Ladies and gentlemen, good day and welcome to the Bajaj Finser Q1 FY 2026, 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 a dash and phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Kumar from JM Financial. Thank you, and over to you, sir.
Thank you, Muskan. Good evening, everyone, and welcome to Q1 FY 2026 earnings conference call of Bajaj Finserv Limited. First of all, I would like to thank the management of Bajaj Finserv Limited for giving us the opportunity to host this call. As always, we will have the 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, President of Insurance and Special Projects, Bajaj Finserv Limited; Mr. Ramandeep Singh Sahni, CFO of Bajaj Finserv Limited; Mr. Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance Company Limited; Mr. Tarun Chugh, MD and CEO of Bajaj Allianz Life Insurance Company Limited; Mr. Anckur Anil Kanwar, CFO of Bajaj Allianz General Insurance Company Limited; Mr. Vipin Bansal, CFO of Bajaj Allianz Life Insurance Company Limited; Mr. Ashish Panchal, MD and CEO of Bajaj Finserv Direct Limited; Mr. Devang Mody, MD and CEO of Bajaj Finserv Health Limited; and Mr. Ganesh Mohan, MD of Bajaj Finserv Asset Management Limited. With that, I would like to hand over the floor to Mr. Ramandeep, sir. Please take the comments. Thank you, and over to you, sir.
Thank you. Good evening, everybody. We welcome everyone to the conference call to discuss the results of Bajaj Finserv Limited, BFS, for Quarter 1 FY 2026. 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), Bajaj Allianz Life Insurance (BALIC), and their material standalone results of Bajaj Finserv. Bajaj Finance ( BFL), and Bajaj Housing Finance ( BHFL), other major subsidiaries of ours have already had their conference calls, and hence we would pursue only very high-level questions on both BFL and BHFL. To start with a few hygiene points, as a word of caution, we affirm that any statements that may look like forward-looking statements are just estimates and do not constitute any assurance or indication of any future performance results. Let me also give an update on the basis of accounting.
As required by the regulations, BFS prepares its financials in compliance with Indian accounting standard referred as Ind AS. The insurance companies are, however, not covered under Ind AS. They have prepared Ind AS financials only for the purpose of consolidation with BFS. Accordingly, for BAGIC and BALIC , the standalone numbers reported are based on the non-Ind AS accounting standards referred as Indian GAAP as applicable to the insurance companies. I also confirm that the press release accompanying the results and our investor deck have been uploaded on our website within half an hour of our results. I would like to draw your attention to our enhanced investor deck where additional insights have been added based on feedback from a few investors. We do hope you appreciate this and look forward to your feedback if any.
Now, let me give a brief update on the status of Allianz's exit from the joint venture agreements with BAGIC and BALIC . Approvals for the acquisition of 26% stake in each of BAGIC and BALIC by BFS and the promoter group companies have been received from both the Competition Commission of India and the Insurance Regulatory and Development Authority of India ( IRDAI). Approval for name change, however, is in process. As indicated earlier, the acquisition may be in one or more tranches, of which the initial first tranche shall be for a minimum of 6.1% stake, which needs to be paid within six months of IRDAI approval. The outside timelines for the acquisition of the entire 26% stake stands at 16th October 2026, as per the SPA.
Upon completion of the initial first tranche, the existing joint venture agreements between the company and Allianz SE in respect of both BAGIC and BALIC shall stand terminated, with Allianz having reduced rights until they hold 5% stake, below which their rights will fall away. Let me now give you a high-level update on the consolidated financial results for Quarter 1, which have been published in a press release on 25th July 2025. The consolidated total income for the group grew 13% to INR 35,451 crore, as against INR 31,480 crore for the same period last year. Consolidated profit after tax grew at a good 30% to INR 2,789 crore vs. INR 2,138 crore for the same period last year. This number seems to be an all-time high quarterly PAT for Bajaj Finserv.
It's important to note, however, the PBT growth for Bajaj Finserv on a consolidated basis was at 21%. The delta between 30% PAT growth and PBT growth of 21% is attributable to higher tax on dividends in Quarter 1 of last year, attributable to higher dividends largely received from BAGIC and BALIC . In respect of BAGIC , the GWP grew 9% to INR 5,202 crore vs. INR 4,761 crore for Quarter 1 of last year. Ex-crop and government health business, the GWP grew at 10% to INR 5,107 crore vs. INR 4,664 crore for the same period last year. Tax grew at 15% to INR 660 crore vs. INR 576 crore in the same period last year. ROE was up at a healthy 21.4%, compared to 21.3% for the same period last year.
The combined ratio was down to 103.6% vs. 103.7% last year. In respect of Bajaj Allianz Life Insurance Company Limited, the GWP grew 9% to INR 5,479 crore vs. INR 5,018 crore for the same period last year. The PAT grew at a very healthy 76% to INR 171 crore vs. INR 97 crore for the same period last year. Value of new business registered a 39% increase, moving up to INR 145 crore, up from INR 104 crore for the same period last year. In respect of Bajaj Finance Limited, for consolidated net total income, it grew at 21% to INR 12,610 crore vs. INR 10,418 crore for the same period last year. Consolidated PAT for Bajaj Finance Limited grew at 22% at INR 4,765 crore vs. INR 3,912 crore. The ROE stood at a healthy 19% vs. 19.86% for the same period last year.
Let me now deep dive into each of the further companies to give you a texture on their performance on a standalone basis. With respect to BAGIC , as we have discussed earlier, effective 1st October 2024, as was mandated by IRDAI , the premium on long-term products was to be accounted on one-by-N basis, where N is the contract duration. Hence, the Q1 numbers for the current year are not comparable with the prior year. The change in the accounting, as we know, however, has no bearing on the underwriting profits and PAT for the company, but impacts the reported GWP and combined ratio for the period. As highlighted earlier, the GWP for Quarter 1 for BAGIC increased by 9% on an overall basis to INR 5,202 crore.
However, if we exclude the bulky tender-driven crop and government health business and we eliminate the impact of the one-by-N regulations, the growth for BAGIC has been very healthy, 15% for the quarter, as against the industry growth of 14%. The growth was largely attributable to all the core business lines, such as commercial lines, which include Fire and marine engineering and liability, motor line of business, and retail health. In all these lines, the growth was higher than the industry. The underwriting loss for the period stood at INR 116 crore vs. the underwriting profit of INR 16 crore for the same period last year. The combined ratio stood at 103.6% vs. 103.7% for the same period last year. Excluding the impact of one-by-N regulations, the combined ratio is lower at about 102.5%.
As compared to last year, on a comparable basis, down by a good 1.2% for the same period. Underwriting losses and combined ratio have been impacted by higher acquisition costs, with focus on preferred business segments, where the commissions are expected to be on the higher side. While higher than 100%, we believe that the combined ratio for BAGIC will still be amongst the lowest in the multi-line market, with the ROE reasonably above 20%. Profit after tax for Quarter 1 for BAGIC stood at INR 660 crore vs. INR 576 crore, an increase of 15% attributable to better investment performance.
AUM, represented by cash and investments, as of 30th of June 2025, stood at a healthy INR 35,199 crore vs. INR 31,651 crore for the same period last year, a healthy increase of 11%. BAGIC continues to deliver a superior ROE consistently. The annualized ROE for FY 2026, as mentioned earlier, is about 21.4%. However, if we exclude the impact of surplus capital, which is assuming solvency at 200%, the ROE is expected to be upwards of 25%. On the customer front, BAGIC relentlessly drives the theme of caringly yours on the foundation of customer obsession through innovation in customer experience. Accordingly, BAGIC continues to have the lowest grievance ratios in the industry and the highest net promoter score consistently year- on- year.
In a market which is intensely price competitive, this operating result, we believe, displays BAGIC '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, despite market constraints, a decent result from BAGIC in terms of growing higher than the industry on core business lines and maintaining strong profitability metrics. I will now move to BALIC . BALIC 2.0 was initiated in the second half of last year with focus on sustainable and profitable growth. This was backed by changes in product structures and cost rationalization. Happy to state that the outcomes in Q1 are as expected, while top-line growth was muted in line with our expectations given the change in strategy.
The VNB and NBM growth is on a trend trajectory. The results of BALIC 2.0 are visible through three outcomes. Number one, VNB growth of 39% despite a flattish growth on retail weighted received premium for Quarter 1 and group protection degrowth of 7%, which is largely attributable to slowdown in lending growth, especially in the MFI space. The second one being NBM from new business margin expansion by about 4.2 % at strong 11.1% for the quarter as compared to 6.9% for the same period last year. The third one being retail protection growth of 53% with a 9% contribution to the overall retail weighted received premium. On the back of continued strong renewal premium growth of 28%, Bajaj's GWP grew 9% during the quarter.
Persistency dips were, however, observed in the 13-month bucket in line with the industry because of the base effect of higher ticket size. In Q1 FY 2025, largely because of the business written in Q4 FY 2024 due to the income tax changes, which had significantly higher persistency. Overall, the individual rated new business mix for Quarter 1 was balanced and stood as follows. Participating business at 22%, non-par savings at a healthy 19%. Term as a very healthy 9%, annuity at 5%, and ULIPs at 45%. BALIC has been increasing its focus on retail protection business, which grew by 53% to INR 110 crore in Quarter 1 current year vs. INR 72 crore in the Quarter 1 for the same period last year. BALIC continues to focus on use of data and analytics for direct sales through upsell and cross-sell initiatives.
It has led to BALIC's presence in 520 cities with dedicated verticals for various customer segments, with an aim to be amongst the largest direct channel in the industry. On the institutional business side, the company continues to expand its network of partners and grow existing partnerships. BALIC now has a reasonably high number of bancassurance tie-ups, which should help it reduce its concentration risk. Profit after tax for Quarter 1 for BALIC stood at INR 171 crore as against INR 97 crore for the same period last year, a growth of 76%, largely attributable to higher investment income, largely supported by gains in equity investments. BALIC's AUM for the quarter ended at INR 131,052 crore. Overall, the quarter for BALIC is in line with expectations and on the right trajectory of sustainable and profitable growth, a journey which we embarked upon in H2 of last year.
Finally, both the insurance companies are financially among the most solvent in the industry, BAGIC with a solvency of 343% and BALIC at 334%. We are well poised to weather any external adversity. 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 interests of our policyholders. Let me now move to our lending businesses, Bajaj Finance and Bajaj Housing Finance Limited. For Bajaj Finance, a good quarter on business volumes, AUM, OpEx, and profitability. The new loans booked were at 13.49 million in Quarter 1 as against 10.97 million in Quarter 1 last year, recording a growth of 23%. The company expects to disburse over 50 million new loans in the full financial year FY 2026. BFL added about 4.69 million customers to its franchise during the quarter.
The company expects to add about 14-16 million new customers to this franchise in the full year FY 2026. The company's diversified business model has enabled it to record a strong AUM growth of 25% at INR 441,450 crore as on 30th June 2025, as compared to INR 354,192 crore for the same period last year. Net interest income grew by 22% to INR 10,227 crore as against INR 8,365 crore for the same period last year. OPEX to net total income improved to 32.7% as against 33.3% for the same period last year. Net loan losses and provisions for Quarter 1 were at INR 2,120 crore, up by 26% from the same period last year. GNPA and NNPA stood at 1.03% and 0.86% respectively as of 30th June, as against 0.86% and 0.38% for the same period last year, which continued to be amongst the lowest in the industry.
Profit after tax grew 22% during the quarter, up from INR 3,912 crore to INR 4,765 crore. ROA and ROE remained steady. The capital adequacy ratio remained strong at 21.96% as of 30th June. Tier 1 capital was 21.19%. Bajaj Finserv App now has 7 crore net users, and the Finserv transformation is progressing well. Moving now to Bajaj Housing Finance, a balanced quarter with AUM growth of 24% driven by moderation in the real estate market and intense competition, resulting in higher attrition. Growth was very well distributed across business segments, however. Home loans AUM grew by 21%. Loan against property grew 30%. Lease rental discounting grew a healthy 29%. Developer finance at a healthy 32%. Net interest income grew by 33% at INR 887 crore as against INR 665 crore for the same period last year.
Operating efficiencies continued with OPEX- to- NII flat, but at a healthy 21.2% as against 21% for the same period last year. Loan losses and provisions were at INR 41 crore. Again, we believe the lowest amongst peers. Healthy asset quality was maintained with GNPA and NNPA, which stood at 0.3% and 0.13% respectively as of 30th June, as against 0.28% and 0.11% as of 30th June last year. Profit after tax grew by 21% to INR 583 crore for the quarter. ROA and ROE were again steady. Capital adequacy ratios stood at 26.94% as of 30th June, and the Tier 1 capital was 26.43%. In summary, another very strong quarter for both our lending companies, Bajaj Finance Limited and Bajaj Housing Finance Limited.
Now, to give an update on our platform companies, Bajaj Finserv Health Limited, also referred as BFH, and Bajaj Finserv Direct, referred as Bajaj Markets and Bajaj Finserv AMC. In Quarter 1, Bajaj Finserv Health Limited carried out 5.8 million health transactions, up from 2.05 million in the same period last year, accelerated significantly through a few large government contracts and the commencement of OPD business with several insurers in Quarter 1. Bajaj Finserv Health continued expansion of the provider network, which includes 130,000+ doctors, about 15,500 + hospitals, and about 4,000 lab touchpoints. Utilizing this network strength and its tech platform, EBH is able to offer integrated OPD, IPD, and wellness experience to both retail as well as to corporate customers. Moving to Bajaj Markets, during the quarter, four new partners were added, leading to a total unique partner count moving up to 100 in all.
Bajaj Markets lending, which includes secured, unsecured, both from Bajaj Finance and other partnerships, disbursements went up from, sorry, stood at about INR 1,210 crore as against INR 1,800 crore last year. Loan organic visits have increased by 61% during the quarter from the same period last year. Top line for the company has, however, fallen to INR 92 crore from INR 135 crore for the same period last year, which is attributable to decrease in loans, as I mentioned earlier, and transaction customers during the quarter on account of a scheduled change in Bajaj Markets digital journey for the benefit of the customers. They believe that the growth will get reinstated in Quarter 2 onwards. There has been no capital infusion in the company since March 2022, showing capital efficiency of the company. An update now on Bajaj Technology.
Seven new logos were won across various markets, and the company achieved AWS Advanced Tier Partnerships during the quarter. Now, moving to the asset management business. The AMC ended with an AUM of a very healthy INR 25,000 crore as on 30th June, which was up by 23% from the immediately preceding quarter and 107% up from the same period last year. We believe Bajaj Finserv AMC is the fastest to cross the INR 25,000 crore mark in less than two full years of operation. The non-group share of AUM for the AMC stood at a healthy 83% of the total AUM. This was from my side on the performance of the companies. 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.
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 touchscreen telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use hands if collecting a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Swarna Mukherjee from B&K Securities. Please go ahead.
Hi sir, thank you for the opportunity. I have two quick questions on one each of BAGIC and BALIC. In BAGIC, I just wanted to understand that we have seen some strong growth in areas like motor TP and Fire, where we have been hearing that the competition intensity remains fairly strong. I just wanted to know your thoughts on what are you seeing in the market. Are you, you know, you are going after favorable micro markets where you expect the profitability to be better than what you would normally expect in case of a high competitive intensity? That is what I wanted to ask from you regarding BAGIC. Maybe anything you can talk about motor TP price hike related, that would also be very useful. In terms of BALIC, I just wanted to understand that I think this is possibly the third consecutive quarter that I'm, I think the agency channel seems to be growing on a year-on-year basis. Just wanted to understand that. Given that you know how you have steadily improved on the margins and VNB growth is better than the top line growth.
I think definitely this does not hint towards a productivity drop in terms of, you know, how VNB is generated. If you could give us some color on how the underlying product mix should be on the agency side, keeping this in perspective. Yeah, those would be my two questions.
I'll first request Tapan to take the first question.
Thank you, Mr. Mukherjee. If you look at our company, I think competition has always been there. I'll just say that after the free pricing in the year 2007, which is now what, about, if you add up, it's more than 17-18 years, the combined rate of the industry has been hovering between 115%-120%. This is nothing new.
We don't have in the dimensions business, there's nothing called winner takes it all because even the largest market share company, we got 14%-15%, which means that there'd be enough micro segments at all points of time in which you can still look at good business and look at it. Some strengths and strengths, as I've mentioned, a lot of these are to look at our portfolio in Fire, we are one of the dominant players in the market in the last year, which is rare. TP also, our feeling is not for the past, what, three-four years, as we know, price hike at all. The industry has been asking for it, and there would be our belief that some action happening on that because within quite some time, which would be there, price hike part of the question if you ask.
I hope I've been able to answer your question.
Yeah, yes. Just a quick follow-up, if I may, I mean.
Yeah, please, please, please, please go ahead.
Yeah. At one point of time, I think Bajaj General is known for their best-in-class operating profitability. Combined ratio has been for many years under 100%. Now we are seeing that this number generally creeps up ahead of 100%, maybe 101, 102. Should we think this as a steady state given how situations are there? I mean, hopefully, I understand that there is an impact of one by ending here. Overall, should we expect that maybe this will continue to remain elevated, or is there any scope that we can go back to a less than 100% scenario over the next two, three years?
The endeavor for our company is to always maintain a combined ratio close to 100, is what I've always mentioned over time. That is what it remains. That is what our endeavor shall always be because our belief is even the market may be at whatever combined ratio, the discipline for business has to be there. Good companies with high discipline are the ones which serve customers very well. If you can look at data across, you'll find that companies with a good discipline of doing business, their GWP ratio is among the lowest in the industry. If you look at our company, and you pick up on the time IRDAI is publishing GWP ratio, you'll find that in spite of having such a large customer franchise—in fact, last year, if you see, we issued close to 4.83 crore policies.
We are the largest policy issuers in the Indian market in terms of number of customers. In fact, the large customer franchise also, our GWP ratio has been among the lowest continuously every quarter, every decade, if you look at it. This clearly shows that a good company with good discipline serves customers very well. That is why our endeavor is not to lose sight of running a company which is well in spite of how the market behaves. Now, will it be below 100? Will it be over 100? I think that as the business and things progress, that will always be close to 100. That has been our endeavor, and that is what we keep on pushing for.
Sure, sir. Very helpful. Thank you. If you could respond to the question on licensure. Yeah, hi.
In the H1 call last year, we had, and Ramandeep also clarified that we have very clearly taken a stand that after these surrender value changes, we are going to take a pause for some time in terms of focusing now largely on profitability-driven growth. That is what we have stuck to, and I must say, with results which are totally as per plan. You have seen that the margins have gone up, and VNB growth has been substantial. In terms of a specific point on agency, including this year's agency numbers, agency has had a five-year CAGR of 25%. So it's a pretty healthy growth despite this year, this first half, we have particularly taken a pause for a specific reason.
Agency did most of the heavy lifting of the change that we did in terms of cost reduction, in terms of product shift, in terms of a focus on term, including deployment of commissions and span increase at the agency level as well. This has then shown very encouraging results, and agency's trajectory and profitability is quite good. In terms of specific product mix, we don't really talk about channel-wide product mix. But given the fact that on an AP basis, our term mix is at 11% for the company, the ballpark for agency would be far higher than what it used to be in terms of percentage. The significant shift, particularly in agency, is more focus on term plans, remain focused on mid-market India, remain focused on creating more distributors.
We expect for agency another three months of impact on the growth because of this change, and then we should come back to seeing a healthy growth back in agency. I've tried to answer more than your questions so that I'm sure there'll be residual questions of this line.
Yeah, we are very clear, sir. Yeah. In interest of time, I'll now maybe take four follow-ups offline. Thank you so much and all the best, sir.
Thank you. The next question is from the line of Supratim from Ambit Capital. Please go ahead.
Thanks for the opportunity. My first question is on BALIC. Now, we have seen the product mix shape with the share of protection going up by 300 basis points. But the margin delta corresponding to that product mix shape seems to be 400 basis points.
Just wanted to understand, is it only product mix driven or has the product structures themselves changed? And what has been the change that has allowed the product level margins also to expand? That would be my first question. On the motor TP side, I think you already alluded to some extent on this question, but just wanted to get a bit more clarity on this. On motor TP, we have seen previously you were conservative for one year. Now there is growth that has come back, and the loss ratios there also seem to be better than what we were expecting. What is happening there, and which are the segments where you are seeing this into profitability and growth potential? If you could give us some color on this and whether this spend can sustain into the future, how are you thinking about that? That would be very helpful.
Thank you. I'll request Tarun to take the first one on BALIC, please.
Yeah. No, I think that's a very good question. And I think you're following up quite well on the performance. So, Ajit, the margin delta is healthy, and I think we're going to be one of the highest deltas. In the industry this year. I think we should expect that to directionally remain positive as we go forward in our growth journey. If you're saying that it could have been more, let me answer that first. Very clearly, the first quarter is the least productive quarter, and there are six cops that sit on it. Yes, to that, from a perspective of maybe it is low. From the fact that why is it quite healthy, if that's the perspective.
The product mix, of course, with term coming in, gets to be a very useful piece from a profitability perspective. 30% of our customers in agency now are added through term. We have changed product structures significantly, as in, and I'd like to underline, significantly. Whether it's the ULIPs, ULIPs or non-par plans as well. I think that is what is going to aid the further delta in agency as we grow and for the company as well. Largely, I think it's a mix of these. In addition, we've also looked at cost reductions, which is going to help in the margin delta. I hope I've answered your question.
Yeah. Just one follow-up. Could you let me know what is the rider attachment rate now in this quarter vs. what it was last year?
We have largely focused on, significantly on, one, the shift to term.
The rider attachment is going to be a phased growth, if I may say so. It is already quite healthy. We were near zero, but now it is at 17% attachment of riders across all businesses.
Thank you. I'll request Tapan to take the next one on TP growth.
Yes. Just if you look at when you are a large player in GI business and you are into all lines of businesses, there will be times in which you will move some business up and some business even slow down on. Let me take you back. When we started doing crop business, I think at the time everybody was saying that crop is something that they would not be doing at that time. Now if you look at it, everybody has jumped into crop business.
If you see our crop business, it would reduce compared to what it used to be earlier times. I think lines of businesses would fluctuate based on how we see markets move and how we strategize ourselves in terms of where we want to push into it. There is no such hard line that it will continuously be the same year- on- year. That is the orchestra that you have to play when you're a large player into every line of business and a significant amount of business, each line of business. That is why you'll see the shifts happening. Now, to give you a precise answer in terms of what in TP that we would be doing, that I do not think that on a call I would be talking about. Yes, what you have observed is that you have seen our motor TP market share move up.
At the same time, as I mentioned to you, you will see our crop market share over time come down for this. Is it permanent? No. If things change and again, we will change our strategy of what we write.
Understand. Thank you. Thank you.
Thank you. The next question is from the line of Nisreen Jawati from Kotak. Please go ahead.
Hi. Thanks for taking my question. Maybe I can go back to life and the question on essentially the term business. I am not sure whether you have convinced us in terms of what could be the reason for the margin expansion, basically driven by term business. On the face of it, it appears that your term business margin is probably 2x-3x of what maybe some of the other peers are reporting. Just curious, which channels are you reporting, selling this product through?
If you could give some color on ticket size and sum assured over here. I believe you also said that almost one-third of the customers acquired through agency are in term, which means probably this will be a higher ticket policy. Just some more color on this will be helpful.
Okay. I am surprised you are not convinced, but anyway, that is for you to figure out. As far as term details, you would like, we moved up our average premium for the face-to-face channels. It is very different from online channels at approximately INR 30,000-INR 35,000, depending upon which channel is selling it. In terms of which channels are selling, I would say it is agency and institutional business. We are significant players on aggregators as well.
The proprietary sales channel is relatively focusing more on non-term, but is now starting off specific term channels, which is going to be focusing selling largely term.
Is there any increase in ticket size? I mean, I did not know that before what the ticket size was.
9% increase in ticket size.
Got it. Got it. The direct channel primarily focuses on savings, is what you said.
Yes. They are by itself quite profitable. They focus on our segments that we want to focus on. Their mix of term is still taking some time to pick up, especially as they are making profit on the other pieces.
Got it. Thanks. Just moving on to BAGIC. In the health side, if you could give us a breakup of loss ratios between group and individual.
No, we do not do that.
I think this question I have answered many times, that I do not get into micro loss ratio declaration because that will give us business strategies and listing. Ours is a very competitive business, as you see.
No, no, no. Understood. Understood.
Thank you.
Sure. Just curious, I mean, your loss ratio has gone up, I believe, despite the fact that retail business share has gone up. Is it something that on a like-to-like basis, retail business has become having a higher loss ratio this year?
That is asking the same question again. If you understand loss ratios, then what I can tell you is look at retail loss ratios across the industry. Look at GMC loss ratios. Look at government health loss ratios. Look at percentage of businesses, and then you can figure out broadly why loss ratios would move up and down.
When your retail businesses move up, then obviously loss ratios would decrease. That is a very natural phenomenon to do so. These are very obvious answers. If you ask me to give micro details of exact loss ratios, I never do on a call.
Sure. No problem. Not on the numbers, but I was just looking at the directional color. You gave them a minute.
Yeah. Initially, obviously, I said our endeavor is always to have the best combined ratio over time. That we shall continue doing so.
Got it. Got it. Thanks.
Yeah. If you look at our growth in GMC vs. retail over the last 12 months, you will get the answer.
Like Apan is explaining, it is a product mix play, which is causing this ambiguity. As we all know, the more you do retail health, your loss ratios ought to improve.
Yeah. Got it. Got it. Got it. As I see it, your loss ratio has probably eased up a little bit on a year-on-year basis. That is where actually my question was.
You should look at the last year growth numbers also because some of the spillover of earnings comes from last year, right?
Okay. Got it. Got it. Those were my questions. Thank you very much and all the best. Thank you.
Thank you. A reminder to all the participants to press star and then to ask questions. The next question is from the line of Sanketh Godha from Avendus Spark . Please go ahead.
Thank you for the opportunity. First question is on BALIC. Basically, as you said, the second half reversal should happen in the growth because the base naturally will be favorable for you. If that happens, then given last three quarters, we have been that single-digit zone to negative zone. How much growth we can expect to play out for the full year in life insurance, given the second half reversal is expected to happen? That is point number one. With respect to the growth only, if you can even give a color on group protection business, which has been a bit of a struggle, just wanted to understand that color too. Lastly, on life, the margin delta, what you witnessed being almost 4% in first quarter compared to the previous first quarter. Is it fair to say that you are 14.5, what you exited for the full year?
We can experience a similar number to play out for the entire year, given group will come back, your restructuring will play out, and even the term will be improving. Is it fair to say that you can fairly exit at a similar delta change for the full year number two? Those are two of my questions on BALIC. Maybe I have one on BAGIC, which I will ask afterward
No, it's nice questions. Thank you for them. The H2 growth, yes, will be significantly comfortable, is what I can say. The industry has slowed down. While our slight degrowth is visible, it actually comes on the base of a very high growth we had last first half. We grew upwards of 31%, and depending on the quarter, 31-34% that you could possibly have seen.
That growth rate has been impacting our, so to say, growth trajectory as may be visible, which is why I'm guiding you to look at the five-year CAGR. As far as H2 is concerned, I expect our growth to be in full bloom. I cannot give a forward-looking statement, as you're aware, Sanketh. That's where I'd like to, on the growth part, you asked me three questions. I'll come to the other two. Group protection has been a struggle, yes, largely because the loan dispersals, particularly in the MFI space, which for us is almost like one-third of our credit-like credit protection business. That degrowth has been substantial for the industry. We do expect, naturally, the fact that MFI growth has come down. Now it's from one-third down to about 20%, approximately. We expect all lines to now pick up as we see the second half of group protection.
Of course, I have to fingers crossed for that because it's directly linked to a sector which we don't control. If credit uptake does happen, which is expected given the actions of the regulator, the inflation movement, interest rate movement downward, that should assist and we'll be betting on that, and should, of course, help group protection numbers to go up. The third question is on the delta. Again, I can't make a forward-looking statement, but yes, you should expect that all the impact that we've taken, particularly the effort we've taken on cost reduction, on product structures, like I answered a previous product answer of the brief question that you had, that we've not only done product mix changes, but even structure changes significantly, distribution payouts, and all of that. The cost reduction has gone well. It's already setting, as I would say.
I think it's already playing out on a quarterly basis. That should help. Term, you did, of course, say that the term mix would go up in the future. I would not really point you in that direction. I think the changes we've made already are quite significant. As I explained, 30% of agency customers already are term customers. I think that's a healthy mix. Beyond that, we do know that term being a risk business, we are very careful. We do not want to be mindlessly going there. We're very strong. We take care of the quality of life and the pricing that we follow there. Hence, I think you should expect term to largely remain in this ballpark and not go up any further. I should not give you more hope there.
Okay. Perfect. Perfect. That answers my question. Maybe two simple questions on BAGIC. Just wanted to understand your outlook on tender-based businesses. Maybe in the current year, I know it's a difficult question to answer whether you'll win the contract or not, but given INR 85,000-odd crore last year, for you, whether a similar number can be expected in government tender-based businesses in the current year, it's more from a growth point of view I'm asking this question. Second, a data-keeping one, if you can quantify your capital gains in the quarterly to the SBC.
Okay. Thank you for the question. It's an interesting question. Because see, if you look at insurance business, and I think I've told this many times in the past also, it's a risk business. There are two things that you would never watch in terms of a progressive move on that.
First is, if let's say certain catastrophes happen, certain huge losses happen, then those times the loss ratios move up, and for some time it goes down. That's where the hard market and the soft market and the market would move on that basis. Second is on businesses. Let's say if we look at tender business. Now, what's our endeavor? Our endeavor is always to be at the right price. If you can get a tender, good. If you don't get a tender, so be it. We are not somebody who, in desperation, would do business just for the sake of pushing up a top line.
Having said that, consistently we look at for over a long time, and we should also see that we have been an organically grown company with no acquisition, and we have reached the top three in terms of top line also, which should be there. The pressure that just for top line, we would quote any price to bring, it will not happen. Whether it will happen or not depends on how other players look at it. If you look at the crop business, as I mentioned earlier, I see huge intensity there. The price at which some of the tenders are going, we are not comfortable with that. We're perfectly fine to let it be because we have seen, as I said earlier, it's cyclic. It again comes back at the price that we want.
I cannot give an exact answer in terms of how much tender business we shall be getting going forward, but I can give you an answer that we shall be prudent in our pricing, and we shall keep our philosophy of trying to see that we run the business well. That doesn't change. It should be there. If it comes in our price range in which we feel it is comfortable for us to run the business and serve the customer well, we should be getting it. Otherwise, if it's not there, it's perfectly fine to let it go for some time. That would be our safety numbers.
Got it. Perfect. On the capital gains part.
Sorry. Sanketh, on capital gains, we have booked a capital gain around INR 450 crore coming from both debt and equity. The larger part of the growth is from the debt book.
Got it. Anckur, if you can quantify unrealized portion in our balance sheet now.
Those are to. What we had around INR 1200 crore.
Sorry, come again? Sorry, I lost. I didn't.
INR 1,200 crore.
Okay. Perfect. Thank you, Anckur. That's it for me. Thank you.
Yeah. Thank you. The next question is from the line of Shobhit Sharma from HDFC Securities. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I have a few questions on BAGIC. Then I will move to BALIC. Firstly, on BAGIC side, in the combined ratio, if you can help us understand what has led to a significant increase in the net commission and the expense ratio. Secondly, coming to the motor TP side, there is a significant reduction in the loss ratio. Can you help us understand what has led to this lower loss ratio? Was there any one-off this quarter? How should we think on a full-year basis for this? On the crop side, do we expect loss ratio to revert to our historical levels? These are my questions on BAGIC. Then I will ask on BALIC.
Let's look at crop. The loss ratio will depend on how the weather performs. That is how it is. If the weather goes good, then obviously the loss ratios are lower. If it doesn't perform well, then it goes up. If you look at an average and the price point at which it is right now, the way the market has been quoting, I think to our view, that's below the average losses which happen. If the year has any kind of movement, then the losses move up. From our perspective, I think the tender at which we had quoted earlier was quite comfortable.
We do not see on an average basis much movement from what we had on the crop basis. On the acquisition cost movement, when you acquire a business which is comfortable and profitable, there would be a strain on acquisition cost, which would be there. As retail business moves up, you would see that strain happening there. That is why you see a bit of movement, but that would obviously be because you are trying to acquire more business, which has a lower loss ratio in that basis. That is why you see a bit of movement there. On TP, I think you should look at TP loss issues in a year-long period, not on a quarterly basis. It depends on how the claims get settled, how the reserves get released. Overall, you should see on a yearly basis how it moves, not on a quarterly basis.
Any color around your motor book, if you can give the mix of the book, whether it is heavy on commercial vehicles, private cars, that would be great for you.
If you again look, as I said, I do not do micro-segmentation, but broadly, if you look at the company strategy, we do not exit any line of business completely, and we do not really go whole hog in terms of any level. We move all businesses significantly, and we play in a variance in terms of some we reduce, some we increase. That would be that. The motor also, all be two-wheeler, four-wheeler commercial, we would be in that space in a reasonably well-positioned manner. There would be some variations which would go up and down, which would happen like two-wheeler.
Initially, we had some resistance because of the Bajaj brand from some of the two-wheeler manufacturers, but that is not there now. If you see our two-wheeler business has moved up from that perspective, which would be there. That was more because not because of intent, but because of the brand resistance within the market. Hopefully, over time, people realize that the data, everything is secure, and that resistance comes down, and our movement has happened in two-wheeler also. That is how it would be. If you broadly look at it, we will be into all parts of the motor business also.
Thanks.
Just to add there, maybe this can answer both your questions. The commissions have gone up, like Tapan rightly said, because of our preferred businesses going up. There also, as you know, on the new business, the commissions are on the higher side because you are paying upfront for three years and five years. If you see our new mix, it has actually improved. On four-wheeler, as against the market share of 7.3% last year, we moved to about 8.7%. On two-wheeler, from about 8.9%, we moved closer to 12%. That maybe answers both your questions in some form.
Yeah. Thanks. Thanks. That was helpful. Coming on to BALIC, sir, overall, we have seen a healthy improvement in margins. But sir, can you help us understand the measures which you have taken on the cost rationalization side, and how should we think about it going forward? Secondly, can you please help us understand why there is a drop in the 13th and 14th months' purchase? Is it linked to any particular product or business segment?
Okay. Shobhit, I hope you're doing well in your new sector. Yeah. Thank you, sir. First and foremost, yes. On the cost side, the action actually has been a 360-degree action, if I can say so. I talked of commission deferment and reduction. There has been reduction in variable and R&R spends. There has been reduction in fixed costs, particularly the non-productive, if I can say so, non-producing layer of businesses. We looked at processes in head office and looked at how we can re-engineer our processes. That process is ongoing now that it's done, and how we can replug some of these processes at lower cost. We've gone and renegotiated with our vendors. What else would you want to know? I think pretty much all of it is here. A lot of the span increase has been consistent. There was a hint of knowing what we'll do going forward.
I think the direction on being focused on cost remains. While at the same time, I must point out that we are present in a pretty large domain in terms of true business. A lot of our business gets done in beyond 100 cities, beyond 200 cities vs. what our cohort of competition in the market is. Because we remain a market player, and that's where we want to stay. As a result, there, cost productivity, of course, will relatively be higher when you compare with some bank-owned companies, particularly. I think that still gives us good benefit because a lot of these customers and service dwell are more relationship-oriented than maybe sometimes in top cities. We will remain concentrated on our cost reduction. Your next question was on the latter cohorts.
Yes, there are a few experiments we run, Shobhit, where we are always trying to expand our presence in mid-markets, customer mid-market segments. Some of these experiments at various points in time, if the second premium did not come, those have moved on. The good thing is now these cohorts are slowly moving to the latter half, and that should move out of the 61st soon, the way it's going. Having said that, our 25th month is up. Our 37th month is up. Our 61st month is up. All businesses are focused in looking at autopay as a significant move. Not only are we focusing on the flow, but even on the stock of customers that we have to ensure that persistency remains at a healthy level.
Okay. Okay. Thank you. Thanks for this and very all the best. Thank you.
Ladies and gentlemen, as a personal last question for the week, I now hand the conference over to Mr. Ajit Kumar for closing comments. Over to you, sir.
Thank you to all the participants for joining the call. Anything else, Ramandeep sir, you want to add?
No, I just realized we should not keep the calls so late in the evening. We have less questions this time. No, nothing more to add. Thank you, everybody, for all the questions and making it at this hour.
Thank you. On behalf of JM Financial, that completes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you, everybody.
Thank you.