Bajaj Finserv Ltd. (NSE:BAJAJFINSV)

Q1 20/21

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Jul 23, 2020

Ladies and gentlemen, good day, and welcome to the Badaj Funds of Q1 FY twenty twenty one Earnings Conference Call hosted by GM Financial Institutional Securities Limited. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Bani Pavji from GM Financial. Thank you, and over to you, ma'am. Thank you. Good morning, everybody, and welcome to Bajaj Finsar's earnings call to discuss the first quarter FY 'twenty one results. To discuss the same, we have on the call mister Srinivasan, CFO, Bajaj Fincer mister Tapan Singhal, CEO, Bajaj Allianz General Insurance mister Amandeep Singh Sahani, CFO, Bajaj Allianz General Insurance mister Tarun Chuk, CEO, Bajaj Alliance Life Insurance and mister Mahat Kalsi, CFO, Bajaj Alliance Life Insurance. May I request mister Srinivasan take us through the financial highlights, which we can open the call for q and a session. Over to you, sir. Thank you, Bonnie. Good morning, everyone. I welcome you a hearty welcome to to the conference call to discuss the results that has been served for q one f y twenty one. We had issued a press release on twenty first after our board meeting approved the results. At the same time, we are a PM as well. As before in this call, we will largely be concentrating on the consolidated results as well as the results of our insurance operations through Bajajillion General Insurance Magic, Bajajillion Life Insurance Bank, and their materials, the stand alone results of the company, BFS. But that's finance BFL, which is another major subsidiary of ours as of conference call. But if 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 companies, except to mention that the status has remained the same as at the end of the previous quarter, and there is no change there. Any statement that may look like forward looking statements are just estimates and do not constitute an assurance or indication of any future performance result. Just as a matter of hygiene to clarify that as required by regulation, BFS has adopted a Indian accounting standard in the years from FY 'nineteen. The insurance companies are not covered under India's. They have they have prepared India's financials only for the purpose of consolidation. According to the magic and balance, the Sandler O'Neill numbers reported below are based on non India's accounting standards or Indian GAAP, as you may call them, as applicable to the insurance companies. Now just to give you an update on performance, I'll start by mentioning generally about the quarter and initiatives taken by the company before I get into the financial performance. This quarter, as you know, the first full quarter where much the business was impacted by the national, state, district, and local lockdowns. So we had different levels of lockdowns. Although easy with the national lockdown was by mid May, many of the large cities like Mumbai, Delhi, Chennai, etcetera, continue to be under a lockdown. This clearly affected sales of motor vehicles across all segments for Magic, private cars, two wheelers, commercial vehicles. As a consequence, the general insurance industry in general and Magic too suffered significant degrowth in the largest line of business, which is motor insurance. While there has been improvement in June as auto factories opened up, the capacity utilization and sales are still well below full capacity. Travel insurance came to a near stand since the small line of business, but nevertheless, it is a profitable line. So to that extent, it is important. At the same time, we saw good traction in insurance by corporates, mainly property insurance. While there was reinsurance driven rate increase, as you might be aware, I would like to stress that we have won several accounts in the corporate segment, and we had both volume and rate increases in the property segment. As customers, we were given time by the regulator to I mean, customers were given time by the regulator to cover to extend the cover under the existing policies until mid May. And there there therefore, there was no incentive for customers to renew their policies. Badgic has been contributing on employer employee group health business for the last eighteen months or so due to excessive price competition leading to high loss ratios as has been highlighted in the previous investor calls. Badgeek has also recorded 12% growth in retail and insurance, which is well above the industry average. And as with other major players in the industry, Badgeek had losses from the Cyclone Ampond, which hit the East Coast and to a lesser extent from Nixerga, which hit the West Coast. Now coming to Balik, in the case of life insurance, we have seen significant degrowth for the industry, more so in respect of equity market linked business like units. As we saw after the global financial crisis, when the risk environment deteriorates, life insurance policyholders prefer guaranteed products and protection products. This is customer behavior we see across cycles. The major difference this time is that empty rates are at all time lows. And therefore, from a return perspective as well as taxability, credit to life insurance products have suddenly become attractive for policyholders. If you recall, Valek had taken the bold step about two years ago of changing the product mix such that the dependence on units was reduced, and the company had a more sustainable product mix going forward. And this this required major shifts in the distribution. The launch of upgraded term product in early q four FY twenty also came in handy, and Balik was able to start making an impression in the retail term life market during the year. Both Balik and Balik were able to utilize their digital properties to harness the best possible under the lockdown scenario when branches were not in operation. Conservable effort was made to reach out to partners, individual agents, retail brokers, and point of sale personnel. And virtual training programs were initiated to quickly bring them onto the digital platforms and help them to make onboarding and sales pitches on digital media. I'll give you some more light on this because normally, we don't we have not talked so much about the digital capabilities of our insurance companies. And I thought this is the time that, you know, we, invite in investors on that aspect. In Magic, we now have a sort of all in one app called the Caringly Yours customer app. And this was upgraded further with more features, more functionalities, and customers were able to handle many of their current needs seamlessly through this app, including the features to facilitate social backtracking. We had a doctor on call, as well on this. The app usage was in excess of two, like, 50,000 active users during the quarter. Badges digital adoption peaked during the lockdown period with about 85% plus digital policy issuance, close to 80% digital servicing and 95% tele medical examination. Approximately 50% of motor claims and fifty five percent of health claims are being reported digitally. Agent onboarding was completely through the digital agent onboarding app, Sarki. That is point of sale personnel, channel and virtual points of presence were running on fully digital processes even before the lockdown as you might be aware. As a result, during the quarter, Badge was able to issue three and a half million policies, settled over 1,600,000 claims and 700,000 plus customer footprints were serviced. Most of these digital parameters are holding up even post the software. Coming to Balik, Balik has enabled and rapidly upgraded the digital tools across the value chain, including those who are onboarding of agents, customer by journey, lead management, among others. This is on-site and managing ensuring end to end digital journeys through various tools like LMS two point zero. In staff, it's enabled by journey. I recruit the digital onboarding of agents and POST and other digital tools like I manage for real time information for managers and agents. For example, eSamPak by Dialyq is a platform for ICs and SMs to share personalized and approved content on WhatsApp, emails, and social media. Although many of these properties for both the companies are already in use, their frequency of use has significantly increased during the lockdown. On the customer service front, various tools are provided to customers to manage their servicing requirements. What's that service with best in class innovative features enabled with machine learning and NLP capabilities to understand customer intent and live agent connectivity and also significantly, helped digital digitization during this period. Over five lakh customers of Malik have used WhatsApp service in q one. Apart from WhatsApp, other self servicing such as live business tab and customer website also empower customers to fulfill their servicing requirement. All in all, Dialect issued ninety thousand three sixty one policies, which is 54% growth over last year, the highest growth in the industry. Out of the 90,000 plus policies issued in the quarter, term contribute about 37%. About 50% of total renewals came via digital assets. Pallet also launched the of its SmartProtect Gold, which is the term plan. It's it's a new participating product called Flexi Income Gold and introduced an innovative plan in systematic our unit platform for people to manage their unit products. Most companies able to do able to recruit agents and POST personnel in fairly large numbers in this quarter. And it recruited more than thousand agents, about 7,300 POST personnel, while Badge has recruited those 2,000 agents and POST personnel. Overall, both companies have handled the lockdown situation very well. Things have started looking up. We hope to see more traction in the coming quarters. Although the situation is still evolving, and the pandemic is still under full control yet, We may be seeing more local level lockdowns until we see a back them up. Both of these are financially among the most solvent, valid with 760% and valid with 180, And again, the 150% required under regulation and ends up financially well for to weather this crisis. The digital initiatives, the wide and deep distribution, and the strong management teams of both companies to help them come out as stricter and more efficient companies. Going to the financial results, let me start with a small bit of news. On twenty second June twenty twenty, BFS was included with the benchmark BSC Sensex with the top 30 stuff, India, which BFL is already a part of this index in December 2018. Most of them are now that part of the two bellwether in large cap indices, which are ten thirty and fifty fifty. Coming to the highlights of q one, you've seen some of you may have seen it in the press release, but I'll just repeat it for those who haven't. Consolidated total income was 14,192 crores, up 16% from the previous year. Consolidated profit after tax, 1,215 crores, which is up 44% from the last year figure of INR $8.45 crores. And consolidated profit after tax, excluding unusual items, which I will explain, INR $14.59 crores versus INR $8.45 crores last year, which is an increase of 73%. Among the major material subsidiaries, Bajaj Finance consolidated profit after tax was $9.62 crores, which is down, 19 from last year, largely on account of a specific last provision they have taken. General insurance profit after tax was up 88% at 395 crores versus 210 crores, and life insurance shareholders profit after tax was up 100 and, 10% and 130 crores versus 62 crores. I mentioned about these unusual items. I'll just highlight there are two things here. In the security equity securities, the held by Magic and Valid under shareholders funds are classified as fair value through proper loss account. They are required to be mark to market when they submit their NDA compliant figures for consolidation. While in Q4 and FY 'twenty, this had resulted in a post tax negative impact of INR $4.51 crores in the consolidated target. In this quarter, it has seen a positive impact of INR330 crores in the consolidated fact. During this quarter, BFL has also upped its contingency provisions under the expected credit loss method by an amount of INR1450 crores pretax, and this negatively impacted the consolidated profit after tax by INR $5.74 crore. You may recall that in the previous quarter, BFL had a similar provision of INR 900 crores pretax, which impacted the consolidated tax negatively by INR $3.56 crores. If you exclude the effect of these items of unusual nature, BFS' consolidated profit after tax would have been INR $14.59 crores, as I mentioned earlier, an increase of 73%. A short summary of this performance of major subsidiaries. BFR's AUM increased by 7% year on year to INR 138.55 crore. Total income increased 14% Y o Y at 6,650, while PAT was lower by 19% at INR $9.60 crore as compared to Q1 of FY 'twenty. Over PAT was mainly due to the extra provision for credit losses, as explained earlier, of INR1450 crore pretax, which is INR1084 crore after tax. The pre provision operating profit continues to grow strong, and BFL was able to reduce in the period OpEx significantly, and OpEx will have just 27.9% as against 35% in Q1 of FY twenty twenty. Loss NPA and net NPA ECL Stage three recognized as per Xtant RBI prudential norms and provisioned approaching the expected credit loss method prescribed in Ind AS as of thirtieth June twenty twenty stood at 1.40.5% respectively. Standard assets provisioning, ECL Stage one and two stood at 2.73, including the contingency provision for COVID-nineteen and just 1.01% excluding that. So overall, the credit metrics continue to be strong. Capital adequacy ratio, including Tier two capital, stood at 26.4%, and the Tier one capital was 22.6%. The company is very well capitalized. For Badaj Housing Finance Limited, a 100% mortgage subsidy of BFL, the capital adequacy ratio stood at 25.94%, again, very well capitalized. Coming to Badaj Lake, the gross written premium came in at 19 and a half negative 19 and a half 19 and a half percent lower than here here at rupees $2,002.89 crores, mainly due to lower motor premium, lower government health business, and no tenders were issued in q one, and lower employer employee group health, which tactically had short to reduce exposure. The claim ratio reduced to 68.1% in q one FY twenty one versus 72.8% in q FY twenty. Trade experience, our work was mixed during the quarter with higher claims in property and engineering, which were affected by Cyclone and to some extent by as well. In addition, one of the third party line, also had higher claims mainly due to higher reserves, while some other lines like health and motor home damage and lower claim ratios. While there were lower claims reported in some segments like motor and health, especially in April and May, the uncertainty, over ultimate losses is quite high for the following reasons. Water claim frequencies have started it post the lifting of lockdown and are moving towards normal frequency. In the third party, MEC and other crores have been at very low activity in this quarter. And when orders are finalized, we expect there could be an interest impacts on outstanding claims. Many nonemergency and elective health insurance treatments were postponed. And as the lockdown gets lifted, we expect a higher frequency of health claims. And it is possible that auto garages and hospitals, which have lost revenue, may seek higher rates once the lockdown is removed and is normalized. One of the major risks for the industry is obviously COVID claims at private hospitals. They are increasing in line with cases reported nationally. Badgeek has only a 4% share of the total non government health business, and it is expected that the share of claims may be similar. Keeping these factors in mind, the company has sought to increase the margin for adverse deviation in its ultimate expected loss provisioning. Reflecting a strong underwriting performance, Badger reported a combined ratio of 97.6% in Q1 FY twenty twenty one versus INR 103.1%. This performance is underlying in underwriting profit, which increased INR $2.75 crore for Q1 FY twenty twenty one versus INR 9 crore in Q1 FY twenty twenty. As a result of the strong underwriting performance and satisfactory investment performance, profit after tax for Q1 FY 'twenty one increased 88% to INR $3.95 crore from INR $2.10 crore in Q1 FY 'twenty. I must mention that the lower tax rate of 25% came into effects, from the second quarter of last year. Assets under management represented by cash and investment that's on thirty twenty twenty stood at 19,611 crore versus 17,466 crore as of June 2060, which is an increase of 12%. Now a short more on crop insurance. The scheme is modified by the government, as you might be aware, from first April. And the major changes are, a, insurance being made voluntary for Rooney farmers, and, b, the scheme will be for three years. That we have been able to secure good quality reinsurance backing for three years and will be participating the tenders for the current season. Coming to Balik, individual rated new business premium was flat at 331 crore in q one FY twenty one versus 332 crore in q one FY twenty. Our performance was significantly better than the market degrowth of 18% and the private industry degrowth of 23%. The performance was aided by the institutional business side, mainly as Bank Insurance Partners, Bank and India Post started contributing. During the quarter, another significant event was a corporate agency tie up with RBL, which also started producing business in Group production new business overall was lower at INR89 crore versus INR39 crore in FY 'twenty. The degrowth was primarily due to lower disbursements by banks and NBFCs through which these products are largely sold. Renewal premium for Q1 FY 'twenty one was $9.58 crores, a solid increase of 16%. Increase in persistency was seen in the twenty fifth month and later vintages. Thirteen month of March was actually lower due to volatility in capital markets and COVID nineteen related lockdowns. The, as I mentioned earlier, the patch was, higher by a 110% at a 130 crores. And last year, the shareholders' profit after tax was adversely affected by a provision for impairment of 126 crores, which is a 108 crore after tax. AUM represented by total investments stood at 60,968 crore as on thirtieth June twenty twenty versus $57,008.60 crore on thirtieth June two thousand nineteen, an increase of 5%. So the major, the landmarks this quarter and the net worth of Vale has crossed 10,000 crores, and the total investment has crossed the AUM has crossed $6,160,000 crores. So just to close the opening remarks, overall, facing the COVID nineteen and the subsequent lockdown, the company and its subsidiaries took immediate steps to handle this extreme situation. The company and its subsidiaries are navigating through this challenge with focus on profitability over growth. They are conserving cash, strengthening risk, borrowing long term, strengthening collections, and reducing overheads. As a result, the operating companies have strong solvency well above the required capital and are positioning themselves as stronger companies as and when the lockdown eases. Thank you for your patience, and I now open the floor for questions and answers. Thank you very much. We will now begin the question and answer session. The The first question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead. Yes. Hi. I must complement Mister Shah, can you speak closer to the handset, please? Your voice is not audible. Yeah. Hi. Is this clear now? Yes, sir. Okay. I must compliment Badaj Singh's team. This has been a difficult quarter, but qualitatively, the performance has been pretty robust, both in general insurance and even in life insurance. Now we are seeing improvement in the shape of things to come. So my I have principally two questions. One, generally insurance, we have seen in any case always, there has been a very robust approach to the business underwriting. And we've even seen investment performance now catching up and improving. So this is a business where it is last two, three quarters. We are once again seeing the glimpse of the kind of older performance of Badaj, which used to post industry leading performance all the time. Once again, we are seeing that kind of performance coming back in basic. So that's a source of a great delight. In daily cooking, we are seeing with the change of strategy initiated over a couple of years some of the key important shape of things to come. So my question is, we've seen that individual part of the business is being emphasized, which is more profitable and more sticky, I suppose. JULIPS being deemphasized and rightly. The protection part presently is surprisingly increased to almost about 17 and a half percent of the total APE in life insurance. So all these are very, very healthy and good features. But what I want to know is over three to five years, how will the shape of things to come? What will be the metrics and what will be the benchmarks which will be used to incur life insurance performance, credit performance over this period? So this quarter is a delight and we are seeing that Delic is now getting into a right kind of a shape in terms of behavior, pursuing only right kind of business in a proper balance way. But if you have to view the business over three to five year, how could we how will we define it? And what metrics we should, track and graduate? Okay. So before I pass it on to Tarun and Tapan, who are better to the I don't Before I pass it on to Tarun and Tapan, Bharat, good morning anyway. I will just take a broadly I'll give a view. I think your question was, as of now, performance was good. But over three to five year horizon, what kind of metrics would you see that, you know, the companies will drive to remain, as best in class? If you know, I think, you know, when I started with Bad Lake, I think three years ago, started on a series of levers we thought will drive the company in the right direction. The first was individual AP growth. The second was persistency that we want to make small amounts of money over long periods from customers to be able to realize superior NBV and return on capital. The third was focus on NBV rather than NBM because different products have different margins. And, ultimately, NBV reflects your volume growth as well as your margins and your product mix. Additionally, we strengthen the management team. So as we look at three to five years, from a financial perspective, it clearly are the same levers, higher persistency. We would like to see lower cost overruns and therefore higher margins. And three, a sustainable product mix. There are no point for that becomes more than, say, 55% of the total portfolio one product line. Apart from that, new customer acquisition, use of analytics, and technology, and would be and expansion of distribution would be other key metrics. In terms of magic, as you know, we have had a very robust and well, I would call a formidable distribution network, which comprises of a large number of motor dealers running into a few thousands. We have the largest network we claim, we think, of independent banks who are affiliated with us all types, national banks, regional banks, cooperative banks. We also have one of the most focused underwriting teams in the industry, and we have continued to focus on combined ratio. The market is very volatile and very difficult to predict because pricing and discounting is increasing, and we are sharpening our swords on, you know, how to select better customers with lower claim experience, how to give customers more on various things on that side. And finally, customer experience is something we are spending a lot of time and effort and money on, which where we are redefining customers, bringing them into app, more digitization, which is why it took some time to explain the type of initiatives the companies are taking. With this broad opening thing, I would now leave it first to Tapan and then Tarun to take up magic and value perspective. Tapan? You, Shreevi. Thank you, mister Shah. I think very relevant question. If you look at the the donation industry overall, you know, and if you look at that historically also, it's a a huge distribution led game. Now the beauty is if from a distribution led game where customers have to have a conversation with a distributor to buy, and customers are realizing the importance of insurance on their own. And that's a very good shift which happens because then they start looking at adequate good products, good pricing, and what's beneficial for them. You know? To some extent, you see the shift happening, let's say, for health, where customers are looking at different parameters, and you see the health uptake happening. And I think COVID has also pushed that to some extent. So I personally feel that as customer awareness keeps on going up, this shift will happen in three to five years' time. The customer would be more, you know, looking into what kind of products he has to have and what are the protection he has to have. I think that importance to me will be happening. And that is why when Srini started his talk, mentioned about our apps. He mentioned about our digital strength. He mentioned about distribution strength also. I think combining distribution with customer preferences, offering them the best products at the right price, and giving them an out of world experience in servicing is what we are really focusing on, and that is what we are building up. No? And we have been pushing on this front. That's why we look at the variance donations company, Griviance ratio is among the lowest in industry. In fact, during COVID times, our Griviance ratio dropped by ninety percent. So not only we have been among the lowest in the industry for a long time, but in the COVID time, because of the still competent and capability, our grievance ratio dropped by 90% further. I think that gives me a bit of happiness. So that is what we want to push. We want to push, as we move forward, very good customer experience. Which is completely frictionless. I mean, that is what we're really pushing mister Shah over time. Now while we do this, we shall not let go of our strengths. The strength has been, one, if you look at we have an underwriting company, which I've always mentioned, and we continue to be so. You know, we always look at good underwriting practices because as I mentioned earlier also, if you look back a couple of years back, I'd mentioned the volatility in terms of returns and investment always keeps on fluctuating. No? So a company has a very strong writing company, and they also have to maintain a good investment team to see how much they can cut on volatility. But a good underwriting company sustains a very long time. That's been our belief and philosophy of the end of the nations company, which we shall not let go. Second, our philosophy has been the reach, that we should be at every nook and corner of the country because our customer would be moving, and they would be at every place. No. You can't be just concentrated in one location. And that's why we see that either, what we said, a virtual office or through a bank branch network. We are into the furthest and the remotest corner of the country. If you go anywhere, you'll be serviced by the end of nation's company very comfortably. I think that has been our strength. We're not letting go of strength of servicing a customer at any place, any point of time, at any part of the country, wherever they are. Even internationally, the ticket are positive there. That we're not letting go. The third strength of Badig has been a claim settlement. No? If you take any kind of feedback, any kind of matrices, or any feedback from your own people who you know, they all mentioned that Valhalla Generation company is a very good claim settling company. I think that is our obsession. Claim settlement obsession will not let it go, and that is our key strength, which we shall not let go in any circumstances. So broadly put forward, I think a high focus on customer in terms of, the choices that he has, in terms of ways we service, keeping our anchor strength of distribution reach, underwriting, settlement of claims, and handling a customer shall be our key focus for the next three to five years. And that, think, is broadly till this thing turns on the way I mentioned, we'll keep on focusing and keep on improving by the day also. While we look at long term, five years, ten years, we also look at every day and how do we make us better than what we were previously as we push forward. So I hope it answers your question, mister Shah. Thank you for the opportunity. Sure. Sure. K. Hello? Yeah. Bharat, thanks for acknowledging the shift that you're seeing in Balik. Yeah. Actually, it's it's it's happening to hear this feedback and getting this acknowledgment for the team Because, yes, we've been through a turnaround, and I do feel that we are now sitting on a strong foundation for the future. You talked about the metrics that you like to see or what we would like to focus on. Honestly, they're not going to be very different from what you see in the sector, but I'll get into a little bit more finesse within that. Persistency, a lot has been mentioned already by Suneet, so it's not gonna be very different from what you said. Persistency is going to be a very key parameter. It's something we focus on first. And we want to be in the eighties clubs. We are, every time, just kind of a little shy of that. That's for the thirteenth month. But the focus is really to get the subsequent buckets also moving. I think we are improving in every part of of of those buckets. But still, there is a lot more effort that we want to put in there, and that's something that you will see improving as well. In terms of retail AP, no question about it. That is going to be always has been and will remain the most important bit to look at. Within that, the critical piece which normally doesn't get reported, but is the channel mix and the product mix. About four years back, this company was 92% led by agency. Now well, agency since then, of course, has grown. We are now at about this quarter 44 agency, and the rest is different channels. The and which usually is something that has been the growth engine for most. Bank assurance is something popping up. Our partnership businesses, which are banks and corporate agents, brokers, online players, and ecommerce companies, is now about 45% of the business. That is a very critical part of our metric that we monitor. Why that becomes critical is that agency, as you know, the way in India, because of regulation, it is a very high cost and a very high fixed cost model. So one thing we always look at is seeing how we can variabilize our cost more than anything else, and the bank assurance allows that kind of shift. So that has been a happy bit. Although within that, how we'll be different from the larger companies, and these are the bank promoted companies, and some who have given their silverware to other to to banks to own, we are very clear that not a single distributor is gonna be more than 20 to 25% of our business. Unlike the larger ones, that is going to be, I think, once bitten, twice shy with agencies is 92%. We've learned our lessons there, and that's something that we'll be very, very clear. No single bank, no single partner will have a subsequent will have a such a huge portion that today, the large companies suffer from, I would say. In terms of product mix, it is I think Srini mentioned it very clearly. We are we've that was the journey of being a 75% EULIP company to now under forty percent. Of course, it's to do with COVID as well at this point in time. But that's the way we see the ballpark we will range, and that is a very critical bit. Within that, we'll have nonpar term, nonpar guarantee. We also intend to look at the health business, but only for a small impact for the next one year. But we do want to look at the morbidity risk, which we've not been experimenting with. Although I must say that you saw seventeen percent nonpart term, which is, of course, a very healthy one. This was zero last same year last quarter. This is also because of COVID push and the fact that the rates of term were quite low. The rates have now gone up because of reinsurance, so this will taper down. So let me just I mean, be very realistic about the proportions of them. This will come down to the sector, and and we won't be very different in the next six to nine months. But, yeah, I'm quite happy with the fact that we were this is untested muscle that we were able to bring up. Internally, there are a lot of other bits that impact us to build up these external matrices, cost efficiency, percentage of fixed cost, the throughput from every salesperson, the productivity as we talk about, the what percentage of business is coming from new products. So are we relevant in terms of our product fees? The way we manage risk, I think that's a very critical part. Some companies, as you would see, are getting aggressive on this. We will always remain conservative. The bane for the life insurance sector globally has not been underwriting, but more guarantees. So very careful of that. And we put a very robust risk management piece in the last one year in place, something that is usually not visible. In addition to that, we're quite strong now on our mortality risk as well. It is something which was not so robust three years back, and now we are as good as anybody else. Probably, I'll leave it there. There's a lot I can still say because this is a very exciting area for us in a as a group, and we're quite happy the way we are now moving. Sure. No. Thank you. My second question is related to what you just now mentioned. I've always deeply appreciated strong focus on underwriting and intelligent and careful underwriting both in basic, which we have seen all the time. And basic also now beginning to emerge with the strengthening of the initiatives over last couple of years. Now I have as an investor, I have one dilemma when I look at underwriting profits. In basic, it's easier because insurance policies are only for one year. And premium done and the claims and expenses logically correlate. And to that extent, we can see what are the underwriting profits. And those underwriting profits are probably almost entirely close to the reality. But in life insurance, whatever insurance I've underwritten in the past or a distant past may reflect as a claim today. And to that extent, my ability to correlate today's premium with the past claims doesn't give me a good As far as expenses in life insurance are concerned, they probably will be more closely correlated to the current year premium earning and expenses also will be fairly higher in that year, though there'll be expenses pertaining to the past as well. Now as an investor, I can't really correlate this data very easily and because I simply do not have means to be able to do that. So unless and until the insurance firm, computes the real underwriting profits for life insurance, I'm saying, by properly correlating premiums earned in a particular period and some kind of a sense of history of the how the past underwriting has been reflected in form of claims, judicious allocation of cost and expenses both to the new business as well as to the past business so that we can get a true picture of the underwriting profit. Is there any way we can get a help on this? Because while I'm sure all of that must be being done carefully, but in a general insurance short term product of a one year easily allows underwriting profit to be closer to the reality as shown. But in life insurance, it is more complicated given the longevity of the property. So, what will be your comment from that? Bharat, can I take that question? Yes. You know, what you say is right. We declared a new business value, which is nothing but the future projected cash flows as made on certain assumptions of persistency, debt claims, surrenders, and whatnot. Now your question says that, did you actually deliver on that? And how do I, as an investor, know about it? Correct. That, I think what happened in life insurance is large part of the first year premium. Most companies are most products run at a loss. Depending on the product, the strain on new business, we have seen that early when the companies were growing. Then we saw a period of rally in the industry after the global financial crisis, then suddenly the statutory profits the reported profits went up. And now last few years, are saying that reported profits are not growing. All the new business value is growing for many players in the industry. One of the things we could think of, maybe from next quarter, we can disclose how much is the new business train on our new business, which means that if I wrote 100 rupees of new premium, how much is the loss I have incurred on that? To that extent, it might answer your question because then if you remove that loss, how much is the profit from the existing book? Internally, of course, we have models and different metrics we track including, you know, how the new version value flows through. And we also have a lead that claims subsequent that claims are all that. But they become too statistically complex to actually disclose. I think in a matter of couple of years, if this India is one one seven comes, I think it will be required that you show the development of the margin in subsequent years. I think that's one of the requirements of India is one one seven or the IFRS seven 17. So as of now, that's what I can tell you. And Yeah. That is we're disclosing the new business when when when when will see what the market is doing as well, but we'll try to see if we can give some flavor on our debt claim underwriting capability with term and savings products. Sure. Yeah. That exactly was my intent. And thank you for saying what kind of data can be given. Because past new business value assessed will reflect today as a number whether it was fairly completed new business value or it was overoptimistic or underoptimistic. And that kind of a data over the trend line of the past, only you as a company can can do. I, as an investor, really more capability to be able to actually We need to close on the embedded value of the variances by different categories. But, anyway, we will revisit that and see what we can do. Sure. Sure. Tapan, do you have any comments to offer from that? Sorry. Sadhu, do you have any comments to offer? No. Largely, I think Sriniv commented on that already. The issue is basically two pronged. We're very different as a business. We just don't write only risk. If you are it's a 90% risk business and 10% saving, it would have been a lot easier to depict the way you are wanting to know. And the other is our AP is really a long term AP. So there are enough complications in terms of modeling and reserving at the back end. Hence, it is a it is a very different business. It's not just about underwriting. It's a lot many things that play there. So I myself wondering how to be able to answer other than what she's saying. I think transparency and simplicity are unfortunately something that are alien to life insurance at serial mode. Okay. Yeah. No. That is exactly my dilemma because good underwriter should get recognized for what they are doing in a careful risk controlled way. What the work they are doing should be recognized. Because current numbers can get confused with growth with the way business is being slanted. Sometimes, too much of nonparts, sometimes too too much of, you know, one kind of a policy and profits and other numbers can get confused. But core to insurance business, whether general or life remains underwriting profit as a core, supplemented by investment income, and both engines must fire. And good underwriting skill should reveal in terms of pricing power, prudence mix, distribution, balance, persistency, everything. And, therefore, through underwriting profits are identified and provided, then I think it it should be results in a better respect and valuation of careful underwriters compared to the others. And data is a data point. I mean, much as I struggle, I'm unable to do it myself adequately. That is why I discussed, Bharat. One is that, you know, actually more than underwriting in terms of risk, it is all mostly predominantly about guarantees. There's two things which life companies do, which nobody else does, is actually, one is giving guarantees on investments that is fairly long term guarantees on either regular premium or single premium. And the second thing they do is take long term mortality risk that people will die natural death. Because actual death is also covered by general insurance. Clearly, in these two, there's a considerable amount of statistical models, particularly in the latter. And one has to you know, because some of the products are, like, thirty, forty years. So I may be able to report profits now. But in twenty years time, the profit is not there. Then it you know, it'll be very difficult to prove that. The other thing on guarantee so, ultimately, it all boils down to how much you want to expose to this risk as a portfolio. B, how do you track it? What kind of external instrument you will use to hedge the exposure? Like, in the case of guarantees, there are instruments available some extent. And thirdly, how you diversify your portfolio so that you are not a one horse race? So, fundamentally, we use more management principles and risk principles here and try to control our exposure. That's why you won't see us talking too much about our nonpar guaranteed products and offer very fancy returns because we don't think that's a good thing to do in the long run because, cyclically, you may, at times, get caught. Sure. No. I appreciate. I appreciate. I thought I'll just leave the idea on the table. Thank you. Yes. Thanks. Thank you. The next question is from the line of Asmug Gala from Finvest Advisors. Please go ahead. Paragbhai, several important questions. Now I will just add one or two things. Should we start reporting the VNB margin every quarter? Because I think a lot of things which go in the background in the insurance company, which we are not aware of. But at least when you give VNB margin and if possible, the embedded value, like the other companies have started doing it, I think that two parameters will help us to understand the direction with the life insurance company is taking. So what is your view on that? Although we are not listed companies, but still for, you know, helping the investors to appreciate the results better. Sure. Yeah. I'll tell you. The reason, we are not doing that is because quarter one is basically a very weak quarter for the whole industry. Correct. Usually, the expenses are up fronted. So they they didn't give a correct picture. And I don't think there's a regulation or any framework under which we can report rolling 12, kind of margins and all that. So the last time we had in the call discussed this, we said we will consider reporting this, half yearly from this September. We are still working on it. Hopefully, we should be able to disclose at least interim And we divide the industry largely. It's a half year half year business. You know? Business starts picking up slowly in July, then it and some work goes up in 02/03 because of the MBRT and the agent, reward programs. And the last quarter is the tax season. This year is the the whole that's got upset as well. Okay. Forward, the tax season was extended. The renewal dates were extended. So we are into that, and we'll see whether we can disclose it from q two. Okay. Okay. That would be great. My second question for, you know, Badjik as well as Balihi is that going ahead, do you expect sizable chunk of claims to come either COVID or non COVID related? Like you already correctly mentioned in your presentation that lot of motor claims could come up, health claims of non COVID related treatment could come up. So are we capable to handle all that? And how will it affect our finances? Yes. As far as finances are concerned, we said we have increased the margin for adverse deviation. So we have made based on available information because there are limited ways in which you can't can't just put something there. You can only do it on existing policies. To that extent, we have actually what is allowed under the actuarial standards and IT guidelines. We have, reviewed that and made some provisions. Now exact amount, don't want to disclose now, but there have been some assessment of each of these as I told you about. Regarding ability to handle, Tapan, you can take that. Yeah. Okay. Thank you. I think it's interesting question because, this is very relevant in terms of how the quarters will move, going forward. Yes. So we need to look at now, on a per day basis, the number of claims have In fact, for the industry, they start touching close to 10 course now, you know, which is there. So expectation, if you look at it, that the COVID claims will move up. And, like, Shini mentioned, we have access and we have made provisions on that basis for the ensuring that, no, as it moves up, we are adequately provided for it, and we don't start losing, you know, in terms of, where you'd be caught by surprise. The second phase where we feel that, things will come is the third party part. As you see, he mentioned in opening speech. Right now, because of course being closed, you know, a lot of judgment have not come. And then because of delay in judgment, there would be interest, which will be levied. And the claim size will actually move higher is our belief. And, again, for that also, we have no SSR test and provided for it in terms of how how Okay. The third part is motor own damage. No? So because of lockdown, a lot of, vehicles went, less movement. So there seems to be, you know, an advantage there. But what we forget is that as the lockdown gets over and you look at in the countries other than India that has happened in the past, let's say Wuhan, China is the case. Mhmm. Lot of people prefer to move in their own vehicles. No? Yes. Yes. Looking at commercial movement, which means that the number of vehicles on the road increases dramatically, which also means the frequency of action goes up. No? And it so belief again, as you rightly know, thought about it, the time should come, the motor will also move up. And that also we have now put it to understood and see how it could provide for. So the company, we appoint we have essentially three big impacts which would happen in businesses. In fact, some impact would also happen in the industrial business. But that's because of the if you look at the initial result and the down one cycle, that was only gonna impact it to a large extent because of the cycle which is happened, which is there. But predominantly, retail line, this would see big impacts, which we have no taken into consideration and we have no provided for. So in that sense, as of now, we feel that based on the information that we have and our assessment, we would be prepared, no, to handle the scenario as it progress further. Okay. K. My last question is on the crop insurance. What is your thinking? Like, how will we move now? Which are the states which we will cover up, etcetera? That is too micro question for investor call. No? I think but let me give you a broad view on that. If you look at our crop performance, we have been there from 2014 in crop insurance, if I'm right. And every year, have been able to generate profit. No? So our segmentation, our picking up the states, and our spread of the business has been our hard work on the ground in terms of deployment of people, in terms of corporate insight, in terms of collaborating with the government, in terms of technology reuse, I think we have been pushing ourselves and picking this business pretty well over time consistently. So that will remain the same. I think that is what we have done. And if you look at it also, like, Srini mentioned opening speech, even for three years the government requirement, we have also arranged for good, reinsurance, support in that sense. So this is our business that we really worked hard, understood the business well, and we'll continue doing the business as we have been doing in the past. Okay. Okay. Thank you very much, Wish you all the Thank you very much. Thank you for your questions. Thank you. The next question is from the line of Harshita Tosh Newal from PremG Invest. Please go ahead. Hi, sir. Two questions. One on the protection. So clearly, in Q1, we had a strong competitive pricing advantage, but we have taken the rate hikes in the near end of the quarter. To that extent, I understand that maybe for the volumes might normalize. But our market share, which we saw, how do you think that gets impacted for the balance nine months? Okay. I presume this is to Balik. Yeah. Yes. So we had a very aggressive pricing, but at the same time, a very strong underwriting capability, which we put. See, what we've done is we've increased prices like anybody everybody else. And in fact, honestly, we would have wanted to increase more. But, I mean, there was an informal understanding that companies will not increase more than a certain amount. Now what we've done is we've got both a nonmedical and a medical rate. And we do expect that the price hike will affect the overall business for the life sector because as advisers could see this coming, they've ensured that they have pushed a lot more term cover as a fire sale in the first three months of the quarter. And, honestly, with COVID there, there's a lot more interest in term, particularly in the lockdown had exponentially taken up the risk thought process. Now we are going to be focused on term, but, overall, I do find at this point our guaranteed products are going to are selling more off the shelf and and flying off the shelf more. So I do not expect the 17% is sustainable because there was a movement of significant purchase that was happening. Now that is going to get down. So within our own business, there is going to be a reduction market share there. But, nevertheless, it's going to be a engine which we are very clearly looking at. Plus, we are very mindful of the kind of risk we are writing. So, therefore, we are only hardening our underwriting as we're going and getting more and more experience. So when there's a lot of demand for a product, you have to balance out underwriting as well. So we we wanna be mindful of that. As as far as the sector is concerned, we'll be broadly in sync with the sector. Does that answer your question? So seems like we lost the connection for the current participant. We move to the next question from the line of Lalitap Srivastava from Shere Khan. Please go ahead. Yeah. Hello, sir. Thank you for taking my question. I wanted some on magic business. We had, you know, this is a yearly renewing business. And we, as an insurer, would have, you know, assumed a certain number of hospitalization days for an average client for a particular age category. And so let's say, suppose we have the average cover is around 2 lakh, and we have assumed x x as a probable amount of expense claim claims to be paid. So two minus x is what is the margin that we have. Now with the COVID situation, not only the probability of a a day or three day hospitalization has gone up, the the the expenses have also climbed, which means that the margins that an insurance company would would normally have would, you know, considerably come down for a lot of its customers if the pandemic, you know, continues the way it is. So my question is that, you know, are we expecting or are we how are we planning to address this stuff? Thank you. Come on. Yep. Okay. Thank you. I think I'm very impressed with all the interesting questions that are coming up. Pandemic is a black swan event. When a black swan event happens, lot of things changes very, very fast. Let me explain two things. One side is where you are saying that the COVID claims are coming and the expense obviously, the fact is the severity has moved up considerably, and the frequency also is moving up, you know, which is there. The second place we look at, most hospitals, if you heard them, their occupancy is only thirty five percent, you know, for non COVID part of their hospital that they have kept. Because many people are not going to hospital right now because of the fear of COVID. So whatever can be postponed or what does not require urgent intervention, we're not going. So it's interesting. Across the world, the occupancy of hospitals fell sharply in the COVID time. India also, I think 25, 35% is the occupancy of hospitals. No? The beds are going now weakened, you know, which is interesting. While the COVID ones are overflowing, these ones are going empty now. So, obviously, there is some benefit there of beds going empty based on the previous calculation. That is a relief. And COVID, obviously, is building up as the claims are moving up. Now, Shini, in his opening speech, also mentioned that if you look at our Badgic shares, about 4% which is there. And a company like Badgic, which has got multichannel, multiproduct, multidistribution, the widespread, we assume things like this. Let's say when a cyclone happens, then the property doesn't get hit. No. That's why these two cycles happened early on. The first month itself, we got it in April and May. So this two cycle, they are pretty bad. And that is built up. No? So the generation's business expect these things. That is why a good insurance company will diversify their product and will diversify their geography also, being at different places. So when certain event happens, it does not cripple the company to a larger picture. Now that is why if you look at Badgeek as a company, because of its diversified presence, it is able to handle the charts pretty comfortably, and it's been tested over time. Now coming to the health part of it. In the COVID part, as you rightly mentioned, now if you see the severity and the frequency is moving up, and the per day cases are moving up pretty fast. The two things happening is interesting here. A lot of home treatments are happening now, you know, which is there. The hospital beds are not available, and that home treatment has a different cost compared to a hospital treatment. That's what happens when ventilators are in place, then the frequency and the severity moves up. Now having calculated that and uncertainty of that, in our books using the actual calculations as provided by IIT and the actual practices, we provided for these kind of future events to be happening. So that when it happens, we already provided for it. We're not caught up by that. But, yes, the black swan events are very, very interesting. They teach you a lot, and they they got very, very interesting factors which is there. So very good question. And as a company, as I mentioned that, no, we have looked into this, and we are making that trend and how the claims will be moving up, and we are providing for that. So we're not caught up by that. But because of our distribution and our multiple strategy and our strength in nearly all the products that are in the market, essentially, Even if this goes out of control, company will not be hit very, very badly. Yeah. Thank you, sir. Thanks a lot. Thank thank you very much. Thank you. The next question is from the line of Daval Gada from DSP Mutual Fund. Please go ahead. Yeah. Hi. Thanks for the opportunity. I had three questions. First is for Kapan. This is related to the the retail health business. So last year, I understand we set up a separate vertical for for this business, and, you know, we expected the supply distribution to gain significant advantage on the growth side. So but when I look at the market share trends, it doesn't seem seem to be reflecting the momentum as yet just yet. So just wanted to understand when should we see the benefits starting to kick in in terms of more velocity of sales and and the consistent 20% plus kind of momentum on this line of business. So that is first. The second, again, Sudhafan, is on the crop business. So he historically, we've had this philosophy that this is a a seven to ten year business and could be looked at in cycles. So how does the regulation change impact the overall business model thought process that we initially had? Does it change that, or it only strengthens the approach to the business? So just wanted to understand the outlook on the fraud business. Maybe you partly answered, but just more clarity. Then the third one was to Tarun. This is on the agency side. So over the last couple of years, we've been, you know, trying to maximize profit of this channel by reducing the share of Gillip and and optimizing it for other products in order to get closer to where, the large size company like iPRO, etcetera, operate. So just where are we in that journey and how much more is is left, to see the benefit, on that front? And lastly, again, to Tarun, as far as persistency is concerned, we have been more migrating to this, you know, one one step higher customer segment more to mass affluent kind of category. But and then traditionally, that segment offers better persistency is what our understanding is. So why are we not seeing that in the fourteen month persistency just yet? Is there some other reason that I should look for to see the benefit company in the subsequent business? Yeah. Thanks. Evan, you want that first? Yeah. Okay. Go ahead. So, again, thank you for your question. So let's talk about the health vertical. If look the health vertical, it will be going around 30 odd percent. No? But what we have to see also that Badriq was not in started health, fresh with health vertical. We already had health in our portfolio done by our agency and our different distribution network was already there. So from a pure health vertical perspective, they'll be doing well, but the base would be big for them to make a huge impact, which you will see in terms of growth percentage we are talking about immediately. And at time, we will see that would show impact on that basis, which is there. So we understand that it's not that health started, no, just about a year and a half back in Magic, and that is why if I look at Google Health vertical, yes, they're going ahead 70%, their growth is going fine. But we already have large pool of retail health, which is there in the book that we have. So on that, when we add that, this percentage growth looks lower. But having said that, we look at the percentage growth still over the industry growth, which should be there from a retail health perspective, which is there. So that, obviously, we continue doing and continue building on that. Right? So that's a significant line of business, and we keep on working on that. And it depends also. Sometimes we go aggressive. Sometimes we go slow depending on how the market is behaving and how the underwriting and the profit pool in the market is seen at. So it is not something that we consistently press the accelerator. At times, we deactivate also if we don't find the market conducive and push it. But, yes, we have all the armies and all the distribution network already filed whenever you want to file a particular product in a particular line of business, in a particular place, which is there. So that is why you don't see all a big impact, but, yes, it's a channel when you look at, it has an impact which is there. Coming to the top business, if you look at it now, we have already been close to five, six years. And when I mentioned earlier, if you look at a longer perspective also, and now we are seeing a lot in also. And then all the six years, if you look at, the Vatican is able to generate profit on the business. And the next year also, which we have acquired case and tender, and we end the business. But as I mentioned, these are businesses that you have to work hard to understand, to learn, like any of business. We look at badging. It's only about cross. We look at our motor business, we have been able to do underwriting profit there. If you look at, you our property business, industry business. Knowledge of businesses, we have worked very hard to understand business as underwriting company, and we will put in date returns and profit on that. It's a million crop also we have worked on. We are gonna field. We were gonna claim settlement. We worked on the pricing. We worked on tenders. We looked at the the writing part of it. And if you look at the number of people we have put on the field and and crop, it'd be among the largest in the country that is there. So it's a serious business that we take and we work on it, and we deliver results on that also based on our core expertise which is there. And so we continue looking at it as I mentioned to you. We'll still be really fine things go out of control, but we cannot do it. Having said that, if you look at in the three years move, the pricing has gotten in crop overall compared to what was last year for the industry as a whole if you see that with the three years lock in has happened. And still, there are some significant amount of states that are participating in this. So I feel that the business is going strong, and let us see how it develops. I hope that will able to answer your question. But thank you. I love the question that you are asking. Thank you very much. Yeah. No. Very very questions. You asked me two questions, one on agency, the second on persistency. I think the agency one is particularly quite interesting. What you asked what you asked was that on the journey of profitability, where are we? And you've taken examples of few other companies. So see the agency is been on the path of information for the last three years. And I think as far there there are two, three levers on which you largely work. One is the product mix, which is possibly the most critical lever. The second is productivities, and the third is fixed cost. On the first one, I think we have pretty much ended our journey. We've we've achieved what we wanted to. We had a bias towards Eulips. Eulips need not necessarily be the most cost effective for for companies. At the same time, you want to shift only when you have a customer base that is willing to buy non Eulips. I think and a distribution which is capable of doing that. I think that transition has been very aptly made. And, like, this quarter itself, I was I was explaining that we are under 40% well under 40% for Eulips. But for the sake of comfort, I would assume that we should assume that 40% Eulips because Eulips are very customer friendly. They're not very shareholder friendly, but very customer friendly. So therefore, 40 where we'll keep that ballpark around. So we are a lot better placed now. And among agencies, I think we are as strong as every everybody in terms of our ability to sell non dealers. Something which is, you know, begging for years back. So that that journey is kind of ended. But as I was answering, Bharat, the the entire bit around the term sales is something the which is still now on, and we will continue on that part. So that part of the production will be more gradual. A very different kind of thing process versus selling a savings plan. On the on the productivity piece, I think we are as good as anybody else, particularly if you look at an indexing of, you know, with with with with leaders you talked about ICICI there. In terms of eulips and non eulips, if you index these products and try to figure out productivity, I think we are as good as anybody else there. As a productivity per sales manager gets to be a very critical piece. Then comes a bit about fixed cost. And honestly, this journey has very seriously begun thanks to COVID. And I think we've begun this with so much gusto than I don't think anybody else in the market is looking at. And we let me just give you a little bit of that. What we've been looking is looking at is to see if we can have a low fixed, high variable kind of a model where we can with an agency. So we are remodeling that and trying to see if we can pay for performance and and work aggressively on that model. A few companies, the smaller companies have got success in this, but none of the large agencies have been able to even start this process. I think we'll be the first ones to initiate it, and it's already started the path is already started. Let me put it this way. And that benefit will be seen in a couple of years. The second bit is how we manage our our fixed costs around admin and branches. Because given the infrastructure that we normally have to have for having a wide footprint like the way the Raja Liang flight has, that is a fixed overhead that we always carry. Now we we huddled up with a lot of consultants to look at various ways in which the rest of the sector is not in India, but abroad is thinking about work from home and being able to optimize that. We've basically gone back to the basics that agency business was never really meant for the offices were never really meant for customer walk ins. But in in India, somehow, it has been large agency offices and very little customer space within that. So what we've done is we've we've we looked at the combination of work from home, and Bombay is a model where we are trying it out first. Where what we're doing is now instead of a I'll just take Bombay's example, 15 large branches where we have anywhere between two and a half thousand to maybe even 20,000 square foot of space. The area customer area gets to be about a 150 odd square foot there. So what we're doing instead is we are consigned everybody comes to the branches, etcetera. But if you look at Southeast Asia, the way it works is that people are more out of the branch and selling than setting in the branch. Usually, in my afternoon, our branches are all empty. So what we've done is we are now consolidating 15 to six plates. And at the same time, these these plates would be in the same range, two and a half to 14,000, a few properties we own. But the rest of the branches will actually move into small smaller customer Shopee's. It will be about high street branches, 300, 350 digital branches where customers can self-service as well. This is expected to have a significant effect on our fixed cost, and we will be using a good mix of work from home. So we want to make this change as a work from home pitch and culture is just about begun particularly in Balik. We are quite seriously looking at it. So that is on the agency part. So on the cost of the bit, the journey started. I'll kinda summarize it at the end there. On persistency, you raised a very good point in the last two years, and I'm happy that you're all watching us, that the customer segment movement began in February. I think we've this will always remain a work in progress, but we are quite well placed. Now you asked this question with a tinge of persistency. And, yes, we the high network and the customers usually have a better persistency. How we are different from the others, appears, is that a lot of their customers are gotten through bank runs. Now that makes a big difference. If you're not able to contact the customer, you have another port of call, another port of data to really go and and be able to reach out to the customer. You've alternate numbers. You've got other means of reaching out another sales team almost at your behalf to help you with that. Given the fact that we are a largely agency business, we've had a slight of that struggle. But having said that, this is going this is the year where we will we will enter the club of 18. We would have done it in the last year itself, but for what happened in the month of March. But this year, are very clear that we will be in the 18 clubs. And then the movement begins strongly. We are really going after auto debit. Usually, fifteenth month productivity fifteenth month persistency is better than our thirteenth month. But, unfortunately, what is measured is fifteen, thirteen month by IDF. If you just look at the perspective of the second year premium and not just the thirteenth or the fourteenth or the fifteenth month, because all actual models actually look at the second year and not the thirteen month only, then we are actually well in the eighties already. Are we the best? No. Not yet. As a business distribution exchanges and the customer segmentation is going to be a work in progress all the time, this is going to get better. I hope I answered it. Yeah. Yeah. Thanks. This is all very clear. Just one last thing for Srini. Any update on the med tech and Finso market initiative? Any any plans for f r twenty one on those front? Thanks. No. I think they are basically, we are still fine tuning the model. Clearly, the fintech, they've learned they've been served direct model has already started selling on the marketplace. They're selling loans. But our initial letter, I mean, we prime primarily want to use that to attract new to Bajaj customers using us in completely this platform for distributing financial products. So they were selling more of loans, insurance, but because of the slowdown in the market, the sales will be a little bit slower than what we thought it was before this year. But, for the model to develop, I think it is still normal, maybe more than a year a week. But we are very happy with the traction of, new custom company website, we're utilizing the services. We also have our own, payment, interface, with Ashpay. So we'll wait and see. On the other one, we are still, you know, it's still too preliminary to make any advanced comment. We have started tie ups and pilots with a few hospitals and doctors. But as things evolve, we will be communicating more information. Perfect. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Abhijit Sarraf from Jefferies India. Please go ahead. Yeah. Hi. Good afternoon, everyone. Thanks for the opportunity. So I have one question on life insurance. Typically, the nonpart saving side, if you can just send a portion of it is all the and people have sector we are selling become so popular right now, and seems like most players are doing that. And, obviously, the share of non pass savings is short of very sharp 33%. And we do our acknowledge that on guaranteed rate, it can be a bit risk in the medium to long term perspective. So what are the total tolerance levels for the non pass savings kind of understand that right now, this line of the ship will obviously be temptation to deliver this tends to be a bit on the high margin side as well. But what are the internal checks and balances that we have in the yeah. And the kind of Think of the top before I Yeah. Yeah. Are you done with your question? Yes, sir, please. Yep. So, see, it's a very good question and a very important one. Guarantees is the one thing that life insurance companies, and Srini mentioned that in his starting suite as well, have to be very mindful of. We've been on the top of this and being very proactive. I can tell you that. I can give you that comfort very clearly. We normally hedge our portfolio well in advance. So so at this point in time, if I was to continue to write a similar percentage of this business for the next nine months, even a year, I am still hedged. So that's a good part. We as a group, we are very careful on risk, and that's exactly the way we are working on. So just to give you comfort, if this momentum continued even till March for us, we would not be in any stress whatsoever or be bothered to go cover more. But there is another point maybe. Let me just add here. Till now, we've been covering this risk very comfortably with very high grade corporate bond, triple a and triple a back with very strong management because triple a we know how triple a's sometimes turn out have turned out in the past. So very mindful of that. Beyond that, what we've also done this quarter is add in another layer of comfort through FRAs, France. So at this point in time, because of the high liquidity in the market, frauds are actually looking very, very comfortable. One of the reasons where life insurance companies are actually selling a lot many guarantees is because the the at the back end, have fraud to cover this. We've also started doing that despite the fact that we already well covered with partly paid funds. What we are already in the process, let me also give you a little bit more comfort, is bringing down our guarantees. Although we need not, honestly, at this point in time, because we are well covered from the August itself. So we're very clear that we want to be more conservative while other players may not be, but we are very clear that we will see. Instead, what we've done is we've moved our business, and that transition is currently visible a little slow because the non par is really flying off, like I said. But onto possibly a path breaking par product, which, again, Suneet mentioned, the five g six flexible income goal plan. This is something that is from August 1, it's going to be a very critical part of us, hopefully. If I can just add, Tarun said, clearly, if you look at, three types of products, power, non power guarantee, and unit lane, they actually meet three different, needs of the customers. Power, it gives a low guarantee, but it gives an upside. It just gives a lot of protection and typically sold with a lot of riders. And this is the product which largely caters to the middle class and the lower middle class across India. About a year, the license holder kind of product that is the lowest profit you can take. But clearly, without doing that, you can't be in business. And in the long run, it's an infinite ROE business if you build the results properly and remain in the business long enough. In case of non par guarantees, there are times when people want guaranteed. This is one of those times. The downside for the customer in nonpar guaranteed product is there's no upside. That's what you get. It's very clear from upfront. And from a insurance company's perspective, it is obviously important. Whatever means you use, you use cash flow and natural cash flow hedging. You could use a party paid bonds. You could use FRAs. And maybe in future, some other instruments may be allowed. But net net, what we are like to look at is when there is a market, you have to expose yourself. And this is one segment of customers who want guarantees or customers who normally want growth may look for guarantees when the market risk environment is difficult. Unit Linked clearly is the only product which has the potential to beat inflation in the long run. Although the performance of the Sensex and Nifty the last ten years doesn't show it has beaten inflation, but it is one where the customer, by investing prudently for the long term, can get both protection and growth beating inflation. So as market cycles change, you need to be nimble enough. The sales techniques required, the distribution required for selling each of these is different. Well, as a company, we would continue to be diversified. Depending on the market, we will expose them that they end up there. All the risk are the balance sheet risk, especially guarantees, which we monitor every quarter. We have detailed discussions that internally the company monitors much more frequently, and then we will take appropriate decisions. Sure. Thanks, Dan. That's quite reassuring. Last bit on it. Is it possible to share that to what would be the currently on a stock level? So if I were to compare with the balance sheet number, so what will be a share of nonpart in this in the guaranteed product? Let's say as a as a percentage of our liabilities. I think we have shown that, I think. It is Yeah. It's hardly anything How much is non par guaranteed products of our total retail? Bharat, would you have the number on the stock flow? I can say 30%, but the non power will be very, small. See, with 62,000 course currently under our belt 3,000 crore is the non power retail fund portfolio a year. 3,000 crore. That's accumulated balance sheet exposure. Yes. Yeah. A lot of that, this is the this is the one which is paying off. This is a large but about almost, like, two thirds of this is one written maybe ten, fifteen years back. So that's the one that's going up, and maturity is happening there. The new portfolio is pretty small. Okay. I mean, you've got a guideline again with this again with a lower You can start new series at different rates. So that increases the flexibility available to the company to manage the guarantees. Sure. Thanks a lot for that. Just one question on the general insurance part. So on other the catastrophe thing, what would have been our in in in I'm fine. The And this thing, I think this Raman, you have I think it's about 40 crores. Right? Okay. And, Harish, we need the total yeah. Total exposure is about 44 crores. Yeah. Yeah. That is net of reinsurance. Otherwise, on the gross basis, not higher. Yeah. It will long. And in reinsurance, I presume that other the excess excess of loss ratio, three d will be there. So our losses are capped at level in in these events? Yeah. Our reinsurance treaties, we don't want to diagnose too much, but they are structured with multiple layers. And, of course, that treaty is one of the treaties we have. But we have very good protection on our net, and there is a certain amount of risk we take as a company on catastrophes, but there are protections available on that as well. So if you look at the reinsurance commission, the cedar, through your ratios, you may get some feel of what we are doing there. Sure. Sure. Yes. Thanks a lot. I thought for that. Thank you. Next question is from the line of Kishore Kaushal from MaxLife. Please go ahead. Thank you for taking my question. My question is for Balik. Is any COVID that happened out of our customer base? How many claims have been received and how much we have paid for because of unfortunate COVID. Yeah. So there are deaths that have happened, and there's a total amount that is about 60 lakhs in that we've had. How much debt? Nine. Nine debt. Okay. Thank you. And one more question I have. Briefly tell about the retail protection through bank regular, pay term product, how our sales have, and how can I get some color on that without brokerage? Sorry. Can you say that again? Briefly tell about the retail protection through bank, regular patent product. How how are sales have? That's question. I think as of now, our protection product itself is only six months old. And as you know, bank insurance with some of the banks we're dealing with are basically branch based. They only started activating them since May. So it takes some more time for us to, you know, get more flavor of protection versus non par and unit and all that. Okay. Thank you. Thank you. Thank you. The next question is from the line of Deepika Gupta from FirstVerge. Please go ahead. Hi, Deepika. I have a couple of questions on this protection product. Firstly, which channels would we have grown protection this quarter? That's the first question. That I didn't really get exactly. You said something on the protection product? Ma'am, can you speak closer to the handset, please? Yes. Is it Meta? You want okay. You wanna know which channels are selling mono protection product? Yeah. Correct. Correct. Yes. What will be the data for the channel for retail protection? K. So the channels that have been selling this more are the online channel and the agency. Okay. Got it. So, you know, I just wanted to understand the market right now. You know, we've seen a very high growth in the overall segment. At the same time, there's a pricing competition that we've seen among the various players. Given that protection is relatively a risk already the, you know, the pricing in India is quite low when you compare to the global averages. Do you expect, you know, the aggressive pricing on protection to continue? No. I don't expect the aggressive pricing to continue, although I just want to give it a little bit more hue to you. If you look at protection rates, and I'm gonna not talk one or two years, but in 2000 and the way they have flown all the way then in 02/1015, now, protection rates have really come down significantly from the time there was no private sector. And they they've come down drastically. So if you look at it from that perspective, there's only a little blip that they've gone up. And hence, I would say that for from a customer perspective, I think these are still low. Currently, there is a major reaction of not buying too much protection at this point in time in this quarter, more because there was a fire sale of low cost products that have happened till May, June. I expect now that the prices of of term plans will only remain the last. So, you know, I just want to understand the long term strategies here. You know, you've been highlighting with all the additional pricing is low, but we're trying to make it up by better underwriting. You know, once you see the market sort of stabilizing, you know, what kind of advantages, you know, could a player like Bajaj have? Or, you know, because you already have a few for larger players in the market. So how are planning to compete with them? That's my final question. Thanks. I will take it before I hand it over to Tarun. You see, unlike general insurance, it is very, rare for, customers in life insurance to be chased by multiple companies. Because the way the distribution is for life insurance is that the bank has got its customers. It tries to sell it to its customers. You have agents. Each of whom has got a set of customers. They try to sell it to those customers. And people are I mean, people don't know. Right? When a car is sold, immediately, there are means of knowing that somebody has bought a car, and therefore, by the next year, they will all chase that car for renewal. So in that sense, you know, it is not that if somebody is doing better, that we would do worse. Secondly, in terms of term life, it is more or less a commodity. There is no, financial value. Of course, we do sell a lot of, return of premium product, but no return product sense. And therefore, it is a question of how you manage your distribution, what kind of product mix you have, how do you drive a profitable growth on that. Arun? Yeah. I think Suneet's answered it to a significant bit. So there is nothing that is going to be suddenly coming out of a magic box on this one. We have a dedicated distribution. We haven't been in term for such a long time. Wherever, this commoditized product can be upsold, it will be. Our advisers have been passed for this, so they are going to keep selling. The only bit comes in when you require something different from your competition, when you have an open perfect market, which is really the aggregators. In that perfect market, we are as good as somebody else, and they're usually the brand plays a big role. I think that by itself will be a strong enough bit for us. When you adjust about, you know, 2% of the entire life insurance market if I count in LIC, I don't think we require too many you know, we need too much of rocket science really to make it work very well, if you ask. Okay. Yeah. That's it. Thanks. Thank you. The next question is from the line of Rishi Junjanwala from IIFL. Please go ahead. Yes, thanks for the opportunity. A couple of questions both on the Motor side. So one, we wanted to understand basically, if you look at last year, there was a significant divergence or at least growth differential between your Motor OD and Motor third party products. But what we have seen in the past four months in the lockdown that the decline in businesses in both the businesses have been similar. So just wanted to understand, you know, the reason behind that, whether it is because of the vehicle mix, or is it that, you know, because of impacted by new sales versus renewals? Just wanted to understand that first. Yeah. Tavan? Yeah. If you look at it from the lockdown period, most businesses in motor came down. But commercial vehicle came down very heavily. Know, the decline commercial vehicle was to the tune of 60 plus percentage. Obviously, they would be paying premium when they'll be moving on the road. And if you look at our business mix, it's distributed well between four wheelers and commercial vehicle, some two wheelers which we have. So our significant drop in the commercial vehicle segment had that number that you're seeing there because the drop is there. But as the commercial starts picking up again, I think the numbers should get better. Understood. And secondly, just on the loss ratios, so we have seen significant improvement on the OD side, but we have seen a lot of, you know, basically, the TP loss ratios go up substantially. Just wanted to understand, you know, how are are there different ways in which you are assuming, you know, provisioning in both of these considering, you know, the lockdown, and do we intend to see that converge for the rest of the year? Rishi, I think I answered that early in the my opening speech. We did the margin for deviation, and with the longer tail businesses, we'll obviously get a higher share of that. So we still don't know how this thing is going to evolve in terms of both health, motor, OD, TPs. To some extent, commercial claims may be a little bit easier to predict. So, therefore, we'll see as it evolves. So this quarter, we may have some impact of that. But, otherwise, we don't see any major trend. Yeah. Agree with you, Shree. I think you're familiar with us. Yes. So just on on PP, basically, given last year, we clearly had 65%. So do we expect for the full year also that the numbers will be substantially higher than last year? Never ask your general insurer how to market claim ratios be. And we have two micro questions. Principle. If you ask me tomorrow, I won't tell you because I don't know if tomorrow there is gonna be a storm or not. So I think we have two micro questions, but as I have, like, I know what you said that we work very hard to ensure that, you know, we underwrite well. We pick up good risk and serve the customer well. We continue doing that. So, you know, to tell you exactly what the next move would be and how would we go to the business. I don't think we can do that in the first call. Okay. Alright. Thank you. Thank you. The next question is from the line of Daval Gada from DSP Mutual Fund. Please go ahead. Yes. Thanks for the follow-up. I just had a question for Tarun related to the Axis Bank channel. How does life change after the sort of formal announcement of Max Axis transaction? And any progress that you've made on the credit protect business from the bank or the other channels where we were not given access initially. So just some comments around your thought process on that channel. Thanks. Okay. So, yeah, we got the access transaction last October. At the time we got it, we were well aware that there will be that there'll be one major player, and there'll be a smaller share given to us. I think that was something that was very clearly told to us by the access management. I think they've been very transparent on that from day one, and we appreciate that. And it's it's pretty much remained the remained the same after the announcement as well. So nothing has really changed for us from that perspective. As far as the channels you talked about, well, we we're currently in the liability sale, which is really the new customer acquisition channel, and that's where we'd we'll be selling only. As far as credit protection is concerned, we've we've been in two zones of of access, and we continue to be there. I'll wait since they've come in the productivity of these zones have particularly gone up versus what they were earlier. And at the same time, I must say that it's not that credit for today flying off the shelf for because credit is not being given out at all. So that but it's going. It's really going slowly at this point. That these are the channels that we are not in there. Understood. Thank you. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to miss Manipabji for closing comments. On behalf of JM Financial, I would like to thank Mr. Suneemastin and the senior management team of the insurance business and all the participants joining us on the call today. Thank you, and have a good day. Thank you. Ladies and gentlemen, on behalf of GM Financial Institutional Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

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