Q2 21/22

Oct 21, 2021

Good evening, ladies and gentlemen. A very warm welcome to ICICI Lombard General Insurance Company Limited Q2 and H1 FY 'twenty two earnings conference call. From the senior management we have with us today Mr. Bhargav Das Gupta, MD and and CEO of the company Mr. Gopal Balachandran, CFO and CRO Mr. Sanjeev Mantri, Executive Director, Retail Mr. Alok Agarwal, Executive Director, Wholesale and Mr. Loknath Garg, Chief Legal and Compliance Officer. Please note that any statements or comments are made in today's call that may look like forward looking statements are based on information presently available to Management and do not constitute an indication of any future performance as future involve risks and uncertainties, which could cause to differ materially from the current views being expressed. 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. On phone. I now hand the conference over to Mr. Bhargav Bhask Gupta, MD and CEO, ICICI Lombard Earnur Insurance Limited. Thank you, and over to you, sir. Thank you, and good evening to each one of you. And A. Thank you for joining the earnings conference call of ICICI Lombard General Insurance Company for Q2 and H1. I hope you and all your colleagues are safe and healthy. I will give a brief overview of the industry trends and developments that we witnessed in the last few months. Post this, our CFO, Mr. Gopal Palachandran, will share the and A. The financial performance of the company for the quarter and half year ended September 30, 2021. As we speak, the economic activity across the country is picking up. And A. Various high frequency indicators like DST collections, manufacturing PMIs, import of non iron and non gold merchandise, irrepidivism 1 and railway freight traffic has shown and Q2. Thereby showing signs of economic environment moving towards the pre pandemic level. The and Q2. This upcoming festive season should give a much clearer picture of where we are headed on the recovery path and how the demand situation will pan out for segments such as motor insurance. Looking ahead, the rapid pace of vaccination is a positive and expected to minimize the risk of complete lockdown in the future. And A. Turning to the GI industry. During the quarter, motor insurance saw more moderate growth and the new motor vehicle sales were impacted due to chip shortages and underlying demand sentiment in the 2 wheeler segment. The corporate health and employer employee health insurance continue to grow. However, unlike and A. Previous quarters, the growth in retail held for the quarter was moderated due to the base effect. As far as commercial lines are concerned, the growth in Fire segment was stronger in the Q2, while Marine and Engineering lines witnessed growth in momentum, mirroring the resurgence in the economic activities. Speaking of the performance, as per the GI Council report, the general insurance industry registered a growth of 12.8% in the first half of this year over last year, with the industry GDP moving to INR 1087,050,000,000 in H1 2022 and a half percent increase from RMB963,900,000,000 last year. Excluding the Crop segment, this growth would have been 16.9%. The overall growth and growth excluding crop was 12.1% and 17.5%, respectively, for quarter 2 FY 2022 as compared to quarter 2 FY 2021. The combined ratio of the industry was 120.5% in quarter 1 FY 2022 as compared to 104.4% in Q1 FY 2021 based on available information from public disclosure. This includes 2 companies that are yet to disclose their quarter one numbers. Further, the overall combined ratio of Private Multiline General Insurance Insurance was 116.9 in Q1 of FY 2022 as compared to 103.0 in Q1 of FY 2021. Let's move to the claims behavior experienced by us during this quarter. The motor home damage scale frequency in the Q2 reached peak COVID levels. On the health side, the overall COVID-nineteen Claims reported for the industry for H1 FY 2022 cost 1,600,000 against 1,000,000 cases reported in the whole of last financial EPS, of which roughly about 4.6% of the claims were reported with us. In the second quarter, most of the COVID claims reported were in respect and earlier which was adequately estimated and provisioned for by the company. NII. While the incidence of COVID claims went down, the non COVID health claim frequency in Q2 FY 2022 saw a sharp increase as compared to Q2 of last year. NII. This can be primarily attributed to increase in medical acute cases such as dengue acute respiratory diseases or on account of and therefore elective surgeries. In addition, we are also witnessing an increase in average claim size. It is possible that this is due to additional precautions that may Which may have been taken during or post the second phase. We will have to monitor this trend for coming few months to assess if this is a temporary or a structural change. Moving to business impact this quarter. As indicated in our last call, we increased pricing on our corporate health portfolio by more than 15% to 20%. And A. In spite of the increase, we were able to retain over 90% of the accounts of our corporate customers. In retail health, we saw fast we grew faster than the industry, and thereby maintaining our market share. Retail health continues to be a key focus area for the company, and we expect it to grow in times to come. Our holistic insurance and wellness app, iL Tank Care, has surpassed 8,000,000 downloads, enabling us to get closer to our customers by providing a unique platform for continuous engagement. This app has the potential to harness entire health care needs of our customers at their fingertips. Our motor business continued to face headwinds in form of supply disruptions, lower demand sentiment and competitive intensity. Going forward, we would continue to maintain cautious approach in certain subsegments that we believe can make our business unsustainable in the long run. As far as the commercial lines are concerned, we continue to see robust growth and Q2 given the resurgence of the economic activity. Now as you are aware, in August last year, we undertook a landmark step and entered into a scheme of arrangement with Bhatia as a general insurance company. NII. Over the past year, after receiving all the requisite approvals from the concerned statutory regulatory authorities, we are happy to share a milestone in this journey and A. The milestone in this journey has been achieved with IDI granting final approval on September 3, 2021. With all approvals in place, September 8, 2021, was the effective date of integration wherein both the organizations came together to form a single larger entity. In both Q days, our 2 teams worked tirelessly and seamlessly to ensure a smooth transition. On day 1 of the merger, we transitioned over and 3,000 distribution partners with minimal disruption, onboarded 3,000 plus hospital network and 3,700 plus hospital, hospital network and garages, NII smoothly transitioned over 60 applications, these are technology applications, including the connectivity, access, security and data aspects on boarded over 3,400 employees and staff members, transitioned and rebranded over 140 plus branches of Bharti AXA. Over 30,500,000 communications were sent on the merger to customers and partners to ensure uninterrupted business continuity and operational efficiency. We are excited with the progress made on operational integration of the 2 entities, and we expect to realize synergy benefits over the next 24 months. And A. As we head into the second half of the fiscal, we are reasonably well placed, and I'm confident that we will continue to deliver long term value for our shareholders. And I will now request Gopal to take you through the financial numbers for the recently concluded quarter. Thanks, Rajab, and good evening to each one of you. And I will now give you a brief overview of the financial performance of the company for quarter 2 and H1 FY 2020, 2022. And A. We have put up the results presentation on our website. You can access it as we walk you through the performance numbers. As mentioned by Pargav earlier, and A merger with Bazi Akhtar was formally consummated on September 8, 2021, with April 1, 2020 as the appointed date. And A. The effect of the demerger in the financials has been incorporated in the form of opening net worth as on April 1, 2021. And A. Further, the financials for the current year represent numbers of the merged entity. Accordingly, Q1 FY 2022 has been restated. The comparative numbers for the previous year in the financials pertains to stand alone ICICI Lombard and hence are not comparable. The gross direct premium income of the company increased to INR 86,130,000,000 in H1 FY 2022 as against NPLY 64,900,000,000 in H1 of last year. The industry reported a double digit growth of 12.8% on a lower base for a similar period. And A. Our GDP growth was primarily driven by growth in preferred segments given that our approach has always been growing business sustainably. NFIRE segment's GDP was RUB 16,100,000,000 in H1 this year as against RUB 12,590,000,000 in H1 last year. And A. As indicated in our results presentation, the overall GDP of our Property and Casualty segment was INR 27,690,000,000 in and Q1 this year as against INR 21,130,000,000 in H1 last year. On the retail side of business, GDP of the Motor segment was INR 32,460,000,000 in H1 FY 2022 as against rupees 27,510,000,000 in H1 last year. To harness the potential of these segments, we have been expanding our distribution network to increase penetration in entire 3 entire 4 cities. Our agents, which include the point of sale distribution, has NIM. We've seen an increase to RMB 78,035 as on September 30, 2021, up from RMB 61,385 as on June 30, 2021. The advanced premium was INR 36,860,000,000 as at September 30, 2021, as against INR 32,060,000,000 as at March 31, 2021. During our Q1 earnings call, we had indicated creating a provision of INR 6,020,000,000 in respect of COVID claims, keeping in view increase in reimbursement claims and anticipation of fixed sale of claims. However, after considering the recent claim intimation trends, our overall assumption has been favorable for quarter 2 FY 2022. We thus revised our COVID claim estimate to INR 5,610,000,000 for H1 FY 2022 for the combined entity. Resultantly, combined ratio was 114.3% in H1 FY 2022 as against 99.8% in H1 FY2021. Excluding the impact of flood and cyclone losses of INR 0.82 billion, the combined ratio of 113% in H1 this year as against 97.5 percent in H1 last year, excluding the impact of cyclone and flood losses of INR 1,070,000,000. Combined ratio was 105.3 percent in quarter 2 this year as against 99.7% in quarter 2 last year. And excluding the impact of flood and cyclone losses of INR 500,000,000, combined ratio was 103.7% in quarter and Q2 this year as against 96.6 percent in quarter 2 last year, excluding the impact of cyclone and credit losses of INR 0.77 billion. Our investment assets rose to INR 371,950,000,000 at September 30, 2021 from INR 371,070,000,000 at June 30, 2021. And our investment leverage net of borrowings was 4.27 times at September 30, 2021, up from 4.34 times at and June 30, 2021. Investment income increased to INR 16,050,000,000 in H1 of the current year as against NISR 10,900,000,000 in H1 of last year. On a quarterly basis, investment income increased to INR 7,160,000,000 in quarter 2 this year, as against INR 5,92,000,000 in quarter 2 last year. Our capital gains were INR 4,710,000,000 in H1 this year as against INR 1,840,000,000 in H1 of last year. Capital gains in quarter 2 this year was at INR 1,440,000,000 as against INR 1,240,000,000 in quarter 2 last year. The expenses incurred of approximately INR 0.17 billion on account of the demerger has been absorbed in the P and L during H1 FY2022. Our profit before tax was INR NPL 8,520,000,000 in H1 FY 2022 as against INR 10,860,000,000 in H1 last year, whereas PBT was NPLS 5,940,000,000 in quarter 2 FY 2022 as against RMB 5,550,000,000 in quarter 2 of the current year of the last year. Consequently, profit after tax was INR 6,410,000,000 in H1 this year, as against INR 8,410,000,000 in H1 of the previous year, Whereas profit after tax stood at INR 4,460,000,000 in quarter 2 this year from INR 4,160,000,000 in quarter 2 of last year. The return on average equity was 15.2% in H1 FY 2022 as against 24.9% in H1 of last year. NII. The return on equity for quarter 2 this year was 21% as against 24.7% in quarter 2 of last year. Solvency ratio was at NIIR 2.49x at September 30, 2021, as against 2.61x at June 30, 2021, and Q2 continued to be higher than the minimum regulatory requirement of 1.5 times. The Board of Directors of the company has declared interim dividend of INR 4 per share for H1 FY 2022. As I conclude, I would like to reiterate that we continue to stay focused on building a profitable book and creating sustainable value creation. I would like to thank you all for attending this earnings call, and we'll be happy to take any questions that you may have. And and the first question is from the line of Avinash Singh from MK Global. Please go ahead. And Mr. Avinash Singh, your line is in top mode. Please go ahead with your question. Hello. Yes. Good evening. A couple of questions. The first one is more on a strategy than quarter That you have chosen, I mean, profit over growth over the last few years. Now you have reached a point where, I mean, a Cob business is not your target segment, largely. In Motor also, uranium is selective. So going forward, I mean, what is sort of your medium term strategy in terms of how are you going to sort of grow the top line? Because I mean, I You have been selective for quite a long time. And if I were to look, I mean, the market in the segments where you are avoiding still remains very, very hypercompetitive. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So what sort of growth strategy or medium term you are going to apply? Secondly, now in terms of, Again, retail health, the regulatory arbitrage or the advantage that a standalone health insurance players have, that still remains. So what sort of plans do you have for this growing retail health book? Because I mean, at some point, if You go ahead. Let's see if then again the market will become in terms of the profitability will be impacted. So yes, we have my 2 questions. Thank you. Thanks, Avinash. So on the first one, if you study The business over a long period of time, it's not unusual to see phases where there is competitive There are aggressive pricing in subsegments at different points in time. Usually, they don't sustain. And our belief is that over a longer period and A If you see history of general insurance companies that do well, they've always focused on underwriting. And A. Having said that, at different points in time, as you rightly identified, more segments could be under competitive pressure. So for example, right now, because of this slowdown in motor and given the fact that new vehicle sales have been low, there is probably Additional additions that we are seeing there. Equally, at the same time, what we are seeing is the commercial lines are going much faster than what we had budgeted in the beginning of the year, and we are gaining market Ahead of what we had planned for. So the approach that we've taken is whenever we are seeing sensible pricing, and In any case, we've built some amount of competitive advantage. We will kind of gain market share there. The second area that we are focusing on is that, as you've talked about in the last quarter also, is The health indemnity piece. On the health side, there is one of a bit of a base effect that we are facing which will get over this year. The base effect is largely and A. Given the fact that one of our large bank partner has reduced their distribution business on the insurance side, that is affecting us. But that Asset pays out pay through by end of this quarter. And from next quarter onwards, we anticipate growth to come back. And on Health, as we talked about in the last quarter, we are adding significant amount of distribution. That's an investment call that we are making, and we are going to go ahead and In a sense, invest for the long term growth. And that brings me to your second question in terms of health. Yes, there is some regulatory arbitrage on the distribution side. But at the same time, there is a POS license that has been given to multi line companies that Helps us in terms of address that to some extent. What we're also doing is with the distribution, there is Many other things that we can do in terms of fact that we can provide multiple products to the same distribution, etcetera. So we have our own advantages. On the cost side, we have some advantages. And we are still going ahead and adding agents at a pace that you've seen in the last quarter. So We are being able to add agents. That's not been that big a challenge. So overall, the health side remains a trusted area for us, retail health indemnity. On the benefit side, the base effect is largely getting paid out this quarter. And from this quarter onwards, that should start coming back. Last year, the Motor segment, yes, we've been a bit cautious in the last couple of quarters. We are also looking at certain subsegments where we're growing faster than in aggregate numbers, it doesn't show. But in certain subsegments, We are going faster than what we had anticipated. When you cut down on certain segments, that cut down happens more sharply. When you add, it takes a bit more time to build up. So we are reasonably confident that we will be able to recover the motor business in a matter of time because our also our sense is that these Kind of aggressive behavior doesn't sustain for too long because people start realizing the cost of the aggression very soon. Thank you. A quick follow-up. And what's the strategy or outlook on the so called online broker or web aggregator platform? Because you have been sort of siding away from that platform. Yes. There's no change in that. Our approach is that we would rather invest in our own B2C channel rather than pay online aggregator and A? For getting business through that, because at the end of the day, the customer ownership is more valuable. And our B2C business is growing reasonably well. The next question is from the line of Abhishek Sarraf from Jefferies. Please go ahead. Yes. Hi. Thanks for the opportunity. So I have just two questions. Now with the merger with Bhati AXA, so now Crop segment has become 7%. So if you can just reiterate what our strategy will be going forward and what are the trends that we are witnessing in crop segment, which can affect our strategy? And second is on the motor TP price hike, so it has still not come by. So when do you think that, that can come through? And what could be the quantum that one may be expecting? Yes. So on the second one first, the as we said in the last Quarter earnings call also, we wouldn't anticipate an increase this year because we are halfway past the year. End. We will also need to see the new leadership in IRD. At the same time, it's the fact that for 2 years, we've not got a price increase. So that is So we are reasonably hopeful that if you go back to the past, every April 1, we used to get a price increase. So we are Hopeful that coming April 1, we will see a price increase. In terms of quantum, it's very difficult for us to Anticipate what exactly the percentage will be, but if we just look at what the exposure draft talked about In March of 2020, before the first lockdown happened and hence that was deferred, that roughly meant roughly about 7% and A on a weighted average portfolio basis for the industry. So maybe that is an indicative number because that used data of the previous year or previous period To come up with that estimate, but that doesn't necessarily mean that you will get a 7% increase. I'm just giving you what the passing indication was. Coming to crop, So the new crop business has come in. As our usual practice, our reserving on the crop, if you remember what we used to do in the When we used to write crop, we reserve at company as giving no profit, no loss till the actual picture emerges. So even this quarter, we've You have a full 100% loss on the crop book. And in terms of where we are seeing it, as of now, I see the magic performance of the crop has been pretty good till now. Future, we'll have to see how it goes. What we said is that we will observe the prop business closely with the new team and see how that is playing out. And we will then take a call. We anyway have to continue for a couple of years because these are 3 year commitments. So we'll honor that commitment and then and In the past, that will definitely help in the call that we take. Sure. So that's very helpful. Just one final clarification on this. On the crop side, whatever business we are having, this is basically flow through of the earlier contracts or companies that we have had. And There would not be any new ones in the recent times with Bazi XR or is there also new ones could be also be there? And Yes. So these are basically contracts that Marcias had signed. As I said, most of the contracts are 3 years. So that is continuing right now in 2 states. That's what we are considering. There is nothing incremental that we are adding. Okay. Thanks. That's it. Thanks for the question. Thank you. The next question is from the line of miraj Toshniwala from UBS. Please go ahead. Yes. Hi, hope I'm audible. Yes, Rajeev. Yes. So there was supposed to be a one time tax So Neeraj, as I mentioned as a part of our opening remarks, and A. The appointed date for the scheme is from April 1, 2020. So hence and given the fact that and A. The tax returns for the financial year 2021 is yet to be filed. We have already kind of and then special purpose financial statements for the previous year ended March 31, 2021. And as a part of the and Return tax returns that we will file for that year is where the entire tax benefit of carry forward losses would be available to us. So to answer your point, I think the entire benefit of the tax on the carryover losses of Vafi EXA will be available for us as a part of the tax return that we will file for the financial year 2021. Okay. And how much would the quantum be if you can I'll disclose that. It will be straightforward. It should be 8 years of process of from 2020, right? I mean not and before that, 8 years, Before 2020, right, because the appointment is 1 April 2020. So if you remember what we had even at the time when we announced the transaction, and A. We have kind of indicated the amount to be about between INR 675 crores to INR 700 crores. That amount pretty much remains the same. That's the amount of tax losses on which you will be getting a benefit of 25%. Okay, okay. That's interesting. And on the COVID morbidity claims, I heard it correct, hopefully that price of attrition you had some positive The feasible outcome on the reserve is a bit, but actually the loss the amount of active cases were higher than probably what we have estimated. So did Sivendi actually come down Sivendi, I mean, so that's what I've got the differential in terms of the favorable outcome. And How one should read that? So, Dheeraj, I think, so if you look at even in quarter 1, when we had reserved for COVID claim, The actual incurred at that point was point of time was about RMB 3,780,000,000, and we had carried about RMB 2.12 crores as the IBNR, anticipating the thick tail of claims for the in the subsequent quarters, which is what we had also put out which is what we have put out as a part of our opening remarks. In line with what you see at a national level and which is true what you get to see for the overall sector as well, I think clearly we are seeing a declining and Q3. And Q2 specific, I think clearly we have seen a significant decline in number of intimations and corresponding to what you would have seen in quarter 1 and which is why against that INR 602 crores number, that number was, of course, for was for ICICI Lombard on a stand alone basis. But on a merged basis, when you look at the numbers for the half year, That number of INR602 plus whatever would have been attributable to Bhakti Agta for quarter 1, both of that put together stands revised to INR561 crores. So in effect, in quarter 2, I mean, that number for market share was roughly over INR 26 crores. So in quarter 2, we have seen a benefit of over NIMR67 crores of COVID claims reversal on account of the trend line that we are seeing on decreased intimation of cases. Going forward, I mean, what will happen is anybody's guess because I think but clearly, if you see what we have been talking about in line with what we are seeing in some of the other market, wherever let's say vaccination rates have significantly increased, clearly, the extent of hospitalization cases are kind of seeing a declining trend. So maybe a similar thing could possibly happen even in maybe in our markets. That's something that we will wait and see so far as Any possible third way. But otherwise, as things stand currently, I think there seems to be a declining trend in intimations on COVID cases. Sure. And so last question on the synergies on the time of 24 months, can we further break it down into We are actually planning every 6 months or what kind of review we will be doing and how much we can actually benefit out of it? So Dheeraj, what we have been doing is, I think if you remember, what we have been speaking over the last couple of few quarters is from the time the transaction was announced, we had already engaged Integration consultants who would help us is a part of the once the operational day 1 integration, which is what we have been able to successfully get it and in that sense effective. I think now is the time for us to kind of get some of the benefits of synergy. The tax is something that I already spoke about, which we will be able to realize it in FY20 and Well, the rest of the synergies on the cost side and let's say on the revenue synergies, what you would possibly get to see is and A large part of the cost synergies is something that will play out over the next, I would say, 9 months. The benefit in the form of revenue synergies, again, in line with what We have been talking about something that we will start to see over the next 18 to 24 months. Right. In terms of revenue synergy, What we mean by that is obviously the businesses that you see, the aggregate numbers that you're seeing, obviously, that benefit is straight away coming in. But with the distribution, the thought process that we had was to see if we could increase the depth and the product that we have. With the same distribution partners, we have more parents across the country. We have more product capabilities. So that's what Gopal is Talking about in terms of incremental benefit out of the same decision. Sure. Got it. Okay. Thank you so much. Thanks, Niraj. Thank you. Thank you. The next question is from the line of Nitesh Jain from Investec. Please go Annette. Thanks for the opportunity. So post Bharti Exa merger, can you elaborate how's What will be our digital strategy going forward? Because if I look at the online premium for us has been quite stagnant for last 3 years. How do we see that number panning out and what is the strategy to scale that number? And third is that we are seeing increased competition from some of the new age players Who are private equity driven, that sort of competition probably we have not seen in the industry in the past, Probably they will not worry too much about Neerthan profitability. So in that context, does our focus on 20% ROE remains Yes. So I think a great bunch of questions. So in terms of the Distribution that we've got from the Badri transaction, we're very happy to see the progress that is happening on those. As of now, All the banks that were there, they are continuing with us. And in fact, vis a vis their numbers last year, there's been good growth in the 1st 6 months and A In most of these banking partners, including the larger ones that you talked about. So that one is that is fine. The second, in terms of our online business, you're right. In the last couple of years, we've not grown, but that's also To a large extent, because of two reasons. 1, we had a very large share of travel business that needs to do online. That business effectively disappeared, Which is beginning to come back, so that's a positive story. 2nd is 2 wheeler business post the 5 plus 1, that Had some impact in that on the online business because pure OT for 2 liter distributing in a sense marketing or NIM? Trying to do digital marketing, the cost was not the cost was too prohibitive. That's the second thing. But in terms of the current numbers, we are Growing reasonably well on the digital on the B2C side. On the B2C side, there's another asset, which is a partnership with The digital players, the ecosystem that is evolving in this country, that business has done well. Yes. The point that we've taken in that business is to address the third question that you had. We basically kind of Internally carved it out into a separate almost like a digital arm virtual company, whatever you call it, with It's on advisory board with external advisers and some of us being there with a lot of flexibility and freedom in terms of what we do. And we believe that increasingly, that business will grow faster than the overall business that we have. In terms of the competition, you're right. It's a very different set of competition. We obviously can't be bleeding and operating at such and A. High combined ratios. But at the same time, we have to look at life cycle value of a customer and see whether we over a long life cycle, We create value for our shareholders. And accordingly, we'll have to take a calibrated call. In the long term, if it means that we have to get a bit more aggressive In the segment, we will have to because we don't want to lose that segment for the long term. And participants to ask a question, you may press star and 1. The next question is from the line of Prajesh Jain from Motilal Oswal. Please go ahead. Yes. Good evening, sir. So firstly, on the health screen, could you guide us to what kind of exit rate would you have We have seen in the month of September, where possibly this year, the higher fees would have been front ended in the quarter. And So a more normalized run rate would be a September month. And in case of day 3 or something that doesn't turn out within the and A. Can you talk about kind of loss ratio and rate maybe sustainable from a medium term perspective? So I'll ask Gopal to give some more details. But just from a headline perspective, if you divide this into COVID and non COVID, Movement, if there's no Wave 3, then whatever we are holding, we should be very comfortable. We have some IB and R still kept for ourselves. So If there is no wave tree, we should be fine. But as Gopal explained, it's very difficult to credit whether there is a there will be a wave tree or not. We are hopeful based on experiences that and A. We've seen globally based on vaccination. So that's to answer your question on the COVID. And the run rate has come down significantly. So we are reasonably confident of the COVID numbers. At the same time, the non COVID claims have gone up, both in terms of frequency has gone back to it's gone higher than last year, it's gone back to the previous year, in fact slightly more elevated. This year, Q2, we've seen a lot of medical acute cases that I talked about in the opening remarks. The second thing that we've seen is an average claim size increase. I mean over the like to like over 2 years, it's almost a 10% compounded growth in average game size. So that Could be because of, as I said, more precautions being taken in the hospitals in terms of additional tests, an RT PCR test just to start with, more BPs, etcetera, Which could also be structural or temporary. That time will tell. But no one want to add anything to that. Yes, So, Paresh, I think in line with what we mentioned earlier, I think if you look at the overall health Loss ratio experienced for quarter 2, that number would be roughly at about 78%, unlike, let's say, the significant increase in loss ratios that we had seen in quarter 1 because and A But even when you look at this number of 78%, as I said, it's a part of our one of the responses to the earlier questions. We did Talk about in that means a reversal of almost about INR 67 crores, so which in that sense, I would say, is and A one off reversal is what you get to see in quarter 2. So hence, when you look at this loss ratio of 78%, you will have to factor in for this release that you have seen on account of COVID claim. Having said that, I think to answer your point in terms of how could this loss ratio trend up, at least when you look at, let's say, maybe the subsequent couple of quarters and as What Varvoo mentioned, clearly, we are seeing the number of intimations on non COVID cases to be on the higher side. And therefore, From a trend line, clearly, the 78% loss ratio is something that will not be necessarily sustainable as we look forward, particularly when you look at, let's say, Q3 or and Q4. Having said that, I think the benefit of the increased pricing that we have affected on the corporate health portfolio, which has been upwards of 15% to 20%. And we have been able to hold on to, let's say, more than 90% of those corporate customer accounts. And A. Those benefit of increased pricing will start to play through over the next, I would say, 3 or 4 quarters. So in the immediate quarters, You could see some increase in the overall health loss ratio numbers. But as we kind of look forward maybe over the next 3 or 4 quarters, The benefit of increased pricing that we have affected on the portfolio will start to play through. Yes. That's helpful. And A. And from our pricing perspective, is there any scope to increase the pricing on the retail side of the and how soon can you take it? And so that's in the second question. So in retail, if you remember, we had talked about this. We had actually taken a price increase in January of in November and January of this year, November for the new and January for the renewal book. That was based on the data of the past because in retail help to get a pricing piece, you have to again present the natural and A. So we have done that. That has actually helped us in terms of the retail book. NFF? We will study this number. As we said, we are not sure about this average change has increased, whether it's a structural or a temporary phenomenon. We will meet maybe about a couple of months more months to form up our views on that. Based on that, we will take a call. If it is more temporary in nature, then we may not meet the pricing. Okay. And the last question, again, on the health book, What are the reinsurance strategy for the overall health book sale? And how do you I mean, I've heard that the pricing on the reinsurance for retail is also increasing substantially. Is that true? And how do you plan to come for that? So, Paresh, for us, if you look at particularly on the retail indemnity book, Predominantly, we have always we have never operated with the arrangement structure. I mean, leave aside the 5% obligatory that is mandatory for every risk that you write at the company. On the indemnity book, we kind of pretty much retained the entire 95% of the risk on the net account. So hence, to that extent, any dependency on reinsurance is something that Not there, at least on the indemnity book. On the benefit construct, which is the which is which kind of pays for those coverages of critical illnesses, and A? That historically, we have always operated through a reinsurance structure, and that's something that we will kind of continue to do so Even as we kind of look forward. But on the indemnity side, clearly, there is no dependence on reinsurance given that we retain 95% of the And then unlike in the other the Life side, we've not as of now, we've not seen any pressure on the reinsurance market. The next question is from the line of Chetan Thakkar from ASK Managers. Please go ahead. Good evening, sir. So just two questions. One is on the number of claims to which this RICI 1 crore of COVID claim pertains to? And Q3? And second is what is the difference between COVID and non COVID average pay? So Chetan, if you look at the number of So COVID intubmissions, what we had said was in quarter 1, that number was roughly at about 46,000 and thereabout in terms of number of intimations. If you look at quarter 2, the number of COVID claim intimations that we have got is roughly at about 26,000 in number. So for the half year, that number will be about 72,200 and 90 and thereabout, which corresponds to this number of INR 5.61 crores. And answer the average claim size of COVID to non COVID. Thank you. Other point on average claim size on COVID and non COVID, COVID claims will I mean, generally kind of average between about 85,000 to 90,000, thereabout, And non COVID health claims will be slightly in the range of about 60,000 to 61,000. And that includes the 10% PAGR inflation that we would On the non COVID side? That's correct. Okay. The only caveat that I will add is that these numbers Change is depending upon the type of claims that you get, right? So if you have more these dengue or malaria cases, it could be lower. If you have less surgery, it will be higher. Thanks, Jason. Thank you. The next question is from the line of So I have 2, 3 questions. So one first question is on the ILSS, and AHSL Reliance Capital Exposure of Bharti Aksha. So the numbers what we see is fully provided Or maybe some things need to be provided. I think we had an exposure of 85 outflows when the deal was announced. So just wanted to understand how the provisioning The entire amount has been provided for Sanket. Okay, perfect. And second, On the tax benefit which you all said on accumulated losses, it will be routed through P and L or it will be adjusted in the network itself, whenever do you take it? It will be as I said, given that last year's FY 2021 accounts was already approved by our AGM, so the benefit of tax on the and Okay, perfect. And this INR 5.61 crores of COVID claims, which has been revised down, So we are still carrying IDNR or it is actual paid amount and there is a if there is an IDNR, There is a possibility of release there too. There is always an element of EBITDA that we carry, Sankir, because if you see, for example, If one would have to slightly go back to let's take quarter 2 last year when we were at when we were sick of COVID cases, and A. Clearly, the extent of IBNR that we had to carry was far higher because there was always an element of uncertainty on maybe intimations coming through in the subsequent quarters. But as things started to kind of subside maybe in Q3 and more towards Q4, clearly, obviously, the number of COVID cases comes down and correspondingly, obviously, The kind of IBR that we carry as a part of the book also tends to slightly get moderated. It's pretty much on the same line. Even today when we speak, it's not that we have seen the end of, let's say intimations of claims that pertains to, let's say, a loss admission that would have happened in quarter 1 or even, let's say, for the matter of fact pertaining to the last year. And A. But the extent of cases that could come last year would be slightly lower. But clearly, at least so far as quarter 1 loss admissions are concerned, we continue to see Yes, intimations of claims that come through given the fact that these are largely reimbursement cases. So hence, when we build the number, it's always facing with an element of IBNR anticipating a possibility of claims to come into subsequent quarters. That's for, let's say, loss admissions till quarter 1. Quarter 2 still, There are cases that come under the cashless route and there are cases that still come through reimbursement. So therefore hence when you look at it on an aggregate basis, we will continue to We will be required to continue to carry those IBNR numbers. Yes. My question was more specific to COVID whether we are still Specifically in the context of COVID, on quarter 2, we are anticipating certain cases to come through under the reimbursement route in quarter 3. And hence, to that extent, we have built in an element of IBNR as a part of the COVID claim numbers of INR 5.61 crores. So can you quantify that INR 5.61 crores? How much is So I think it's if you look at the Ibera numbers, that number will be roughly anywhere between about INR 65 crores to INR 70 crores. 65 to 70 crores. Yes. And one more thing, just wanted to understand the entire strategy on motor, and especially with respect to the restructuring thing, which is happening with electrification of the vehicle. So are we Just wanted to understand if there are completely new OEMs, not the existing OEMs, which operate in IT Engine. So if new OEMs develop or gain market Whether if most of the vehicles become over the period of time become electric, then the overall loss ratio To answer the first part of your question, obviously, we are clearly focused on whatever can happen in the future, and we are very active in the EV segment as well. NF? In the four wheeler side, there is really 2 OEMs who are doing anything of and Consequence, and we are partnering with both. The real action is seen in the 2 wheeler side. And we are partnering with Almost all of them. In fact, the one that which has been talked about a lot in terms of very large scale Launch, we were the 1st company that they tied up with. I'm sure they'll tie up with a couple of others, but we're already there whenever they launch it. So this is something that is clearly remains a focus for us. We are again building a leadership position there also. And The second part of the question in terms of the loss ratios, look, there are 2 parts of the motor vehicle. 1 is the 3rd part in the first and the other is the own damage. In own damage, Yes, the traditional thought process is the number of moving parts are less. But the motor claims happen because of theft, Because of, let's say, in this case, maybe a theft of a battery or a physical damage to the vehicle when you're driving. So time will tell whether the losses are less or not. But as of now, we believe that there will continue to be losses. And the third party claims anyway will continue to And there will be probably new types of damages, maybe something through the software or some other liability risk that we never cover in due course. Question is from the line of Hitesh Gulati from Haitong. Please go ahead. Yes, thank you for giving me an opportunity. I just wanted to check how has been the traction on the non ICICI bank channel in the benefit health space, because you did mention there is some base and A. P. Vijay Kumar:] Yes. So in general, Hitesh, I think in line with what we have been saying, I think that part of the book has generally been kind of doing well. And with now, let's say, Disbursements are kind of starting to come back. I think clearly, we are starting to see increasing trend of Growth coming in on account of the non ICICI Bank related book. And the process has been quite positive. So any range because any range of growth that you can expect or take for example the mix we used to talk about Last year, the meeting being 4th year, the meeting being 30. So is that what is broadly continuing this year as well? One I think that will take time if you look at I think the extent of benefit mix to reach that kind of proportion in the past. In fact, 2 thirds used to be benefits and 1 third used to be Indemnity. That makes underwrite a substantial change post what we spoke about of one of our large bank business partners deciding to take and Q3 last year. So hence, the mix of indemnity benefit underwent a substantial change. But as I said, I think clearly, The expectation is with the levels of disbursement starting to pick up, I think the growth in the non ICICI Bank distribution, I think clearly it's looking at upwards of growth in the range of anywhere upwards of 30% to 35% and above. There are sort of most of the banks now, in terms of the apart from the new partners that have come on board Post the merger, we've also been there with quite a few of the other banks like private sector banks like Yes Bank, which is a reasonably new addition IDSE Bank, again, reasonably new addition. We've added Karol Vaisse Bank, again, reasonably a new addition. So there's quite a few partners. Plus, the bigger opportunity that We see also is the ATSK, NBFC space, which where we used to have a very large share, but post IFRS, their business came down. And now we are beginning to see them come back very strong. Okay. So just one last thing on motor OD, the last and A. 2 years combined ratio for the industry has been bad for us, it will be above 100. But this year, do we think for us at least because we are moderating growth and it will combine ratio will come and A Very difficult to say to kind of tell. I think the endeavor is what I think we look at the we would look at the portfolio on an aggregate basis. I mean particularly for motor Ogi lines of businesses, you will find in some periods possibly the loss development could be better than, Let's say what we would have expected and therefore you could see some periods of release in which case the loss ratios will look lower. But generally the thought process is as we have articulated, I think we would want to see on an aggregate basis try and price the portfolio in a manner which will meet our long term sustainable objectives that we have laid out, Which is try and see if we can kind of drive the business towards the combined ratios, which can be closer to the 100% threshold. I think that's largely the drive. But having said that, I think in the short term, given the increased competitive intensity that you're seeing in the market, I think there is clearly going to be some levels of stress on the OD loss ratios. Whether it will be sub 100, I think honestly very difficult to The next question is from the line of Madhukar Landa from Elara Capital. Please go ahead. Hi, good evening and thank you for giving me this opportunity. I have a couple of questions. 1st, on the OD side, I see that from 1Q to 1 first half, The loss ratio was down from about 68% to 64%. Just wanted to understand what is driving that? Eric and when do these crop contracts that Bharti has and so what sort of time period is left? I think you mentioned 3 years for 2 states. So what is the balanced time period? And A? And 3rd, I just wanted to get the numbers right. So INR 6.2 crores was the COVID came provisioning in 1Q for Lombard standalone. What would that number be including Bharti? Because the 561 number Is now Lombard plus BHARTI, is my understanding correct? And AUM. Yes. So let me answer the last one first Madhukar. So if you look yes, your understanding is absolutely correct. As I had mentioned, the INR 602 crores numbers is for ICICI Lombard on a and A standalone basis, Bharti had a number of about INR 26 crores. So both of that put together was about INR 628 crores. Again That is for the first half. That is for the Q1. Okay. So that number is 628. Against that, for the half year, that number stands revised to 5 Got it. Hence, the write back This is why I kind of said the overall release in quarter 2 is about INR 67 crores. NIM. So that's the response to your question on the health and COVID numbers. On the OD loss ratio, I think, again, when you look at the numbers, you are looking at, let's say, ICICI Lombard on a stand alone basis, which was at about 68.2%. On a March basis in quarter 2, that number is kind of stands divide to about 62.8%. But again, when you look at these numbers, including Bafi Absa, I think Q1, the numbers on a merged basis for OD would be looking like 65.3 percent, which is down to 62.8%. If you recollect, Odukar, what we had kind of spoken about even in quarter 1, we have been not necessarily kind of taking the entire benefit of the reduction in and a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a quarter of a Relative reduction in motor OD claims ratios for quarter 2. And the last question that you had, Madhu, in terms of crop, The contracts are there till next year, FY 'twenty three. Okay. That's it from me. All the best. Thank you. And Q3. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Hargav for closing comments. Thank you. Thank you all. We started late today. Thank you for joining this call and look forward to engaging with you during the course of the next few weeks. Thank you. Thank you. Thank you. N. Ladies and gentlemen, on behalf of ICICI Lombard General Insurance Company Limited, that concludes this conference. Thank you