Ladies and gentlemen, good day, and welcome to Bajaj Finserv Limited Q2 FY 2023-2024 analyst conference call hosted by JM Financial. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sameer Desai from JM Financial. Thank you, and over to you, sir.
Thank you, Ziko. Good morning, everyone, and welcome to the 2Q FY 2024 earnings conference call of Bajaj Finserv Limited. First of all, I would like to thank the management of Bajaj Finserv for giving us this opportunity to host the call. As usual, we will have opening remarks from the management team, post which we will open the floor for Q&A. From the management team today, we have Mr. S. Sreenivasan, CFO, Bajaj Finserv Limited; Mr. Tapan Singhel, CEO, Bajaj Allianz General Insurance Company; Mr. Ramandeep Singh Sahni, CFO, Bajaj Allianz General Insurance Company; Mr. Bharat Kalsi, CFO of Bajaj Allianz Life Insurance Company, and CEOs of Bajaj Finserv Direct, Mr. Ashish Panchal, and CEO of Bajaj Finserv Health, Mr. Devang Mody. With that, I would now like to hand over the floor to Mr. Sreenivasan for his opening remarks.
Thank you, sir.
Good morning, everybody. I welcome all of you to the conference call to discuss the results of Bajaj Finserv Limited for Q2 FY 2024, which also is the half year ended 30th September 2023. I must apologize for the slight delay on the technology front, and I apologize for that on behalf of the company. As before, in this call, we will largely be concentrating on the consolidated results as well as the results of our insurance operations through Bajaj Allianz General Insurance Company, BAGIC, and Bajaj Allianz Life Insurance, BALIC, and where material, the standalone results of our company, Bajaj Finserv, BFS. Bajaj Finance Limited, BFL, which is another major subsidiary of ours, has already had its conference call on 17th October 2023. However, if there are any high-level questions on BFL, we will 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. The status has remained the same as at the end of the previous quarter, and there is no further update on that. Any statements that may look like forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance result. Now, remarks on Ind AS. As required by regulation, BFS prepares its financials in compliance with Indian accounting standards or Ind AS. Insurance companies are not yet covered under Ind AS. They have prepared Ind AS financials only for the purpose of consolidation. Accordingly, for BAGIC and BALIC, standalone numbers reported are based on non-Ind AS accounting standards, Indian GAAP, as applicable to insurance companies.
Our results, the press release accompanying the results and our investor deck have been uploaded on our website on Friday, and I do hope all of you have had a chance to go through the same. I will now move on to the business update. I will start with our mutual fund business, Bajaj Finserv Asset Management. Our AMC commenced business in this quarter, launching liquid, flexicap, and arbitrage funds. We have provided an update on this business in our investor presentation and will continue updating you every quarter. The total assets under management stood at INR 5,235 crore at thirtieth September 2023, with a market position of 29 out of 42. Over the next few months, BFS AMC will be launching other categories of funds, including balance funds, ETFs, et cetera. The start has been good.
However, as you may be aware, the asset accumulation in the mutual fund business happens over the long term with SIPs and other formats of investments used by retail customers. We hope to be able to continue the initial momentum going forward. Now for the update on the performance for Q2 FY 2024. Macroeconomic conditions were favorable during the quarter, with a higher level of business confidence. In this conducive environment, our companies have once again delivered a very strong operating performance. Let me start with BALIC. In the previous quarter, we had explained how some of the initiatives we had invested in in late FY 2022 and FY 2023, such as focusing on smaller tier towns with a multi-channel model, expansion of distribution, doing more with bank insurance partners, and increasing presence in the large ticket corporate segment, was starting to bear fruit in terms of growth.
I'm glad to report that this quarter, too, BAGIC continued the momentum. BAGIC had an excellent quarter on both the growth and profitability fronts. Headline gross domestic premium income, GDPI, increased 53.6% YOY, as we reported already, while core GWP, excluding tender-driven crop and government health business, grew 22.4%, both well in excess of the industry growth of 16.1%. BAGIC also has reported a 95.3% combined ratio, measured as defined by the IRDA, along with an underwriting profit of INR 37 crore, which is its best performance over the last several quarters. With the aid of higher investment yields supported by strong growth in AUM, BAGIC recorded 39% growth in profit after tax.
In Q2, BAGIC continued its growth in motor business, recording strong growth of 20% in the two-wheeler segment and 17% in private cars. BAGIC continues to be selective on the commercial vehicle segment, where it focuses on the lower risk and profitability, and hence, this segment grew at a muted rate of 6%. Commercial lines, which include property, engineering, liability across MSME, SME and large corporate segments, grew 8.6% as against an industry growth of 6%.... are not on the earned premium. When growth is strong in the general insurance business, the earned premium grows less than the gross premium, as premiums are deferred across the tenure of the policy, while costs are written off upfront.
As a result, you may note that the net earned premium grew only 8% in this quarter, but this unearned premium is expected to get mostly earned in the subsequent quarters of this year and the first half of next year. Although I must caution here that if growth in GWP continues strongly, the additional premium will also take longer to get earned. For Q2 FY 2024, the loss ratio was 78% as against 75.5% in Q2 FY 2023. The combined ratio for Q2 FY 2024, as I mentioned earlier, was a healthy 95.3%, as compared to 99.8% in Q2 FY 2023, driven by better expense ratios and reinsurance terms. It's the lowest combined ratio in the last 14 quarters.
We expect this will be one of the best among competitive general insurance of companies of comparable size. During the quarter, Bajaj reported an underwriting profit of INR 37 crore, as against a loss of INR 18 crore in Q2 of FY 2023. In a market which is intensely price competitive, this operating result, we believe, displays Bajaj's commitment to a balanced and profitable growth on the back of strong sourcing, claims management, and effective customer service, as indicated by low grievance ratios, high LPRs and low claim repudiation ratios. This balance, we believe, is very important for sustaining profitability in the general insurance business. Profit after tax of Bajaj at INR 468 crore in Q2 FY 2024 was higher by 39% as compared to INR 336 crore in Q2 of FY 2023.
The higher profit after tax was attributable to better underwriting results and better investment performance, including higher profit on sale of investment. BAGIC AUM grew by 13% to INR 29,511 crore as on 30 September 2023, versus INR 26,052 crore as on 30 September 2022. The advance premium from long-term policies was INR 1,643 crore as of 30 September 2023, which is higher by 33% over September 2022. In summary, an excellent quarter for BAGIC. I must, however, reiterate that insurance is a long-term business and subject to volatility in claims. We do believe that focusing on core principles of balancing growth with profitability and quality should keep BAGIC in good stead in the coming quarters as well. I will move to BAGIC next.
In the previous quarter, Bajaj had reported muted growth in NBV, although growth in individual rated business was strong. We had mentioned in our call that we had chosen the relatively slack Q1 for launching a new yearly product, which is low margin and which caused the NBV growth to be muted. We have further indicated that we are taking steps to balance the product mix. I am pleased to report that with the launch of the eighth participating product, Bajaj has been able to correct the product mix and return to a healthy NBV growth. During the quarter, Bajaj continued its above-market growth trajectory and reported an individual rated new business growth of 32% against the industry and private players' growth of 13% and 16% respectively.
The market share in IRNB terms increased from 7.3% in Q2 of FY 2023 to 8.2% in Q2 of FY 2024 among the private players, leading to BAGIC maintaining its ranking on IRNB basis at sixth position, and fifth position based on retail regular NB policies. BAGIC's two years IRNB CAGR of 32% in Q2 of FY 2024 is among the highest in the industry. The total number of policies for BAGIC grew 23% to 316,000 in H1 of FY 2024, which is the third position among private players, and with the growth in Q2 being even higher at 27%. Overall, IRNB mix for Q2 FY 2024 stood at par, 32%, non-par savings, 24%, term, 4%, annuity, 5%, and unit, 34%.
As compared to Q1, par mix has improved by 19% and unit mix has dropped by 8%. In absolute terms, we have seen a significant growth this quarter in the term segment at 82% as compared to Q2 of FY 2023, and 9% as compared to Q1 of FY 2024. During the quarter, growth was broad-based and driven by all the main channels, with agency, institutional business, and BAGIC direct growing at 34%, 31%, and 35% respectively. During this year, BAGIC started activating several of their recently signed corporate agency tie-ups with AU Small Finance Bank, South Indian Bank, Development Bank of Singapore , City Union Bank, Tamilnad Mercantile Bank, Punjab and Sind Bank, and Jammu and Kashmir Bank. Moreover, with the opening of a rep office in Dubai, BAGIC looks to further strengthen their institutional business.
BAGIC now has a reasonably large number of bank insurance tie-ups, which should help it reduce concentration risk on its institutional business over the next few years. Another point, I would like to highlight here is the various initiatives undertaken by BAGIC to improve persistency across most cohorts, especially in the lighter markets. As at 30 September 2023, the 13-month persistency stood at 83%. The 49 and 61-month persistency have improved to 63% and 50% respectively. The increase in persistency over the last few years helped deliver a strong growth of 31% in renewal premium in Q2 of FY 2024. New business value, net of all expense overruns, grew by 25% from INR 190 crore in Q2 FY 2023 to INR 237 crore in Q2 FY 2024, mainly due to a change in product mix and interest rate movement.
Profit after tax grew by 21% from INR 160 crore in Q2 FY 2023 to INR 193 crore in Q2 FY 2024, supported by higher shareholder income, lower death claims and partially offset by higher new business claim on account of business growth. Overall, a good balanced quarter for BALIC, with a strong focus on retail distribution growth. We also saw BALIC bouncing back in profitability from Q1. Finally, both insurance companies are financially among the most solvent, BALIC with 466% solvency and BAGIC with 362%, and hence are well poised to weather any external adversity. Let me move on lending business, BFL and BHFL.
Q2 FY 2024 was another excellent quarter for BFL, with the company delivering on all its long-term financial guidance metrics, AUM and profit growth, return on assets, return on equity, as well as gross and net NPA. Continuing its growth story, BFL acquired INR 35.8 lakh, new customers in Q2 FY 2024. The total customer franchise as on 30th September 2023, stood at INR 7.66 crore, while the cross-sell franchise stood at INR 4.67 crore. Building on this customer franchise, the number of new loans booked in Q2 FY 2024 increased by 26% from INR 67.6 lakh in Q2 FY 2023 to INR 85.3 lakh in Q2 FY 2024.
The company's diversified business model has enabled it to record a strong AUM growth, as seen from the total AUM at INR 2,90,000 crore as on 30th September, which is 33% higher compared to the INR 2,18,000 crore on 30th September 2022. The quality of the book continues to be very strong, with a gross NPA, net NPA being 0.91% and 0.31% respectively, as against 1.17% and 0.44% at the end of Q2 of last year. BFL holds the management and macroeconomic overlay of INR 740 crore as of 30th September 2023. The company has released INR 100 crore from the overlay in Q2.
BFL ended the quarter with a consolidated profit after tax of INR 3,551 crore, which is 28% more than the Q2 FY 2023 tax of INR 2,781 crore. The capital adequacy ratio, including tier two capital, as of 30th September 2023, remains strong at 23.19%. The tier one capital stood at 21.88%. Bajaj Housing Finance Limited, the 100% mortgage subsidiary of BFL, continues to do well. AUM grew by 29% to INR 81,215 crore as of 30th September 2023, from INR 62,931 crore on 30th September 2022. Profit after tax grew 47% to INR 451 crore in Q2 of FY 2024, against INR 306 crore in Q2 of FY 2023. The capital adequacy ratio stood at 22.64%.
The GNPA and NNPA stood at 0.24% and 0.09% at 30th September 2023. In summary, another very strong quarter for both BFL and BHFL. Now, I'll give you some update on our platform companies, Bajaj Markets, Bajaj Finserv Direct, which is also called Bajaj Markets, and Bajaj Finserv Health. During Q2 FY 2024, Bajaj Markets attracted around INR 1 crore consumers on its digital platform, of which INR 2.3 lakh became customers, as against INR 87 lakh and INR 2.2 lakh customers in Q1 FY 2024. The lending, unsecured and secured lending of both BFL and partnership business disbursement for the quarter stood at INR 1,658 crore, as against INR 1,427 crore in Q1 of FY 2024.
It also sourced 82,818 cards, as against 74,146 credit cards in Q1 of FY 2024. In all these metrics, Finserv Markets has shown quarter-on-quarter growth. In terms of Bajaj Finserv Health, they carried out INR 12.37 lakh health transactions versus INR 7.02 lakhs in Q2 of FY 2023, having INR 3.4 lakh+ monthly active users. For the quarter, Bajaj Finserv Health had INR 15.74 lakh paying users versus INR 8.09 lakh in Q2 of FY 2023, with INR 4.3 lakh users having renewable products versus INR 2.27 lakhs in Q2 of FY 2023.
Bajaj Finserv Health is also expanding its provider network, which currently includes 103,000 odd doctors, 5,500 odd lab touchpoints, 2,000 odd hospitals. Using the network strength, Bajaj Finserv Health is able to offer and serve as differentiated product plans for both retail as well as the corporates for employee health benefit segment. In summary, both our emerging businesses have done very well in Q2 of FY 2024. I will now come to the highlights of our consolidated financial results, which reflect all of these, and which has been put up in our press release on 27th October. Consolidated total income at INR 26,023 crore was up 25% over INR 20,803 crore in the same quarter of previous year.
The consolidated profit after tax was up 24% at INR 1,929 crore, versus INR 1,557 crore. Under Ind AS, the insurance subsidiaries have chosen to hold a large part of the equity securities portfolio at fair value through profit and loss account, which results in unrealized mark-to-market gains and losses on investments getting included in the consolidated profit. The amount was a loss of INR 72 crore in Q2 FY 2024, versus a loss of INR 21 crore in Q2 FY 2023. If one were to exclude the volatile impact of NPM losses and gains, the core profit after tax would have increased by 27% in Q2 of FY 2024. Before concluding, let me just highlight the half year numbers as well.
BFL recorded top line growth of 34% in H1 FY 2024 at INR 49,303 crore. The consolidated profit after tax is a 35% increase at INR 3,872 crore. BFL recorded consolidated total income at INR 25,882 crore, which is a 34% increase, and a consolidated profit after tax at INR 6,988 crore, is a 30% increase. The ROE for the six months, not annualized, was 12.2%, versus 11.7%. BAGIC recorded a 41% increase in premium at INR 11,132 crore, 18% increase in profit after tax at INR 883 crore, and an ROE of 88.9% versus 8.6%, not annualized, for the six months ended 30th September 2023.
The combined ratio for the six months was 97.6%, versus 102% in the same half year of last year. BALIC reported a gross written premium increase of 10%, an IRNB premium growth in excess of 30%, profit after tax increase of 23%, and an NBV increase of 2%, 331 versus 325. Before we open for questions, considering the positivity of time, I would request the audience to keep their questions brief and not repeat questions which have already been answered, so that we can cover more queries during the call. With this, I invite questions from the audience. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Yes. Our first question is from the line of Swarnab Mukherjee from B&K Securities. Please go ahead.
Hi, sir. Thank you for the opportunity, and congrats on a good set of numbers. I had a few questions on BAGIC, BALIC. Firstly, on BAGIC, regarding the trend there on the government health side, I just wanted to understand, in your presentation you have highlighted that there is an impact that has come in worsening of the loss ratio for the health segment. If you could call out whether this 8.5 percentage point impact is only due to government health or the loss ratios maybe of the three health segments separately, that would be very useful. Also, in terms of the inward reinsurance commissions, what would be the quantification as a percentage of NWP? That would also be very helpful.
In terms of the profits, I think the profits were supported very significantly by the investment income. So wanted to know whether that would be sustainable or not. How should we think about it? For BALIC, I just wanted to understand the VNB margins on a 12-month rolling basis. We are still below what it was last year. So I understand that first half have been largely driven by ULIP and PAR. So, how should we think about the second half? Do we plan to push on PAR products? What is the appetite you are seeing on that side? So comments on VNB margin on that, and also factoring in the EOM guidelines, what would be your strategy for that?
One bookkeeping question on BALIC is, if you could call out the share of Axis Bank in our IRNB and the counter share there. And lastly, one quick question on Bajaj Health. So, in the presentation, I see an increase in terms of insurance partners on both life and general insurance side. So if you could highlight who you have tied up with and what is the kind of scale you expect out of these partnerships?
Yes, sir. Thank you. I think it is Bajaj Finserv Markets, I think you're talking about in terms of increasing number of partners and health as well. Okay. You have asked a few questions. The first one was on the health loss ratios and the government health scheme on BAGIC. The second was on the investment income and whether it was sustainable. And the third was on the reinsurance commissions-
Correct.
and how much it was as a percentage of NWP. In terms of Life, you wanted to know why the 12-month rolling margin is still lower than the same period of last year, and you want to know what is the concentration of business on Axis. And on Bajaj Finserv Health, you wanted to know the onboarding of additional partners on the insurance side. So I will first start with Raman to take the three questions on the general insurance side, followed by Bharat and then Devak.
So I'll take the first question on the health portfolio. To answer your question, whether the loss ratios have worsened in all the segments, the answer is no. Actually, if you break the segments in four parts-... One is retail health. There, the loss ratios have indeed improved versus last year. We had seen a lot of increase in severity in the last few quarters. That is kind of getting negated now because we had mentioned, if you recall, in the call two quarters back, that we were seeing a lot of frauds happening, and some of that is getting addressed now. So that's why the retail health loss ratios have started coming down.
On GMC, the loss ratios have been constant, and they are better than what we used to see pre-pandemic, and that trend continues. The other piece is also on retail, on the group platform, we also write a lot of credit-linked products. There also, the loss ratios have been very healthy and they continue. So to summarize, the only place where loss ratios seem to be higher are only because of the government health business in Gujarat, which we've retained. And there also, just to give you a flavor, the way that normally these accounts work, in the initial part, when we take over the portfolio from another insurer, the first quarter normally has a lot of backlog getting reported.
Now, some of them, you know, because of the transition from one insurer to the other, is not actually due but reported. And hence, you see in the first quarter, the loss ratios normally shoot up, and then over a period of time, they settle down. And that's what we are seeing now also. But the way we do the accounting, because these are reported losses but not settled, we will obviously account for it in the financial statements. So that's just to give you a flavor of the health loss ratios.
Coming to the investment income, the big chunk of increase you're seeing is coming from the advanced premium moving up. While obviously the investment performance has been good overall, that's because the yields have moved up in the last few years, few quarters, I would rather say.
Overall yields for the companies have moved up, and hence, that benefit. But the larger chunk comes from the advanced premium moving up. And like Srini summarized earlier, the advanced premium for us has actually grown by almost 33% for H1, from about INR 1,250 crore last year same period, to about INR 1,650 crore. So that's the big delta we are seeing now. Whether this sustains actually depends on how much of motor business we write, especially the long-term one or two-wheeler and four-wheeler. So it will depend on that, and obviously, the yields depending on the market. Now, also, as you-- we've discussed in the past, a big chunk of this growth in advanced premium for us is coming because of the two-wheeler business handicap we used to run in the past.
We don't call it a handicap anymore because our market share, which two years back on two-wheeler fresh business, used to be less than 4%, and now that's moved up significantly. And this quarter, in fact, that market share was upwards of 9%. So that handicap, which was there earlier, is now behind us. So barring, one OEM, we've now tied up with almost all the OEMs, and that's why you see this, significant growth coming, in the long-term business and, because of that, in the advanced premium. So this, this is just to answer on the questions you raised on BAGIC.
Sir, actually, if you, if you could address the reinsurance commission as a percantage inward commission as a percantage of NWP. And just to clarify, you, what you are saying is that the impact on loss ratios from the government health will unwind, later on.
Sir, I think what Raman indicated is that we have priced the government scheme based on our expectation of loss ratios, and this is also reinsured. I think almost 80% is reinsured, if I'm not mistaken. And therefore, the expected loss ratios do consider... In a liability policy, usually there are claims made basis or claims incurred basis, but in a annually renewable policy like this, is already claims made. That is, any claim reported after the new insurer takes over, is treated as part of this, one-year tender. So this is, in a way, what Raman indicated, this is priced into the product. Now we'll have to wait and see over the next two, three quarters whether that falls in line with our expectation or not.
Got it. Got it, sir.
Also, on the RI commission, you all, you wanted to know the percentage, right?
Percentage of NWP, if you could give an indication or the number.
I don't have the NWP handy, but the RI commission to RI ceded is about 14.5% for quarter two.
Okay. Got it, sir. Thank you.
Thank you.
Good morning. So I'll take the three questions on the BALIC part. The first question was on the overall NBM growth on the H1 basis. So see, as we've been mentioning, is that as of now, we are investing into so many new businesses, whether it is tying up with a new partner, which, Srini also covered, that we have signed up with six, seven more bank insurance partners. We are at the very early stage where we are, as of now, investing more than the, actually, the throughput is there. Secondly, if you look at that, we have also started investing a lot more in the agency channel in terms of our new business, business lines or the channel within the channel. Again, they all are at a very early stage of the, say, business expansion, and hence, their NBV or NBM signature is lower.
We always been saying is that for us, what matters is the NBV growth, and if you look at our NBV growth has been 22% on a rolling 12-month basis also. So to that extent, I think it's a mixture of too many things moving. Within that, if you also look at that, our group protection is not grown, which typically is a higher margin business. That all is playing in, but our NBV strong growth of 22% is there. So that's the one on the-
NBV part. With respect to Axis Bank, our share in the business has come down from 25% - 23%. In terms of the wallet share within the Axis franchise, we are there and thereabout at 28-29%, which is consistent to what it was last year. Axis Bank has been a good growth for us also, even in the, say, H1 basis, the bank franchises for us has grown by 14%, though our overall growth is 24%. The share is coming down, but it is still a good share in terms of our business. That was your second question. Anything else was there in that? Anything else was there?
No, sir, on Bajaj Finserv Health.
Yeah. Yeah. So, I think, Devang Mody here. So we work with all general insurance, standalone health insurance, as well as life insurance insurers, who roll out the healthcare benefit for their customers. We obviously are very proud to be servicing both our group companies on GI side as well as life side. In last quarter, we have added one major player. It would be inappropriate for us to name the players, as well as one life insurer, and we are working with lot of them to roll out our proposition to their customer. It's a long-run process. We create a proposition, they have to file the product, we have to integrate their systems, then they have to take it to their distribution.
We are very happy with the progress, and in coming time, we are confident that we will be able to work with more and more players. I hope it answers the question you asked.
Yes, sir. Very helpful. Thank you so much, and all the best to the team.
Thank you. Our next question is from the line of Bhavesh Kanani from ASK Investment Managers. Please go ahead.
Thank you for taking my question. My question was on Bajaj, where we have seen the expense ratio coming down, you know, much lower than the historical trend we have seen. So if you can help us understand the reasons behind that.
So if you look at the expense ratio, if you see, first see the GWP growth which we've registered, that is extraordinarily high because of the government health business which we've registered. And that's why you see the ratio factoring in this large, bulky business which has got reported, it's looking like a very nominal number. So that's one reason why the expense ratio is looking abnormally low, is what I would say. As we, you know, as the business gets normalized over a period of time, you will see it the ratio also normalize. And what we said in the past, the ratio is amongst the healthiest in the market, and we will continue to endeavor to do that. And yeah, that's how I would summarize it.
But it's also down on absolute basis, year-on-year. And, you know, even the base quarter also had a fair bit of share, in fact, a higher share of every in the premium collected in Q2 2023.
Yes. Overall also, if you see, you're right. If you look at the numbers on totality, expense plus acquisition cost, net acquisition cost is down by almost 7% on totality basis. But if I see it, excluding the bulky businesses of crop and government health also, it's down by about 1.3% is what I recall. That's largely because of the growth we've registered, but we've not invested that much in business. And that's why, you know, you're seeing the ratio improve. And what we cautioned in the past as an organization, you know, during the pandemic, we had actually scaled down a lot, and we will be scaling up now.
In fact, if you look at our employee count, pre-pandemic, we had gone down—sorry, during the pandemic, we had gone down to almost 7,700 people, and now we've already reached upwards of 10,000 people. So, while the loss ratio, sorry, the expense ratio this quarter is looking a little lower because of the high growth, but just a word of caution is that for the next few quarters, because we are still investing in manpower, and we had also mentioned that we are getting into the rural parts of the country, so we are adding new branches there. So it may move up a little, but like I mentioned earlier, we will still continue to or strive to be amongst the lowest in the industry.
So in effect, sir, we should not be taking this 95% combined as sustainable. What kind of number would you be targeting on full year basis, sir?
There are endeavors always to be better than the market. Now, the market, however, is unusually high. We know that the overall market is at 116%, but what we've been registering is close to 100%, and that's what we will endeavor for. And earlier, our journey used to be to aim at less than 100, but because of the investments we are doing now, which I mentioned a little earlier, we will probably be a little over 100% for the next few quarters, is what I would guide.
Let me add to what Raman said. I think there are multiple forces here. One is obviously how the loss ratio moves. There are different segments, some of which have been favorable, some not so favorable, as highlighted earlier by Raman.
... and how they will pan out over the next six months is one factor. The second is earned premium growth has been low, so when you look at expense ratio as a percentage of earned premium, there'll be one factor which should result in a higher earnings on the existing business that we have retained. And the third is the investment that we will continue to make. The advantage of the investment is if the growth comes next year also, we will get the benefit of operating leverage, and BAGIC as overall on an expense ratio, they would like to be among the best in the market. So that journey will continue, and we hope over the next few quarters, we'll be able to make it up.
But as a combined ratio, we normally try to say that we would like to be below 100, because if you want to be at 90, you have to give up too much of business, and the incremental business you give to get the incremental profit is, actually may lose market, share or market position. So that is something that we balance. We have been doing that over the years, and we'll continue to do that.
Wonderful. Thank you for answering my question.
Thank you. Our next question is from the line of Sanketh Goda from Avendus Spark. Please go ahead.
Yeah, thank you, thank you for the opportunity. Sir, this our group has, given you highlighted that 80% of the business is seeded. So considering the reinsurance commission, do you believe this business is less than 100 combined product ultimately means or it will invariably be little higher than the company average? Just wanted to understand the logic of doing the business. Are you confident that with reinsurance it can be still delivered below 100 combined? That's my first question.
A broad answer, which should answer the question, unless someone wants to add to it. In insurance, you always do business on expectation of profit. In the same way that customers expect that there will be a claim, and that is why they take insurance, the insurance company also has a certain probability of making money. If I definitely know that I'm going to lose money, I'll never do that business. At least Bajaj would never do that. Therefore, in this business, our whole quotations are based on expectation of profit, based on the data that we have of the past year and increase the number of people, the type of illnesses covered, and various other things, the hospital rates that have been negotiated by the state government and various other things.
So our expectation is that it should be on a total basis priced to be favorable combined ratio. I think I'll now give it to Tapan because he is an expert in this subject, and he can add a lot of flavor on how Bajaj approaches this.
Yeah, well, I think what you said is right. Yeah, yeah, Srini, what you said is right. So I don't think anybody writes business thinking that this is how it is going to be. These are difficult, complex businesses, and we have expertise. We handle government health business, and that's why we write this business. And obviously, you know, the outcome will depend on how the year goes by. If you have something like what happened in the previous outbreak of some kind of illness or disease, then the loss ratio moves up. If it normalizes, it comes down. So that's all calculated while we put up the terminal basis. So I think you really mentioned it well, Srini.
Got it. The reason I was asking, sir, that in this government health, probably the float is not there because the government pays premium little later. Cash doesn't come in upfront. So it should be substantially below 95 combined to make a ROE, which company reports. So just wondering whether the pricing is-
In Gujarat, we have the condition the government is paying premium, no? So it is there. So, and that's why I say there are a lot of things that you add on to it, no, to look into how the business gets done.
Got it, sir. And on Bajaj, one last one. On crop, just wondering, given in first half, we have declined compared to first half of last year, whether our ability to maintain the INR 2,550 crores of business what we did last year in crop could be sustained in the current year? Or you think, there could be moderation and, given the competition of EOM, you believe crop might slow down for us, going ahead?
See, you have to understand our philosophy first and foremost. We have never done business in a desperate manner. I think that is the first thing.
Right.
We've always done business, the way business should be done, no? We have looked at opportunities where we can serve our customers well. We have tried to bring innovation. We have tried to bring efficiency, which was discussed in the just in the immediate past by the previous question. We have tried to, you know, see how do we bring much more value to the customer than, than can be thought of. So that's our philosophy. So it, it is never a philosophy to say that, no, it is sustainable, not sustainable.
If you see our crop business also, I think if you look at the market rates and if you look at where we have written our business, you'll see that we have written businesses where we are able to serve well and deliver to our farmers and the country as such. So it depends on the tenders which come together, no? So these questions, that if you say that we feel that we'll be undershot, overshot, I don't think it's the way we look at any kind of business, be it government business, be it crop business, be it motor, be it health. It all depends on our pricing, our ability to, you know, find efficiencies and deliver to the customer of the highest order in terms of excellence.
And that's why you see our grievance ratio has been among the lowest in the industry for, like, over a decade now. It's not even one or two quarters, every quarter for over a decade. If you look at our settlement ratios, those are obsessions, no? So I don't think that we measure ourselves in terms of, let's say, every quarter, every half year, that should we be underweight or... It is our principle. We continue doing business the way business should be done. That is, you know, to sum it up. So it just depends on how the future agenda comes together.
... Got you, got it, sir. Sir, lastly, on basics, one thing on two- wheelers. So our market share from four has gone to nine, on new vehicles. Do you maybe just wanted to understand, our there is more headroom for us to grow at a rate better than the industry or at 9% incrementally, we will be broadly growing at in line with the industry. Because I can see from your quarterly numbers, that compared to 23% kind of a growth, it has moderated to 16-17. Whether there is still room left over to grow at a rate better than the industry in two- wheelers?
Yeah. So as you have rightly seen, as companies and the market share gets bigger, the growth rate will always start moderating down, no? If you have 100% of the market, your growth will be what the market growth rate is, no? Fundamentally from general perspective. So as somebody gains more market share, their growth rate gets moderated. But our ambition has always been that, in businesses that we feel we have to have a good presence, we have a reasonably good presence. So our strategy would remain to grow businesses where, as I told you in the past, where we feel that we the pricing is right and we should be able to serve the customers well. We keep on pushing that.
Got it, sir. Sir, on, I have one question or two questions on BALIC. Just wanted to understand this non-par part or annuity part not growing meaningfully. Is it more to do with macro? That is, the interest rates of the deposits are much higher and that's why we are struggling. Or, given the yield curve has become little, little flatter and the IRRs, you are repricing it and that product is becoming an unattractive product relatively. We just wanted to understand because the product seems to be under pressure for the industry as a whole. Just your understanding of how non-par or annuity business growth would be incrementally. That's one thing.
Second, actually, you try to tell on that point on group protection, the reason, reason for, for decline, is, is it we, we have withdrawn from some MFI portfolios because of the price competition or, or something else we need to read into it?
Sure. Thank you, Sanket. So on the first part is where your question is on the overall non-par saving as well as on the annuity, where the linkage to the overall, say, yield curve, as well as the pressure in the industry, what you have seen it on the line of business. So there are two, three things which is playing in. So first of all, the overall returns, if you look at the customer IRRs, over the last two quarters, has come down really what it was, say, in the quarter four of last year because of the overall change in the yield curve.
Yeah.
Within that, there is a little bit of a technical aspect that's saying that the maybe the slope of the yield curve has much more flattened, which kind of creates a pressure on what you can buy in the forward market. So that also reflects in the customer returns. So if the slope is a little steep, you get a benefit. If the slope is flat, that also impacts the return which you can declare to the customers. Despite that, overall interest rate has gone up.
Yeah.
That plays it in the pricing part. So I think that is true for most of the players, and so is it for us. And even if you look at in our case, last quarter, we have reduced our, on the flagship product, our IRR has been reduced by around 18-20 basis point, just to be aligned with the yield curve movement. Otherwise, there are only two aspects: either you give it to the customer or you, you say that you will take everything out of the margin. So it's a very chicken and egg story where you want to balance it out. But in general, whether it is annuity and non-par saving, I think the overall returns has come down from the customer, and coupled with that, above INR 5 lakh, there is no tax benefit.
Mm.
So that business which used to come in the guarantee side, which was more than INR 5 lakh, has actually reduced for us as well as what I've seen it for others also. We did update it to the stock exchanges after the Union Budget. The impact could be 3%-4% of that business coming down. So one is that business has come down. Secondly, obviously, the attractiveness of the IRR has come down, and INR 5 lakh and above 5 has come down. So those are playing it. But broadly, I don't think so that the choices of the customer has said that, that the guarantees business is not in the flavor. If you look at even in absolute basis, our business would be there and thereabout, but because the company has grown faster, the share is coming down.
But it at times works like in quarter one for us, we launched a ULIP annuity new flavor. In quarter two, we launched a PAR product, it too a flavor. So at times, those flavors also play in, but otherwise there is no change per se, I would say, from a customer perception on the guaranteed business. So that should come back or would streamline in the coming quarters. So that's not the concern. The second question, Sanket, was?
On group protection, basically, why, why slow down? Is it MFI withdrawal, price competition? Just, just wanted to understand the reasons around it.
So like in our case, there are four, five lines when we talk about group protection. One is the MFI business, and within the MFI business, we have seen a de-grown. And this is again a temporary in our case because one of our partner is undergoing a process change. So to that extent, it is already closed by end of Q2. So this will start reflecting from Q3. That's one. The second is if you look at our group credit protection, that has actually grown marginally. Again, that is more linked to the overall credit uptake by the distributors because it's more like an attachment product. So if anything slow, slowness happen on the credit uptake, it reflects on the credit protection. The third is the group term life, which is an employer-employee.
What has happened over the period after the COVID, the prices has actually come down. Almost the price correction is before pre-COVID level, which is down by 30%-40%. All I can tell you, like in Q2, we would have added around 72 new GTL policies versus what it was there in the Q2 of previous year, around 40, 42. But one, the size is lower, and second, the same renewal has come out at a very comparatively a lower prices because of the price correction. So that is reflecting in. And in our case, one thing has also changed-
... PMJJBY, we started doing it from last year. Last year, it came in Q2, but this time it came in Q1, because the, the policy is typically from April to March. But because we picked up some policies last year in Q2, so it reflected. So it's like a timing difference. Having said that, those are the three, four variables. I don't see any significant change. Yeah, it could be a, a quarter-to-quarter movement which is playing in. Otherwise, there is nothing drastic change other than in our one-off our MFI partner business is slowed down. But otherwise, even MFI business for us has gone up significantly during the quarter two, excluding that one-off adjustment, which will be corrected in October, starting this month.
Got it, sir. Perfect. That's it from my side. Thank you very much.
Thank you. Our next question is from the line of Supratim Datta from Ambit. Please go ahead.
Thanks for the opportunity. So starting off with,
Sorry to interrupt, Mr. Datta. May we request you to use your headset, sir? You're not audible.
No.
Hello?
Can you hear me now?
Yes, sir. Please go ahead.
Yeah. So starting off with the Bajaj business, and now on the motor OD side, the loss ratio has improved to around 63%, despite, you know, the flood losses in northern India. So just wanted to understand, you know, one of your peers has also reported a significant improvement on the motor OD side. So just wanted to understand at the industry level, what is happening, why has the loss ratios improved significantly? You know, are you seeing any change when it comes to competition, or, you know, what are the other factors which would have resulted in this? That's the first question. Now, coming to my second question on Bajaj. So you have, you know, taken the group health business, government group health business.
Just wanted to understand, is, you know, if this, the Gujarat business is your benchmark, then would you next year go ahead and bid for more government health projects? Is—would that be the strategy? So those are the two questions on Bajaj before I get into balance. Thank you.
So on the motor OD, I'll give it to Raman and Tapan later to expand. But largely, I think Bajaj usually is very good at selecting businesses. So when we see loss ratios and we go to counters or we grow segments of business, whether it is private cars, two-wheelers or commercial vehicles, Bajaj always is very, very disciplined in the way it looks at data and decides to slow down business where loss ratios are high and where the losses are expected to be lower. So that's a disciplined process. Across the market, we cannot say, because there are smaller companies which will take a business that we wouldn't write. So that we'll have to wait for all companies to come out with their disclosure and see where it stands. But largely, I think that is what it is.
I'll just add to what Sreeni said. See, one outlier actually in the current year vis-a-vis last year was that last year, if you recall, quarter one was the first full year after the pandemic, and, you know, there was this concept of revenge travel, and because of which, the OD loss ratio had actually gone off the roof. At least in my tenure in the GI company, I had never seen OD loss ratios go so odd, and that's why there is this base effect sitting there. But if you look at the OD loss ratios now, and if you compare it, you know, a few years earlier, I think they're at similar levels. So they... Not that it's significantly come down from those levels, it's only a impact from last year, because last year was largely overstated because of the revenge travel.
Mm-hmm.
On the government scheme, as has been the case and what Tapan always tells the analysts is that, you know, we want to be in every line of business. Given the fact that we are a GI company, whatever is the opportunity, we try to capitalize on that as far as it makes commercial sense for us. And the same way, you know, where people used to challenge us when we started doing the crop business. And I think that's one segment where we've proven everybody wrong and tried to make money where everybody else was losing money. So I think the same fundamentals apply here also.
As far as it will make commercial sense for us, we will continue to, you know, stretch further and get into other states also, is where we will park it.
Got it. Got it. And, one final question on the Bajaj business. So, you know, the five-year policy, which, you know, came into being, that is running off, that has started running off. So the, you know, the first policy is there, five-year tenure has come to an end. So could you let us know that, you know, what kind of renewals you are seeing in those policies? And, you know, how much of your unearned premiums typically would be from these policies?
I don't have the data handy. Maybe we could take it offline and I'll share some details.
All I can say is, you know, the reason the Supreme Court ordered five-year policies was because there was a very large number of two-wheelers which did not have insurance after the first year.
Mm-hmm.
Now, with this coming in, overall, we have seen an increase in the renewal ratios because these policies do have cover. And within Bajaj, I think we have focused quite a lot on renewing, and our renewal loss ratios for two-wheelers have gone up substantially. It used to be in the order of 25-30% a few years ago. Now we are closer to 40-45%. Having said that, whether after five years these people will continue the insurance or not, one has to wait and see. But it is too early to say how much it is. We don't have the data handy now.
... Got it, got it. That's very helpful, sir. And, lastly-
Yeah, offline, and we'll share the details.
Sure, sure, sure. On BALIC, you know, just wanted to understand, you know, some of the distributors as well as, you know, peers have indicated that distribution costs have increased following the change in the UM guidelines. So just wanted to understand what you are seeing and, you know, which channels are seeing a higher demand for the, you know, payouts. If, if you could give some color on that, that would be very helpful. Thank you.
You see, as you know, that we have many distributors, including banks, brokers, and all. We haven't seen any increase in the costs just because UM has been made flexible. So I personally haven't seen and neither BALIC has seen that cost pressure because of the UM being flexible. It is just that the flexibility helps us to look at commission rewards more directly rather than ground-level activities. But otherwise, there is no increase per se in the cost of acquisition.
Got it. Just a follow-up on this. So as an industry, are there life insurance players, are you communicating with other players and, you know, trying to come up with a more rational, you know, cost, you know, distribution payout structure? Because, you know, just to understand, you know, how competition with payout could go on.
So I think this is, you're referring to a newspaper article where there was a discussion going on the group credit protection to have a one unified number, which is the maximum cap. Otherwise, personally, see, every business is at a very different stage of, either the business model or as well as the maturity of the distribution. So somebody like who's at a, very early stage, they want to pay more and just to grow the business, it's a very different strategy. But somebody who's very mature and have a much more stable business, they may not want to compromise on the margins. So I think having one answer to saying that is a industry working on something like a maximum number may not be the best way to articulate it.
But yes, on the group side, there has been an article and discussion going on, but whether this is a right thing or wrong, I don't know. But I did also went through that article. Nothing more than that, I know.
Yeah. I think I'll just add. In the insurance business, I think most of the distribution is captive, and there are many distributors which are very large captive customers, like banks and very large brokers and agents and people like that. Therefore, on an individual basis or many of them have multiple tie-ups, which is allowed as per regulation, barring individual agents, certainly everybody can have multiple tie-ups now. Therefore, the cost is not a function of how much you pay to one intermediary or a particular product, and different products are also priced according to different levels of acquisition or management expenses, depending on the scale, the ticket size, and various other things.
Therefore, and from a management perspective, it's largely about managing the product and channel mix to arrive at a reasonable expense ratio that is sustainable and that will deliver sustainable margins for the company. This is true for both BAGIC and BALIC. And this is something both companies are very well aware of, and the IRDA has now brought in some discipline in terms of the EOM, which actually, over three years you will see it play out because they have given a three-year transition period for companies which are above that. And therefore, over three years, we will see that everything gravitates slightly lower than what the IRDA has said as a maximum limit. Some people will be much lower, some people will be higher. So there are multiple, too many moving parts here.
Overall, managing the aggregate cost ratio in line with your plan and how the business is growing is what the companies are trying to do.
Okay. That's very helpful. Thank you.
Thank you. Our next question is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead.
Hi, good morning. See, most of my questions have been answered. Just one thing I from the opening remarks, you know, you mentioned that you've added a lot of bank partners in the life insurance business. We also know that the number of partnerships now possible at each bank has sort of increased from 3 to 9. I want to get a sense of how are banks looking at it, and how many of these new additions are you sort of the fourth or fifth partner? And, you know, it, it's almost like banks are now no longer agents. They are becoming more like brokers as you, as you have more and more, you know, sort of insurance partners out there.
In that context, how do you see that channel shaping up and your business growth potential from this channel?
Broadly-
Some quantitative color of yours will be appreciated.
I think you're referring to the life business. In the general business, as you know, we have a very broad and deep network of banker partners, and in almost all of them, there are multiple partners. So it's not something that we are not used to. In the life business, again, we have tied up with a lot of partners. I don't think we are the sole partner in any of them. We are entering as a second or third player. We have invested a lot. We think we understand the banker space better. We think we have the flexibility in our team to be able to address the different sales models of the bank. Some of them are centralized, some of them are branch banking-based. Some of them have more of the attachment products.
Based on that, I think each one is assessed on merit.
...we would not enter a relationship just for having a relationship on our name. We have a very clear goal that we have to be among one of the top three partners in each of these. Bharat?
I can add that. So just to answer that, further, one is that, as Srini rightly said, that we may be the second or the third partner. Most of the places we are enjoying almost one third or more wallet share, which, which is driven by the engagement product offering as well as the tech enablement and the support at the ground. Having said that, see, our stated philosophy has always been that we should not be overdependent on one partner. That is where we are moving to a more distributed, distribution footprint. And one thing which I think we normally don't discuss here is that if you look at our agency, today, it is the second largest agency in the country after SBI.
The growth is of about 30%, and which is where we are saying that even if our own channel, whether it is our BALIC direct, which is growing at 35% plus or so, and agency growing at 30%. So we are not only saying that we have to enhance our distribution to banks or brokers, we have to first enhance our own proprietary channels. So I think it will be a mix of all the distribution engines. So if you look at on Q2 basis, all the three channels, whether it is a bank channel, including broker and online, or it is our own channel, direct or agency, all have given us 30%+ return.
I think we understand that business, and that's where we are adding banks also, but we are also expanding our proprietary channels.
All right. All the best. Thank you.
Thank you. Our next question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited. Please go ahead.
Yeah. Thanks for the opportunity. You know, we've talked about investments in the retail health segment. Given you know where we are in terms of mix, you know, what could that contribution be like? And, you know, post-COVID, what are the inflationary trends in health insurance, and, price hike typically is done alternate year or based on our experience? That's the first question. Secondly, you know, on our customer-facing app, Caringly Yours, how are we ensuring, you know, customer is, spending, you know, more time on the app? What are the new features we've added? And, you know, will this eventually, you know, lead to being a renewal platform? Is, is that broadly the game plan?
Lastly, on Bajaj Finserv Health, is it, you know, a recruitment tool for Tier 3, Tier 4 cities where, you know, new clients get some basic diagnostic or doctor consultation, and eventually, you know, the idea is to upsell health insurance. Is that the right way to look at it? These were my three questions.
Devang is here. I would broadly say that that is clearly not Bajaj Finserv Health is about. It's a healthcare venture. They will offer products and platforms. They will connect providers and users, and it is not an engine which Bajaj will use to expand their distribution. Bajaj already has a formidable distribution, but they will collaborate on products, on surveys, on offerings, on various things.
So I think Srini has pretty much answered.
Our purpose is to create platform to carry out health transactions for customers. Now, customers could be corporate, offering these services to their employees, or health insurance or life insurance companies wanting their customers to be given health benefits. So it's not tier three, tier four. Yes, we service tier three and tier four customers also, in case some health insurance company has customers there. So hope this clarifies. It's not about acquiring customers, it's all about enabling transactions digitally and putting that data to use for better healthcare management cost. The other question was retail health. Tapan, I think you can give a flavor on that.
Yeah. Sorry, Srini, will you just repeat the question? What exactly on the retail health?
I was talking about investments in retail health, and how do you see-
Yeah.
it panning out?
Yeah. So if you look at the retail health portfolio, you know, it's in India currently, if I look at the government will be covering about INR 50 crore and, you know, the insurance companies will be covering about twenty-five, thirty crores. There'll be INR 30 crore-INR 40 crore still to be covered, if you look at in terms of non-covered, which will be there, which is the so-called missing middle. So retail health in India will grow. It will grow very aggressively, I think, for the next decade or so, because till the entire coverage happens, it's critical for the country also, because that is a social security which has to be there. The health infrastructure will also grow. So my personal view is that this segment will keep on going, and we have to look at different...
Retail health is not just one product. It is a combination of different solutions for a customer, depending on the need and requirement. And the innovations like what Devang just mentioned about, you know, bringing BFH into it. It is not about expanding or selling the retail health on that basis. I don't think that is the intention. It's about the customer centricity that we have as an organization, as Bajaj Finserv, as a group, and as Bajaj as an insurance company. It is about our obsession to see how do we give to the customer a holistic experience. And this was a missing gap in the retail health portfolio. The OPD. No company was really looking at how do we service that. That's why I think BFH has that.
If you are a customer of ours, and if you have BFH, and you have retail health of Bajaj, I think you, you yourself feel very delighted to see that you can get reimbursement of OPD plus diagnostic. I think that is the intent. It is from a customer centricity perspective, I think. And retail health, we'll keep on investing on that, and we'll keep on growing the portfolio because it will be a substantial chunk of business. But we'll go in the right way. We'll go it from a customer-centric perspective, we'll not undercut price, we'll not try to just offer a very base solutions, but we're looking at a very holistic solutions going forward. That is how we'd be looking to retail health.
Right. And typically, that price hike is alternate year or in the-
No, see, the price hike, actually, what happens is from a regulatory perspective, they look at a three-year base, you know, in which you should do a price hike. And then the price hike, also, if you look at if you are a regulator, you do not want the price to become unfeasible, you know, from a customer segment perspective. So it is to the company to see how do they come out with good offering, how do they curtail fraud, and how do they, you know, put things together, how do they negotiate with hospitals, so their customer service is very good and the price is reasonable. And it is, like from a long-term perspective, it should be sustainable.
But with today's, you know, digital world, wouldn't fraud now no longer be such a concern given that, you know, there is KYC, eKYC, Aadhaar, JAM Trinity, everything seems to be linked, so I would guess things to be improving?
So I think what you're talking of is hard frauds. Unfortunately, in insurance, hard frauds is one aspect. Frauds of other nature is also very high. Let me say, and we should not call it fraud, I think, we have to give it a different name. Let's say you go to some hospital and you say you are uninsured. They charge you INR 100. The moment you say insured, they charge you INR 120, you know? Now, what would you define this as, you know? Would you define this as a fraud or would you define this, you know, as something... So let's say if you go as uninsured, the number of PPE kits in COVID you saw would be charged for you would be maybe five, 10.
If you're insured, we have seen a bill which is 140 PPE kits were charged, you know? So I think the issue in insurance industry is much broader than just very hardcore pure frauds. I think pure fraud is one part of it. Other is also a challenge, how do you negotiate, how do you put that together? The industry is coming together to solve this also in terms of, you know, putting up standards, and seeing how you should mind, the hospital are not regulated in India, no? That is also an issue, which is there.
Right. That is another-
So, there are many aspects to this statement of yours, you know, if you say so. It is not about just one, just relying on KYC which takes care of it, so there are many more aspects to it.
Understood. And, you know, on the app, if you could give us some sense, is, you know, Caringly Yours app going to be the app, you know, for renewal also? Can you talk about some features or-
It's already there.
Sorry, you were saying something. Please, go on.
I was saying, I think that the Caringly app is now undergoing a lot of improvements. I think if you compare the app, every day, I think they are looking at new features. It has become a very strong platform for customers to have one account in which all their policies are there, renewals are done through that to a large extent. Having said that, I think, predominant part of the business across the industry is intermediated, and we will—we believe that it will continue to be intermediated. It is, still a long distance away that people come to you digitally and do everything digitally and do not want an intermediary because there are, you know, a large number of products and there are large number of offerings under each product line. Under health line, each company will have at least 15, 20 products.
It's not easy for a customer to choose directly from a digital platform and take something. There are a lot of balancing that has to be done. Caringly Yours is a thing which will drive loyalty, renewal, and greater cross-sell and up-sell to customers over time. But it will not be a customer acquisition engine at this stage.
Understood. That is helpful. Thank you.
Thank you. Ladies and gentlemen, that was the last question of our question and answer session. As there are no further questions from the participants, I now hand the conference over to Mr. Akshay Jain from JM Financial for closing comments.
Thank you all for joining the call and the management of Bajaj Finserv Limited for giving us this opportunity to host the call.
Thank you all. All the best. Very happy Diwali to all of you.
Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.