Ladies and gentlemen, good day and welcome to the Q4 FY 2022 results conference call of Bajaj Finserv Limited, 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, Rituja. Good morning, everyone, and welcome to the earnings conference call of Bajaj Finserv. First of all, I would like to thank the management team at Bajaj Finserv for giving us this opportunity to host the call. From the management team, we have Mr. Sreenivasan, Chief Financial Officer, Bajaj Finserv; Mr. Tapan Singhel, CEO, Bajaj Allianz General Insurance; Mr. Tarun Chugh CEO, Bajaj Allianz Life Insurance; Mr. Ramandeep Singh Sahni, CFO of Bajaj Allianz General Insurance; and Mr. Bharat Kalsi, CFO of Bajaj Allianz Life . I would like to now transfer the call to Mr. S. Sreenivasan for his opening comments, after which, we will open for Q&A. Thank you, and over to you, sir.
Thank you. Thank you. Good morning, everybody. I would welcome everyone to the conference call to discuss the results of Bajaj Finserv Limited, BFS, for Q4 FY 2022 and the year ended 31st March 2022. As before, in this call, we will largely be concentrating on the consolidated results as well as the results of our insurance operations through Bajaj Allianz General Insurance, BAGIC, and Bajaj Allianz Life Insurance, BALIC, and where material, the standalone results of our company. BFS, Bajaj Finance Limited is another major subsidiary of ours that's already had its conference call. However, if there are any high-level questions on BFL, we would be glad to take that as well.
We will not be taking any questions on the status of Allianz's stake in our insurance company except to state that there is no change, as compared to the end of the previous quarter. Any statements that may look like forward-looking statements are just estimates or qualitative commentaries and do not constitute an assurance or indication of any future performance result. While BFS prepares its financials in compliance with Ind AS, Indian Accounting Standards, the insurance companies are not covered under Ind AS. They have prepared Ind AS financials only for the purpose of consolidation. Accordingly, for BAGIC and BALIC, standalone numbers would be reported below, based on the Indian GAAP applicable to insurance companies. Our results, the press release accompanying the results and our investor deck have been uploaded on our website on 28th of April.
Coming to the performance for Q4, I think business conditions overall improved significantly in Q4, but they were volatile due to the outbreak of war in Ukraine. The lower sales of automobiles due to supply chain problems affected the general insurance business. However, the overall environment was conducive to growth and all our businesses recorded excellent growth. Let me touch upon each of our businesses starting with BAGIC. For the quarter, BAGIC reported a growth of 17.8% in gross domestic premium income, GDPI. GDPI, as compared to GWP, excludes inward, facultative business which many GI companies do, to a small extent. Industry growth was just 7.8%.
If you exclude the tender-driven businesses which are crop and government health scheme, the GDPI growth for the quarter was 6%, and that for the full year is 9.1%. In BAGIC, as we mentioned earlier, we continue our approach to calibrated growth, seeking to grow in preferred segments which are predominantly retail lines, private cars, two-wheelers and retail health and commercial lines, while remaining cautious yet opportunistic on health, particularly group health. To add some more detail, while growth was just 6% excluding crop and government health, BAGIC recorded excellent growth in commercial and corporate lines. Fire 11%, engineering 16%, marine 23% and liability 33%. During the quarter, the sales of new private cars and two-wheelers was, again, we've witnessed a continuation of the slowdown, particularly in motor OD policies.
The commercial vehicle segment was just under strain to grow for much of FY 2021 and the early part of FY 2022 continues to recover, and barring any significant impact from any future wave of COVID, we see it improving towards pre-pandemic levels in the coming financial year. Overall, BAGIC had a moderate growth of 2.5%, which was lower than the industry growth of 4%. Let me touch upon the growth in commercial lines, which is day one of BAGIC's strong points. It was aided by BAGIC's strong bank insurance network and agency channel, supported by its underwriting and reinsurance capacity for covering large risks. BAGIC continued a strong performance across retail, commercial and industrial risk categories. Fire and marine segments continued their growth momentum. Engineering liability lines have also shown strong growth, continuing the momentum of the previous quarter.
Overall, commercial lines continue to do better than the industry with Q4 FY 2022 and FY 2022 growth of 14.4% and 16.5% respectively, as again industry growth of just 9% and 12.6%. On the claims end, the experience in Q4 has further improved over Q3 and is significantly better than the first two quarters of FY 2022, which had been negatively impacted by higher claims for the second wave of COVID and higher claims in the Kharif season of crop.
There was quarter-on-quarter reduction in COVID-19 claims, but severity of non-COVID health claims was still relatively high as compared to pre-COVID levels. All these factors did impact results for the quarter, but notwithstanding these, the combined ratio increased only marginally to 98.3% as against 96.6% in Q4 of FY 2021 on account of lower expenses. In a market which is intensely price competitive, this result we believe is very satisfactory as most companies have combined ratios well in excess of 100%. Let me touch upon the general insurance industry as a whole. The year FY 2022 has been a challenging one, as everybody is aware.
If you were to go by the nine-month FY 2022 results for the industry, the underwriting loss reported by the top five companies was well over INR 3,000 crore, while BAGIC managed to remain marginally profitable. The impact of COVID claims has been severe, not only in terms of losses, but also in challenging the claims settlement capabilities of a large number of insurers. The results of BAGIC and its excellent claims settlement record have to be seen in this light. In the last 21 years after privatization, there have been only about four years or so when the industry's premium growth has been less than 10%. FY 2021 was one such. FY 2022 was one such as well.
As we begin the new year, we see headwinds in terms of inflation and its impact on claims costs, uncertainty over growth in auto sales and slowing capital investment by private sector, while the tailwinds are an economy that is growing, a strong labor market indicating higher disposable incomes, and a government budget focused on CapEx. In these circumstances, BAGIC will continue to focus on profitable growth, but will accelerate expansion while seeking to further improve customer experience. BAGIC did indeed maintain its market position, notwithstanding the fact that there have been a couple of acquisitions in the industry. We will try to improve efficiency and customer experience. Maintaining underwriting discipline in this difficult environment is very critical for GI business, and BAGIC will continue to do so. Therefore, while being optimistic, we will also be somewhat cautious, especially in the first half of the year.
One of the issues with GI business is that as growth returns, initially there could be some strain on reported profits because the earned premiums may lag GWP at least for a couple of quarters. In summary, a tough quarter for the GI industry in which BAGIC has held its own. Let me move to the life insurance business. Overall, the life insurance industry continues to deliver solid growth driven by private players. During the quarter, while few private players have slowed down in their growth as compared to the previous year, BALIC continued its month-on-month growth trajectory and reported an industry-leading individual rated premium growth of 36% as against the industry and private players' growth of 9%. In fact, in Q4 FY 2022, Bajaj was the fastest- growing life insurer among the top 10 private players on the individual rated premium basis.
Similarly, on a full-year basis, among the top 10 private players, BALIC's IRNB growth of 49% was again the fastest against the industry growth of 16%. The private players' growth was 22%. Basically, BALIC has been growing more than twice the rate of the private industry. BALIC h as also registered strong NOP, number of policies growth of 11% in FY 2022, versus the industry and private players' growth of just 3% and 2% respectively. On the product front, the annuity product launched by Bajaj in Q4 of FY 2021 continues to be well received in the market. During FY 2022, 11% of the rated business was from the annuity segment.
In line with the industry, demand for retail protection continues to be sluggish, and BALIC's contribution was just 2% and 3% of the product mix in Q4 FY 2022 and all of FY 2022 respectively. I must hasten to add here that the term insurance business was the one most affected by COVID claims, which of course is not included in the NBV numbers because this is a variance from the previously reported NBVs. BALIC continues to seek a balance in its product mix. BALIC's ULIP contribution to product mix was 36% in the quarter versus 44% in Q4 FY 2021. While the contribution has come down, in absolute terms, the ULIP rated business has grown 10% during the quarter.
Guaranteed non-par savings contribution has increased to 33% from 24% in Q4 FY 2022 as compared to the same quarter of last year. The annuity line of business is part of the non-par savings, and post inclusion of annuity, the non-par savings growth was 42% versus 28% in Q4 FY 2021. This helped in the overall NBV improvement, albeit with higher risk. It can be seen that while most lines except retail term have shown solid growth, the business mix changes will reflect relative differences in growth and hence is not a matter that we are concerned with in the short run. Group protection also saw a revival after a difficult year in FY 2021. QoQ growth of 1% in INR 739 crore.
QoQ growth in the Q4 of FY 2022, but the whole of FY 2022, we have seen a growth of 21%. Group protection, as you know, is largely led by lending of banks and NBFCs, which was at a very low ebb in FY 2021, and that has improved and this reflects that as well. All our channels, agency, institutional business and BALIC Direct grew well. Agency grew at 12%, institutional business at 64%, and BALIC Direct at 13%. For the full year, agency grew at 36%, institutional business 68%, and BALIC Direct 29%. Another point I'd like to highlight is the strong year-on-year increase in persistency across vintages, especially in the later buckets. At a 49th-month persistency increased by 8% to 62% and 61st-month persistency increased by 6% to 48%.
In fact, I would rate persistency increase as a significant win for BALIC in FY 2022. On the claims front, the COVID wave two and three impact is largely settled, and the impact of COVID-19 claims was marginal in Q4 FY 2022. The new business value net of expense overruns the key metric of profitability increased by 40% from in Q4 FY 2022 from INR 219 crore to INR 308 crore. For the twelve months ended 31st March 2022, the NBV was INR 621 crore as against INR 361 crore for the 12 months ended 31st March 2021, which is a growth of 72%. BALIC's profit after tax for Q4 was INR 48 crore against INR 234 crore, impacted mainly due to lower investment income and mostly by higher new business strain arising out of more than expected business growth.
BALIC starts FY 2023 on the back of two years of solid growth. While the higher base and the impact due to higher inflation, which could be a headwind, is not clear yet, other conditions like strong labor market, higher disposable income are tailwinds. The company is optimistic about its prospects for FY 2023. Overall, another very good quarter for BALIC. Finally, both insurance companies continue to be financially strong and among the most solvent, BALIC with 581% solvency and BAGIC with 344% and hence are well poised to weather any external adversity. Both companies have paid an interim dividend, a final dividend and a special dividend to its shareholders given the excess solvency.
All our businesses have further augmented their digital capabilities, which along with greater digital acceptance by customers should, we hope, help create the foundation to deliver a strong performance in FY 2023. Further details regarding BAGIC and BALIC's digital capability are covered in the investor deck uploaded on the website. Finally, a short word about our lending businesses, BFL and BHFL. BFL has already had its concall, and we'll only broadly touch upon BFL results. Both Q4 and the full year of FY 2022 was excellent for BFL as the company delivered on all its long-term financial guidance metrics, AUM, profit growth, return on assets, return on equity, as well as gross and net NPA.
Continuing its growth story, BFL acquired 2.2 million customers in Q4 and 9 million new customers in FY 2022, the highest ever increase in customer franchise in a year for the company. The number of new loan books increased to 6.2 million in Q4 as against 5.47 million in Q4 FY 2021, and this is now back to pre-COVID levels. The company's diversified business model has enabled to record strong AUM growth as seen from the total AUM standing at INR 1,97,452 crore as of March 31st, 2022 versus INR 1,52,900 crore as on March 31st, 2021. We have seen very good improvement in debt management efficiencies, especially collection efficiencies, and is better than pre-COVID levels across most businesses.
BFL has made loan loss provisions on expected credit loss basis, which is required under Ind AS. It continues to carry a management overlay. The management overlay as of March 31st, 2022 is about INR 1,059 crore. Gross and net NPA continue to be under control. Gross NPA of 1.60% and 0.68% respectively. We've ended the year with a PAT of INR 2,420 crore, which was 80% more than the Q4 FY 2021 PAT of INR 1,347 crore. Capital adequacy ratio is strong with 24.75% Tier I capital and 27% Tier II capital. Both are combined capital. BHFL also had the hundred percent mortgage subsidiary of BFL also continues to do well.
AUM grew 37% during the year. Profit after tax grew 11% to INR 198 crore in Q4 and on account of significant investment to pay for the next level of growth. For the full year, PAT grew 57% to INR 710 crore. Capital adequacy stood at 19.7%. Finally, BFL has increased share capital of INR 2,500 crore in the housing finance company just after the end of the year on 5th April, and INR 400 crores in Bajaj Financial Securities Limited to support their capital needs for the next two years. To summarize, our consolidated total income recorded a 23% increase in Q4 from INR 15,387 crore to INR 18,862 crore.
Consolidated profit after tax grew by 37% from INR 979 crore to INR 1,346 crore. The consolidated profit after tax includes an unrealized mark-to-market gains and loss on investments arising out of insurance companies. If we were to exclude the effect of that, the Q4 profit would itself have been higher by 27%-46%. On the ESG front, we have started taking significant steps. We now have a clear three, four, 5-year roadmap on improving our ESG disclosures, and we have taken a lot of steps during the year. The mega vaccination drive, where over 1 million doses of COVID-19 vaccine were distributed across Pune and Aurangabad by Bajaj Group. As committed in FY 2021, BFL opened 50 financial inclusion branches in rural area and backward areas.
BAGIC and BALIC continue to be very strong on the rural and social segments, significantly in excess of the required exposure. We did voluntary third-party assessments for 19 CSR partner organizations and our flagship program, this certificate program in banking, finance and insurance, which is now getting excellent traction, has so far enrolled more than 20,000 students. These are programs for financial skilling of people from rural and poorer financial backgrounds. During the year FY 2022, we added more than 10,000 students to that. People are getting recruited across the financial sector, and we have a high representation of females in this. I think more than 65% are women of the pass out from the CPBFI program.
With this, I conclude my opening remarks, and I would now invite the audience to come out with any questions or clarifications they need. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch- tone telephone. If you wish to remove yourself from the question queue you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead.
Yeah. Hi. Good morning to everyone. One question, which links both BAGIC and BALIC businesses. Fundamentally, our strategy has been very clear and sound that we want to focus on quality business and not all businesses. Growth for the sake of growth can be injurious rather than actually value creating. That is an absolutely sound and very comfort giving focus. BAGIC has always been very strong on that and qualitatively very prudent. BALIC has been materially and rapidly improving in terms of the character and the strength of the life insurance business from where it was a few years back to where it is today, where there is a consistent improvement we've been seeing.
Now, given all of that, absolutely correct trust in a qualitatively sound business, self-chosen restraint to do only the right thing rather than everything. Given that compass and correct compass, what else can be done or what should be done, A, for BAGIC to make it a larger or much larger business than what it is today? And B, while BALIC is being rapidly growing, what are some of the things that we still need to do to become a much more meaningfully larger player than where we are? And what are the steps that we are taking?
Yeah. Thank you, Bharat. I would request Tapan to take this question.
Yeah. Thank you, Sreeni. Thank you, Mr. Bharat. I think when you look at value, Mr. Bharat. If you see, we would be among the largest. This year's results we already ahead of our PSU and very close to one more PSU. Our ranking, you know, keeps on moving up in terms of. Now we are going to be ahead of, you know, at least a couple of PSUs also as we progress further. If you look at our competitors also, I think we have been ahead of them. It's not that we are not a large player today. We are a large player. Our growth, if you look at, is also a bit above the market. We don't lose market share, you know.
While we do focus on underwriting profit, we believe that is required for a very good customer experience, innovation and keep on redefining the industry which we have been doing so. You know, over time you look at our grievance ratio on IRDA website, it's one of the lowest. It's the lowest in fact in the industry. If you look at our claim settlement ratio, it's one of the best in the industry. If you look at our NPS scores, it's one of the best in the industry. So in terms of the obsession that we have for our customers, it's always there. We believe that only a company with strong balance sheet and good underwriting discipline can deliver to the customers beyond the expectation in terms of delivery to the customer. That we have been doing consistently.
In terms of our expansion in business, if you look at like Sreeni mentioned in his opening remark, be it commercial lines of businesses, be it retail, be it any line of business, you'll see us among the top players in every line of business in the country which we be there. The strategy we have is very simple, that we have to keep on expanding our footprints in the country. We have to keep on ensuring every line of business we are able to do well. We have to keep on opening new product lines, like we came out with pet insurance, no. We are the first in the industry to do so. We came out with the cyber insurance, retail cyber insurance, the first in the industry to do so.
We keep on coming up with relevant products for the customers and keep on expanding our distribution network. That is how we'll be able to maintain and keep on increasing our position in the industry in terms of where we are positioned in terms of the top players in the industry. Hope I would answer your question, Mr. Bharat.
Yes. But while we are a meaningfully large player in general insurance and we maintain or say inch upon market share, that was not my comment. I mean the size of the business is not merely related. It is also absolute in the context of the size of opportunity, not merely how others do in the industry or the competitors do in the industry. One comparison benchmark, but compared to what the size of opportunity is, how can we get meaningfully larger? That's one. You know, as a leader, there is a responsibility for us to create industry and to enhance the character and the size of opportunity so that it is in our interest to keep getting bigger. It was more from that context.
Bharat, if I can take before I hand it over to Tapan. See, if you look at the last 20 years of privatization, the penetration of general insurance as a percentage of GDP or even the density has not really taken off. It is still probably, you know, little over 1%, if I'm not mistaken. Obviously with a lot of private companies. There is always, in a market like this, one has to fight for market share because it's an annually renewable product. Every policy comes up for renewal every year, and there is one which is the fight for market share. That means you have a risk-focused company like ours will also weed out some unprofitable accounts, at the same time try to gain market share. Secondly, we have to continuously develop new product markets, new geographies.
Unlike, say, lending business or something where, you know, one may want to be more careful about whom to lend money to. Here one has to create the demand and, it is across all segments. You know, we do mass, we do mass affluent, we do middle class, the entire segment of urbanized. It is not just restricted to the affluent and above. There I think the industry as a whole has some way to go, but there is also an element that, you know, insurance is still an expense and, therefore everybody's fighting for the same wallet. We are fighting with the customers need to go to malls or spend on entertainment or transport or, various other things, you know, clothing or whatever.
It takes time and the per capita income, I mean, there were some studies earlier which says that, you know, in real terms, with some base reference, if the per capita increases to beyond $3,000, then normally general insurance will see an exponential growth. We have not reached that, at least in India, because, you know, it is still concentrated in select segments. That's where we are, and I think BAGIC is trying as well. I think Tapan, can you?
Yeah. Let me answer this. Sreeni, you've really summed it very beautifully. Let me answer Mr. Bharat's question in a different perspective. If you look at general insurance business across the world, Mr. Bharat, you'll find that most of this business, like Sreeni mentioned, it is not the highest priority of any customer to go and buy general insurance business. It's among the least means lowest priority in thinking. If you ask this question to all of us in, you know, in this call, who actually has got up to buy a general insurance product in their entire life, my answer which I get every time is nobody, you know. It's on the least priority in a customer's mind to buy this product.
If you look at what products do get sold in general insurance, most of it is mandated, you know, by the government. Let's say motor insurance in India has high penetration, you know. Private four-wheeler has a penetration of over 80%, you know, in India. Commercial vehicle close to 60%-70%. Now why is it so? Because if you don't have a valid insurance, you can't drive on the road, you know. That is why it's high. In countries where it's not mandated to have motor insurance, there the penetration is 20%-25%, you know. Now, if you look at in countries where it's mandatory to have home insurance, you know, that's like a place like U.S., 95% penetration is there. In India, it's less than 1% penetration of home insurance.
I think most of us in the call also if I ask the question, how many of us actually have a home insurance? The answer will be very, very low. Well, the products are very good. If I would recommend people should buy all insurance because they're actually very, very good. The challenge is how do you get to the next level? As an industry leader, we are working closely in trying to push this concept that government and insurance companies together make a huge impact on society, you know. Let me put a case on the point. Let's say with government health insurance, you know, which has covered like INR 40 crore in insurance. So while if you look at in the statistics perspective that, the penetration of insurance by, you know, density has not moved up, is close to 1%.
If you look at number of lives covered has moved up significantly from what it was compared to what it was. If I look at today, about, if I just add up about 60%-70% crore Indians are covered by general insurance. So it's not a small amount of people which are covered. The ticket size is low, and because of free pricing, the prices fell down and that is why it has reached at 1%, not moved to 2% otherwise if free pricing had not happened in 2007, maybe the numbers statistically would have looked at 2%, but that's a different story altogether. To answer your question, Mr. Bharat, as industry leader, we would be working very closely with the government authorities, with the regulator in seeing how we open up new avenues.
Right now we are working on there has to be a protection against catastrophic losses. You know, if you look at the losses happening because of frequent floods happening across the country and there are solutions which are there and it has to come through in some at least one state government, you know, put forward and went ahead with it. We're trying to see how more state governments come. That will increase the number of lives covered again exponentially in the country from what it was there. So a lot of work we are doing with the government and the regulator to see how do we take it next level. To your point, India has to reach a 2%, you know, penetration level, and that is the ambition which, as an industry we'll be having, Mr. Bharat.
It's a very good question, but it has its own way of moving forward. Government and insurance companies across the world we look at where the penetration is high, you will find that they work together to make the lives better of citizens of the country which is there. That is what our ambition would be as a leader to take it forward to that level.
Sure. No, thank you for that. Any comments on the BALIC part, where of course, qualitatively as well as in terms of the character of the business, diversity and resilience of the portfolio, and the rapid growth. All these have been underpinning BALIC growth in last few years from where it was to where it is today. We still are fairly small player there. Just wanted to understand the ambition for the kind of a meaningful share there. Are there any sectors that we need to enter or are we entering, and what are we doing about it?
Tarun?
Yeah. Yeah, Sreeni. Bharat, you are always the ones that, you know, kind of your questions are always the ones which help us in thinking more and putting things in the right perspective. See, the way I'm looking at it, the industry itself is growing and we've had two years of industry growth which has not been there in most sectors. I think that's been a good facet of life insurance. The needle is moving towards a little bit more desire or want of life insurance as a product category to come in, and we are right up there to take benefit of that. Globally answering that question, we took the stand of being a life goal enabler for the entire sector, and we are engineered like that.
It's like, what should I say? It's like almost plumbing. Our plumbing is around that level, and we will go deeper and deeper in trying to get a life goal enabler image and effort and visibility in front of the customer, and that is the one which is going to work for us as a strategy. I'm very happy to see that a few other players, including some really meaningfully large players, have also started copying this call. In fact, we took this call about five years back. That is on a very global scale. The things that we are otherwise working on is, and there's a lot of potential, and I think you've correctly said we materially moved. Yes. We've the shape of the ball is now getting to be rounded.
It was full of dents earlier, so we do look like a robust business. There is so much still to be done within that. If I was to just quickly rattle out some stuff is, we've now at least got partners in the institutional business side where we have all kinds of banking partners. We earlier had only low middle income customer base partners. That has really moved the needle for us. Of course the move with Axis, IDFC, RBL, KVB, and so on so forth has been quite good. That has helped us. This gives us also a very large palette to dig deeper, get productivities, work with banks, and that will keep unfurling for the next few years.
We don't want to elongate it. We want to prepone it as much as we can so the banks see our impact as well. Broadly in the advisor business, the agency business, there's a huge untapped potential still, and we believe clearly that while this debate of bancassurance and agency, which is going to be the key business by which customers will reach out to life insurance companies, we believe it'll be a clear mix, and it will be a little difficult to suddenly just cut and say metros will be this and smaller towns will be the other because banks are moving into tertiaries and secondary towns and agency is getting stronger and there's a lot more to move into metros.
I actually believe that agency is now going to start seeing the upswing in the retail business and particularly in metros and in the private sector. I think with the listing of LIC that should give more and more fillip to this for the private sector as well, because if LIC benefits, we benefit with this listing. The other piece which is particularly, I'd say not entirely holistically circular yet, in terms of the shape of the company is our presence to an extent Tapan talked about the focus of BAGIC getting larger and larger in various spaces where even we intend to of course go.
We have a clear lot of action and work yet to be done in the south markets and other than Delhi in a lot of the north markets. Even the state capitals and the secondary towns, we aren't as strong. I think very clearly our focus is underway where in the Bangalores, Chennais, Hyderabads, Coimbatores, et cetera, we get bigger and bigger and we're minuscule in these. We are very strong in the West and the East and particularly now in the east with our banking partners as well. There is a lot of work that's needed to be done. We will be working a lot on upselling to our existing customers at the same time using profiling, a lot of data analytics.
Hopefully, the account aggregator should come in, good. At the same time adding more customers because BALIC still, as you said, materially has a lot more to do. This is broadly from a company perspective where we as a sum of parts help the industry. On the other piece on the product side, the risk buckets, particularly on the term side, we had taken a step back last year because of the huge issues around the reinsurance side, which are now seemingly settled. I think they will play out in the next couple of years and they'll kind of be a lot better for us. We intend to ride that.
Even on the annuity side, while we were the innovators and we brought in the regular pay annuity product, deferred annuity product, what we've seen is that lots of other companies have followed us, including the large ones, and they've got similar products. Usually in a situation like this, the first mover does get the advantage and we hope to get more and more of that. Although it's a price sensitive market, but we have to go with the. We've moved on the quality side, and that's exactly where we intend to move there as well. There's more education, more effort required and hence, increasing the size of the pie for the life insurance sector. We are very hopeful with the new Chairman of IRDA.
There's a lot of freshness that is getting to be seen. We shall of course work with IRDAI to expand the opportunity size of the life insurance sector as well.
Sure. No, no, that's very, very helpful, both Tarun and Tapan. Always enjoy getting those responses in very granular and strategic terms. Thank you for that. Just one last question. Brief comments on the health of the investment portfolio, both on BAGIC as well as BALIC side, on the fixed income as well as on the equity side. Just wanted to hear comments on the health of the investment portfolio.
Yeah. Bharat, Raman, you want to take it?
Thank you, Bharat. Bharat this side. See with respect to the overall health of the investment portfolio, there is nothing that significantly changes today in terms of the overall investment portfolio because the debt market, obviously as the market has gone up, there has been a change in the underlying part of it. Anyways, this is mainly the held to maturity portfolio and this is well kind of linked to the respective funds. Whether it is PAR fund where we are trying to manage the PRE or whether it is a guaranteed fund where the yields are locked in and it is meant for a held to maturity portfolio to meet the guarantee. We haven't seen anything significantly.
What is happening overall as we are also looking at actively managing our debt portfolio given there has been a sharp increase in the yield. As part of the active management on the debt side, the usual way of taking calls to keep maybe something on the money market and maybe redeploy that at the higher yields. That active management which the CIO is responsible is being done regularly. Other than that there is nothing significant which has drastically changed on the fund management side.
The quality of the portfolio, I suppose continues to remain at the top-notch.
Yes, yes. What we have done after the events of 2018 when we had a couple of exposures is on the debt side we have now a defined list of credits and that we over every two or three weeks or so across the group we have a stress investment forum where all the credits are aggregated because we need to do that for regulatory purpose as well. From the group risk side, there is a call in which everybody shares their views on new credits coming in the market, how it is changing. Overall the discipline towards credit is significantly better now. We have credit analysts in each of our companies and there is no significant corporate bond credit risk in our portfolio anymore.
Of course, most of them are PSUs and the bond market continues to be shallow in that sense. Overall they are on a good wicket now, both for BAGIC and BALIC.
Thank you. All the best.
Only thing is, when we have whatever equity we have invested in BAGIC and BALIC, the profit can be booked into the P&L only when realized. Therefore, you know, the unrealized gain in our PAR portfolio for example, we have a significant unrealized gain on equities. We have some unrealized gain on the shareholders portfolio in both BAGIC and BALIC. However, given the volatility in the market, we tend to keep that and because, you know, growing the overall size of the pie is more important than realizing the profit, which is more of an accounting exercise.
Sure. Thank you. All the best to the entire Finserv team.
Thank you, Bharat.
Thank you. The next question is from the line of Ashish Sharma from ENAM Asset Management. Please go ahead.
Yeah. Thanks for the opportunity. Two questions, one on BALIC and BAGIC. First on BAGIC, I mean in terms of combined ratio, what's the outlook? And if you can touch upon also the competitive intensity for the industry. I mean, that would be the question on BAGIC. On BALIC, if you can comment that we have done well on the VNB margin. I mean, what's the next leg of journey in terms of VNB margins? I mean, some comment on that would be helpful, sir.
Yeah. Bharat, would you like to start with BALIC?
Yeah, I can start. Thank you.
Yeah. We don't give a forward-looking view on what the NBV or the combined ratio will be like, but you can give a general-
Yeah.
-approach.
Thank you. Thank you, Sreeni. See, as you've seen our number in terms of the overall VNB growth, it has been very strong at 72%. Margins, we are now at around 14% or so.
Yeah.
I think overall year-on-year, you've been seeing that we are improving by, say, 1.5% or 2% kind of a number. Our intent is that we continue to look forward to those efficiencies, better product mix, and expanding the business and even coming up with all those white spaces which were not there in our business. Like recently, we launched our new product called AWG. Last time we launched annuity, this time we launched a non-par savings AWG. The idea is to be efficient, provide more products, customer choices, and drive those business growth. That leads to a directionally positive growth in the VNB is what we are looking at. Having said that, as Sreeni said, we do not provide any forward-looking guidance, but the intent is to move further upward from here.
Okay. Sure.
Raman?
Yeah. On the combined ratio, I think, as we've seen in the past, we've been able to deliver sub 100%, while, you know, we don't make forward-looking statements, but at least our experience and, our, you know, past results, obviously, indicate that this is something which we would want to sustain. Given the competitive environment, you know, like you said, the competition is getting fiercer day by day, especially if you look at, you know, the large segments like motor.
Yeah.
Where we know that the more profitable the new car sales is impacted due to the semiconductor issues. You know, Maruti, for example, has gone to the marketplace. The competition is only getting intense day by day. You know, our endeavor is obviously to identify newer pools of business, newer profit pools, and continue to sustain delivery of sub hundred percent combined ratio. That's where I'll leave it there.
Have we taken any price hikes in the OD business?
In the OD business? No, nothing significant.
See, in the OD business, if I were to add to what Raman said, there is no such thing as a fixed price. It's a market price, and therefore, BAGIC has always followed a segmented pricing, depends on the customer, the channel, the geography. There's so many factors which go into pricing.
Sure.
There is a whole amount of flexibility. For example, customers who are already with us, customers who are new to us, customers who are rolling over from other insurance companies, we have different approaches to each of these. This is one of BAGIC's strengths, actually. In a condition like this, when you know, new addition to assets is low, existing assets are depreciating, and therefore some insurers are falling, I think this is the time when one has to focus on maintaining the strength of the balance sheet, as Tapan said earlier, and that's what we have been doing. As growth comes back, we will obviously change gear. We already changed gear, actually, and we will see. As it comes, we will see how it pans out.
Perfect. That's helpful. Thank you.
Yeah.
Thank you. The next question is from the line of Chirag Kumar Jain from Magma HDI General Insurance. Please go ahead.
Yeah. Hi. Good morning to all. My question is to Mr. Tapan Singhel. Actually, I'm happy that I heard a year back in a forum that you were talking about cyber insurance and now you have launched it. I've also seen in couple of forums that you talk about this flood and catastrophic event, and I'm sure that BAGIC will lead the way. My question is related to health insurance. If I've heard it right, that non-COVID claims have also gone up, like pre-COVID era it was told. I want to understand that why claims have gone up, whether it is a particular geography segment in health insurance, and what is your perspective on health insurance for FY 2023 and going forward, retail health insurance specifically?
Thank you. It's a very good question. See, if you look at health insurance and look at COVID, what actually happened was in COVID time, there was a lot of fear of people going to hospital. That time the non-COVID claims actually dropped. You can't hold for long. If you are ill, you have to go to the hospital. Moment there was some kind of wave coming down, I think people who were holding on started going to hospital, so the hospital cases started moving up. Now, more than that, what happened was now the hospitals have to take a lot of precautions because of COVID. They have to, you know, take all those tests, RT-PCR tests, and the kits and all have to be taken care of. The per patient cost has moved up, you know, because of the precautions.
It doesn't matter whether the patient is a COVID patient or non-COVID patient, but the per patient cost has moved up. Rightly so, because hospitals should take precautions too, that people should not get infected. I think post-COVID, the era for hospital has been very, very different, you know, from that perspective. Also, you have medical inflation which keeps on going. Unfortunately, in the country, we don't have a health regulator. You have a lot of variance in price between different hospitals because no regulation happening. The inflation in hospitals would vary because they would move the price up and down depending on what it is. Not all hospitals, but some hospitals start doing that. That leads to an unreasonable increase of price compared to what it should happen in difficult times like this, which is there.
All that impacts on the claim ratio of insurance companies. Obviously, when the claim ratios of insurance companies goes up, their price hike happens for insurance companies. There the problem is for three years, insurance company can't increase the price hike for retail insurance because that is where the regulations knows to provide. That is why when you see the loss ratios in the industry for health, it's very, very high because this combination is just there. Now let's look at what would actually change in the times to come. From a health inflation perspective, I don't think that will change. The expenses on taking protocols for COVID will remain.
The claim ratio on that is going to be, you know, higher on that side. From insurance companies' perspective, I think, there are two, three which I'm seeing in industry. Some people are getting very strict on claims. Our belief has been that we are in a very customer-centric company. From a claim perspective, we have always been the front even when COVID claims and this cocktail drugs was there. Initially, some companies were refusing. We went in and paid that also. Because customer service and obsession to take care of customers should be the focal point of any company's core belief, and we actually do that. Health, to your point, I think it will be in doldrums in terms of the profitability for another one or two years.
The regulator also is aware of these things, and they are looking at, you know, how do we correct this scenario. I think demand for hospital regulation has been very intense on industry. I think that should actually bring in some semblance. It will take a couple of years to settle down, you know, if that was your question.
Yeah. Thank you, Tapan. Another thing you had told in couple of forums also, like now also you have mentioned about health inflation, health regulator you wanted. So any work BAGIC has done with regulator on this? Any start of the work on this to pressurize regulator? Yeah.
Nobody can pressurize regulator. Regulators are the ones who control everything. The only point here is that as an industry leader, I think we have been, and you have seen us, we have been very vocal about our views, at all places, along with the regulator. We have, you know, ensure that we had a talk with them and put our points, forward, you know. I'm sure the regulator will look at the industry and the customer, and they are the custodian of the policyholders in terms of the protection that they have to provide and try and come out with solutions for this. I think we have been very clear about it. We also represent the ministry in terms of a regulator for the hospital fee there. That we do as industry leader along with industry bodies that we have, we do represent, you know.
Yeah.
We're very clear and vocal about our views. I don't think that we change our stance or views. What is relevant for industry, we actually try and put it up at all points.
Yeah. Thank you. Thank you so much.
Thank you.
Thank you. The next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.
Thank you. Thank you for the opportunity. A couple of questions on BAGIC and BALIC. On BAGIC, just wanted to understand what exactly we will be looking at the government health business. The business has grown almost 5x in the current year compared to last year. Just wanted to understand the broader strategy, how you will approach this business. It could be more tactical and how do you see this business happening? Second on group health, I just wanted to understand that we might have slowed down that business in the current year, but we believe we understand that the pricing has substantially improved in the current fiscal year.
How you are going to approach that particular business in the current year. That's the question on BAGIC. On BALIC, the larger question is on the bank insurance premium. I just wanted to understand how much is Axis and non-Axis. To understand which channel almost contributed to the growth. The second point is that within credit life, we see a bit of moderation in the fourth quarter. Any specific reason on quarter-over-quarter moderation in the credit life business and how it will play out going ahead? These are the two questions. Finally, if sir can give some update on Bajaj Finserv Marketplace, Bajaj Finserv Health and AMC business, that will be useful.
I'll take the last question first because that is directly related to BFS. In terms of Bajaj Finserv Markets, I think we are having good traction between us and BFL. We have now capitalized that company well for going forward for the next two years. We have now multiple partners for lending. It is an open architecture platform, as you know. We have more than 100 financial products available on the app. If anybody has used the app can see we have had now multiple versions of the upgrades on the app already launched. So, on the insurance side, we have now 8 partners. That is, actually, our primary focus was to establish the lending platform and the credit card platform. They are now getting good traction actually.
We are now the cards platform now, for example, is live with five card insurers if you have seen the app, RBL, SBI, Axis, ICICI and Citi. We will continue to keep looking for people who are aligned with us. Only thing is they need to have the straight-through apps and be clear, you know, customer-focused, quick, decision-making and underwriting. I think it is still early days for that business. It will take another couple of years at most for it to reach a real traction. The way it has been growing in terms of traction on number of users, the number of conversions, the rating on the Google Play Store, on the App Store, I think, it is here to stay and is doing quite well.
Coming to the Bajaj Finserv Health business, that again is gaining good traction. I think we have, as you know, multiple, it's one of its kind in a way because we have the one is the B2C business, where we offer a complete suite of healthcare solutions, backed where required by an insurance product from Bajaj and/or financing from BFL. Predominantly it covers OPD, it covers telemedicine, it covers a whole lot of lab tests at home and a whole lot of services all on a single app. The app has got a good rating. We have got a good traction on hiring of doctors.
We have apps for doctors where we stimulate, I mean, we encourage them to use the app more and more, and we are seeing good traction on the utilization of the doctor app for servicing appointments. Overall, we are now a wave one partner for the national Unified Health Interface of the Ayushman Bharat Digital Mission. So that again, still more work to do. I think next year and the following year are very critical in terms of getting more services onto our app. Today, we don't, for example, do drugs or pharmacies. We need more hospital tie-ups. We need to hire more doctors, and through them, we need to get traction. So far, we are quite satisfied, and we will be continuing to support that from BFS.
In terms of the mutual fund, it's early days yet. We have finished preparing. We have got our CIO in place. We have got our initial team in place. Mr. Ganesh Mohan, who was Head of Strategy in BFS, is taking over as the CEO of that, has already taken over. There is a process from SEBI. They have to come and inspect, see that we have all the requirements in place to launch the funds. We think by second half of this year, we would have launched our first set of funds. Broadly, we are still working on our strategy as to how we will differentiate in the market, which is already well penetrated and where the top players are continuing significant market share. I think we will come out with a reasonably strong offering there.
I'll pass it on to Tapan to handle the question on government health and group health.
Thank you, Sreeni. I think it's a very interesting question. To understand the government health business, let's understand that as a group, we are not only focused on, you know, just doing business in big cities, but we on a social responsibility work very closely, how do we expand our presence all across. On government health business, we have been a strong supporter because we strongly feel that this helps, you know, increase the longevity of Indians in terms of the average lifespan is moving up, you know, because when it's catering at the lowest rung and doing it well there. From very early on, if you see, we did Jammu and Kashmir also. We have been investing in terms of looking at this business and doing it well.
I'm happy to say that I think in states where we have done this business, we have been able to deliver pretty well on the ground in terms of the customer, which is there, and build a network there. Because it's highly intense and hard work, like you have to be there on the ground and building up together. But if you are a country like India, if you're not able to handle government health business, you're not able to handle crop insurance business, you're not able to handle the hinterlands, then you would remain a very, very niche player in the top cities only.
Mm.
To be a large player, you have to be into all markets, into all lines of business, and you should be able to do it well, and you should be able to service the customers well. I think that's been a philosophy, and that's why in that philosophy, government health business, crop, all this business comes into perspective and we have been doing it pretty sincerely on that basis. On a group health basis, if you look at for us at the price that we serve the customers well, we're very happy to pick up business. We don't slow down or go aggressive in terms of business, no, we should be there. We do business at our price that we feel we service the customer very well.
As you mentioned, if it's hardening and the price is at a comfort level in which we can give extraordinary service to our customer, we'll be very happy to keep on expanding it. We don't try to limit our business in any kind of business or, you know, go overboard any business. We just look at the right price at which we serve the customer well, and at that price we're able to do any kind of business and we do it well. That's our philosophy. Thanks for asking, sir.
Got it. Sir, just on the government health, just wanted to understand in the current year whether it is combined ratio positive and other than Gujarat, which was the other state we have done that business in?
We did Jammu and Kashmir. Before that we've done West Bengal, then Mizoram. We have done quite a few states over time.
Okay. Whether it is combined ratio positive, sir?
Yeah, if you look at the, it is.
Okay. Got it. Yeah, on BALIC, please.
Your question on BALIC was on the group credit protection, why there was a slowdown in Q4.
There were two questions. One was a channel-wise and one was a group.
Yeah.
I'll answer the channel-wise first. Yeah. See the Axis has grown, of course, fastest among all businesses. It now contributes to about a quarter of the company's business. At the same time, I must say everything that we have been doing in various channels has actually worked quite well. Our agency has grown almost by 36%. BALIC Direct has grown by almost 30%. The effort is to ensure that while Axis, of course, the base effect of a low base last year is kicking in, that all businesses really grow with the right quality focus and that that's the imperative in front of us.
We would not want to land up like the other large companies to have a dependency on one large bank only, and I'm sure the bank also would not want it that way. That is a mutual interest, and we will be ensuring that other businesses do keep growing and that effort is on. On the credit line business, very interesting that you noticed this. See the last year Q4 growth was. Q4 this year versus Q4 last year.
Yeah.
There is a base effect that has kicked in because last year Q4 as the market had opened up, a lot of lending did happen and that is what is kicked in. If I look at the pre-COVID levels, we've had a 9% CAGR in our credit life portfolio over a two-year period. I think that's a better math to use because this was volatile last year particularly. It pretty much is in keeping with the credit growth in the market. What we do keep on ensuring is that till BALIC about 5 years back was very skewed towards the MFI business. Now that's not the case going forward, and we have been able to use COVID well and rebalance this to consumer durables, mortgage and MFI as well.
That will remain as a strategy to derisk us and not have any dependencies on either a geography or a product mix. Does that answer your question?
Yes, sir. It will be great if you are comfortable to share what is the mix of credit life currently in terms of mortgages and consumer durables and MFIs. That one thing and just on this Axis Bank, is it safe to assume that we are closer to 25%-30% market share of what we are of Axis as a whole? As a channel?
Yeah. See, the first, the credit portfolio, we don't really disclose. It's-
Okay.
,,,, Something that we want, it's a competitive advantage we want to keep to ourselves.
Mm-hmm.
I will not be able to disclose that. It does impede me in the market if I was to share that data, so I would not be able to do that. In Axis, no, we are nowhere near the 25 yet. I think we're comfortably still with enough headroom available. It is not too far off as well. You should expect that Axis will grow next year by our business itself.
Got it.
Just to add to what Tarun said, if your question was, is the institutional business driven only by growth in Axis Bank? I think almost all our segments of institutional business have shown very strong growth. Be it Bandhan Bank, then we have a whole lot of emerging banks like Dhanlaxmi Bank or some of the newer relationships like IDFC First Bank, RBL Bank, KVB. Most of them have shown significant growth in FY 2022 and in Q4. However, the base for many of them are small, so we don't want to talk much about the growth in those segments. There were some segments like SFBs and all, where growth has been affected post-COVID, but they are also starting to pick up now. Overall, it is not. I mean, growth has been fairly across the board, you know. Both on BALIC Direct, agency and IB.
In IB, the growth has been higher. Axis has been high, but many of our emerging bancassurance have also done excellent growth.
Got it, sir. Thanks. Thanks for that.
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Sameer Bhise for closing comments.
Thank you. Thank you, everyone, today for joining us on this call. Thank you to the team of Bajaj Finserv for giving us the opportunity to host it. Thank you, everyone.
Thank you, everyone.
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.