Ladies and gentlemen, good day, and welcome to Q4 FY24 Bajaj Finserv Limited earnings conference call hosted by JM Financial. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Bhise from JM Financial. Thank you, and over to you, sir.
Thank you, Muskan. Good afternoon, everyone, and welcome to the Q4 FY24 earnings conference call for Bajaj Finserv Limited. First of all, I would like to thank the management of Bajaj Finserv for giving us this opportunity to host the call. As always, we will have opening comments from the management team, post which we will open the floor for Q&A. From the management side, today, we have Mr. S. Sreenivasan, CFO, Bajaj Finserv; Mr. Tapan Singhel, CEO, Bajaj Allianz General Insurance; Mr. Tarun Chugh, CEO of Bajaj Allianz Life Insurance; Mr. Ramandeep Singh Sahni, CFO of the general insurance business; Mr. Vipin Bansal, CFO of the life insurance business; Mr. Ashish Panchal, CEO of Bajaj Finserv Direct; and Mr. Devang Mody, CEO of Bajaj Finserv Health. With that, I would like to hand over the floor to Mr. Sreenivasan for his opening comments. Over to you, sir. Thank you.
Thank you, Sameer. I hope everyone can hear me well. Good afternoon, everyone. This is the conference call to discuss the results of Bajaj Finserv Limited for Q4 of FY24 and for the financial year ended at 31st March 2024. As usual, we will be concentrating largely on the results of our two insurance companies, Bajaj Allianz General Insurance, BAGIC, and Bajaj Allianz Life Insurance, BALIC, and also the some of the smaller companies of ours, predominantly Bajaj Finserv Direct and Bajaj Finserv Health. Bajaj Finance has already had its call yesterday and but we would be glad to take any high-level questions on BFL. We will not be taking any questions on the status of Allianz's stake in our insurance companies, except to state that it has remained the same, and there is no change.
Any statements that look like forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance research from our side. As you know, while Bajaj Finserv prepares its financials in compliance with Indian accounting standards, the two insurance companies are not yet covered by Ind AS, and their standalone results are on the Indian GAAP, basically based on the IRDAI's regulations governing the preparation of financial statements. However, for the purpose of consolidation, they do provide us with Ind AS compliant financial statements. Now let me start with the key highlights for FY 24. Actually, the FY 24 for us has been a year in which we crossed many milestones.
Bajaj Finserv's consolidated total income for the year crossed INR 100,000 crore, and then we ended at INR 110,383 crore, which is a 34% year-on-year increase. Our consolidated profit after tax for FY24 was INR 8,148 crore, which is 27% higher than the previous year. Even excluding the volatile mark-to-market unrealized gains of BAGIC and BALIC, the consolidated profit after tax was INR 8,180 crore, which is up 21% year-on-year. Both the consolidated revenue and profit after tax were the highest ever for Bajaj Finserv. BFL's consolidated AUM exceeded INR 330,000 crore. BAGIC became the third largest insurer, with premium exceeding INR 20,000 crore, overtaking three public sector companies of long vintage in the process.
BALIC's AUM crossed INR 100,000 crore, and Bajaj Finserv Health entered the hospitalization and insurance claim settlement space with the completion of its acquisition of Vidal Healthcare Services. This acquisition has been approved by the insurance regulator in Q4. Bajaj Finserv AMC ended the year with an AUM of INR 9,552 crore, a tad under INR 10,000 crore, just 9 months after the launch of its first fund. Let me give you a brief update on the Vidal acquisition. In the previous quarter, we said that Bajaj Finserv Health has entered into an agreement to acquire Vidal Healthcare Services, and Vidal Healthcare Services in turn own Vidal Health Insurance TPA, a registered third-party administrator under the insurance regulations. This transaction has been completed, and the payment for the acquisition has been made in April 2024.
Bajaj Finserv Health shall now work from the next quarter over the integration of the business and utilization of the Vidal network and offerings for its customers. The acquisition of VHC significantly augments the capabilities of our healthcare venture in the digital healthcare space, empowering it to provide services to insurance companies, employers, and governments, and will also enable them to cover all customer segments through products, managed care offerings, outpatient services, inpatient hospitalization and claims management, and digital platforms. Between BAGIC and Bajaj Finserv Health, we now have the toolkits needed to become a meaningful player in the healthcare services space. Devang, the CEO of Finserv Health, is with us in this call to take any questions you may have on this acquisition on Finserv Health strategy.
Let me now start with the highlights of our consolidated financial results for Q4, which have been put up in our press release a while ago. Our consolidated total income for Q4, up 36% at INR 32,042 crore, compared with INR 23,625 crore in Q4 of FY23. The consolidated profit after tax, a 20% increase at INR 2,119 crore versus INR 1,769 crore in the same quarter of the previous year. As I mentioned earlier, since the insurance companies account for unrealized gains or mark-to-market gains or losses on the equity account as fair value through profit and loss account, we tend to also, we traditionally also disclose the impact on profit of such volatile gains
If you were to exclude the impact of these MTM losses and gains, the core profit after tax would have increased by 17% in Q4 FY24. During the quarter, BFL recorded a top line growth of 25%, growing from INR 7,781 to INR 9,714, and a consolidated profit after tax higher by 21% at INR 3,825 crore versus INR 3,158 crore. The ROE was 20.5% versus 23.9%, largely because BFL had raised about INR 9,000 crore in Q3 of FY24. BAGIC recorded top line growth in gross written premium of 32%, INR 4,962 crore versus INR 3,766 crore.
Profit after tax increased by 18% to INR 380 crore versus INR 322 crore, and the ROE was 3.6% versus 3.4%. The combined ratio, as measured as per the IRDAI's master circular on financial statements, was 101.6 versus 97.3%, 97.2% in the same quarter of the previous year. BAGIC recorded a top-line growth of 27%, with gross written premium increasing to INR 8,183 crore in the quarter, compared with INR 6,434 crore. A profit after tax higher by 321% from INR 26 crore to INR 106 crore. More importantly, the NBV increased by 16% from INR 415 crore to INR 480 crore.
More about these companies in the rest of my presentation. Going to the business update on the performance for Q4 and FY24, the external environment was generally favorable for the insurance sector. Some of the challenges to growth during the post-pandemic period also receded compared to the previous year. Positive regulatory development in the insurance sector aimed at attaining insurance for all by 2047 continued in FY24. All this created a conducive market for both the life and general insurance sector, and we remain optimistic that the industry will continue to grow given the favorable macros, regulatory changes, low penetration and relatively positive consumer sentiments. Coming to BAGIC. Before I get into performance, I want to mention that our claims reserving triangle and the claims paid triangle has been included in our investor presentation.
You may note that for the last few years, we have been doing that once a year, as is the practice in the market. And of the total reserves we have had, a favorable development of about 8%. Bajaj continues to be well reserved. Bajaj continues to balance growth with profitability and consistently delivers a superior combined ratio versus the industry. It continued its growth momentum, recording above-market growth in Q4, as well as all of FY 2024. Headline gross direct premium income increased 32.3% during the quarter, well above the industry, which includes private and public multi-line players, growth of 10.9%. And in FY 2024, its growth of 33.5% was higher than the private sector's 17.5% and the industry's 14.2%.
The market share increased to 8.3% in FY24 from 7.1% in FY23, which is more than 100 basis points improvement. Even excluding the tender-driven bulky government health and crop line, the growth for BAGIC is 13.34% as compared to the previous quarter, but it's in excess of the industry growth of 11.5%. GDPI grew by 20.4% for FY24, excluding the standard-driven businesses, versus the private sector's 16.4% and the industry's 13.3%. This market-leading growth was contributed mainly by commercial, 14%, group health, 46%, retail health, 11%, and miscellaneous, 95%.
On the bottom line, the industry has been significantly impacted by nat cat events this year, and as you know, larger companies tend to have a greater exposure to nat cat events, especially those which have a higher book of commercial and corporate businesses. We experienced eight events, mainly North Indian flood, Sikkim flash flood, Tamil Nadu flood, cyclone events such as Cyclone Biparjoy and Michaung during the year, as only one flood event in the previous year. The combined ratio for the quarter was higher at 101.6 as against 97.3% in Q5 of-- Q4 of FY 2024. The higher ratio is on account of higher claims during the quarter.
The combined ratio improved to 99.9% in FY 2024 versus 100.5% in all of FY 2023, notwithstanding Nat Cat claims of INR 118 crore, which is net of reinsurance and reinstatement premiums. The profit after tax for the quarter has grown at a healthy level of 18% from INR 322 crore to INR 380 crore, and it was higher by 15% for the full year from INR 1,348 crore to INR 1,550 crore. The higher PAT is attributable to better investment income. Excluding the impact of Nat Cat claims, the growth in profit would have exceeded 20%. Growth in motor insurance during the quarter was muted.
It was 9% for the year, partly because of Bajaj's tight focus on writing only preferred categories of business and in line with new auto sales growth of 10%. Bajaj continues to adopt a conservative stance on commercial vehicles underwriting. While motor still continues to dominate the business mix, other significant movements in FY24 included significant increase in government health mix by 13%, decrease in crop insurance mix by 4% against the previous year, attributable to more prudent selection of the areas where we wanted to participate. In particular, Bajaj continues to be conservative in writing large volumes of commercial vehicle insurance, where the growth is only 3% for the year. The claim ratio was 70.3% in Q4, as against 66.4% in Q4 of FY23.
The claim ratio was higher than previous on account of higher claim ratio in health and motor TP segments, partially offset by lower commercial and crop claims. Claim ratio for the full year, however, at 73.8%, ex-nat cats at 72.5%, was marginally better than last year at 72.9%. As we highlighted earlier, the earned premium takes time to catch up when the growth is strong, like we have seen with Bajaj. The NEP growth this quarter was 18%, as against 13% in the previous quarter and 11% on a yearly basis. Over the next six to nine months, this earned premium that we wrote till now will get earned. However, new premium, based on the growth we will achieve in FY 2025 will also get that point.
Bajaj's AUM, including cash, crossed INR 30,000 crore during the year, growing by 12% to INR 31,196 crore as at March 31 versus INR 27,809 crore as on March 31, 2023. The advanced premium from long-term policies was INR 1,829 crore at March 31, 2024, which is higher by 26% over March 2023. As we mentioned before, many of the new initiatives which Bajaj invested in over the last 18-24 months, including focus on smaller tier towns, distribution expansion, doing more with bank insurance partners, and strong presence in large ticket corporate segment, has resulted in this performance and will continue to contribute in the coming quarters, we hope. Bajaj was further able to capitalize on a small, strong presence in smaller towns and rural areas during FY24.
In a market where auto insurance is intensely price competitive, this operating result, we believe, displays Bajaj's commitment to a balanced and profitable growth on the back of a deep and broad distribution and prudent underwriting, while focusing on best-in-class customer service. In summary, an excellent quarter for Bajaj in terms of top line growth and satisfactory profitability. I must, however, reiterate that insurance is a long-term business, and we remain steadfast in our commitment to drive profitable growth, create sustainable value, and always prioritize the interest of our policyholders. I will move to BALIC next. During the quarter, BALIC continued its strong market-leading growth trajectory and reported an individual rated premium growth of 17% against flat industry growth and private sector industry growth of 2%.
If you recall, the last year, we had the tax change where the high-ticket traditional policies were brought into the tax brackets, and which resulted in a significant amount of sale in the month of March. Therefore, on the back of this high base, the growth achieved by BALIC, we believe, is quite commendable. In FY24, IRNB grew by 21%, which is about 2.5 times the industry growth of the private industry growth, and about 4 times the overall industry growth, including LIC.
Both in FY24 and Q4 of FY24, BALIC was the fastest growing company among the top ten private players on an IRNB basis, and the market share in individual rated new business or IRNB increased by 100 basis points from 7.6% in FY23 to 8.6% in FY24 among private players. In FY24, BALIC ranked sixth among private players on IRNB basis and fourth on new business policies, number of policies under retail regular business. Newly launched participating product, Life Ace, contributed INR 1,357 crore. If you recall, this product was launched in Q2 of FY24, and in a space of nine months, it has contributed INR 1,357 crore. It has been well received across all channels.
The company's growth was secular and driven by all key channels, with agency, institutional business, and BALIC Direct growing at 10%, 14%, and 63% respectively during the quarter. But more importantly, for the year, agency grew 20%, institutional business grew 17%, and BALIC Direct grew 52%. This growth is despite significant one-time benefit in sales due to the impact of the tax change in Q4 of FY 2023. On the back of strong renewal premium growth, BALIC's GWP grew 17% during the quarter and 18% for the year. The consistent growth in renewal premium reflects improvement persistency that BALIC has been driving over the last five years. The total number of new policies, the NP for BALIC, grew 22% in FY 2024 to 77.4 lakhs.
Again, one of the highest growth rates among the top ten companies. During the quarter, BALIC's NBV, new business value, grew by 16% from INR 415 crore to INR 480 crore. Clearly, when they have grown better than market, they will get the benefit of operating leverage in Q4, and that is reflected in the higher growth of NBV. On a yearly basis, NBV growth was 12%, growing from INR 950 crore to INR 1,061 crore. And if you recall, the first quarter was a fairly weak quarter for NBV for BALIC. So the last three quarters were substantially made up....Overall, the business mix for FY24 on individual rated business was PAR 27%, non-PAR 24%, term 4%, annuity 6%, and unit 39%.
This balance, we believe, is very strong benefits that BALIC continues to drive. BALIC has continued to focus scaling up agency and direct channel through investing in people, processes, and also institutionalizing on the variabilization of agency costs through low-cost models. It has led to BALIC building up one of the largest agency channels in the private life insurance space, with more than 150,000 agents. BALIC is also building on the data and analytics for direct sales through upsell and cross-sell initiatives. It has led to BALIC's presence in now in 313 cities, with separate verticals for certain key segments of customers. On the institutional business side, the company continues to expand its network of partners and grow existing partnerships.
BALIC now has a reasonably large number of bank insurance tie-ups, which should help it to reduce concentration risk on Axis Bank. On the persistency front, there has been improvement across most cohorts, with 13-month persistency ending at 84% and the 61st month persistency at 52%. Profit after tax, as I mentioned earlier, grew from INR 26 crore in Q4 to INR 106 crore in Q4 of FY 2024, and BALIC had a growth of 44% on PAT for the year from INR 390 crore to INR 563 crore. This was supported by higher than expected release from the past book and better mortality experience, partly offset by higher new business strain on account of business growth. BALIC ended the year with an AUM of INR 1,09,829 crore. Overall, another good balanced quarter for BALIC.
Finally, as you know, both the insurance companies are among the most solvent, BALIC with 432% and BAGIC with 349%, and hence are well poised to weather any external adversity. Given the excess capital, we have been paying out dividends from BAGIC and BALIC for the last few years, and this year the dividend has been increased from the previous year. BAGIC has declared INR 661 crore of dividend, with a BFS share of INR 489 crore. BALIC has declared a dividend of INR 497 crore, with a BFS's own share of INR 368 crore. BFL has announced a dividend of INR 2,228 crore, of which INR 1,144 crore will be for BFL, subject to approval by shareholders. This...
Over the last seven years, BAGIC has declared a total dividend of INR 1,605 crore, and BALIC has a dividend of INR 1,821 crore, and we have been reinvesting the dividends into our emerging businesses, Bajaj Finserv Direct, Bajaj Finserv Health, and the AMC. Let me move to the lending businesses, BFL and BHFL. I will only briefly touch upon the results, since the results are already available in the public domain. A good quarter for BFL on our growth metrics, AUM, customer acquisition, portfolio metrics, and operating efficiencies. For rural B2C business, growth continued to be rooted at 6%, which was planned due to the elevated risk and which has been called out by, Rajeev Jain in his investor calls over the last two quarters.
Profit after tax grew 21% during the quarter and 26% during the year. Customer acquisition, 32.3 lakh new customers, disbursed 3.6 crore loans and added a record 1.45 crore new customers in FY 2024, the highest ever till date, as against 2.96 crore new loans in FY 2023, which is a growth of 20%. The customer franchise is very strong at 8.36 crore, while cross-sell franchise itself has crossed the milestone of 5 crore. The Bajaj Finserv app now has 5.24 crore net users as against 3.55 crore users on 31st March 2023, and the AUM ended at INR 3,30,615 crore on a consolidated basis.
The risk metrics continue to hold well, gross NPA, net NPA at 0.85% and 0.37% respectively. BFL holds a management macroeconomic overlay of INR 300 crore, and during the quarter, we utilized INR 127 crore towards strengthening its ECL model and INR 163 crore towards loan losses and provisions. BFL ended the quarter with a consolidated PAT of INR 3,825 crore. The capital adequacy ratio remained very strong at 22.52%, with 21.5% being tier one capital. This was held by the capital raise in Q3. Our housing finance company, the 100% mortgage subsidiary of BFL, continues to do extremely well. AUM grew 32% to INR 91,374 crore.
Profit after tax grew 26% to INR 381 crore in Q4, and for the year at INR 1,731 crore; it grew by 38%. Capital adequacy ratios were at 21.28, with 20.67% being tier one. GNPA and NNPA were again very strong, 0.27% and 0.1% respectively, as of March 2024. In summary, another very strong quarter for both BFL and BHFL. Now, let's move on to our platform company, Bajaj Finserv Direct. During the Q4 of FY 2024, Bajaj Markets attracted 72 lakh consumers on its digital platform, of which 1.6 lakh became customers, as against 84 lakh and 1.9 lakh customers in Q3 of FY 2024.
BFSD lending, unsecured, secured, both BFL and partnerships disbursement for the quarter stood at INR 1,636 crore, as against INR 1,664 crore. So the card sourcing was lower at 20,673 versus 36,603. As you are aware, and we had called out earlier, Bajaj Markets have voluntarily decided to stop sourcing EMI cards for the RBI order on BFL. After correction of the deficiencies pointed out, BFL has already applied to RBI for a review, and as soon as RBI allows, Bajaj Markets will also resume sale. During the quarter, Bajaj Finserv AMC launched two new passive equity funds, and one large and mid-cap fund. They attracted good investor interest.
We ended the year at INR 9,552 crore of AUM, of which INR 3,400 crore was on equity-oriented funds. Bajaj Finserv Health carried out 9.3 lakh health transactions, having 2.48 lakh+ monthly active users. For the quarter, EBH had 18.98+ lakhs paying users, which is almost double that of Q4 of FY23, with 7.17 lakh users having renewable products. As Devang mentioned earlier, these are two key metrics, which is the paying users and, the payment, number of payments we make. And the third metric is, of course, how many have renewable products.
Bajaj Finserv Health also expanded its provider network, which now includes 107,000+ doctors, 5,400+ lab touch points and 2,250+ hospitals. With that, I come to the end of my opening remarks. Before we open for questions, considering the paucity of time, I would request the audience to kindly keep their questions brief so that we can cover more queries during this call. With this, I invite questions from the audience, and I hand it to you, okay. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on the touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we'll wait for the moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Hi, sir. Thank you for the opportunity. A couple of questions from my side. First, I wanted to ask on the Bajaj segments. So, I think when we look at how the exit growth rates have been in the different segment, I think retail lines are looking slower. Much of the growth has come on the back of commercial lines and tender-driven businesses. So just wanted to understand, first of all, you know, what kind of challenges or enhanced cost of acquisition, et cetera, you are seeing in the industry in this retail lines, which is preventing you to accelerate the growth. For example, motor OD loss ratio, if I see for the full year, is around 64%.
So, would it be the range, you know, you'd like to operate at, or, can there be further headroom for growth, in this? So if you can give us some sense on how do you—which areas you want to focus on in FY 25 to drive growth, in the GI business. That is the first question. And also wanted to hear your comments on the higher expense ratio that we reported for this quarter in BAGIC. And, on BALIC, I wanted to understand that, for FY 24, the 37th month persistency, seems to have recorded a drop, so, what has happened, because of which, you know, in this cohort, we are seeing a challenge.
Also, if you can give some idea about how we should think about VNB growth and margin for FY25 in BALIC?
Thank you for that. I think, as you know, on the VNB margins or combined ratios, we do not give guidance, particularly in insurance, where, you know, nobody can predict when catastrophes will happen or what kind of yield curve movements will happen. But if I were to summarize your question, the first one was the outlook on retail growth and whether it was a bit slower than what you anticipated in Q4. The expense ratio in BAGIC, why it was higher in Q4. In BALIC, you wanted to know the outlook on VNB growth. Directionally, I think Tarun or Nischint will provide that. And lastly, why there was a drop in the 37-month persistency.
So I now hand it over to Tapan first to take the question on the motor growth, and Ramandeep can support with the expense ratio, and then followed by Tarun and Nischint.
So thank you for the question. See, at Bajaj Allianz, our philosophy has been very clear from day zero. Wherever we see opportunity to grow, we grow that, you know? And if you look at retail lines of business, we're still the one of the large players in the Indian market. If the opportunity does not seem as per our pricing or as per our comfort of combined ratio, then we slow down because it's cyclic in nature. Business, you know, is not something which has always been constant. So if you watch over a long period of time, it's always cyclic. So opportunity again comes in, and then we again grow and take our place. But we would never be aggressive when the market is not conducive for high growth.
Q4, normally, if you look at most of the years, retail gets aggressive in Q4 because the way the motor business is structured, a lot of commercial business happens in April, no? 1st April is the date, and then is September, which will be there. While if you look at towards JFM, it's mostly retail business where the aggression comes in. That is how the GI business gets structured. So typically in Q4, in retail, the aggression of the market increases beyond our comfort level, and that's why you'll always see a bit of a slowdown in Q4 retail. But again, the next quarter, typically as per cycle, as we have seen in the past, the next quarter again gets, you know, much more easier.
So it's a natural cyclical performance. So there's nothing in terms of that we are, our strategy are slowing down or no, or looking at. Wherever opportunity comes, so when we saw opportunity, like you rightly mentioned in commercial, we did that. We saw opportunity in crop. You look at our Q4 growth, it's over 30%. It's much over the market growth of, you know, 12% in Q4. So it's about closer to two to three times. Like, it's actually a much higher growth than the market. So the company, I would say, has done very well in terms of Q4 growth, in terms of the positioning where it is. Retail, obviously, as I mentioned to you, it's overaggressive, then we tend to slow down. That's the answer on how it looked at.
Over to you, Raman, in terms of taking the other questions.
Yeah, I'll take the question on the higher cost ratio. See, normally, if you see, if I compare the cost ratio with the whole year, it looks a little higher. But if you compare it with the same period last year, quarter four and quarter four, there's hardly any delta. It's 31.3% versus 30.9% last year. So structurally, actually, nothing has changed. What is really just moved up, so OpEx, there is actually no change. But a bit of higher commissions in quarter four has actually inflated the overall cost ratios for the company. And that is cyclical. Because if you look at our growth in quarter four, it's largely coming from some profitable lines where the commission rates are higher. So that's the only reason the growth is higher.
The cost ratio is higher, but like I said, if you look at it on a totality basis for the full year, we are actually 1.5% lower compared to last year. I hope that answers that.
One more thing, Raman. In terms of the expense of management, I think the regulators come out, our company is safely within that. The regulator is 30% to the management, and if you see most of the companies, well, more than half of the companies have been reaching that. Our company would be close to 22, 22.5, remember right, in terms of where we stack up. So if you look at the industry, we'll be one of the most efficient companies in expense of management, which has come together, and we compare that, that would be among one of the best in the industry. Raman, if you want to put the answer to that, you can add.
Yeah, you're right. The actual number is 22.7%, which gets reported to IRDAI. So we are well within the regulatory norms.
Tarun?
Just, just a quick follow-up on the first one, sir. We were getting feedback that, you know, the competitive intensity in the motor OD side is possibly seeing some, you know, better than— Do you also see similar trends or, in the micro markets which you are focusing on?
See, if you look at it, the worry for the industry is TP. You know, there has not been a TP price hike for some years. And in TP claims, there are inflations, no? I think, and motor TP constitutes a reasonable sum of business. So if you get into the guarantee of it, you'll actually see where the problem lies. OD is fine. Well, if you have lots of, let's say, flooding, like Bangalore flooding happens or no, Delhi flooding happens or something, no, goes beyond, that is there. But if you look at again, the accidents on highway, there was a dip after COVID, but now if you look at the frequency has, you know, again moved up from it was.
So if you study these three, four parameters, then you can, you know, figure out, the answer that you've been asking for on a regular basis. So, that is what, you know, you should be looking at. But now the frequency actually moved up.
Sure, sir. Understood.
Okay. On the Bajaj Allianz Life side, there were two specific questions, one on the 37th month bucket and the VNB growth. Let me answer the first one first. The 37th month, it's, you, correctly pointed out, has been lower. It's, it's a fact which is visible. This is a continuation of one specific bucket of one specific partner with a significant share yet in the business, where, that bucket has, not really performed as, as the way we would have, rather have it perform. And, this will, of course, not steady itself. The 37th month will steady itself, going forward. But we do expect that maybe a 49th month, see, every year this moves on, from one to the other.
49th month could be impacted slightly, but of course, as a company, we are a lot larger in terms of size. Dependencies on partners is getting small, even better. So this we will be able to rectify as we go. And overall, our persistency, as you know, for all buckets has been up, and directionally, that shall remain. So that means there's 84.3%, 25th, that's 72.7%. 49 is up to 64, and the 61st is first time upwards of 50, 52. And these are all moving up only. In terms of VNB margins, you asked, and Srini correctly answered that we will not ever give a forward-looking statement. But directionally, I can tell you, you know, about the history of the company.
The company has had a turnaround in the last 5-6 years. And we've moved into positive territory on margin about 5-6 years back, and the direction is only up, as we now have a steady scale, a steady product mix. Cost efficiencies are now getting thrown up. And for the last 2-3 years, there was a disproportionate amount of money getting invested in new partnerships that we were investing in. Hence, here on, the story will remain positive. Of course, we have to. As Srini also pointed out, you can't be 100% sure about the way the yield curve is going to be. The non-par funds particularly get impacted by that.
So lastly, these are the reasons where we see a trend going up, but of course, we shall not be able to give any forward-looking statement. Vipin, is there anything you'd like to add?
No, I think just, just on the persistency to reemphasize, if you see the previous year, 25th month was down by about 2%-2% odd, and it's the flow like Tarun mentioned. So last year it was 25th, month, this year it is 37, and next year, probably 49 may have something. So it's a book we acquired about 3 years back, and that's growing too. But, otherwise we don't see any, stress on our persistency. It's been improving.
Understood, sir. Just quick follow-up. Is this on a savings?
[Foreign language], right?
Sorry, sir, your voice was not audible quite well.
Yeah. Can we move on?
Andrea [audio distortion]
Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth. Please go ahead.
Hi, good afternoon, and congratulations on a good set of numbers. So, 2 quick questions from me. On the motor side, you know, I noticed that there have been some good reserve releases for batting in the latter years. So if you look at sort of FY21 onwards, the reserve releases have been quite good. So, you know, can you sort of explain what's happening over there? And second on life insurance, there is some chatter that the regulator is reconsidering you know on the surrender charges regulation. So they had floated a draft and then rolled back a large part of it.
And now, I think there is some talk of again implementing maybe part of it or in whole or I don't know. So, I'd like to get some color from you on that aspect as well. These would be my two questions.
Yes. Tapan, would you like to take a question on motor?
Yeah, I'll take that, Srini.
Yeah.
Yeah, you're absolutely right that the reserve releases are more in the recent years. And that's what naturally happens. If you look at the TP claims, the way it work, most of the claims reporting happens in the four-year period. And that's why if you see that the entire development is almost done in four to five years. So whenever you'll see releases happening, hence tend to happen nearer, which is, you know, less than four-year period. And that's what you are seeing in our trends also. So it all depends on how, you know, the development happens. And our experience has been in four to five years, about 70%-80% of the claims get intimated, and that's why the release is happening more in the recent past.
If I were to add to Raman's statement, if you look at the paid to ultimate, we probably are one of the lowest among the top companies, even after fifth or sixth year on the Motor TP book. So we are fairly comfortable there.
Right.
Thank you.
On the life insurance bit, that question is coming.
As a matter of speculation, we'll wait to see more hard action from the regulator. We do not comment on the...
Is there some conversation?
Because it can change, they'll keep discussing. If it's really out in the public domain in terms of an exposure draft or a regulation, then we will discuss that.
Right. I have one more follow-up. Can you split the loss ratios between retail health, group health, and government, and, and what's been sort of the comment a little bit on, you know, the recent government health performance, because you've written a lot of business over there?
We don't give micro breakups, no, because that's part of our business strategy.
Some direction comments, what are you seeing in the government side and-
No, no comment on that.
Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Supratim Datta from Ambit Capital. Please go ahead.
I'Hi, thanks a lot for the opportunity. So the first question that I had was, you know, on the motor TP front, you know, like you rightly pointed out that, you know, we haven't had a price increase. However, this year we have seen, you know, the loss ratio is improving at an industry level there. So what could be the trigger, you know, to get a price increase here? Or do you see, you know, a scope for price increase in this segment this year, or, you know, that is also looking unlikely? If, you know, if you could throw some color on that, that would be very helpful.
Okay. So for motor TP, the way you have to look at it is, the award, like Raman mentioned, just previously, what it takes 3-4 years to develop, no? So if you look at the current award trend and how it's moving and the frequency which is moving up in terms of number of road accidents on death and the way court judgments are coming, I think when you start putting that together to see that if the same price would sustain in the future or not, no? Because it's a long-tail business. In a short-tail business, it's pretty more comfortable to look at pricing, you know, in a year's time.
But in long-tail business, you have to put in a lot of factors to see, let's say, three years from now or four years from now, will this price be sufficient or not, or how is it moving? That is how this gets done by actuaries, you know, and then it is presented. What you look at is the book as of today. I think that is where this kind of comes from. That's why previously, if I see COVID, the frequency actually dropped during COVID, and we all know what happened that time. The motor were not driving. And then post-COVID started moving up. Now, if there's a drop in the frequency again, the roads had become better.
Now if I look at this year's result in terms of what is declared by national highway, then I see the frequency actually has moved up, no? So those are the parameters in which all this decision gets taken. But this is more complex, as I told you. I just tried to simply tell you how to, how it moves up. So a lot of impact that you see is post-COVID, the drop in frequency, which actually happened there, and that's why you see this impact coming in currently. But more or less, the impact of that is getting over, and in the future there would be no requirement of a price hike, is what the industry feels, and is represented also to the regulator.
Got it. When is this likely to, you know, when will this decision going to come through? Ideally, it comes in June, right? The price hike.
Yeah, actually, now as well, see, the only, if I say the only tariff which remains today is the Motor TP price. And the procedure is the industry, you know, requests the regulator recommends to ministry, and then it comes. I think that is how the procedure is. So difficult for me to say now, with the election year going on, you know, how it looks like.
Yeah. Yeah. Okay, thank you.
Thank you. A reminder to all participants, you may press star and one to ask questions. The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.
Thanks, [Tov]. Thanks for taking my question. You know, on the motor insurance business, you know, just trying to understand your view in terms of sustainability of the improvement in claims ratio on the OD side. Do you think, I mean, obviously, there was a big fall in the fourth quarter, but even if I look at the full year basis, there has been a fair amount of improvement. So do you see this sustaining, you know, especially, you know, given the fact that you mentioned that you're seeing, you know, the transportation activity picking up again?
So the way you have to look at it is first and with, vis-à-vis the market, no, how it moves. And OD is a short-term, tail, no, which means that whatever the result, it's on your face, no? Immediately you see the impact of it. So a fall in OD actually shows that the company has been segmenting the, customers', right, no? It's a, it shows, reflection of good underwriting by the company and been able to segment customers well, and that's why you see a fall, you know, in terms of, the OD ratio. Because as I mentioned to you, the short-term ratios, you'll be immediately able to see the impact, no, in terms of what business you write. And TPA is a long term, so you see the impact a bit later. Now, is it sustainable
Obviously, our ambition has always been to be a good underwriting company, and that has been reflecting our Combined Ratio over years now, I can say. It's not about one or two years. I think if you take it back to 10, 15 years, we have had one of the best Combined Ratios of the industry. That's the philosophy of the company. So we keep on looking and writing very, very minutely to see how we can get better at it. That would be our focus. But how does it play out? I can't give a forward-looking statement, but as a philosophy of the company, we'll continue focusing on that.
It's fair to say that you have seen competitive intensity being lower, because of which I think we are able to achieve this, that's supporting our approach.
Competitive intensity is not lower. I don't agree to that. Because you, if you see, let's say, if I take you back about 6-7 years, or let me just redraft my answer. Whenever a new company comes into the market, what do they do? Which business do they get into? Let's start from here. The first business they get into is motor, you know, any company. So with more addition of companies, motor will always be competitive. So, and let's say if I take you back about 8-10 years, then look at the motor portfolio of different companies. What, what composition of motor the different companies have, you know?
And fast forward today, look at the motor portfolio of each company, and maybe for 2, 3 years, take a trend and see how motor portfolio has moved up, you know, and let's say the top companies and the newer companies joined in. If the motor portfolio is moving up in companies, then the competitive intensity cannot be lower, no? I think it's a simple way, it's all data-based. So, instead of taking into perceptions or feelings, just look at data. You'll actually watch that motor portfolio and companies will start moving up, which means that the companies are targeting motor more, which means that the competitive intensity is much higher.
Sure, sure. Got it. And just on the health side, you know, I probably missed this, but you mentioned that the increase in claims ratio over here is largely a function of change in product mix, and at the product level, you've not really seen any changes. Is that what you mentioned? I probably missed it.
Yeah. Yeah, that is, that is how it is. So let's, let's look at how, how does it operate. If you see retail business, no, retail business has, now, any business in GI business would have three components. One is claim ratio, other would be commission, and third would be expense ratio, right? Now, expense ratio would more or less be the same for both lines of business, but would be more in retail lines of business, lower in, let's say, GMC. Commission ratio, again, would be higher in retail lines of business because it's individual agents' effort to get individual customers. In GMC, the commission ratio is much lower, no?
So GMC would have a much higher claim ratio, but the overall combined ratio at a higher claim ratio may be lower or equivalent to the, let's say, retail with a lower claim ratio because of the way these three things are stacked up, no? So if you have written a good portfolio of GMC, then your claim ratio would move up. Which does not mean that the combined ratio has moved up, no? So typically, the way to look at it is look at the combined ratios. And that's what to answer, no, the previous questions also, just to tell you how to look at ratios, and then you can understand me.
If you, if you try to compare Claim Ratio, Claim Ratio, as in the previous case, I said, I don't want to answer that question on a micro level. Simply because when you are doing that comparison, it does not give you how does it flow. Combined Ratio is a parameter in which you look at balancing how things goes, no? So if you look at overall Combined Ratio, you would find that the company is doing very good on that.
Some of your peers who sort of, you know, have kind of, you know, reported higher claims because of higher infectious diseases or, you know, probably to some extent-
I don't comment on my peers, no?
No, no, fair point. But, but from our point of view, that is, that is not affected at the motor level.
About the business, I can tell you about how it looks like and about our results.
No, no, fair point. So from our results point of view, you know, these kind of factors have probably not affected us. It's what, it's a fair, fair reading to make. That's, that's what I was coming to.
Yeah, I think how do you build a new business? How do you look at it? How do you look at spread? How would you look at distribution? It's, it's, it's more complex than just simple, no? But this is our goal. Let's say, to give you example, let's say flood happens in one part of the country. Let's say Bangalore had a flood, or let's say you had, you know, a Sikkim flood. Now, let's say as a company, you are focused only on Sikkim and you have a major stake there. It will really impact you very bad. Like I said, spread out all across the country, and Sikkim is a, is, is a small part of your portfolio, it do not affect you much, no?
So that's why when you, when you see a statement like this, I don't say my, my competitors or peers have made a mistake in saying what they are saying. They must have got affected on the balance of book that they have. Some companies will be more affected than other companies, but it all depends on how your business gets stacked up and how do you spread the risk and how do you look at it. So that's why making a comment on a statement without knowing the details is not very fair to anybody, and that's why I don't do that.
Sure. Thank you very much.
Sure.
Thank you. The next question is from the line of Sanket Godha from Avendus Spark. Please go ahead.
Yeah, thank you for the opportunity. I on life insurance, I have two simple questions. One is on Axis Bank, how much it contributed in the current quarter and full year, compared to previous year? I believe the channel is becoming more and more open architecture. So to counter that challenge, what we are trying to do? I mean, I see in the fourth quarter, our direct channel has done phenomenally well. So the answer to that could be direct channel or any other channel diversification will play a role. If you can give a better color on it, it would be useful. That's on life. On general insurance, I mean, I have two questions and one data point.
One, one is your crop has been flat year-on-year. So, you know, we all know that every company will change EOM as they're getting closer to FY 2026. So it means it has been flat in the current year, and we have always been a very good underwriter with the crop. So just wanted to understand that, with pricing maybe further deteriorating or your view on that, you see crop to come off compared to what it is today? That's one thing. And then second is on reinsurance market. Last year, we all know that, commercial line saw a reinsurance hardening. How is that trend? How are your April renewals with respect to reinsurance market?
If it is often, what is the likely benefit you will see through it? And lastly, if you can tell me NWP number for the quarter would be useful.
So let me start with the life insurance question first. When you asked about the Axis Bank-
Right.
See, that's it's been our stated policy. You heard me consistently, and we are clear about the way we are going. When we started off, Axis used to be, almost 35%-40% of our business. Steadily, it's been coming down. Last year, FY 2023, it was 25%. This year it is 23%. In Q4, we grew the company at 17%, Axis grew by 14%, so lower than the company. So the intent is, of course, at the same time, let me also just tell you this, that yes, it is going to be getting into multiple architecture, but I do feel that if you look at the customer, acquisition and also the current, space in Axis, there is a lot more yet to be done.
Despite the fact that we still had 28% of Axis share, despite you know the fact that they had their own subsidiary. Axis grew faster than its peer banks, if you look at the numbers in the bank insurance space.
Mm-hmm.
So overall, it's very beneficial to Axis having an open architecture. And I guess that continues.
But our market share in Axis has remained stable compared to last year?
Correct. Yeah, so yeah, it has been stable at the same level as last year.
Okay. Mm-hmm.
Yeah. So but I do not expect that it will. I mean, they, they are adding more players, but I guess that the pie is going to get bigger.
Mm-hmm.
And when we do our bank insurance trials, that's really what we bring to the table. That people, it's not that you do replacement business, but you also do additional business. That's the whole value prop. And I think that's playing out, particularly in Axis Bank's case, and like I said, there is enough there to be done. So Axis will remain a growth space. But having said that, we do not have, want to have dependency, as they don't want to have dependency on less number of insurers. Similarly, we don't want to have our dependency on one distribution business. So the share is, the share of Axis in BALIC and contribution to BALIC will come down, largely because we'll be growing, we are growing, and we will continue to grow our other businesses.
Yes, BALIC Direct from a lower base did very well, our fastest growing business. There were a lot of things that we got right. We got our technology right, we got our data slicing right, we added a Defence channel there. We've been able to look at the portfolio management channel, how we handle wealth customers differently, all that which we'd invested in, and we used to talk about it on our calls. All that has gone well, and directionally shall remain our fastest growing channel. Will it keep growing at the same pace? No. Will the company intend to grow faster than BALIC as a company versus our peers, faster than the others? Absolutely. What numbers are going to be, I can't, of course, state as of now.
What we are additionally doing is that we are adding new business models, and we are adding new branches at Tier Two, Tier Three, and even in Tier One. See, traditionally, while most companies got a significant percentage of their business from the top 10 metros, the top 10 cities, BALIC's share was not so. That is now falling in place, but there is still, even in Tier One, there is a lot of room for upside. And now that we have more and more banks, Tier Two and Three as well will be adding more branches, and that is going to give us a footprint, that is going to give us more agencies, more direct business, more servicing capabilities of branches of our bank partners.
We last year have added quite a few bank partners as well. These are smaller banks, of course, not the size of an Axis or an IDFC, or a Bandhan for that matter, but a lot many. So that is, all that is a steady pace that's been happening. Growth shall remain, consistent and, stronger than the rest of the industry that we care about. And dependency of one, channel shall, be reduced. That's a stated policy of the company.
Perfect. Thank you. And maybe on life in particular, on group protection, and just wanted to understand your view on as we have declined for the full year and it is neutral for the quarter. So what are the course correction has to happen with respect to the product have happened and we expect to see a revival going ahead? Or you see the competitive intensity is still there and pricing is not appropriate, so you will be little cautious in conducting that business?
No, Sanket, so that's a good question. You're right, we did struggle this last year on group. It is more because we had dependency on only two or three partners, really. And there were a disproportionate size, and we're trying to diversify in retail, of course. Group being a relatively smaller business for us, our dependency was very high. And, directionally, though, one or two of our partners haven't really performed well due to various reasons, which I don't need to really get into. And Q2 and Q3, as you know, we did de-grow actually in group. We were back to growth numbers in Q4, and we expect this to go ahead.
In a trajectory which is only positive. And we're doing that by diversifying into more partners, more segments. We are already quite strong in MFI. MBFC is something that we are slowly getting stronger, mortgage, insurance, personal loans, there's a lot more to be done. A lot of these bank partners who are with us, that's a steady place we can anyways, from liabilities also get on the asset side. So that will remain, a growth engine for us. And yes, India is a competitive market, so it shall, always, I believe more business in India is easy to do, so we will keep seeing that, competition growing in this space.
Perfect. Thanks for the answer. On general insurance, if you can give the response.
Yeah. So on crop, if we recollect, I think, when we're doing crop, most questions would come that, you know, a lot of our peers would say that they will not be entering crop business, and, you know, it doesn't make sense. But I think over years, we have proved that crop business makes sense, and we have been able to work hard, deliver on the ground and been able to do the business on a profitable basis and also on scale. And as we mentioned, the philosophy is very clear, we are an underwriting company, and we do business at the price that we are comfortable with. If the price is not to our comfort, we are very happy to let go of business.
So we are never into this, rush of acquiring business just for the sake of acquiring business. It has to be done sensibly, because in generation business, it's a very long-term business. It is not about one or two years. If you, if you run this business, the view you should have is for a hundred years, you know, how does it go? And the stronger your balance sheet becomes, the much better as a company you are able to move forward. Balance sheet, underwriting competence, skill set, and that's how it is. So if you, rise into businesses which doesn't make sense, then you, spoil your balance sheet. So I think that is something which, one has to be very careful about, and as a company, we, see that.
If you look at crop, though you say it's flat, but we are still a very large player in the crop insurance business, you know, which should be there.
Right.
But again, as I said, if, if the business does not make sense, we are very happy to have a smaller share, and when it makes sense, we'll again move up. We, we never have made any statement that we are walking out of any business or getting into business. You, you never hear from that. We are into all lines of businesses, and we do, you know, into all channels of business, and we are across the country into every nook and corner of the country. And as we said, we do business at a price that we just serve our customers well, you know? And if you see the IRDAI figure in terms of grievance ratio, we are one of the lowest in terms of grievance ratio also in the country, in spite of having such a large amount of customer base, which should be there.
On crop, this is our philosophy, and this is how it, you know, it will also continue.
But will you be confident to achieve the similar number? Because I know, as you rightly said, many people will be chasing that business now. So just-
If the price is not right, as I said, I'm very happy to let go of my market share in crop.
If the price is right, I'll gain. So I can only... It's a tender business, no? So the next tender, it depends on how the pricing goes, and that's how it will be, no? So-
Okay.
How can you...? My confidence is only on one thing, that-
Actually.
We decide the business.
Yeah. And if, because of the tender-based business means on government health, I just wanted to understand, you did very well in the current year. Means, given that scale is very big now, you will repeat it, given if you did not disclose the experience there. But looking at your experience, whether you'll repeat that business in the next year or how is your output there?
If you look at it, that's again new to us. That is the point I've been saying. Government health, we have done in the past also. We have done for Jammu and Kashmir. We, in the past, we've done for Gujarat also. We have done for West Bengal also. Now, I think, if I remember right, we did for Chhattisgarh also. It's not that it's new to us. And wherever the pricing is right, that you do. If it's not right, we'll not do. So in the past also, at times, some years we have written good governmental business. Some years we have not written good governmental business. It just depends at what price point do we get it. So on tender business, you know, for me to confidently say that, "Yes, we will write it," would be wrong.
Because as I said, that we will write it at the price that we are comfortable with, and on that price, we, if we get it, we write it. And we are. Will we be doing this business? Yes, we will be doing this business. The years when the business pricing not right, those years you'll not find us. But you look in the past also, you'll find that Bajaj Allianz has been doing government health business. There's nothing new that, you know, that this is the first time we've written the government health business.
Right.
Government health.
Got it. Got it. And on the reinsurance market, if you can comment?
Yeah. On the reinsurance market, if you look at it, our capacity now is the biggest in the, in the Indian market, no? Amongst all companies, be it public sector or private, we have the biggest fire capacity, we have biggest engineering capacity, because we are a serious player in the commercial lines of business. And to the question you asked on April first, it did go pretty decent for us in terms of first April also, because of the capacity that we have. Large risks require a good capacity, and our capacity is built by some of the top reinsurers of the world. It is, and minus the Indian reinsurers, I think, which we have the right and Order of Preference, all our reinsurers are A and above rated, you know?
Typically, that is how we have one of the finest reinsurance capacity in the market, and that will obviously help us write commercial lines of businesses.
Got it. And around, if you can give me that NWP , the NWP number for the quarter, that will be useful.
Yeah.
Sorry.
Some dated, [audio distortion].
[audio Distortion]. Perfect. Thank you. That's it from my si de. Thank you.
Thank you. The next question is from the line of Nidhesh Jain from Investec. Please go ahead.
Thanks for the opportunity. My question is on, life insurance. How are the trends on segmental margins, and how are the trends on the competitive intensity in terms of commission payout or IRR, or pricing on the protection side there that, that we are seeing in the marketplace?
I'll give it to Vipin for margins. On commissions, I'll just broadly take it. I think you'll see that the commission ratios for all players looking higher, but largely it is really trueing up of all the marketing efforts that we were making all reported in the same. As commission now, because we're paying it directly, we're not just doing vendors and all of that. We're directly giving it to the... All the marketing efforts are being done by the banks themselves.
So, largely, while the number will look going up versus last year, the good thing is that the life insurance sector has been steady and we do expect that while there will always remain pressure on commissions and payouts on wholesale distributors, largely as we're getting scale and the brand is getting stronger and stronger, we will be able to keep a steady number there. Let me hand it over to Vipin to ask to the margin question.
So, so on the margin, like we mentioned in the beginning, our NBV has had a healthy growth. We are seeing efficiencies also kicking in. But what we have to understand, and like, I think you are also indicating, it's, it's a competitive space, where interest play a significant role in the way the products are priced and the way customers look at it. So it's a space which is competitive. I think we choose to play to our strength. We don't necessarily compete with all players on the pricing. I think so that's where we are. And in terms of, like I said, margin, you know, while the margin that gets reported has a lot of noise because, the group business, gets reflected there.
But if you look at it in terms of NBV, I think that gives you a better picture that our margins have been getting better, and we are seeing the benefits of scale as we are growing. So I think that's where we are.
But on a segmental basis, are the margins steady or they have reduced, for example, in the non-PAR savings protection?
I think, I would generally say across segments, our margins has been largely getting better. We don't specifically talk about segmental margins, but on an overall basis, I would say across segments, we are seeing stable to improving margins.
Okay. Thank you. That's it from my side.
Thank you. As that was the last question from the participants, I now hand the conference over to Mr. Raghav Garg from JM Financial for closing comments. Over to you, sir.
Thank you to all the participants for joining in the call, and a special thanks to the management of Bajaj Finserv for allowing us to host the call. Thank you.
Thank you.
Thank you.
Thank you.
On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.