PB Fintech · tone and specificity signals across the available quarters.
Language signals
I would, usually, I would ask you to desist from focusing on new business margin. It doesn't make sense. If health grows faster than other categories, you will see our margin decline. Health on new business is a zero margin category. I would rather that we were at 15%-20% negative margin on the first year, but we're growing much faster.
The industry always grows together. It is not like one player will grow and the rest of the industry will go into the dumps. Usually, you may have player-to-player shift a little bit. We are still a very small market share. The area we focus on will hopefully grow faster than the rest of the industry, because protection is what we are focusing on.
We have moved from -13% [EBITDA margin] to very near to double digits in the last 1 year. That's a very big change. Our renewal revenue is growing at 53%. Let's see. Paisa has always been a strategic question mark and an operational positive surprise. I expect the same.
I believe we are still in the very, very early days of our growth stage. Just to put in perspective, we haven't had growth like this in a very long time, and this is on the core business itself.
Our renewal rates have held up. In fact, they are only improving. We don't see that issue. As I explained, our porting is lower than the market. How do I say it in the simplest form? We are the solution, we are not the problem.
The sweet spot for us is really 20%-35%, because if you go beyond 50, the founder somehow believes that it's not their company anymore. I think that was where early learning was.
Our focus for the time being is entirely on growth. Yes, we will deliver profits, but there will be an outcome rather than... We are clearly not optimizing for profits right now.
Whenever there's a call we have to make on can we make this investment and maybe there's a doubt that it will help us in terms of growth or not, we will more often than not make that investment and err on the side of having taken on extra cost and not being able to deliver the growth rather than having the growth opportunity and not being able to deliver because we did not take on a particular cost.
We are not in the market share game... We are in the market creation game. Our belief is Policybazaar alone will be bigger than that market projection over the next 10 years.
82% of the business that we did was from new customers, new to insurance customers. They may have had a corporate policy. They did not have a retail Health insurance policy.
This is the first quarter since we went public that I'm actually happy with the results... Priority zero would be the growth of our health and term business, which accounts for more than three quarters of the value of this company.
In health, the NPV, when you calculate it, is significantly higher than the first-year revenue because it's a lifetime payout product... Instead of getting a 46% margin as we usually get, on that part you'll be getting a 0% margin. So obviously if that part grows, that will have an impact, but it's a very happy impact.
I'm extremely confident that this should be our last quarter of losses. So next quarter, we'll definitely have profits.
Don't get used to the 60%-70% kind of growth. It's good. It's been happening. So far, it does not seem like it's changing. But listen, this is unreal growth. Our long-term guidance, our midterm guidance continues to be 30%-ish.
Policybazaar is not investing in this venture from a financial return perspective. Policybazaar, if it is investing, is investing from an enablement perspective because this venture benefits Policybazaar a lot, a huge amount, right? And the industry a huge amount.
Our three-year CAGR is about 41% on fresh business... what we are saying is maybe the next three, four years, CAGR is going to be maybe 30%.
PB Partners is not a massively profitable business ever. So somebody who believes that POSP will start generating the same kind of margins like contribution margins like Policybazaar has is dreaming because that's impossible.
After 17 years, 18 years... we are able to get to about 1.77% of insurance premium as a profit pool. It will of course grow. This should kind of keep growing into the future.
What you will hear as you go around the market, if anybody does the due diligence, is that Policybazaar always pays on time... Policybazaar does not snatch people's customers, does not try to steal the renewals. Those kind of things you will hear in the market. I think that is one of the reasons why people are starting to gravitate towards us because eventually it's a game of trust.
It's a triangle, always: consumer, insurance company, and Policybazaar. All three have to gain because otherwise it's a zero-sum game. If you take some from one person, give it to the other, I think all three will gain, and that's what we are really focused on.
We had aimed for a full year PAT breakeven in the financial year 2024, and very happy to announce that we've already achieved that within the first three quarters, with the strongest quarter yet to follow.
Our incremental revenue and our Adjusted EBITDA. Incremental Adjusted EBITDA is 34% of the incremental revenue. That probably gives you some indication of the minimum that we can achieve.
Health makes up... no, no, but even in the other products, there is a 15% extra that comes because of renewal business. In health, I'm telling you, in the, on the new business, if you look at it, we'll have a significantly negative EBITDA margin. At the contribution itself, it is zero.
Fresh business might have slightly higher yield than renewal business. Almost flat. It's almost flat, by the way.
We are growth of premium-hungry. We are not growth of commission-hungry. I know that at some level, from a financial perspective, that sounds very stupid, but I think at another level, it's very smart.
From the day of the IPO till today, our premium is about six times higher. But our commissions are exactly the same. Obviously, a six times larger player with larger market share should have been able to attract higher commissions if they wanted to muscle into it or something of that sort. That's not our intent.
I think Policybazaar is perhaps the most evolved insurance distribution model across the world. We add a lot of value to the consumers, a huge amount of value to the consumers, and a huge amount of value to our insurance partners.
Risk products have to be sold on the basis of disclosure and the fact that you are able to help a person at the time of claim. This circle takes a long time to set up. So what we are seeing today is the benefit of decades-plus of effort that Policybazaar has put into the market.
We are not commission-centric. We are consumer-centric, and we make ourselves so efficient in risk capture and disclosure capture, so that at the point of claim, we are standing there to do that.
We are very, very comfortable within the EOM framework. At our scale, specifically, you would struggle to find anybody there. Anything that makes the market condition harder plays to your benefit in terms of market share gains.
Health and life insurance combined, which is the core of our business and a bulk of our long-term value, had a combined growth of 53% year-on-year in new premiums for the quarter. Our total insurance premium for the quarter was INR 5,123 crores, and that gives us an ARR of INR 20,000 crores, which was also a long-awaited milestone.
We had aimed for a full-year PAT breakeven, and we are very happy to announce that we achieved that ahead of the target in Q3 itself and have now ended the year with a PAT of INR 64 crores from a loss of INR 488 crores last year. This is a swing of INR 552 crores. I think if you were to ask me my own opinion, I think the INR 64 crores, in my estimate, is a little below where I expected it to be.
We are at a very, very early stage of evolution. We are solving a pretty big problem. At a fundamental level, the problem we are going to solve is what is the problem in healthcare? It's all about misaligned interests. A person does not want to buy insurance till they need it. By the time they buy insurance, nobody wants to give them insurance. Our endeavor, if you ask us in the long run, is going to be to address all the problems.
The company is about six times larger in the last four years from 2021-2025. What we used to do in the whole year, we're now doing in every two months.
We are at this stage where for the last three, four years we have been saying 'This is what will happen, this is what will happen' and actually go ahead and do that. This is a management that is delivering as per its plan.
Our R1 (first-year) persistency is at all-time highs. It is largely structural because it is driven by the nature of the products that we have been introducing with very high no-claim bonus.
Only 5% of customers bought insurance 10 years ago have ever made more than 1 claim. Those 67% do not interact with anybody. That is our job, and that is what Policybazaar really, really specializes at—bringing in that 67% of people who are not gonna claim because without that, please appreciate that 5% of lives will simply not be able to afford their situation.
If Policybazaar was an insurance company, our total costs and the claims paid out on our book, and when I'm looking at a fully loaded delayed book, are less than 80%. There is no insurance company in the country who can compete with that. All I'm saying is we have the most profitable book in the industry by a 20% delta from the rest of the industry.
Please read us. While a lot of questions come around profits, that has not been our focus. Our focus is the other two [growth and quality]. This leg [profitability] will just follow along.