
Profit after tax for quarter 1 FY '24 was INR 415 crores, representing a year-on-year increase of 15%. The profit emergence from our backbook continues to show strong growth of 19%. We have included an additional slide in the presentation to provide some perspective on the timing of profit emergence across product categories and correlation to this value in force at an overall company level. The board recommended a dividend of INR 1.90 per share aggregating to a payout of INR 408 crores, subject to approval by our shareholders. Our solvency ratio was 200% as on June 30, 2023. Renewal collection trends continue to be healthy on the back of steady persistency.
Our 13th and 61st month persistency was 87% and 53%, respectively, versus 87% and 52% last year despite making inroads into Tier 2 and 3 towns. Persistency has seen an improvement across product categories, cohorts and geographies over the last few years. Over the last 3 years, our persistency has improved from 89% to 92% in Tier 1 markets, from 84% to 87% in Tier 2 markets and from 80% to 84% in Tier 3 markets. This performance gives us the confidence to continue our journey of deepening our customer engagement beyond metro cities.
Next, on channel performance. Our bancassurance channel has grown by over 25% in quarter 1 FY '24 based on individual APE. We are witnessing robust growth across all our large partnerships. With HDFC Bank as our promoter, we will work towards enhancing the availability and accessibility of insurance across the bank's customer base and increasing our market presence within the bank's operations. Our agency channel grew by more than 1.5x company growth in terms of individual APE. We continue to increase our agent network by adding over 15,000 agents in quarter 1 FY '20.
With respect to our acquisition, we are effectively realizing synergies, both in terms of revenue generation and expense management, and our efforts are on track. We are proud to be recognized as one of India's top 10 best companies to work for by Great Places to Work. We are the only insurance company to receive this recognition, which is a testament to our unwavering commitment to creating a people-centric workplace. While we remain optimistic about growth opportunities in the life insurance sector, our vision extends beyond just business growth.
Following a customer-centric approach, we remain steadfast in our mission to ensure India and ensure financial security for families and individuals across the nation. We believe that widespread financial protection is a crucial aspect of economic growth, and we are enthusiastic about collaborating with our regulator to contribute meaningfully to this collective effort. The detailed disclosure on our results is available in our investor presentation.
We are happy to take questions now.
[Operator Instructions] The first question is from the line of Suresh Ganapathy from Macquarie Capital.
Yes, I have 2 questions. One is on the HDFC Bank channel. So the counter share was 55% has it changed this quarter? Have you seen better traction? Any color on that?
Yes, Suresh. This has been targeted in the 10 set. Some of the branches that have been somewhat of laggards, there's been a fairly deep and joint focus on those, and that has seen traction. And hence, overall, close to about just shy of 100 basis points has been the traction that we have seen between 50 to 100 basis points, depending on which zone you see in terms of overall market share. So early days, but in the positive direction.
Another interesting point, while that was not your question, is that our uptick in protection that we are able to sell at HDFC Bank. And hence, just collaborating in terms of what are the right products to sell and so on. So there also, we have managed to make a fair bit of inroad in -- and this is something we've always been mentioning that protection levels at HDFC Bank can be higher, and that is something that we have managed to do and will continue to do.
Mr. Ganapathy, do you have any other questions?
Yes, yes, one more question. Vibha, just on the VNB margins and growth I had, I mean, your original guidance was 15% APE growth, excluding the INR 1,000 crores one-off of last year, right? So that translates into a 7% reported APE growth. Now if I were to extrapolate saying that the margins are flat, you're looking at, say, 7% VNB growth. So my point here is, I mean, your margins are lower than what your competitors are closer to 30%. What explains is expense and also the fact that you would expect better synergies coming from Exide Life then why is the margin projection a bit more conservative despite protection actually growing pretty fast.
Yes. A few points here. One of the largest -- I'll come to the versus peers comparison. But on a stand-alone basis, first is that we -- the first quarter of last year, we did not have Exide Life, and we did mention at that point in time that Exide Life had low single-digit margins. From H1 onwards, we started showing consolidated margin. So if you were to look at Slide 24 of our investor presentation, we have given the walk for both with Exide Life and without Exide Life.
Second point is we have said that margin neutrality, so we feel reasonably confident that by the end of the year, there will be margin neutrality. They're one of the -- or perhaps the only reason in terms of not having falling slightly short of margin neutrality, which means stand-alone HDFC Life margins in quarter 1 is purely because of the tax reason. And typically, our growth rate has been in the range of 17%, 18% versus an APE growth that we've seen of 13%, total APE growth of 13%, so that shortfall, and we've capacitize for 17%, 18%. Once we start making up for that shortfall margins will rise and month-on-month, we have continued to trend upwards. So it's more in terms of fixed cost leverage because of the capacitization. So that is as far as...
But the protection will not help you. I mean, the fact that it's growing faster, yes.
So it is, but in terms of VNB and the volume, I have to sell maybe 3 protection policies for 1 saving, in terms of the volume of it. So that is one. Second is while protection has gone up, but non-par savings has gone down. So to some extent, there has been a trade-off. And second is you will also see in our investor presentation on product mix. For the quarter, Unit Linked has gone up slightly because of the market. It's very small numbers.
So if you were to look at -- this is Slide 16, you will see quarter 1 FY '23 Unit Linked was 23% versus this quarter is 25%. So 200 basis points, which you're correct. We are very sure that it will correct over a period of time. But in customer's interest, is typically when markets do well, there is a bit of uptick in Unit Linked and Par has gone down a little bit. So there have been trade-offs between protection versus others.
So if this scenario has panned out wherein protection uptick has happened and tax changes had not happened, then clearly, no question about it margin uplift would have happened very significantly. But in the whole scheme of things, given that if you recall, just 2 or 3 months ago, post of tax changes, the industry was expected best-case scenario to be flat. So against that, I think the 13% just goes to show that the correlation between tax that being the only play that is clearly -- has been reputed. And every month, we have grown very well. And each month has successively been better than the earlier months.
And that's why that gives us the confidence about quarter 2 being better than quarter 1. And overall, H2 being better than H1. And overall, we have grown 1.5x the industry. Now coming to your question on industry. Suresh, we can get to 30% if we were to lose market share. But our market share, as you see, has actually expanded by 90 bps, right? So there will always be a trade-off in terms of we want to stay relevant. We don't want to lose our ranking as among the top 3 in the including LIC in the life insurance space.
And actually, if you look at Slide 6, you'll see that every year from FY '19 to FY '20, a, we have grown faster than the overall private sector and overall sector and our market share expansion. So we were 12.5% in FY '19, and we've reached 16.5% in FY '23. So that is the philosophy of triangulating and not wanting to lose our position in terms of ranking. And then that hopefully answers the -- why can't it be 30%, I can easily be 30%, right? So it's this triangulation wherein we will grow brick by brick. The pause was only because of the tax, but this year, we will come out similar margin neutral to last year, and next year, we will continue to move upwards.
The next question is from the line of Adarsh from CLSA.
Vibha congrats. A question on protection. Obviously, protection is now growing from a low base. Just wanted to understand...
Sorry, Adarsh, can you come closer to the mic, please?
Sir, your voice is muffled actually. We are not able to hear you clearly.
So I think hopefully this should be better.
Sir, can you use your handset, please?
I'm using my phone, so should be okay now.
Could you please keep it a little bit far from your mouth and speak?
Is this better? Or I'll come back later.
Yes, sir. Please continue.
Okay. Sorry about this. Protection, I just wanted to understand Vibha, how even you and I-pru seen a good pickup, so just wanted to ask how sustainable this pickup looks? What are the factors driving this now?
Yes. I'll hand this over to Suresh.
So up to the multiple elements in terms of why we are seeing a protection uptick. First, of course, yes, we see customer demand and we believe that will be sustainable. In terms of whether we see the kind of web searches, which are happening, HDFC Life name search in terms of term and protection, which is happening. Clearly, we are seeing a customer level demand. The second piece also is that we are now looking at moving higher activation on our frontline sales across all geographies in a very calibrated and product-centric approach. So what we are trying to do is trying to see whether we can have return of premium products in the Tier 2 and Tier 3, whether we can have a better mix of term products in the larger markets. And based on which, what has happened is we have been trying to grow the overall retail protection.
Of course, on the credit life side, given that we are a little agnostic in terms of how our protection is growing between retail and credit life, we have managed to maintain our market share across most of our credit life partners, their disbursements have grown. On top of that, our penetration and value penetration have grown across multiple verticals, which is there. We are also using a lot of brand awareness in terms of production. You must have recently seen the Rishabh Pant campaign that we have done. We do believe that with the combination of visibility, data analytics, a lot of those efforts at a specific customer level, we are able to push protection. And this focused effort will probably remain right through the year.
And last point I want to mention here, Adarsh, is that if you just look at Slide 16 in our product mix, even if you look at the bancassurance you will see that term has gone up from 4% to 5%. So on 50% of our business, you're looking at an uptick. So it was 3% and then it went to 4%. Well, 4% was quarter 1 of last year and then 5%. So that kind of a meaningful growth that you're beginning to see, which is what I alluded to in the earlier question.
Across our channels is -- and this is without -- and I want to stress this is without doing anything adventurous on the underwriting guidelines or even on pricing. So in a calibrated but focused basis, of course, some of this is also whatever we went through during COVID and then repricing and then price increases. So there was a little bit of one had to socialize that all of these changes have happened and people deferring decisions to buy protection. So the combination of all of that coming through. And also I'd be honest, because this -- on savings, what we did go through as a sector forced us to also focus on protection, which also we alluded to in April.
Let me also add, I think it's not just in terms of the product features as such as well as the activation. I think there's a lot of effort in terms of our conversion efficiencies, like we spent effort in terms of how do we look at the overall end-to-end throughput, the speed of being able to convert the policies which have got logged-in, and we are seeing significant upward movement on that front also.
Got it. The BroCA channel, right, which has seen a doubling of the share of term does that include online players. I just wanted to check that.
That is right. Some of the players like PolicyBazaar and all are now moved from a web aggregator to a broking code. So they reflect under the BroCA code.
Got it. And my second question is now if you go back to the last call or what you have been saying that the merger at the group, the share you end the year or you aspire to end the year with a 70% wallet share, which is a very big move from where we were last year. So obviously, you started moving in this quarter, small changes in once, as you mentioned. What's the big change that will happen on ground for you? And do you see that playing out to up to 70%? Or it will be a little more gradual?
So I'll add on to what Vibha mentioned in the first answer to Suresh. So we have seen a slight increase on 0.5% to 1% increase overall in terms of our market share across HDFC Bank. But to your point to say will it be gradual or will be overnight, I think it will be gradual, and it is because it is going to be calibrated both at the bank level as well as at our level. We have multiple levers that we have identified in terms of how do we increase our market share, whether it's in terms of certain branches and certain geographies where we believe we need to put in more effort whether it's in terms of certain products that we need to focus on jointly, whether it's in terms of manpower that we need to deploy at a certain number of branches.
And there are these 6, 7 levers where there is a high level of engagement between the bank party -- a third-party team as well as our team in terms of what is it that we want to do. Clearly, we don't want to dilute any of the underwriting standards or we want to change too much in terms of pricing. So it will be moving up on a calibrated manner. But given the messaging which has come from the senior management of the bank and the ground level effort that our team has been putting in, we can see the traction has started to show across multiple geographies.
Got it. No, I will just thanks for the clarification. So just wanted to check, Vibha that 70% still remains an aspiration by the year-end or on-ground implementation can be a little more spaced out.
Yes. See, the 70% is not a number that we are articulating and it's up to the bank, how they see it. But see, it's not even been a month since the final consummation of the merger. So the banks will be in a new avatar of a conglomerate as against the bank. And as that organically starts keeping in and how leadership at the bank have said how we can upsell many things to the customer.
So it just -- so it's a strategy that will be led by the bank as the parent, what Suresh alluded to are all the things that we are doing so that no stone is left unturned to meet them halfway to say that, okay, we've earned our spur, we have done x, y, z things, and we have really been really efficient or conversion on how we're handling come play in and so on. And then it's up for a bank to see us to how they execute what they have already started articulating in terms of various bouquet of products that they can upsell to the customer. But yes, it will be brick by brick, Adarsh, in terms of how we collaborate. But it is being done every day. On a daily basis, these conversations are happening at various levels.
[Operator Instructions] The next question is from the line of Anuj Singla from Bank of America.
So Vibha, following up on the protection side only. Can you give some color on how the strategy of growth in Tier 2 and 3 cities have progressed on the policy split side, first of all, if we can give some color how the policy split that has been shaping up since we started this focus? And secondly, can you also talk about how the mix of production is changing in Tier 2, 3. Like you mentioned in your remarks, more ROP probably and maybe lower ticket size. So should we expect the VNB margins of protection growth in these cities being lower versus the backbook?
Yes, sure. So what we are looking at is -- I'll just give you a step back in terms of why we were hesitant. Earlier, we were a little bit hesitant because of a couple of things, lesser of salaried and so nonstandard income proofs and how we process that from an underwriting perspective. Also reinsurers were hesitant also against the COVID backdrop. Now some of those things we have managed to continue to iron out with reinsurers wherein we've gone very, very in a detailed manner to say from a strategy perspective or an objective perspective, we want to get into Tier 2 and 3.
Now how do we make ourselves comfortable with nonstandard income proof. So we started off by also piggybacking and learning from a lot of NBFCs that do this. Yes, they don't know medical underwriting, but at least financial underwriting. So doing that, starting to take less than maybe INR 50 lakh cover on our books. And then having conversations with reinsurers to say this book is something that they can look at and whether they want to do a quota share on that book because we had already started writing that business and showing skin in the game rather than just being a pass-through.
Then we look at the return of premium because just in terms of pitch for that segment, we realized that it's probably being seen even more so as an expense and okay, I get protection, but I'll get my money back. And like we've always said, we don't want to sit in judgment in terms of what should the customer be doing and thinking for the customer just the way all of us on this call are able to think or our priorities are different. So we said fine, we'll do that as long as we are able to explain that these are all the different protection products that they have as a choice as against only return of premium. So looking at that aspect.
Also looking at what we realized and also, we had some preconceptions that the ticket sizes will be quite small. And we were actually surprised at the ticket sizes of Tier 1 versus Tier 2, if Tier 1 is a little bit over a INR 1 lakh, say, about INR 1.3 lakh, Tier 2 was about INR 85-odd thousand and not INR 50,000 or INR 40,000, right? And also we were surprised when we started going deeper, the Tier 3 ticket sizes would be in the range of about INR 70-odd thousand, INR 70,000 to INR 75,000. So we were able to get more and more comfortable with that. Now the only thing is and that's why in my opening remarks, I talked about persistency.
In different cohorts, whether it is protection or whether it is in savings, persistency is going to be different. And we are no longer afraid of it because we have to -- demand is away from the top 10 cities. And over a period of time, we will disclose, we certainly track internally as to different cohorts, Tier 1, what is the persistency like I shared just now. As long as within that cohort, the persistency is the same or slightly better, then the mix impact is something we should not be afraid of. And it was a bit of a revelation moment for us after Exide Life.
Because what happened with Exide Life, and we told you this, that the persistency of Exide Life business was inferior to HDFC Life business. However, the persistency of Exide Life business stand-alone has started improving by about 400 basis points on almost every cohort just because of some simple things of getting standing instructions, making callings and that -- calling well in advance and that sort of thing. So we realize that we are okay with that as long as those cohorts, the persistency is what it is. And this improvement is something that we will continue to see. And over the last 3 years, like I've mentioned in my opening remarks also that the improvement is something we have seen across this cohort.
So it's a combination of underwriting risk that we see as well as the product pitch to the customer, the distributors also, thanks to EoM guidelines and many other things, distributors are also aligned to it. And us getting over what will persistency be, what will mortality experience be and so on. As long as they're pricing it right, even the mortality experience, while it is likely to be inferior to perhaps the salaried metro kind of a profile, it's something that we are -- we think that there's an opportunity, and it can be -- that opportunity can be mined in a sensible manner.
Got it. Got it, Vibha. And the second question is on EoM regulations. How do you see the commission levels? Is there some commission pressure? And how is the competitive landscape on the distribution side changing because of this?
See, the regulator -- the reason they have given us this flexibility is to say that you guys are now -- you've been around for a while, and please behave responsibly. And we would want to respect that thought to be able to say that it's not completely just because you can do much higher levels, it will be done responsibly. What we might do is that it could be that some activities were paid for separately to the distributor, now you pay it as a fully loaded commission and say, tell the distributor or the partner that you guys can run those activities for us that as customer outreach and so on. So that's what you will be. So I don't see any difference, any impact on the customer or any impact on the organization.
The next question is from the line of Mr. Nischint Chawathe from Kotak Institutional Equities.
Two questions from my product. We can see that the -- in the individual APE, the share of bancassurance has gone up significantly, in fact the overall growth in bancassurance is pretty high. So how should we read this? Is it that -- and you kind of mentioned that your counter share in HDFC Bank has sort of just about inched up. So is it something that HDFC Bank has kind of grown at a very strong rate this quarter? Or is it the contribution of other banks?
Nischint, Suresh, here. 3, 4 points on this. One, of course, HDFC Bank has seen a fairly good growth in quarter 1 as compared to last year. And at an overall level, while our market share has inched up, they have shown fairly good growth. Second, we have obviously been supported by a lot of other large partners, whether it's YesBank, IDFC Bank, Bandhan, multiple such large partners, including many of the SOBs where we have a very strong presence, who have also helped us grow. It's not that our proprietary has not grown. Our agency business continues to do well and has also grown fairly well.
There has been a little bit of a dip in the BroCA segment, which has led to an increased contribution because BroCA has had a little bit higher share of the higher ticket size par and non-par and that has slowed down. So both our agency as well as our overall banca has shown significant growth. And once BroCA comes back over this year, we will find all channels firing again.
The second question is really on group savings and annuity and that proportion increased significantly this quarter. So what kind of an impact it could probably have on the margins for you? And similarly, if you could comment on the segmental margins in the non-par business, given the fact that some of these products have to be deflected?
On group savings, it is not hugely margin accretive. So it is more -- the reason we are in this business is more in terms of relationships and being in the market. By group savings, presumably you mean all the funds that we manage group funds.
That's fair. That's fair.
Yes, not very -- it's accretive but not hugely accretive. So I would say that it gives more as a bulk than anything else. And it tends to be lumpy. You are in discussions for a long time with a particular corporate of PSU and so on, and then it comes through or they have shifted from 1 insurer to the other or -- so it tends to be seasonal also. So I would not -- it's good, but I would not read too much from a margin perspective.
And if I can add, I mean, similar to the way we have been managing a balanced product mix on the retail side, I think even last year, if you had seen, we have calibrated our approach on the group savings and group credit life as such has grown significantly for us, which continues to grow. So we have been shifting within group savings to the Unit Linked kind of products, which are better in terms of profitability. So you may find that a little moderated, but it will be much more profitable than the regular traditional group savings products that we have.
Got it. And on the segmental margins in the non-par?
So you want to take it?
Yes. So margins are fairly similar compared to what we've had in the past, just adjusting for this gap in the growth that we spoke about earlier on the call. Basically, our full year aspiration is to grow higher than what we have in quarter 1. So adjusted for that, margins have been fairly similar given that as such, nothing much has changed in terms of average ticket price.
At very high ticket size, of course, volume has impact -- got impact is to some extent as expected, but it's been more than made up by the growth in the other ticket sizes where at an overall level, the average ticket size has been maintained for the segment. And as a consequence of that, margins are more or less where they were earlier as well. There are competitive pressures as you can expect in all categories, including this one. But we've been maintaining our pricing discipline by and large, over the period since we launched this product category, and there could be maybe a lag of a month or so here and there in terms of getting back to the pricing levels that you would like, but we've been fairly disciplined about that to be able to achieve this.
The next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities.
Can you hear me clearly?
Yes. Sir, please proceed.
Okay. Good. So just wanted to understand, you've put in the slide this time, Slide 12, which talks about emergence of existing business surplus. So how do we read that? And on that, you're talking about shift in product profile for longer-term savings. But if we look at EB surplus as a percentage of VIF that is inching down, so what would be the reason for that?
The reason really is in terms of longer-term products, release Indian GAAP profits over a longer period of time. That's all there is to it. So if you see that slide that you're referring to on the left-hand side, by category of products, you will see the emergence is happening over a different period. So if you take Unit Linked, for example, a large part of the surplus is getting generated in the first 5 years of the product being sold.
And if you look at traditional products, you'll find that just about 20% to 25% is happening in the first 5 years, and a lot of it is back ended. So that's just the nature of the product and the situation that arises because of the accounting treatment that we have at this point in time. From an economic perspective, it's clearly more value accretive. It's just that the cash generation or release to the Indian GAAP profits happens over different points in time.
That's the reason why we've highlighted this across the 3 main product categories: traditional savings, protection, which includes both individual and group, which lies somewhere in the middle, and then you have Unit Linked products. And on the right-hand side, what you basically have is that at what percentage of the risk can you actually, give or take, think of the emerging -- the business surplus that can emerge over a period of time.
So that is in the 19%, 20% zone as the product profile has been changing over the last 3 to 4 years. What used to emerge earlier because of, let's say, in FY '18 and prior to that, Unit Linked used to be about 50% of the mix that has now become 25% of the mix. So while the margin expansion has happened over the same period, the generation of surplus is happening over a longer period of time. And to basically give comfort in terms of delivery of this is basically operating variances, which have been positive right through this period. So that does give us that comfort that while the surplus is emerging over a longer period of time, it is more value-adding in terms of economic terms and operating variances being positive, tells us that this is definitely coming.
Understood. And just secondly, on the -- last time, you had called out spend that you're doing on your new technology initiatives. So just wanted to understand where are we on that for this year and how much it could be next year. And what is the impact of that on margins. If it's all material.
Yes. So we are continuing on track with our tech transformation, which is project Inspire. And we have completed our diagnostics in terms of our as well as where do we want to be towards, which are the projects that we want to focus on and change immediately. And now we are in the process of identifying some of the specialist partners who can start to work on changing some of those. It could be without giving away too much in terms of CRM or it could be in terms of how we integrate -- how we have seamless onboarding and so on.
So we are in that phase right now. We did say that it pays a INR 250 crore outlay in total, of which INR 50 crores was expanded last year. This year, we are on track to spend INR 100 crores and next year INR 100 crore. Now this could be a little bit of here or there depending on do we include more upfront? Do we phase it out a little bit more to next year, but largely, it's on track.
Got it. All the best.
Yes, I'm not sure whether you want to me to repeat in terms of what are the benefits or that is reasonably clear.
No, that's clear.
The next question is from the line of Sanketh Godha from Avendus Spark.
The first question is on some data keeping. The unwind rate seems to be at 8 percentage, which is very similar to last year. Just wanted to understand, it seems to be conservative, you want to maintain that level? Or how should we read this number in the equity markets are doing well? And second, on the data keeping is INR 810 crores, can you split the number into equity and debt on how -- where did that come from, basically? That's my first question. And second, I have more on bank, it's my last -- after you answer this.
Yes, I'll pass it on Eshwari. Go ahead, Eshwari.
On the unwind rate, we look at the assets that we are holding. And based on the expected return, the unwind rate is completed. So if you look at the unwind rate of last year, it was based on the expected yield on the debt assets, which were again split into short term and longer term, and the short-term yields are lower, whether there is long-term returns were very high. As it is that this year, the yield covers flatten. So the yield has changed across the tenure. But the increase is not similar across the different tenders. So the weighted average increase is quite small. If you look at all the tenures of the bond that we were holding, we wrote a lot of bonds in the longer end. So why -- the shorter end has increased a lot.
On a weighted average basis, it's a very small number. That's why you see that there's a small increase and maybe the perception that it is conservative is not so it's a very mathematical calculation based on the assets and the expected returns. And on the equity, yes, last year, we are expecting a flattish investment return and the upside that we expect in this year has been incorporated but that's getting offset to some extent from the Exide backbook. Well Exide backbook doesn't have a lot of equity given that they are mostly power business with the low equity exposure. That's why that offsetting impact is reflected in the unwind rate of 8.2%.
On the investment variance of INR 810 crores, that is broadly stay between the impact of equity and impact of debt. In both, we have positive impacts. In equity, the markets have rallied is around 10% return in this quarter compared to an expectation of 2% to 2.5%. That's where positive upside of around INR 500 crores. On the debt, the short end, that's flattened and that has -- shortened and I mean steepened a little compared to March 23, and that has resulted in increase in the value of the debt for the shareholder funds of this asset. That effects around INR 250 crores to INR 270 crores, and the balance is some impact on the steady spreads narrowing.
Perfect. Second question Vibha for you. Basically, we understand that HDFC Bank will probably -- our market share will increase as the timing focus, but if you can give a little clear thought process how it will happen, whether you will penetrate more into the customers what is our current penetration so whether it is the NOP strategy or a ticket-size strategy, whether you will add more people which products you are targeting. So maybe you have touched up on some points, but if you can explain in more clarity how exactly the 55% to 70% journey or closer to that number, will evolve in say, next 2 or 3 years, what would the target might be?
See, even in other relationships, wherein there is no parent-child parent subsidiary kind of connection, there are shares counter shares that go up and down. And it's not just that it is driven because of the customer, but it's often driven within the bank that strategically the x insurer versus y insurer. So the way to do it -- there isn't one way, there are many ways.
For example, they could be rightfully maybe lesser people at the branch because I am of the school of thought that learning from some of the other geographies, perhaps at bancassurance, unbridled kind of number of insurance people being deployed at branches is not optimal from the bank -- any bank's point of view. So one way is to curtail if today does not curtailed. One way is to curtail and for the bank to curtail, and then to maybe like in home loans, for example, and that's how HDFC has been doing that if there are leads, then you don't really need 3 people descending on a customer at a branch. It could be that the lead is passed on to the customer or there is a virtual fulfillment with the aid of the RM and so on.
So that is one way of doing things, which in against what it is today, say at HDFC Bank, wherein they aren't really focused on how many people do they want at each of the branches. So that is one. And that itself today, my market share, by people market share -- people share, we don't see that HDFC Bank is 40%. But my market share is in the mid-50s. So that itself in terms of curtailment could give an uplift.
Another way to do this is, if you recall, really at HDFC Bank, even before multi-tie, it was HDFC Life that had trained all of HDFC Bank people into becoming specified personnel. And then it was added over under the construct of open architecture. So insurers that came in under open architecture benefited from the investment in terms of training and collaboration and getting them licensed and trading on insurance, that HDFC Life had done the heavy lifting.
So it could be that for some time, a new branch does not have all companies at that branch. So there are various such ways, but obviously, it's -- these are interstate discussions between parent and subsidiaries and not really something that I want to go into for reasons I'm sure you'll understand. Suresh, you want to add anything to this?
Yes. So I think fee revenue for the bank is also important. And I think the branch team understands at fair depth in terms of the branch level penetration, the customer penetration. I think they are actively looking at how, like Vibha mentioned, how do they increase the number of branches which are activated. There is a huge amount of focus which is coming in from the bank who have specified persons who are present at each of these branches. We can obviously support in terms of training, in terms of certification. We can look at how do we ensure that they are trained and then they are activated.
So at a unit level, there is a fair amount of focus in terms of how do we get more and more participation. Clearly, the bank has a huge focus on deposits. It's a huge focus on many of the other bank products. But the ability for our team as well as some of the other insurers to ensure that insurance as a product penetrates deeper, I think that is fairly well certain and HDFC Bank has been delivering year-on-year. There has been no doubt if you look at the kind of growth that the bank has been able to perform.
At our end, clearly, what can we do to improve our product proposition, how do we improve our operational efficiencies, how we come out with products which are better than competition, how do we get people to get better lead conversion ratios on the leads that are passed on worse. I think there is a fair amount of focus, and that will automatically come in.
Got it. Got it. And last one from my side, probably. It's an old sight now that our cost associated with HDFC Bank is relatively on the higher side. Now given the relationship changes between parent and child, then do we expect that the cost what we pay to HDFC Bank will still remain at those levels? Or it will broadly grow in line with the APE growth, what channel will give us.
See, we look at this as fully loaded cost. And what the bank has been able to give us is that a very different category of customer, so ability for us to mine that customer. So I think it is not quite right to say 1 particular distributors cost are more -- it's what margin does one make out of it. What is the persistency. So expense is one aspect, but mortality expense -- experience at the same expense is a different. So all of those assumptions will impact what the margin is.
So whether the bank -- if I understand your question right, whether the bank will take into consideration that we are now a subsidiary and leave something on the table. I think these kind of conversations are more for the bank. But when the bank says parent and child, I think it subsumes many such big and small things, which will come out of these discussions which I sure are happening at a very, very regular basis. But I think it will happen because for them also to switch hats from being a bank to a conglomerate is not even a month old.
Got it. Okay. A final one, as the Board -- the bank people have started siting I just wanted to understand when the board constitution will change so that we have people from bank sitting in the Board.
So Renu Karnad, who has been the HDFC Limited nominee has -- today was her last day at this AGM. So she is not -- her tenure is not getting renewed for now and so on. So some of these changes are not very far off in terms of somebody from the banks coming on to our Board.
The next question is from the line of Supratim Datta from Ambit Capital.
So starting off with the first question, could you give me the proportion of policies in quarter 1 that was above 5 lakhs? And how has that changed compared to last year? Then the second question that I had was it seems like you have in this quarter, you're able to get about 100 million in synergies from that side acquisition. Could you talk about what most synergies could you extract from that business? And what -- how much more synergies left to be coping from that business? And lastly, the third question that I had was, could you talk about the strategy of separating the growth and focus markets in the agency channel? And what kind of productivity improvement and growth.
Yes. So Supratim, I'll start off with the first one. The first one is above 5 lakhs is about high single digits. I'll pass on to Niraj for the Exide Life and then maybe Suresh can take the growth and the agency split.
Right. On the Exide Life synergy is, we basically started off with very simply in terms of what is it that we can do to protect the revenues and what is it that we can do in terms of rationalizing costs. So from a cost perspective, any infrastructure, which was -- something which was in, let's say, duplication was something that was addressed first up in terms of branch infrastructure. And also in terms of all corporate expenses, obviously, all of them are something which gets done as 1 unit now.
So these are some of the things that kind of came in, which helped us get to margin neutrality ahead of plan, if you recollect, when we were talking about the transaction in the early days, we had basically said that we want to get to first is to get to margin neutrality on a pre-merger basis, which we did. And since then, the focus as the integration completely has got done now in terms of using technology to get the Exide Life distribution to be able to use HDFC Life digital assets as well as in terms of access to products, which is something that has already started showing up in terms of the channel growth as well as in terms of the changing ticket sizes.
So a lot of these things have started to happen. And now obviously, the entire business is completely aligned into our overall agency business. And the Tier 2, Tier 3 story that we're talking about is something that is only getting enhanced by this entire combination. So we did speak about the Tier 1, Tier 2, Tier 3 distribution and how things have progressed in the past few months. This is something that is definitely adding to that. Persistency is improving. Ticket sizes are getting bigger. So the quality of business that is coming through from these markets is definitely better than what it used to be 3 years and 5 years back. So that gives us more confidence to actually get this model into other geographies compared to where it was when it started off. So that's how things are progressing on the merger front.
Suresh, you want to?
Yes. So I'll start off where Niraj left on the agency business partner and the Exide integration. The good thing is that not only is the technology integrated, the entire business model has integrated with our agency business part model, and we've kind of unified both the teams in the sense that we completely on course in terms of how do we now build that business. Exide obviously had a very large presence in South India in the Tier 2, Tier 3 markets. They had a well set model. We have learned we have expanded and now we probably want to be able to take that model to many of the other geographies.
So that will clearly help us grow along with the tied agency business that we have been doing right across. Even on our agency model, you may have to step back a few years. I think we were #8 on the agency model. And over the years, you have seen the steady growth in our agency model from a #8 position to #2, #3 on an annualized basis. A lot of that has come in terms of the focus that we have brought on the quality of business, the quality of new FC addition that we have got, the activation of our financial consultants as well as reaching out into different markets.
2, 3 new initiatives that we have taken, which would be beyond what we have done on agency in the past. One is clearly that we have now relooked at our entire agency business on the tied side on a focus and growth market. The growth market is clearly focusing on Tier 2 and Tier 3 cities. We will be adding around 75 new branches, plus we will be looking at a hub and spoke in terms of how do we go into further geographies, which can help us expand into these markets.
Second, there has been a significant transition on agency model from frontline productivity-linked model to agency activation and digitization model. There are a huge amount of data analytics and other initiatives that we have taken. There are hyper personalization projects running. There are micro market segments running. And I mean, there are a fair amount of effort that we have put in terms of how do we identify which cohort of agents in which markets and how do we enable them, which will help us grow.
So we know at a pin code level, we know how many financial consultants are there, how many customers are we sourcing which can see -- where is it on insurance density, which we are lower, how do you grow that? How do we improve the quality of financial consultants who are getting onboarded with us. What is the mix changing between house wives, students as well as financial distributors. How do we reduce the death rate or what you call the attrition rate of new agents, how do we activate earlier agents? How do we increase the number of MDRT agents. There are multiple such things which I think our team is holding, I don't want to expand. But clearly, we do believe that the proprietary engine is running well, and we should be able to show our growth over the last 4, 5 -- as we have shown in the last 4, 5 years.
Just on the first one, could you let me know what was the percentage of high ticket size policies last year as well. This year it's high single digit?
That's indicated and -- but after the budget announcement, it was about 12% of the total APE, which is now coming last 2 months.
Okay. I just saw that quarterly it would be different. Okay.
No, no, not really. It's fairly similar. It's now a few percentage points lower, which was completely expected.
I mean, in fact, March would have been higher because of what happened. But otherwise, it was fairly similar across.
[Operator Instructions] The next question is from the line of Avinash from Emkay Global.
Yes. Thanks a lot for adding that Slide 12, that sort of helps in sort of connecting your EB reporting new VIF margin, the gap profitability. My question, again, going back to margins, particularly with the details you have given on Slide 24. If I see year-on-year basis, the product profile has changed to us more profitable like if I look at the annuity as well as protection and that has in feed, yet the sort of a gain from the margin gain from new business of team is very, very limited.
Now has product profitability has changed over years. And the second, I mean, related to this, you are still hopeful of sort of being flattish was FY '23 margin. If I look over the year, I mean, because of the high base of March, I mean right now the growth 12% to 13%, so that means that you are expecting, even with that higher base of March, the full year growth to be above this number because -- and in the product profile if at all, will be a bit adverse on a full year basis because you -- of course, you're -- the non-par savings will go down. And right now, of course, the protection Y-o-Y increase is much higher than it will be on the full year basis.
So my question here is that, I mean, has product margin profiles change. And on a year-on-year basis, with that reported FY '23 APE, you're expecting APE growth now to be more than the 12%, 13%?
So let's just go through the slide that you're talking about. Basically, the reason why we've given these 2 walks or waterfall is really to explain what has happened on a pre and a post-merger basis. So if you were to look at on a combined basis, 25.1% was a starting point and 26.2% is where we are now. And if you see the bars in terms of the fixed cost absorption, that's largely indicating in terms of what is happening in terms of the synergy realization that was to the earlier question.
And a large part of the expansion is obviously in terms of the growth that has happened and also in terms of from a product mix perspective, things have been in some sense on a balance. Unit Linked has increased. Non-par has come down by maybe 1 percentage point. Term has increased. Annuity hasn't gone up. So they're kind of, in some sense, balanced out each other as far as the absolute VNB is concerned. But in terms of margin profile, that's added to about half of this delta between 25.1% and 26.2%, the change in business profile has added to about 50 basis points, which is very significant to your point.
If you look at the starting point in -- on a stand-alone basis, 26.8% to 26.2% that's largely on account of the gap in growth that we spoke about earlier on the call. Our aspiration is to be 15%, 16% on a normalized basis to that, while we've grown faster than the sector, we're still at 12% in quarter 1. So that's largely the gap, which you will see on the -- again, on the fixed cost absorption side in terms of VNB as well as in terms of new business margin.
So to your second question. Yes, our aspiration is to grow faster than what we have in quarter 1. We do expect to be able to generate that kind of growth progressively as the quarters progress. And that's something that we had mentioned in April as well, and we can hold on to that. Of course, we continue to watch what's happening on the ground, but the signs are encouraging in terms of our ability to broad base the business into Tier 2, Tier 3 markets without getting any meaningful impact on average ticket size. So the 12% APE growth has been delivered largely on account of volume expansion, 9% policy growth and 3% average ticket size expansion. So that's how we are thinking about things as we go forward.
Okay. So I mean -- so sort of with that reported base of March, you are still expecting, I mean, the full year growth to cross this 12% number because March, these are kind of a bump-up of 5%, 6%, 7% on a full year basis. So I mean, if you are expecting, I mean, the cost absorption going to be better. So that means that on a reported basis for the full year, the growth will -- or at least hopeful of crossing the 12%.
No, I mean, as I think that will be not the right way to look at it because if you recollect 9 months as well as 11 months, we were growing at 15%, 16% last year. And because of March, our overall growth was significantly higher. So that is something that once we back that out on that basis, we are talking about 15%, 16% growth. But adjusting for that, it will probably be single digits. I mean, on a reported basis, it will be probably...
Yes, we articulated about INR 1,000 crores to INR 1,100 crores of incremental business is what we had explained on the April call. So what Niraj is saying is that you back that out, then it will be somewhat more muted.
The next question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited.
Thank you. My questions have been answered.
Thank you.
The next question is from the line of Prayesh Jain from Motilal Oswal.
Firstly, on the non-par savings guaranteed system products. What has been the experience while the share has definitely gone down. But do you think that the experience has been better or worse than expected from what you would have thought about it when the tax regulations were impacted. And just to extend that question, so when you say that the margins will improve in the second half, how much of the recovery in margins, would you attribute to improvement in non-par business. And yes, that will be enough.
Yes. So I am a school of thought that this will get digested and I said to a lot of you even after the tax changes and then continue to say that in April. That money relatively will flow to wherever you can best... [Technical Difficulty]
Excuse me, ma'am, we couldn't hear you, ma'am. Your audio -- ladies and gentlemen, the management line has been disconnected. Kindly stay connected while we try to reconnect the management. Thank you.
Ladies and gentlemen, the management line has been connected. Over to you, ma'am.
Yes. So what I was saying is that I did allude even in April that we do believe that once the new tax regulations are socialize or digested, people will come around and see where else can they invest wherein they get long-term guaranteed returns. And there aren't that many -- there's really no other option that gives them a better deal than non-par products, and it's a one-stop shop of guaranteed income, which has caught the imagination of a lot of people and at the same time, also having a life cover. So we've already seen the pickup.
And I think what was expected as the best case scenario was flattish growth. And against that, we have grown 13% on an APE basis and 12% in retail. So that gives us the confidence that what we thought is logically how things should pan out, is how it is panning out. Some of it was upfronting in March. And so if you were to discount the slightly slower start in Q1, I think the numbers are very much on track to getting back to normalized growth numbers of 17% to 18%, which is doubling every 4 years. And that's what we have been demonstrating over the last 8 years.
So that's what gives us the confidence that this above 5 lakh, below 5 lakh will start becoming less relevant. Even now, what we said earlier was 12% is before the tax changes is kind of the percentage. That has gone down to low single digits. It hasn't gone down to 1% or 2%, and that's what gives us a lot of confidence. I think what a lot of people were expecting is that nobody will really -- nobody in their right mind will invest in a product like this that just has not panned out.
And so we believe that this will pick up and we'll continue to be more and more relevant, like I mentioned. While that happens, we are seeing that in the 2 lakh to maybe 4 lakh kind of category, growth has been between 30% to 40% in Q1 for us in this segment, not in non-par segment. So a lot of people are allocating their funds as we reach out to more and more customers focus on more customers rather than higher ticket sizes, which is again something we explained in April. And that is how it is panning out.
Do you want to add anything, Niraj?
Yes. Just to your point in terms of what gives us the confidence of the margins expanding to last year levels by the end of the year. It's basically the intrinsic product margins haven't really changed too much. What is really something that we spoke about is the gap in the aspire -- the growth that we aspire for, which is the 15%, 17% number versus the 12% in quarter 1. That is largely the differential in the margin, which is something that we expect to even out as the year progresses.
Great. And just on the protection profitability when you are getting into the lower tier towns, Tier 2, Tier 3, would you say that, that would be on the much -- relatively much lower side as compared to what you would be doing, say, in the metros and Tier 1s.
No, no. It is priced for all the risks that I mentioned to an earlier question, whether it is for lesser maybe mortality slightly worse mortality levels or persistency level. All of that has been priced.
The next question is from the line of Prithvi Rajsaya, an Individual Investor.
I wanted to ask about the annuity new business. We know that NPS is a significant contributor for this business, at least going forward. Can you give some color and quantify in terms of what is the contribution of NPS? And how do you expect that in terms of long term or medium term?
So it's a fairly meaningful portion now. It used to be in early single digits. Now it is at least about more than 20-odd percent of our business really comes from that source apart from what happens on the individual pension products that wedged, people allocating their discretionary savings as well as people retiring from corporates. So it's become a fairly meaningful segment, as you rightly mentioned.
Okay. And you expect that to grow aggressively going forward? Is that right to assume?
See if you were to triangulate, NPS, our subsidiary, the pension company is the largest in the private space and also growing very fast. So it recently crossed INR 50,000 crores. Now it's about INR 52,000 crores or INR 53,000 crores of AUM. So just that traction will mean more and more people will come up to the stage wherein annuities have to be bought. So it will be a natural culmination of our subsidiary, wholly owned subsidiary being the feeder into annuities.
The next question is from the line of Madhukar Ladha from Nuvama Wealth Management.
So most of my questions have been answered. Just 1 thing on the non-par savings debt. Obviously, the rate curve has flattened right now and other competing products also offer attractive rates compared to the last few years. Do -- are we seeing any constraints in terms of availability of as demand for the product and the rates that we can offer because obviously, these things have to be changed with respect to the environment in which we are operating in. So yes, that's one question from me.
So thanks Madhukar. Demand, like we discussed, nothing much has really changed. Of course, it will get reoriented in terms of how it is positioned or proposition to the customer. That is something that is ongoing. And as far as the underlying is concerned in terms of rates, rates, we will keep ensuring that we can give the best based on what is available in the marketplace. While the yield curve is flat, proposition is at the longer end.
We do not compete with instruments which offer similar rates at the shorter end, as you know. So as such, nothing much really changes there, either on the demand side or in terms of the rates we are able to offer. And as far as the ability to manage risk is concerned, again, on that front, no real issue in terms of FRAs being available as more banks are coming into the fold to be able to offer that instrument apart from our own internal hedging capacity, which we continue to have. Spreads on that can keep changing from time to time depending on the shape of the curve, but that is just something that we would price in depending on the commercials that we get from the counterparties.
So would it be -- would you sort of put a number to -- that you would be able to maintain x percentage of your sales mix in non-par savings irrespective of market conditions? Would you be sort of comfortable in saying something like that?
Actually, if you track what happened since March '20, I think, when we launched the product. In the first quarter, it was about 60% after which we basically said that we will try and get into the 30%, 35% zone, which we did as the rest of the year progressed. Since then, we've had multiple cycles, as you can appreciate in terms of credit growth, being a lot more than deposit growth. We've had situations where the yield curve shape has changed, the slope has changed.
But the product mix that we see over the last 3 years has been in the 30%, 35% range. And closer to the budget, of course, it touched 40% for that period. But again, it's back to the 33%, 34% range. So across these 16, 17 quarters through which we've had this product, we are reasonably comfortable to say that we don't see this dramatically changing.
We have the next question from the line of Dipanjan Ghosh from Citigroup.
Just 2 questions from my side. First, if you can quantify your share of HDFC Bank in overall APE for the quarter? And second, if you can give some color on the annuity business -- on the individual annuity business. Has there been any repricing of products in the particular category or the mix between products you mentioned limited pay has been witnessing traction. But if you can give some broader color on that?
The share is in the 45% to 50% range, and it's broadly in that same zone given what Suresh mentioned earlier on the call, while the bank has gone well. Our other banking partners have also grown well. Proprietary distribution has also grown quite well. So basically, the share is fairly similar to what it was last year in that band of 45% to 50%.
Sure. And on the annuities?
Sorry, what was the question on the annuities?
So the question is, has there been any repricing of any product within the annuity segment and the broad mix of the sub-product classes within that witness traction during the quarter.
Yes. So annuity repricing is a very, very regular BAU affair and it happens every other month depending on which way the interest rates are moving. So that is something that happens from time to time. Within that, the 2 subcategories that we have are remitted annuities deferred annuity on single premium side and then now the limited period annuities, limited pay annuity is a relatively recent launch that has continued to do well and is becoming a very meaningful part of the business.
Deferred annuities and limited annuity on the single fume side are still the bulk of the business. And our average deployment period remains 3 to 4 years zone average age at which the product sold is around 60. So nothing much has dramatically changed there, except that the new product that has got launched is something that is now becoming a fairly meaningful contributor.
Sure. Just a small data queuing question. If you can give the operating guidance breakup for the quarter?
Yes. So basically, again, everything positive. Mortality, small positive. Persistency is fairly, I mean, significantly positive and expense variance is also on the positive side.
Ladies and gentlemen, this would be the last question for today, which is from the line of Ashish Agarwal from BNP Paribas. As the current participant is not answering, this would be the end of the Q&A session.
I would now like to hand the conference over to Ms. Vibha Padalkar, MD and CEO of HDFC Life for closing comments. Over to you, ma'am.
Thank you, everyone, for joining us on the call today. Feel free to reach out to our IR team if you require further information or if you have any follow-on queries. We look forward to speaking with you again. Take care, and have a good weekend.
Thank you, ma'am.
Thank you.
Ladies and gentlemen, on behalf of HDFC Life Insurance Company Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.