Q3 18/19

Jan 30, 2019

Ladies and gentlemen, good day, and welcome to the Burcharge Finserv Q3 FY 'nineteen Earnings Conference Call. 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. Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Karan Singh from JM Financial. Thank you, and over to you, sir. Thank you. Good morning, everybody, and welcome to Bajaj Finsur's earnings call to discuss the third quarter FY nineteen results. To discuss the results, have on the call mister Srinivasanu, CFO, Bajaj Finsur mister Tapan Singhal, who's MD and CEO, Bajaj Alliance Gender Insurance mister Miran Chaudhry, CFO, Bajaj Allianz Gender Insurance and mister Ramandeep Singh Sani, CFO, Bajaj Allianz Life Insurance. May I request the management to take through the financial highlights, subsequent to which we can open the floor for q and a session. Over to you, sir. Good morning, everybody. It's our pleasure to host you again for our conference call for Q3 of FY 'nineteen for the quarter and period ended thirty first December twenty eighteen. Welcome, everyone. We have already uploaded our opening statement on our website yesterday. However, for those of you who have not had a chance to read it, I will just go through it shortly. In this call, we will largely be concentrating on the consolidated results as well as results of our insurance operations through Bajaj Allianz General and Bajaj Allianz Life Insurance companies. Bajaj Finance, which is another major subsidiary of ours, has already had its conference call. However, if there are any high level questions, we'd be glad to take that as well. We'll not be taking any questions on the status of Allianz stake in our insurance companies, except to state that the status has remained the same as at the end of the previous quarter, and there's no change there. Any statements that may look like forward looking statements are just estimates and do not constitute an assurance or indication of any future performance. As you are aware, this year from quarter one of this year, we have moved into Indian accounting standards for our consolidated results. Raj Finance is also on in the AS. The insurance company's stand alone results are on Indian GAAP. The IRDA is the Preparation of Financial Statement Regulations. However, for the purpose of consolidation, they do make available to us in that compliant financial statement with the reconciliations. We do have a provision against exposure to ILFS. In the case of BFL, the exposure is secured. The total amount is approximately INR $2.40 crores. It is a loan against property. The property is complete. It is already leased out. However, because the matter is subjudice, the escrow account is temporarily not we're not allowed to withdraw from that. The account went into an MBA bucket, and we have a cumulative provision of 23 on the total outstanding, including interest outstanding. So last quarter, we have provided 10%. We have increased it to 20% plus the additional interest. In the case of Badrik and Balik, Badrik had total exposure of approximately INR50 crores, INR49 crores. They have provided INR37 crores till now, 75% of our exposure is provided. This is on the commercial paper, which is unsecured on the holding company. And last quarter, we have provided 25%. We have increased it to 75% this quarter. Similarly, in the case of Balik, have INR126 crores exposure to the nonunit linked portfolio, which is largely non power and shareholder funds. Again, we have raised the provisions from 25% to 75%. During Q3, this has resulted in a pretax provision of INR25 crores in Badrik and INR66 crores in Badrik. Overall, the quarter was we started this quarter on the aftermath of the events that unfolded after the ILFS default. And thereafter, there were tight liquidity conditions. Interest rates were very volatile. The ten year GSA rate went up to almost 8%, and it has come down. And liquidity conditions remain tight. In this circumstance, I think it is remarkable that Bajaj Finance has produced its highest ever quarterly consolidated profit. The AUM grew by 41%. The profit after tax has grown by 54%. And our consolidated profit has grown by 16%. Bajaj, General Insurance profits are lower than last year for a variety of reasons. One of them is the provision we had to make for ILFS impact on the investment income. We do have higher expenses. As you are aware, we have won a large number of bank assurance relationships over the last two years, including some very big ones, and this required some extra investment in manpower. As the business has started coming in, and we hope over the next few quarters, business will continue to grow. There are certain couple of segments where we have found the loss ratios were higher than what we anticipated, although overall loss ratios are under control. This was on group health particularly. And we will be tweaking our portfolio as we go forward to address this. So to summarize, 39% growth in consolidated total income, 16% growth in consolidated PATH. We believe the quarter has been quite good for us. There is also one more aspect that this quarter, our growth in GI business has been very strong. We have grown 35%, which is significantly higher than the market growth rate. And even excluding crop, our growth rate is 33 against approximately 16% growth rate for the market. So this quarter, our earned premium to return premium ratio is actually lower than the same quarter of last year. But over the next six to nine months, that will get adjusted. In the Life business, again, individual rated premium continues to grow. As you recall, last year, around this time, we had announced that we wanted more stability in our product mix. And therefore, we will be pushing for a greater proportion of traditional individual products in our business mix. I'm glad to report that by the end of this quarter, we have achieved 61% unit and 39% traditional compared to 72% unit and 28% traditional. Overall, in Q3, we have seen subdued performance on the higher ticket unit market. People are cautious because of the range bound equity markets. And so all market linked products are temporarily subdued. We do hope that Q4 and a couple of quarters from now, things will improve. However, uncertainty will continue until the elections are behind us, say, for the next two quarters. Renewal premium growth has been strong in Life at 20%, and overall GWP was also higher at 22%. I will now open the floor for questions and answers. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answer while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Parag Charywala from VitoCap. Sorry to interrupt, but, sir, we are unable to hear you that well. Can you speak a bit louder? Hello? Am I audible now? Yeah. Sure. Thank you. Yeah. So what I was asking on general insurance business is that if you look at the regulation pertaining to payer and higher ATP, my understanding is is that, you know, the agency will have slightly tough time because at the start of the, you know, policy when the new vehicle is sold, I think OEMs will have a a better say. So even traditionally, we are very, very strong with agency. So how does this impact our business? That is first question. Yeah. Secondly, if you can just highlight with respect to the retail part of motor as well as health. I mean, we have done quite well on the group side in the health, but what is the outlook on retail and on the retail side, both on motor and health? Because the growth looks slightly lower on this side. Okay. I will before I pass it on to Tapan, I'll take your first question. Yes, you are right. Because of the three year and five year mandated third party policies, it does move more business to the OEM because at the point of sale, insurance is always sold along with the motor vehicle. But our in Badgic, we have always been very strong in the OEM segment. And apart from the OEM, we also have a large number of dealers who are motor insurance service providers. Our agency business continues to grow quite well, not only in motor but in other lines. So that broadly answers your first question. But now I'll hand over to Tapan to handle your to add to this. Thank you, Suneet. So if you look at in the new car policies, they're talking of c plus three plus c, which means that, no, you're talking of OD three years and TP three years. The penetration is just 2% for that kind of policies. So typically, we see most policies are, right now, even from the OEM perspective, having a three year TP but one year OD, which means that still it is open to agents and others. But to your point, and as mentioned, we also see a trend moving towards OEM for these vehicles in times to come. But as Srini mentioned, our strength on the OEM and the private car is very, very strong. If you look at 97% of the vehicles which are sold in India through the different OEMs, we would have a tie up with them along with other partners also, but that is where we are. So I think if the business is shifting there also, we are strongly positioned in that space, too. So that would be something which would be there. The two wheelers, obviously, the penetration is much higher. It's 21% of the five plus five, which is there. And in two wheeler space, I think if I look at renewal ratio also earlier when it was a one year policy, it used to be 25% in the next second year. So in a way, I think the problem, the two wheeler issuers of under insurance or no insurance would, to some extent, get solved by this. That's a positive sign. Now coming to the point of retail health, if you look at in the GI space, if you exclude the health insurance, standard health insurance companies, the growth of Badgic and the retail health would be better than the GI growth of retail health overall. So which gives the comfort that it is not there. But yes, the standard health company's growth is much better. And it is also our ambition to see that we can push that to the next level. But China Health company has their own advantage because of regulatory help or arbitrage that they have that they can appoint anybody's agents and process for now appointing agents for them is much easier and the process of so they have their advantage. And that's why to do a fair comparison, you have to look at GI companies' growth rate in retailer to voice over budget. That will be a fair comparison. But having said that, as I mentioned, we are working on seeing that how do we reach to a higher growth rate compared to a stand alone health company also. The retail is still going strong. If you look at our agency, number of agents growth has been compared to last year, close to 64% growth in number of agents that we had. So we are focusing on retail, and we are focusing on agency, and we are growing our agents also to take it to the next level. I hope it answers your question. Just to add to what Abhin said, we just checked the numbers. For Q3, the market growth rate for GI companies in Retail Health is 0%, and we have grown 13%. What do we look about the market, right? I mean, even if the standalone is doing well, I mean, it is the same time where everybody will have to See, there are two issues there. A, stand alone companies are growing well, as Tapan mentioned rightly, because they have a couple of distribution advantages. Having said that, we are not aware of any stand alone company making really good profits. At a sustainable level, they have to make somewhere because this is they don't get any float benefit out of retail health, which is very small. It's short tail business. Having said that, we have always focused on that, and we will be looking at the stand alone companies as well as we go forward. Compared to many other banker type of players, we do almost entirely our portfolio is indemnity based products, which is more long term, which is renewable and which is higher ticket. You. Thank you. Thank you. Next question is from the line of Ridhi Mehta from Haidong Securities. Please go ahead. Yes. This is Hitesh from Haidong. Thank you for taking my question. So my first question is, because we have grown so fast in this quarter, will there be an impact of not being able to defer the acquisition costs in Q3? And what would that range be? And secondly, sir, my second question is, what would be the group health claims ratio? Because you spoke about that being slightly moving upwards. So that's only two questions. The first question, this is a very normal thing that when you grow in that till the premium gets earned, you will have the impact of acquisition as well as direct expenses. So that is something if you continue to grow, we will continue to have that strain. The question is whether we are building our unearned premium reserve healthily and whether as the business pans out, you will make profit. So in a down cycle, we will generally recover a lot of the profits. In terms of group health, for Q3, our loss ratios have been 102% compared to and last year, again, it was 104%. Overall, for the nine months, it is at 100.4% compared to 96.5% last year. Sir, can we quantify the impact of acquisition costs on this cost? Okay. The government because it is not required under the law. But roughly, if you wish, you could take the proportion of net earned premium to net return premium. And that same proportion of acquisition cost would be deferred. Next question is from the line of Utsav Gokirwa from Investor Capital. My question is with respect to the Life Insurance business. As you mentioned in your initial commentary that there is a slowdown in the high ticket ULEAP, and that that is largely because of the, because of the market scenario. Just want to understand, is Balik is gaining market share in high ticket EULIP because the large the the the largest player is, losing market share over there. So just want to understand the dynamics of that high ticket unit. Raman? Yes. So see, the data at that level may not be available, but what we are focusing on is high ticket dealers largely come from the affluent category of customers. And in the last two, three years, our focus has been that because we were loaned to be a mass market company in the past, and our focus was to move to the mass affluent and above category. Just to indicate to you how we are migrating in this category, about in FY 2017, about 37% of our business came from this category of mass affluent and above. That has moved up to almost 50 now. So we are penetrating more into that category. So maybe in an indicative way, it answers your question that we may be eating into the pie of others in that segment. Just to add to what Raman said, see, we had launched for the first time this gold assured product, which has a return on mortality premium that we hold to maturity. That has been a big success. And for some time, there were no comparable products in the market that helped us gain market share. We are also gaining market share on the online space, both on a B2C as well as the eulip side of web aggregators. Growth rate has been very strong. So the way we are playing it is by customer segment, by channel and certain channels, we are being able to leverage the power of the channel better, and that is why we think we are getting growth. At the same time, on the other end, we are also looking at sustainable product mix by selling more of traditional business through mainly through our agency channel and some parts of our institutional business. This, we think, will provide us the balance and the risk as well as ability to control expense overruns and thereby report a higher NPV and margins as we go forward. This clearly is a thinking process, and I think this was outlined last year again, and I'm repeating it now. And we will continue this journey. We are very optimistic about the Life business over the next three years because all the levers are functioning, and we continue to push those levers. We hope the result will be as we expect. Sure, sir. Sir, my second question is with respect to Badgic. So in this quarter, we have increased sharp share of group health, and our loss ratio is also higher in that segment. So I just want to understand, by next year, what is, our key focus segments? And, which are the segments we see further improvement in loss ratios? Before we pass it on to Tapan, I will just briefly say it's such a dynamic business that what is good for you today may not be good for you tomorrow. So therefore, we are continuously evaluating our product mix, our channel mix, introducing new products, looking at low ticket, high ticket and across the lines. As we gain experience, we continue to tweak our portfolio. So we would expect that next year, some of the loss making lines are where we feel the market conditions have changed. We would slow down on those, and we'll try to push more aggressively on those lines, which currently are profitable. Kapand? Yes. No, thank you, Srini. I think you sum it up beautifully. But if you look at group health, it constitutes a major chunk of the health portfolio even today, overall for the industry. And the group health loss issues are typically hovering around the 100 or over 100. I think if compared to last year for industry group health loss issue has reduced from what it was. Group health group health predominantly would be at a loss ratio close to 95 to 100. Because if you look at a company, if the group health loss ratio is 30%, they would do in source insurance. Why would they give to insurance company? No? So group health typically gives you scale to negotiate with hospitals. It gives you scale to experiment. It gives you scale to understand the portfolio. And when you look at a corporate overall, they give you, let's say, fire, marine, group health. That is a combination of portfolio in which you would get 40 lines of business, and you may also get a loss swinging business overall as a basket. So it has a lot of other dynamics at play when you look at a group health portfolio as it comes through. Having said that, as Sridhar mentioned, I think we have we keep a very constant watch in terms of that no portfolio should start breeding for us overall and then not give us strategic advantage. And keep on tweaking on that basis. So this year, overall industry group health loss ratio had reduced, and that's why you saw a bit of growth in the private company overall group health, you'll see a growth for all private companies in the industry. And in next year, again, loss of due dates, you would see a decrease in the group health portfolio going forward. So as you mentioned, our business is very, very dynamic, it moves very, very fast. Depending on how the market is moving and where do we see an opportunity, We move in and move out as it progresses. I hope it answers your question. Sure, sir. Thank you. Thank you. Next question is from the line of Krish Sampak, a digital investor. Please go ahead. Sir, my question is on the reinsurance business. We are hearing reports that Alliance wants to enter the insurance business. Is it with you or they are going separately with some other player? See, Allianz has always been present in the Indian reinsurance market by providing support through reinsurance treaties as well as facultative support on a case to case basis for not only us, but for other companies as well. Now because the regulation has come where foreign reinsurers are allowed to set up branches and they get an order of preference, which is superior to cross border reinsurance, which is done from outside India, they have decided to set up a branch in India that will be 100 owned by Allianz. It will not conflict with our business because we are not in the reinsurance business. We are in the insurance business. And through this branch, we will also seek support of Allianz where we feel they offer good terms. Tamal? I think Sriri summed it again as beautifully as it can be. So if you look at the reinsurer and direct insurance are different businesses, as Shini mentioned. So and all direct insurers have strong reinsurance backing. Like for us, we have Allianz, we have Munich Re, Swiss Re, we have Berkshire, who back us up strongly in that basis. And because of the regulatory requirements, now our reinsurers who set up a branch here get order preference. That is how regulations have been defined. So if you look at most of the big players that set up their unit here, be it Munich Re, be it Swiss Re, now Allianz has also set up their unit here. I think in the Berkshire Group company, they have generally which has set up their unit here. And they're all owned 100% by their own stuff. There's no conflict with rate insurers. It's just a natural flow of the relations for them to set up their business here. That's what Allianz has also done. They are allowed 100% ownership? Yeah. In in a reinsurance plan, that is how relations are. So if you look at not only Allianz, see, Munich Re, you know, which, again, if you look at it, is there in Indian market with Apollo, you know, or or with if you look at January or Swiss Re, they all set it up 100% basis. That's how regulation allowed it. So these guys already did the reinsurance in the market. But now because of order of preference, the reinsurance that we offer to companies has a branch locally, first, before it goes outside, it so is advantageous for them to set up a branch. So they set a branch here, which is very natural. So and there's no conflict with it. It's something which is already happening, but now that we have a physical branch, where new regulations just come in. Okay. And my second question is, sir, do you can you share the embedded value of the life insurance business as of thirty first December? No. We don't. We will publish it in March. Okay. Sir, my the other question is, sir, you know, I asked this question earlier also. Do you have any target for growth rates in the embedded value? Because, you know, I see that, you know, it is subpar compared to your competitors in the life insurance business. Typically, if you see embedded value, I mean, we are talking about the operating return on embedded value, excluding the investment variance because investment variance can be positive or negative each year. Typically, you see the ones which are bank sponsored and which are captive banks, they tend to have maybe 12%, 13% or higher return. And typically, non bank sponsored ones will tend to have a slightly lower one, maybe 8% to 9%. They have some cost advantages being captive in the group and doing more of retail products and long term products through their own captive bank. But we are closing in on that. We did have an issue of overruns, which was much higher than what it is today. That had dragged down our return on EV. But year on year, we are seeing improvement in our ability to handle the overruns. Our product mix change also should be favorable for our margins, net of overruns, and we hope this will add to the embedded value. To repeat what I said earlier, we are focusing on the levers of quality business, pushing the right levers, and we expect the results to come. If they don't come, we will do course correction as and when it happens. As of now, things seem to be working very well in our favor. My question was, have you a target that you should be in the top We two of don't have a target for EV as such because EV is actually a you cannot drive business saying that this will result in so much EV. You can only drive business for products which will give you higher margin, balance your product mix, which then has to be married to what the customer wants and what the distributor is willing to sell. So it's a very complex thing. We can put anything on paper, but actually the market may behave differently. So it is something you have to continuously evaluate, rebalance and course correct, which is what we do all the time. And that is how we have arrived at a more sustainable product mix now. I understand that, but just to take this point forward, you know, what is happening is even after selling, you know, whatever products that we are selling Yes. We see that the cumulative value adds capturing the embedded value is not getting reflected there. So you may sell a lot of premium, but if it is not captured in embedded value, do you think that's the right way going forward? No. I think we did have several bad years when we had some de growth in our especially in our individual rated premium. And in a business of this scale, when you do not have growth, then your operating leverage acts against you. Last three years or so, we have been growing well, but we would still like to see our top line growth will drive embedded value. To answer your question more succinctly, if we draw back some market share over the next two to three years, we should see an increase in embedded value because we are selling products which are much better margin on an overall balanced basis. Thank you. Just to add to what Sriniv said, I think the issue has been in the last few years, we have seen a significant amount of degrowth and then we got into this journey of transformation. And if you see, we've started seeing the green shoots from that. Our individual rated new business growth was about 40% for the last two years. For nine months, again, it's pretty high at 15%. Our product mix last two years has been largely concentrated on unit, which obviously we couldn't afford with the kind of expense structures we have, and that's where we are now diversifying that, and you've seen a significant improvement in that. Our Protection business has taken off significantly. Group Protection growth this year has been at about 60%. Our renewals were very stressed. Our persistency levels used to be the worst in the industry. Our renewal growth this year is at 23%. Persistency is inching up to at peer levels. So I think all of the parameters are now looking positive. And once you start seeing the benefits of that flowing to the P and L and obviously then to the EV is when you will see this stabilize. So at this stage, we are still in that journey of transformation, and we're still trying to improve a lot of these quality parameters. So maybe a few more quarters, then you'll start seeing the results. You very much. Thank you. Next question is from the line of Vinod Rajamani from HSBC. Please go ahead. Thank you for taking my question. I just had one question on General Insurance. Could we see a softening of OD rates because insurance will try to lock in customers for longer periods on these multiyear policies? Also just related to that, what kind of investment leverage would be there on post this new multiyear policies? I will let Tapan handle the first question. Investment leverage will be mainly coming only from third party. And what we look at is, really, that is not the purpose we do business. Third party is a statutory business. We have a quota of third party business. And when you do OD business, it is attached to the OD as well. So the dynamics of both will play when third party you make profit, OD prices will be under pressure. Secondly, younger and smaller companies will always try to be very aggressive in the motor business because that is the one which is the easiest to scale up as compared to other business, which requires a lot more capability building at the back end. So we are not particularly looking at it, but we have always been focused and among the top companies doing motor business. Our investment leverage has always been about 3.5 to four times. We haven't taken borrowing as yet. But other than that, if you look at the pure cash flow generation this year, our AUM is INR 16,300 crores. We started the year at a little over INR 14,000 crores. And hopefully, we will end up in the year by adding another close to 1,000 crores. So we have always been generating AUM through appropriate product mix. Tapan? Yes. So the softening of rates has happened. So your point out there is right. But with further soften, I don't think so. I think the initial impact of softening, whatever had to happen for rates on OD, has already taken place this year. I don't see further softening in the years to come. I think people are realizing that softening is not, you know, really giving them the value that it should be. So my hope is that the market will not soften further, you know, in the next year. But, yes, this year, softening has already happened in the motor market. To what extent would you say, I mean, in terms of OD rates? 20% in the new vehicles. You. Thank you. Next question is from the line of Sanket Kotha from Spark Capital. Please go ahead. Thanks. Thanks for the opportunity. Just a couple of questions. Just wanted to know, okay, can you quantify how much this advanced premium from the longer term motor plans, DG plans have contributed to our investment income investments, basically, area? The second question is, basically, just wanted to know your view on two wheeler business because the float created from these long term policies is significantly higher compare in two wheelers compared to the cars. So So just wanted to understand because the investment income could be a bit ticker for the profitability, whether you incrementally will be starting focusing more on two wheelers because it could be a significant ROE driver. And so basically on the similar metric which you have mentioned that 97 percentage of car exposures, mean, we have exposure to car OEMs, what are the cars that sold in India. So what would be that similar number for two wheelers for us? Yeah. What I have to add add here is that the overall advanced premium, what we got as on December 31, where the risk is going to commence later on in the in the coming years is around 150 crores. So out of this 150 crores, almost 83 crores is coming from private cars and 65 crores coming from two wheelers. As Kapam mentioned, right, almost around 98% of the four wheeler premium is coming through a one year OD and a three year TP. Whereas, there is a three into three or a three year OD and a three year TP is a very minuscule percent of around 1.6%. But the position is little different in the two wheelers. Around 20% or 21% premium is coming through long term. I mean, so OD as well as the TP bundled for five years. And around 80% or the 79% is coming through premium, which is one year OD and remaining five year TP. So I think this combination is going to generate this advanced premium and advantage in terms of flow. And, definitely, we'll be working because we have good penetration in terms of the four wheeler OEMs in the market. As far as the two wheeler market is concerned, we are already trying to reach our I would I would say penetration and reach to various channels, and particularly, there is considering the huge amount of under insurance in the two wheeler sector. It's not necessarily limited, only to the new two wheeler. Right? Here, I would request further comments from. Yeah. Thank you. So if I look at the two wheeler growth, it is about 27% right now in our business. We showed that, yes, our focus would be there definitely. And the new OEMs, our tie up is with Bajaj and Vespa. We're trying for a couple of more, which is there. But in the agency channel and our direct channel, I think two wheeler growth is very good. And like Milan said, because we see an opportunity of under insurance, no insurance in the renewal, we see an opportunity to see if we can tap that market, that will be good for us. So that is where we are focusing more. Just to add to that, I think I'll be a little bit cautious on this floor benefit. In the near term, yes, it looks good because the last few years, we have had good increases on third party premiums, which has brought down third party loss ratios. However, incrementally, the rate of increase granted has been coming down. As we go forward, this float is required to also meet inflation in third party claims over the longer term. So therefore, unless you earn a return which is higher than the inflation in the claims as we go forward, this float is required for that. Second question there would be, do I want to share my investment income also with the policyholder in the form of higher discounts on OD or on higher acquisition cost, that play can go either way because it becomes a cash flow underwriting effectively. So somewhere you have to one will have to draw the line. We constantly monitor this, and we try to keep the balance intact. Great. Thanks for answering the questions. Thank you. Thank you. Next question is from the line of Jitesh Chien from Investec Capital. Please go ahead. Sir, Pashuni, sir, sir, on the the float that we have got on this long term policy, $1.50 crores, is it the outstanding float out as of December 18? Because this number looks slightly on the lower side versus the your peers who have generated. The quantum is quite high for them. Yeah. That is that is the outstanding amount, which is there around thirty first December. And, sir, what is the quantum of money that we have received from for compulsory personal accident, and how is the penetration there, whether whether it is long term or one year policy that we are we are sourcing? I think compulsory personal accident has gone through a lot of turmoil in terms of first, it was mandatory, then it then there were some relaxations which came in. Then, again, there were some clarifications issued by RDA that there the vehicle owner doesn't have a driving license or where there there is already a PA cover. Those kind of so many amendments, I would say, carve outs are coming out. And there has not been a stable policy as far as compulsory PA has been concerned in the last quarter. So I think the real impact of compulsory person last year, we are yet to see. But I think as things are going with new vehicles, definitely, company for some last time is getting filed. But the initial rates which were filed, which was a kind of a standard rate at 750 rupees, which was initially drawn, I think that has gone down, and then each company has to file its own actually required rates. So I I think at this point of time, it will be difficult to comment the impact on the CPA. And I think these regions CPA regions, believe, of the customers also get to know more clarity about it, I think the real picture will emerge. Thank you. And sir, what would be the view on crop insurance now because the entire private sector seems to become quite cautious on the crop insurance? So what is our stand on the crop insurance going forward? Probably the pricing may become slightly more attractive going forward. As we mentioned earlier, I think we keep a watch on the market and depending on at our comfort level, we participate into all businesses. So prop also, I think we have watched and we have to look at reinsurance financing for this year, how the prices look at. And the tender base, so at a price which we are comfortable with, which I'm writing, we quote for that. So that's our view. For any business, we don't have a view that we'll be very aggressive. We because of business as a price we are comfortable with has been our philosophy right in the beginning. And for crop, it remains the same. And sir, lastly, on the MathHealth, we understand that Bajaj has won a bid in MathHealth in some of the states where the pricing was also very competitive. So how are we looking at that scheme from a strategy perspective? Yes. So if you look at the state that we have won the tender, as of now, I think the loss ratios look decent. So if you look at the tender in which we possibly the leader, that has been at the price that we bought, it looks decent. So now that we undercut the price for getting business where we participated as a leader in the tender. So as I said that for any business, now if you look at the entire GI business, you pick up group health, you pick up government health, you pick up crop, they contribute substantial amount of the entire market in terms of the business as individual from them. For any large company, I think they'll have to continuously work on that in terms of getting the business model right, in terms of looking at how to participate, in terms of pricing, which is right, and that's what we keep on doing. And if you see, most of the time, we get the pricing right in terms of where we participate in the tenders. Just one question on life insurance. If you can share some more detail on the texture on protection. What is the share of retail protection? What is the share of great life in that protection? Raman, but before I just add, we do predominantly our protection business through group protection. We have started selling retail protection mainly through our B2C and aggregator channels. So Raman, can you give more flavor on that? So like Srini said, you know, retail currently is a very small proportion for us. It's less than 1% of our individual business. That that's primarily because we don't have a competitive product in place. But in the next quarter, hopefully, we should have one in place. So that's an area we are completely out of currently, but that's something which we are focusing on, and you will see us come back over there. However, on the group risk part, which is credit protection and similar products, there we've been growing at a very, very healthy pace. So for the nine month period, we've done about 1,000 crores of premium there, which is a growth rate of about 58% compared to the same period last year. And this growth is primarily driven by Credit Life or Yes, correct. Thank you, sir. That's it from my side. Thank you. Next question is from the line of Abhishek Sera from Deutsche Bank. Please go ahead. Yes, sir. Most of my questions have been answered. Just a few things on the Can I speak a bit louder, please? Yes. Thanks for the opportunity. Sir, just wanted to understand in your VONB post overrun, so when do you think it will be turning? So I presume that it is currently running at a negative VONB margin, right? We will announce it by end of the year because the business is very seasonal and the operating leverage changes quarter on quarter. But if nothing really unforeseen doesn't happen, we expect to close the year with a positive margin, net of overruns. This will be the first time we are doing that in the last four or five years. And we think this is a significant milestone in our turnaround strategy because we have been pushing all the levers. Our renewal premium this year has again grown at 20%. Persistency is moving up. So all in all, our product mix has become more diverse. So all in all, all the levers which are required to improve the margins and controlled overruns are in place. Clearly, with further growth, we should again get more operating leverage, and that should further add momentum to this growth in margins. We think we are quite optimistic over the next three years. But by the end of this year, we hope to be able to deliver positive net margins after Overratch. Okay. Just a word of caution there, though, we are moving into the positive territory, but you also have to understand we are making a significant amount of investments in the new channels we are entering into. So just to mention, you know, we've done five new bank tie ups, including Dana Bank, Janna, Ujivan SFB, Bandhan Bank. So we will have to make some investments in terms of manpower in these, shops to get into the market share there. So next one or two quarters could be a little subdued because of that, because of the investment we are making. But like Shreedy said, I think we're moving rightly in the positive territory, and you should continue to see that trend going forward. Okay. Okay, sir. Nice to hear that. And sir, one last question on the credit life part. So you said that around INR 1,000 crore you did in the nine months. So means which are the key banker partners that you are seeing this growth coming from? Or is it like well dispersed? Just color some color on credit life, how are the key drivers behind that. There are two parts to this. One is credit life which we do with banks and NBFCs, where the largest one is the Vijad Finance itself. And then there are multiple banks after that. And on the the second part, which is about half the promotion is from the MFI space, where, again, it's well distributed with various large entities like Bandhan Bank, Ujiva and Janna SFP, SKS Microfinance now, Mujadj, sorry, Bharat Financial Inclusion. So it's a well diversified portfolio as of now, if you ask me. Great. So is it fair to now assume that going forward, the share of Meansbanka has definitely been one of your historically least contributing segment. So going forward, is it fair to assume that this will be rising further? And if you can give some guidance on what share you are looking from Bankai? Yes. Will take the question. I think, Vijay, only what we have been trying to do last couple of years was to improve our individual rated premium from bank assurance. At the same time, keeping the group protection, which is the ones which goes with the asset book of the banks. I think so far, the strategy has worked quite well. Our individual rated premiums are growing. In a few smaller partnerships, especially in the RRBMFI space, it was a big change actually because they're not used to selling anything other than loan book bundling of credit protection products. But we have made that move. And for the last two years, have had significant growth on a smaller base. But even this quarter, a lot of our growth has come actually from our institutional business on the individual rated premium side. Our endeavor will be to continue this momentum going forward to have the balance of both group and individual. But if you ask me in three years' time, I would expect the share of group to actually come down from where we are today and individual to go up. Fair enough, sir. And sir, share of Banka, if you can Banka, it depends. As of now, we have now Mandan Bank, India Post, Denna Bank. We also have a clutch of SFBs, as Raman pointed out, Ujiband, Janai, SAF. So we continue to seek tires. They are a bit slow in coming. We still haven't got a big bank yet, but we continue to be in discussion with a number of partners. And hopefully, over the next couple of years, we may get a couple of Bangka partners that can change the equation quite dramatically. But I think we have the team in place. We have a unique setup for integrating partners into our system. Our IT systems have been upgraded to handle Bankrupt. So we are in a good position now. Now we have also some names to show to potential partners. Hopefully, that will help us get more partners. All the best. So add to that, Shini, our focus, like Shini mentioned, has been that we move away from concentration on one product portfolio or one line of business or one channel. So agency used to be the sole provider of retail business for us for about the last few years. And from having a concentration of about 90% about two years back, we are down to 70% in this year, and this will only improve going forward. Fair enough, sir. All the best for your new types. Thank you. You. Next question is from the line of Nishanth Sabate from Quoted Securities. Please go ahead. Two questions. One is what is the percentage of claim inflation in third party that we're seeing in the last couple of years? Milan, do you have the data? Claim size for I I I don't have the updated one right now. Okay. Remember, right, it was around 5.8 or so for last year, And so it varies between 7.8% to 5.8%. But just what I remember, I don't have it often right now, but this is as far as memory goes. I think it varies according to the segment of business, especially in commercial vehicles, passenger carrying, goods carrying, heavy vehicles, light vehicles. And IRD also uses this information to grant price increases. So each month's business mix will determine the inflation there as well because some of them are prone to have more severe accidents than others. Sure. On the LI business, what proportion of the premium that you generate from the large financial credit protection? 30%, I think. Rahul? Yes. It's about 30% as of now. And the balance would be? Like I mentioned earlier from various other institutions, you know, MFI as well as banks and NBFCs put together. It depends. I would My my question was a little different. What you're saying is that 30% of your credit protect business comes from Bajaj. No. Out of Bajaj Finance's credit protect business, we do 30%. Correct, Raman? Yeah. Yeah. Okay. A little over that for nine month period, about 35%. So my point was that of the business that you generate from Bajaj Finance, is it only credit protect or you they sell any other products for you? So we've started the journey of selling retail with them, and this started only late last year. So in addition to credit protection, we are running various pilots with them to start selling retail. And this will be our first full year of doing retail business with them, and we expect a healthy double digit number to end this year with. On the share of retail, is it with the total business? Right. Great. Thank you very much and all the rest. Thank you. Next question is from the line of Adash B from Nomura. Please go ahead. Yes. A question on Life business, this ramp up in ULEP business in the last two two, three years. Just wanted to understand what RIV is, say, on a ten year product or or or a ten year basis you all are offering vis a vis where the other large players would be. What is RIV? The, you know, the the the charge that you bake into the product, the you know, like, if I exit the policy after, say, ten years, what is the, you know, gross return minus the net return in the ULEP business? That is set by IITA. In fact, our Gold Ashore product actually returns the mortality charges also. So I think after ten years, I only earned the we only earned the FMC on that product. So there are different products there. Raman? Yes. So I think the way we have to look at it is we do that at a very channel level. So with the channels which are high cost, you will see that there the range is in line with what the maximum allowed by the regulation is. But for lower cost channels, which is a proprietary sales force and online, there, like Srini said, it could be as low as only 1.35%, which is the maximum allowed FMC. So there's a wide range wide as in from 1.35% to what maximum the regulation allows. But I think overall, if you compare us with the industry, the range will be very narrow because the lever allowed by the regulator itself is very limited. No. The point I was trying to ask you is when you when you compete in this market, and I don't know how much of this, you know, pricing matters, but I'm just what what I'm trying to understand is there, you know, some of the players like ICS, CSPI would have a cost which will be significantly, at least as of today, significantly better off. And offering same or lower RIV, like like, how does it add up in terms of VNB margins for you? As in every product that we have launched, we are comparable with the best in the market in terms of the eventual return to the customer based on what the underlying investment does. So we do that benchmarking with every product in the market, and we are among the best. Sir, the return to the investor And should be our products are also similar to the range. Maybe LIC offers a higher return. But I we are in line with the market. Sridhi, I think Now what's from affordability perspective. So Go ahead. What what I was trying to ask is that that, you know, point I was trying to ask is, like, if you're offering probably the best returns to the investor and having a higher cost base, then the VNBs and EULIP, how is it stacking up vis a vis, say, at some of the larger guys? Or overall, like how are the VNBs in the EULIP business written in the last couple of years? So I think the right way to answer that question is the way we manage it is see, last few years, like you rightly said, we've been selling a lot of eulips, but that was with the clear intent that we wanted to get the scale of business up to a particular set of level of sustainability and then start focusing on having a diversified mix to manage our bottom line. So first question to answer ourselves is what product can be afforded by a particular channel to maintain a particular level of profitability is what we answered. So there, the need for diversification actually played in. And if you see what Shini mentioned earlier, we've moved away from selling a lot of eulips, largely in the agency channel, to now having a well diversified mix to ensure that our margins improve. Second, obviously, is that in the product segment itself, how much of play do we do? And that what I mentioned earlier comes from the fact that how much of cost actually gets loaded into from each channel. So the channels which can afford a particular cost level will be able to sell the product they afford. So like I said, online costs are lower, and hence, they can sell a product where the ROI is much lower than what agency can do. So that's how we play it. Understood. No, I'll probably take it offline. Thanks, Venkat. Thank you. Next question is from the line of Anirpan Sarkar from Principal AMC. Please go ahead. My questions have been answered. Thank you, sir. Thank you. Next question is Ladies and gentlemen, this is the last question for today. I would now like to hand the conference over to Mr. Karan Singh for his closing comments. Over to you, sir. Yeah. On behalf of JM Financial, I would like to thank mister Reshiniwatson and the senior management team of Bajaj Finserv and all the participants for joining us on the call today. Thank you, and goodbye. Thank you, everybody. Thank you. Thank you. Thank you very much. Ladies and gentlemen, on behalf of GM Financial, we conclude today's conference. Thank you all for joining us. You may disconnect your lines now.