Go Digit General Insurance Ltd — Q4 FY26

Go Digit General Insurance Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=5SvvULImoLY Published: 2 weeks ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to Go Digit General Resource Company Limited Q4 FY26 earnings 0:11 11 seconds conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode and there will be an 0:19 19 seconds opportunity for you to ask questions after presentation concludes. Should you need assistance during your conference call, please signal an operator by 0:28 28 seconds pressing start then zero on a touchstone phone. Please note that this conference is being recorded. I now hand conference 0:35 35 seconds over to Mr. Rish Kaparia from ICSA securities. Thank you and over to you sir. Thank you. Good day ladies and 0:44 44 seconds gentlemen. On behalf of ICICI securities, I would like to warmly welcome you to the fourdigit general 0:50 50 seconds insurance limited Q4 and FI 2026 results conference call. 0:57 57 seconds We have with us Mr. Kamesh Goyel, founder and chairman of the company along with his team. So without further ado, I would now like to hand over the 1:05 1 minute, 5 seconds floor to Mr. Goyel. Thank you and over to you sir. 1:10 1 minute, 10 seconds Thanks Rishab and uh good evening everyone and thanks for joining the call. I have with me Justine our CEO, 1:16 1 minute, 16 seconds Ravi our CFO, Puse our head of investor relations and Diva and uh Sanskar who 1:23 1 minute, 23 seconds are part of our investor relations and finance controlling team. Now moving uh to slide first uh this is a slide you 1:33 1 minute, 33 seconds all are familiar with. Uh gross return premium was close to 11,300 crores. 1:38 1 minute, 38 seconds market share uh in both overall and uh motor has increased slightly over the 1:45 1 minute, 45 seconds last year. Partner network continues to be uh to grow. Uh our assets under management now are close to about 23,000 1:54 1 minute, 54 seconds cr and our customer satisfaction score continues to be very strong. 2:00 2 minutes Now if we go to the second slide and I think I'll spend a bit of a time here. 2:05 2 minutes, 5 seconds As all of you know that I came out with guidelines that uh Indian accounting standards which are essentially based on 2:13 2 minutes, 13 seconds uh IFRS uh standards would be applicable from 1st of April 2026. So what we have 2:21 2 minutes, 21 seconds done this year is that we have actually got our uh results of 2526 audited 2:28 2 minutes, 28 seconds prepared and audited as per the new accounting standards and the idea is that as we go forward the comparisons of 2:37 2 minutes, 37 seconds this year versus last year becomes better. Till now as you know we were declaring our IFRS results but now this 2:46 2 minutes, 46 seconds has been aligned completely with Indian accounting standards and these results have also been audited. So you are here 2:53 2 minutes, 53 seconds seeing slightly more details in terms of what the results are and I'll quickly take you through there. Obviously no 3:00 3 minutes difference in the premium uh gross direct premium we saw good growth. Uh gross return premium the growth has been slightly less and I'll cover that later. 3:10 3 minutes, 10 seconds uh when we look at the loss ratio there is actually no difference in loss ratio uh between uh uh Indian accounting 3:18 3 minutes, 18 seconds standards and IGAP u and I think last time somebody had asked the question if I remember correctly for some companies 3:25 3 minutes, 25 seconds they seem to be having a difference in the loss ratio also but our understanding is loss ratio should not be different and when we look at Indian 3:33 3 minutes, 33 seconds accounting standards basis our profit uh for the whole year and in profit What we are showing here is which we had 3:42 3 minutes, 42 seconds explained last year Indian accounting profit plus deck. So deck is something which we know is a profit which has been 3:50 3 minutes, 50 seconds expensed up already and this will flow into the profit. So we have not included in this profit the benefit of uh either 4:00 4 minutes uh discounting of reserves or change in mark to market. uh we have prepared a results based on that also later and we'll take you through but here we are 4:09 4 minutes, 9 seconds focusing on what we have always said is the KPI we look at which is IFRS and in 4:16 4 minutes, 16 seconds profitability we are looking at India ICAP plus deck and just to repeat in case of Indian accounting standards now 4:25 4 minutes, 25 seconds like uh you cannot upfront book uh reinsurance commission for future premium in case of uh reinsurance 4:33 4 minutes, 33 seconds insurance commission also otherwise you have to defer it over a period of time. 4:38 4 minutes, 38 seconds So if even if you are reinsuring more the benefit in IFRS would flow in along with the premium you want. So this plays 4:47 4 minutes, 47 seconds both way and that is why we have always said that that is how we look at results internally when we see it on this basis 4:54 4 minutes, 54 seconds our profit for the quarter 2026 is 239 crores profit before tax and uh which 5:02 5 minutes, 2 seconds last year was about 142 crores profit after tax in Indian accounting standards 5:09 5 minutes, 9 seconds after 25% full taxation is 1759 crores compared 206. 5:17 5 minutes, 17 seconds Then we look at our roe on this basis which is fully on post tax basis for the 5:23 5 minutes, 23 seconds quarter roe is 4% while on an annual basis it is about 17.7%. 5:31 5 minutes, 31 seconds So just to repeat 17.7% roe this is on the Indian net worth which is roughly at the end of the year 5:39 5 minutes, 39 seconds about 4600 crores. uh if you take an average this would probably be around 4,300 crores. Now you can actually see 5:48 5 minutes, 48 seconds our IFRS uh or in the Indian accounting standards our net worth is actually 7600 5:54 5 minutes, 54 seconds crores and when you come below in IGAP you can actually see our net worth in if 6:01 6 minutes, 1 second in Indian accounting standard is 3,000 crores more than what it is in the uh uh 6:10 6 minutes, 10 seconds Indian Igap basis. Now since the solvency is still related to I gap basis 6:16 6 minutes, 16 seconds we are calculating RO on that basis. Now this year or next year maybe not this year next year when the risk based 6:24 6 minutes, 24 seconds capital norms come then the chances are that the solvency could go up based on the Indian accounting standards. So we 6:33 6 minutes, 33 seconds will see it that time assuming the uh uh the network is treated as uh I gap only 6:41 6 minutes, 41 seconds then our solveny margin continues to be strong and we'll look at early on that basis if we actually get u some benefit 6:50 6 minutes, 50 seconds out of Indian accounting standards network then obviously we'll have some excess capital uh on that basis. So I 6:59 6 minutes, 59 seconds just wanted to put this perspective. If you look at our combined ratio for the whole year it was 105.7 which is an improvement of 1.2% over previous year. 7:11 7 minutes, 11 seconds And on the quarter again it is very similar 105.8 compared to 106.8% 7:19 7 minutes, 19 seconds which is again an improvement of 1%. The combined ratio you are seeing below this 7:25 7 minutes, 25 seconds which is 104 103 101 and 99.1 this is after discounting of reserves. 7:34 7 minutes, 34 seconds So uh again just to repeat we don't look at uh combined ratio after discounting 7:40 7 minutes, 40 seconds of reserves we look at it I gap everything on ne basis plus uh deck. So 7:50 7 minutes, 50 seconds I think this is something which is uh really important and I think we are happy that uh regulator has moved in 7:57 7 minutes, 57 seconds this direction and I think uh for all of you analysts and fund managers making comparisons would also become lot more 8:05 8 minutes, 5 seconds easier. Uh earlier because of this reinsurance influence upfronting of commission etc. It was very difficult uh 8:13 8 minutes, 13 seconds to figure out performance of one company against the other and I think our finance team which has always been publishing FRS results they have taken 8:22 8 minutes, 22 seconds the lead to get the uh last year results also audited uh under the new accounting standards. 8:30 8 minutes, 30 seconds Uh we already said last year uh that u um uh we uh uh this year the whole account 8:39 8 minutes, 39 seconds accumulated losses would go away. So this year our tax rate was 13.8%, next year the tax rate would move to 25.2% 8:49 8 minutes, 49 seconds basis. Our long-term premium uh as of 31st Mar uh March 2026 8:56 8 minutes, 56 seconds uh it stands at uh overall total of about 3,200 crores out of which uh motor 9:03 9 minutes, 3 seconds would be roughly about 20 um about 80 to 83% and rest will be non-motorous 9:12 9 minutes, 12 seconds and uh about uh one by circular which was published in 2024. 9:18 9 minutes, 18 seconds We have not booked 300 crores of premium 303 crores of the premium but as uh previous quarters we have already 9:27 9 minutes, 27 seconds provided for 109 crores of uh acquisition cost uh already on this unearned premium. This obviously impacts 9:35 9 minutes, 35 seconds only the Indian accounting standards. It would not have any impact on the uh in new uh Indian accounting standards. AUM 9:43 9 minutes, 43 seconds have grown to about roughly 23,000 crores uh and this was about uh 19,700 9:51 9 minutes, 51 seconds crores previous year. So over a period of 1 year we have added more than 3200 crores of AUN which is a growth of about 16.3%. 10:02 10 minutes, 2 seconds Our solveny is now improved to 2.42 42 uh and uh this year uh quarter on 10:09 10 minutes, 9 seconds quarter this has been increasing and uh this again is calculated on the Indian uh IGAP network and uh I think when we 10:18 10 minutes, 18 seconds covered the piece of investment I think this uh as uh I always say that for us to move towards a decent uh uh 10:27 10 minutes, 27 seconds allocation asset allocation having a solvency is very important and I think we have a very very strong solvency. Uh 10:36 10 minutes, 36 seconds as of 31st March 2026, we have uh accumulated deck which we had also declared in our uh previous call last 10:45 10 minutes, 45 seconds quarter call pre-tax of roughly about 2472 crores and roughly 65% of this uh will actually get uh uh will unwind in 2627. 10:59 10 minutes, 59 seconds So just giving you these numbers so you have even more visibility as to how the Indian accounting uh uh standards will 11:09 11 minutes, 9 seconds look at uh IAP uh again I've covered the piece of uh uh on the on the network and as I 11:19 11 minutes, 19 seconds said as uh risk based capital norms come this year. uh either way I think we are placed in a very strong solveny position 11:27 11 minutes, 27 seconds and uh I think for us the issue is likely to be uh uh we anyway don't need any capital uh and even under the new 11:36 11 minutes, 36 seconds scenario we would not expect any new capital uh how much benefit one can get uh due to IFRS uh network is something 11:44 11 minutes, 44 seconds which we will see in uh fourth quarter we are two wheeler business uh had a big 11:51 11 minutes, 51 seconds growth against uh 365 crores we ended up doing 556 crores. Uh this obviously had 11:59 11 minutes, 59 seconds a big impact on our EUM of roughly about 3 uh 5%. Now this is the next slide. uh 12:08 12 minutes, 8 seconds this is where you can see the full reconciliation and uh here you can also see what is the fair value change what is the 12:16 12 minutes, 16 seconds discounting impact and we have also declared uh last year what was the discounting rate and this year what is 12:23 12 minutes, 23 seconds the discounting rate so the discount there is a slight change in uh discount rate there is a well definfined methodology uh as to how the discounting 12:33 12 minutes, 33 seconds of uh reserves would work and uh when we come to the unrealized uh gains or uh losses. 12:42 12 minutes, 42 seconds Uh that is uh uh something which I'll cover in a bit more detail as we come to the investment slide because I think it 12:50 12 minutes, 50 seconds is important for us to uh explain that in a bit more detail on that piece. So 12:57 12 minutes, 57 seconds moving on uh now we are looking at the GDPI growth. our GDPI growth uh 13:03 13 minutes, 3 seconds continues to be GDPI growth continues to be uh strong at uh 16.2% for the whole 13:13 13 minutes, 13 seconds quarter and uh uh this is also for quarter 4 about 21.3%. 13:20 13 minutes, 20 seconds So growth if you actually look at other than fire in quarter 4 uh where the growth rate uh was lesser compared to 13:28 13 minutes, 28 seconds the industry uh if you look at for the whole year against industry's growth of 13% we have actually grown at 34%. So 13:37 13 minutes, 37 seconds overall growth rate has been uh fairly been strong. On the other hand, you would recall that our health travel and 13:44 13 minutes, 44 seconds PA segment were we were actually degrowing or growing in a very lesser way in the previous quarter especially 13:51 13 minutes, 51 seconds in the first half. That seems to have changed where we are actually growing strongly in this segment. Other uh 13:59 13 minutes, 59 seconds growth areas uh are more or less in line with the yearly growth. when we look at motor. Now when we move to the GWP 14:08 14 minutes, 8 seconds growth, uh GWP growth in quarter 4 uh is overall is about 9.8%. 14:16 14 minutes, 16 seconds Uh while uh for us the uh growth rate it's quite similar to the industry's growth rate on GDP but as I had 14:25 14 minutes, 25 seconds explained in quarter three we had not done some reinsurance premium in health. 14:29 14 minutes, 29 seconds The loss was about 200 crores at that time. This time also the loss uh in case 14:35 14 minutes, 35 seconds of health has been about 252 crores. So if we uh uh remove that that itself has 14:44 14 minutes, 44 seconds had an impact of about four 5% uh on the quarter premium actually u 14:51 14 minutes, 51 seconds more than that uh the quarter uh the impact would be even more if we exclude the uh health the overall growth rate on 15:00 15 minutes GWP would still be about 18.8% 8% and again we did not renew this because we 15:07 15 minutes, 7 seconds felt that this business would not give us uh anything in bottom line and uh 15:14 15 minutes, 14 seconds secondly uh in case of uh group health not only bottom line it also doesn't help you on the EUM side 15:22 15 minutes, 22 seconds because uh the claims start flowing in very very closely. So I think again 15:29 15 minutes, 29 seconds moving on uh in in terms of uh two wheeler have already covered so some of the other areas we'll be happy to cover 15:38 15 minutes, 38 seconds during the Q&A but uh moving to the next slide. 15:47 15 minutes, 47 seconds Uh here we are now looking at combined ratio. So you can actually see that the combined ratio again we have shown on uh 15:55 15 minutes, 55 seconds Indian accounting basis in the last call I think we had said that we'll be publishing uh combined ratio on FRS 16:03 16 minutes, 3 seconds basis on a regular basis uh obviously at that time we did not know about the day circular but this we had already suggested and when we look at uh profit 16:12 16 minutes, 12 seconds uh before tax only with deck we have also shown this number and uh below on 16:19 16 minutes, 19 seconds the right side you can also also see profit uh under the IGAP basis which on a quarter basis as well as on the year 16:27 16 minutes, 27 seconds basis has grown up grown by I get profit by about 49% this year now I think coming in on the 16:36 16 minutes, 36 seconds investment side I think uh here is uh something I would want to maybe spend a bit more time I already spoke about uh 16:44 16 minutes, 44 seconds we have added 3,000 crores uh 3200 crores uh through the business in units. So fairly strong growth. Our 16:52 16 minutes, 52 seconds leverage now has increased to 5%. Some of you would remember that uh after the IPO uh when we had looked at leverage 7 17:01 17 minutes, 1 second 30th of June 2024, this number had gone down to about 4.7 4.65. 17:08 17 minutes, 8 seconds Now this has started again going up to five. Uh and some of you may want to check. We had said that over the next two years we would expect it to be about 17:17 17 minutes, 17 seconds five. So again a point I wanted to just reemphasize is that when we give up some business which we it's not profitable 17:26 17 minutes, 26 seconds that really has doesn't have any meaningful impact on the EU especially 17:32 17 minutes, 32 seconds if the business is uh you know we start seeing the claims on a regular basis. 17:38 17 minutes, 38 seconds Now when we look at our investment performance our uh overall yield has been 1.8 date in debt uh including 17:46 17 minutes, 46 seconds capital gains the yield has been uh also about uh 1.9%. 17:54 17 minutes, 54 seconds When we look at investment yields uh excluding capital gains this year uh for the whole year in March is about 7.1% 18:03 18 minutes, 3 seconds uh this was about 7.2% in the previous years. Now covering this 18:10 18 minutes, 10 seconds a bit more uh in terms of what really happened our unrealized loss on the entire investments was about 54 crores. 18:19 18 minutes, 19 seconds This is about 0.2% of our AUM. 18:24 18 minutes, 24 seconds uh against I think if you look at companies uh some of them have had more than that as a percentage of AUM and our unrealized gains on equity portfolio is 18:33 18 minutes, 33 seconds about 45 crores as of 31st March 26 and uh other than equity which is fixed 18:40 18 minutes, 40 seconds income is about 99 crores. Now when we look at uh this uh from a perspective of 18:49 18 minutes, 49 seconds uh duration which I think is uh really important uh 19:00 19 minutes so when we see it from a perspective duration and fixed income and I want to cover this point in a bit more detail because I had seen in between I think 19:09 19 minutes, 9 seconds somebody's saying because a fixed income portfolio is big the chances of unrealized losses would be very high. As 19:16 19 minutes, 16 seconds of March 25, our duration of fixed income portfolio was 5.2. 19:24 19 minutes, 24 seconds This was reduced to in December 25 to 4.4. 19:29 19 minutes, 29 seconds So through passive and some actions we took we actually reduced the duration by 0.8. 19:37 19 minutes, 37 seconds In March, we have actually slightly increased the duration to about 4.5. 19:43 19 minutes, 43 seconds Our reinvestment yield during this period obviously when we were passively investing was a bit lower in the first three quarters and this picked up in the 19:51 19 minutes, 51 seconds quarter from Jan to March. So the way we see our fixed income portfolio is that if and we obviously don't wish it but if 20:01 20 minutes, 1 second due to what is happening in the Middle East in the war or the energy prices etc 20:08 20 minutes, 8 seconds if the interest rates go up we have enough leeway for us to increase the duration and if it doesn't go up it 20:16 20 minutes, 16 seconds stays in this area then we'll try and maintain the duration around 4.5. So in 20:22 20 minutes, 22 seconds fixed income we actually have a fairly um I would say decent situation. When we 20:30 20 minutes, 30 seconds think in terms of equity uh our asset allocation now has moved to roughly about 8.5%. 20:39 20 minutes, 39 seconds Equity uh some of you would remember that I've uh we have always said that 10% is our aim as of now. So when we 20:46 20 minutes, 46 seconds look at our solvency of 242% uh the equity asset allocation actually now can be lot more because uh even with 20:55 20 minutes, 55 seconds a 25% drop in the market value a solveny will still continue to be comfortably be 21:02 21 minutes, 2 seconds above 200%. Now on the equity side, I already told you at a very small loss as of 30 uh 1st of uh March, but when we 21:12 21 minutes, 12 seconds look at this on 22nd of April, we are already sitting at an investment gain of about 191 crores uh on the equity side. 21:23 21 minutes, 23 seconds So and when we look at it on the fixed income, fixed income also as of 22nd March it is about 111 crores. So uh our 21:34 21 minutes, 34 seconds position I think on the investment portfolio we are positioned really uh I would say nicely where if uh god forward 21:42 21 minutes, 42 seconds equity markets drop substantially we have runway to now go even above 10 I would say 12 and a half% is quite 21:49 21 minutes, 49 seconds comfortable for us uh if it doesn't then I said we already are at 8 1/2 similarly on fixed income interest rates stay 21:58 21 minutes, 58 seconds where they are we can maintain the duration of 4.5 if they at least we have enough leg room to increase our 22:05 22 minutes, 5 seconds duration. So I think this is one piece I wanted to cover in a slightly more detail on investments because all of you would remember that if you look at our 22:14 22 minutes, 14 seconds investment yield uh compared to major companies uh last year average that difference in yield would easily be from 22:23 22 minutes, 23 seconds 100 to 150 basis points and if you can reduce that gap by 50 basis points uh 22:30 22 minutes, 30 seconds with our sort of aum and leverage this actually has a very big impact on the profitability. So I think that is the 22:37 22 minutes, 37 seconds point I just wanted to emphasize. Moving to the next slide in terms of loss ratios. So loss ratios I would say 22:46 22 minutes, 46 seconds broadly compared to previous quarter have seen an improvement of 1.3%. 22:51 22 minutes, 51 seconds And uh here uh uh overall period when we look at health and travel has seen a bit 22:58 22 minutes, 58 seconds of a reduction. Fire we have seen uh the net loss ratio to go up but uh when we 23:05 23 minutes, 5 seconds because some two major claims came but when we look at fire on a gross basis then the loss ratio in 2526 was 51% and 23:15 23 minutes, 15 seconds in 2425 it was 48. on a gross basis loss ratio has not increased and the uh 23:23 23 minutes, 23 seconds profitability of commercial portfolio is driven more uh around on a net basis. So loss ratio even with a retention of say 20%. 23:34 23 minutes, 34 seconds Because we also have to pay a substantial premium for the uh uh catastrophe reinsurance and uh risk 23:42 23 minutes, 42 seconds excel covers the so-called non-proportional covers. Net loss ratio will always be substantially more 20 to 23:49 23 minutes, 49 seconds 25% more than the gross but the advantage is whatever premium we see it you get a reinsurance commission on that 23:56 23 minutes, 56 seconds so the results on fire segment will be very positive even for 2526 when you 24:03 24 minutes, 3 seconds will see that otherwise loss ratios more or less stable and compared to previous 24:09 24 minutes, 9 seconds years they have improved slightly on a yearly basis loss ratios stable at 72.8 72 24:18 24 minutes, 18 seconds 9 I think. Uh moving to the next slide 24:27 24 minutes, 27 seconds which is uh on the triangle um I would say maybe before I come to the 24:34 24 minutes, 34 seconds triangles let me quickly cover our reinsurance uh because there were some questions in the last quarter on how the 24:41 24 minutes, 41 seconds reinsurance would happen. So we have renewed our reinsurance program for 2627. 24:48 24 minutes, 48 seconds Our treaties uh the leader continues to be the same. Most of the followers continue to be the same. Uh as I had 24:55 24 minutes, 55 seconds said earlier, our philosophy is not to trade reinsurance relationships for one or two% commission. And uh this year we 25:02 25 minutes, 2 seconds have been able to overall increase our TT capacity in fire and other lines of business and also improve the economics 25:11 25 minutes, 11 seconds uh in the TT uh marine and liabilities there is no real change. Uh what we have introduced this year. Um so property and 25:21 25 minutes, 21 seconds engineering capacities increased and commission terms also improved. marine and liability no real change either in 25:29 25 minutes, 29 seconds capacity or in this but this year we also have a mis a TT called as miscellaneous in which we actually put 25:37 25 minutes, 37 seconds in uh some different kind of risks so this year I think our focus is to introduce some new lines of business and 25:45 25 minutes, 45 seconds commercial these are more niche areas I won't be able to speak in too much detail uh about them now maybe uh after 25:53 25 minutes, 53 seconds end of a year we can speak about them So we have actually added some new lines of business where we see opportunity in 26:00 26 minutes these niche areas and since our overall portfolio in commercial vehicle as you already saw has increased a lot this 26:07 26 minutes, 7 seconds year our accumulations uh were increasing. So in India if we typically look at Gujarat, Maharashtra and 26:16 26 minutes, 16 seconds National Capital of region it actually gets most of the accumulation and for us to better manage our rates on CAT and 26:24 26 minutes, 24 seconds risk a we have also come out with a uh small uh treaty on the whole account 26:31 26 minutes, 31 seconds where we will be seeding 11% of the non motor non-health premium uh so that our overall accumulation 26:40 26 minutes, 40 seconds doesn't go dramatically. So on the risk excel side we are moving our overall limit from 1,600 cr to 2,000 cr for 26:48 26 minutes, 48 seconds earthquake and our uh individual the deductible our own detention would 26:56 26 minutes, 56 seconds actually now increase uh from 36 cr to 45 cr in case of uh netcat while uh in 27:04 27 minutes, 4 seconds case of risk excel it remains the same at 50 crores. So I think uh reinsurance uh uh overall in our view has been good. 27:14 27 minutes, 14 seconds Relationships continue to be very stable. Uh we obviously have um decent terms and conditions and uh we have now 27:23 27 minutes, 23 seconds an opportunity to develop some new lines of business uh which we want to do. Now moving to the next uh reserving 27:31 27 minutes, 31 seconds triangle. If you look at reserving continues overall to be strong and uh if 27:37 27 minutes, 37 seconds we go now to TP where uh uh one is keen so here you can see and we have explained this earlier the first year 27:46 27 minutes, 46 seconds was only about 4 months our reserves was about uh uh 5 crores and we got a single 27:53 27 minutes, 53 seconds claim of 7.5 crores that year which is still not settled uh and NEP was only 7.5 cr in that year 28:03 28 minutes, 3 seconds and uh he got one large claim two large losses. So we have a small uh surprise 28:10 28 minutes, 10 seconds of negative of 60 lakhs but claims have not been settled but after that you can see our reserves uh continue to be very 28:18 28 minutes, 18 seconds very strong and uh when we look at year end of 25 there has obviously not been 28:25 28 minutes, 25 seconds any revision done yet. So this is something for one year we we try and uh not review the results and actually wait 28:32 28 minutes, 32 seconds for the claims to come but overall our results continue to be uh very strong. 28:40 28 minutes, 40 seconds So I think moving uh further um I think if results are covered 28:48 28 minutes, 48 seconds then I think uh we have uh I would say on the EOM we had already 28:56 28 minutes, 56 seconds said that because of two wheeler um went up but I had said this in the last quarter and I would repeat if you put 29:03 29 minutes, 3 seconds our EOM in uh in with the uh I would say with India's largest private companies 29:11 29 minutes, 11 seconds line of business mix our overall EUM will be very very close a difference of less than 1% between us and them and we 29:20 29 minutes, 20 seconds would actually be compliant on that basis so issue in EUM for us always has been line of business mix and not really 29:28 29 minutes, 28 seconds the overall expenses and as all of you know on management expenses we have been by far the most efficient company so 29:36 29 minutes, 36 seconds with this I'll stop so that uh Do you have enough opportunities to ask clarification? Thanks for the patient listening sir. 29:46 29 minutes, 46 seconds Thank you very much. We will now begin the question answer session. Anyone who wish to ask a question may press star N1 29:54 29 minutes, 54 seconds on the test telephone. If you wish to remove yourself from the question queue, you may star N2. Participants are 30:01 30 minutes, 1 second requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question assembles. 30:17 30 minutes, 17 seconds We have first question from the lineup from Aendas Spark. Please go ahead. 30:24 30 minutes, 24 seconds Yeah, thank you. Thank you for the opportunity. Um so my my my first question is is largely on on the 30:32 30 minutes, 32 seconds commercial lines because because that segment grows the fastest uh or rather fire segment which has grown the fastest in the current year. Uh and and our loss 30:41 30 minutes, 41 seconds ratios are deteriorated. You you highlighted K that on gross basis it is it is not that deterioration but on net basis there is a deterioration but just 30:49 30 minutes, 49 seconds just wanted to understand uh given given uh you you have increased your risk covers from 1,600 to 2,000 crores the 30:57 30 minutes, 57 seconds the premium cost naturally will be still higher in the current year then then is it fair to say that the profitability of 31:04 31 minutes, 4 seconds the fire segment might not be as great as it was in 2425 compared to uh even 31:11 31 minutes, 11 seconds given to reiterate even 246. So for the reasons what you said so this and and probably we are entering into a soft market also uh in in the fire segments 31:19 31 minutes, 19 seconds just just wanted to understand how you will see this business to to play out. 31:23 31 minutes, 23 seconds That's that's first question and and the second question is is your outlook on the crop in the current year. Uh maybe maybe you did that business largely 31:31 31 minutes, 31 seconds through the region's accept acceptance and and it's a new tending cycle uh in in the current year. How do you approach uh that business? Do we see you doing 31:41 31 minutes, 41 seconds more geographies and and maybe contributing more directly? And and lastly, one one more technical question on this reverse merger where we are 31:49 31 minutes, 49 seconds standing and and maybe maybe whenever the reverse merger goes through, do you think Fairfax uh will will continue to 31:57 31 minutes, 57 seconds hold the stake what it is holding or or they have intention to pay the stake given given it will become more liquid for them to sell? Yeah, those are my three questions. 32:06 32 minutes, 6 seconds Thanks. So on fire I think I have always said that we have increased the capacity uh on the CAT limit. We have increased 32:14 32 minutes, 14 seconds the CAT limit but we have moved from 36 crores to 40 crores in terms of retention. Overall premium I don't know 32:21 32 minutes, 21 seconds of hand but I don't think our premium has actually gone up on the CAT in absolute amount. Uh secondly, I also said that our commission terms have 32:29 32 minutes, 29 seconds become better in fire and engineering and you already saw in Q4 that uh we can be fairly be aggressive uh if we don't 32:38 32 minutes, 38 seconds like any business. So if the business is not good, our focus would not be on the top line. Our focus will be how do we 32:45 32 minutes, 45 seconds protect the bottom line. So I think overall on that basis I would say based on where we are I would not assume that 32:55 32 minutes, 55 seconds uh profitability will go down and we have to also keep in mind that lot of this business would also get earned this 33:02 33 minutes, 2 seconds year and profit commission also plays a role in in this. So I would say based on 33:09 33 minutes, 9 seconds where we are uh we are fairly comfortable in terms of uh where the fire business will go. The softer terms 33:18 33 minutes, 18 seconds we are not really seeing as much in engineering and if you see a growth in engineering also has been even higher 33:24 33 minutes, 24 seconds compared to the fire business. uh so that is uh one area I would say and thirdly as I said on specialy lines in 33:33 33 minutes, 33 seconds commercial business is a focus area and uh uh that is also something which is uh 33:39 33 minutes, 39 seconds in our view should uh provide a cushion both for the top line and the bottom line on crop I think uh this year we 33:47 33 minutes, 47 seconds want to also participate on the tenders on the direct side uh as of now the government has not really come out with the schemes whether it will be a 33:56 33 minutes, 56 seconds three-ear scheme this year or one year scheme and things like that. So I think we'll wait for this but uh the capability building for crop has been 34:04 34 minutes, 4 seconds going on for some time and uh we would participate in crop on the direct side this year uh because on pricing etc we 34:13 34 minutes, 13 seconds have had a decent exposure but now doing it uh on the direct side is also something which is uh on our focus on 34:21 34 minutes, 21 seconds amalgamation there is no news as such in terms of uh what the next steps are at the time frame. uh as for Fairfax 34:29 34 minutes, 29 seconds selling or not um I think uh I have said this one I don't really know uh I have not spoken to them on this uh and uh secondly I think they are at 58%. 34:41 34 minutes, 41 seconds uh if they decide to go I'm saying below 51 this they are below this then for 34:48 34 minutes, 48 seconds them to come up and gain a majority would trigger a massive open offer and uh Fairfax uh when we started this game 34:57 34 minutes, 57 seconds in 2017 Fairfax wanted majority at that time that is why they got out of uh the minority showing of about 35% 35:06 35 minutes, 6 seconds to actually start a new venture so as I said personally I'm not spoken to them. 35:11 35 minutes, 11 seconds I from a company's perspective uh we would want them to stay there but uh I think uh if you ask Fairfax trainer 35:20 35 minutes, 20 seconds would be the first one to say that business is really driven by the management team but I don't foresee them 35:27 35 minutes, 27 seconds to sell this but I'm never I'm not privy to this and I don't ask any of our investors when you intend to sell or 35:34 35 minutes, 34 seconds when you intend to buy because uh I'm not selling I am committed to building this business for the long term and to 35:43 35 minutes, 43 seconds me that is what matters in them from my own mental perspective. 35:49 35 minutes, 49 seconds Understood. I commit just just one one small thing on fire segment when when we were relatively small in market share we we were maybe maybe much more profitable 35:58 35 minutes, 58 seconds compared to what we are today. So, so as we keep on gaining market share is it fair to say that given given we will be will be less selective or or we might 36:06 36 minutes, 6 seconds not be having to cherrypick the business maybe maybe relatively to part our profitability in the fire segment might be lower but still still very profitable 36:13 36 minutes, 13 seconds but might be lower compared to what we were achieving initially so what I'll say the fire market share last year on JW basis is about 3.9% so 36:23 36 minutes, 23 seconds it's actually more than our overall market share secondly in fire business the more number of rescue you write more 36:30 36 minutes, 30 seconds diversified your book becomes. So you should actually be getting benefit both on the um on the reinsurance side in 36:39 36 minutes, 39 seconds terms of net exposure and secondly diversified book anyway gives you better results. Third is I think we have heard 36:46 36 minutes, 46 seconds this story also on the motor side uh where no so I somehow feel that uh whatever little I know of PNC insurance 36:55 36 minutes, 55 seconds or insuranceances it's a insurance of large numbers more diversified your portfolio is bigger your portfolio is 37:03 37 minutes, 3 seconds better diversity you will have for us like in the fourth quarter we were hit by a claim of 55 crores on a gross basis 37:11 37 minutes, 11 seconds now our fire premium last year if I remember often was close to about 1,100 crores. So 5% were hit in just one claim 37:21 37 minutes, 21 seconds of yearly premium. So you can imagine things can only get better. We have been hit by a 250 cr claim and our fire 37:29 37 minutes, 29 seconds premium was about 650 cr also. Even then our gross loss ratios did not exceed 7475. 37:38 37 minutes, 38 seconds So with better diversity safety if insurance logic holds it should actually lead to better loss ratio 37:47 37 minutes, 47 seconds understood Thomas it's very clear thanks thanks for the answers thank thanks thank you very much a reminder to all 37:56 37 minutes, 56 seconds the participants that you may press star to ask a question we have next question from the line of duta from J please go 38:05 38 minutes, 5 seconds ahead Thanks a lot for the opportunity. Um, so I'll start off with you know the new 38:12 38 minutes, 12 seconds ventures that you know you planned but I think yeah uh is it better now? 38:20 38 minutes, 20 seconds Yeah now better. 38:21 38 minutes, 21 seconds Yeah. Yeah. So what I was asking is on these new ventures on the commercial side that you're planning I understand that you can't give us a lot of detail 38:29 38 minutes, 29 seconds but could you give us a sense about how big these markets could be for you and you know so that you know we get a sense 38:37 38 minutes, 37 seconds of you know how how that feeds into growth and secondly you know based on the commentary coming from you that the treaty capacities on fire and 38:46 38 minutes, 46 seconds engineering has increased you are you know planning your ventures on the specialty line side. Is it fair to again un you 38:55 38 minutes, 55 seconds know assume that growth for the next you know the medium term is going to be more driven by the commercial lines as 39:03 39 minutes, 3 seconds compared to the retail lines. um you know is that the fair assumption and lastly you know what are you seeing with 39:10 39 minutes, 10 seconds respect to competition now in the motor segment because most likely you know we haven't heard anything on the motor TP 39:18 39 minutes, 18 seconds price hike this year even so you know it becomes the fifth year that there is no price hike how do you see then you know 39:25 39 minutes, 25 seconds competition pan out you know those were my questions thank you so thanks so on the new entrance I would say that this actually we have started 39:34 39 minutes, 34 seconds based on the feedback we were getting from some specialized brokers. So there are about 8 to 10 brokers in the market 39:41 39 minutes, 41 seconds and when we were meeting them uh in January February we got this feedback to say this is a 39:49 39 minutes, 49 seconds capacity constraint sort of a market for these lines of business if you can develop some capacity it will be good. 39:56 39 minutes, 56 seconds So for us uh when we uh do anything like this we have to work both on creating a uh technical competence and then also 40:05 40 minutes, 5 seconds create a capacity. So we have been able to do that uh how much etc we will do uh super you know that we don't give any 40:14 40 minutes, 14 seconds sort of a guidance because uh our experience is that uh whatever guidance you give which is based on how the 40:21 40 minutes, 21 seconds market dynamics would be I think you are always wrong. So we will focus as I said 40:28 40 minutes, 28 seconds always on ROE on profitability and we will develop this business from a perspective that in the next 2 3 years 40:37 40 minutes, 37 seconds we are able to substantially increase our capacity in these lines of business. 40:41 40 minutes, 41 seconds So reinsurers should have that confidence that uh these guys know what they are doing. So what we are making us start I personally feel over a three to 40:51 40 minutes, 51 seconds five year period this is a specialized line of business are capable of giving digit about 1,000 cr pre premium in the 41:00 41 minutes next 3 to 5 years. So we have to develop this uh keeping that in mind. Now you 41:06 41 minutes, 6 seconds have seen us even in prop that once we know we are on the right path we can build the business quickly. uh and if not then we'll have to take corrections. 41:16 41 minutes, 16 seconds So that is what I can share uh with you. 41:19 41 minutes, 19 seconds I think as far as motor goes um only yesterday I think uh I was part of a call and I think Justine can add if she 41:26 41 minutes, 26 seconds wants to. I think uh we are seeing in the month of April some correction which is happening in the market both on the 41:35 41 minutes, 35 seconds price as well as on the commission. Now um and I think as the loss ratios etc of 41:42 41 minutes, 42 seconds companies will start coming in we will actually also see uh uh what the impact 41:48 41 minutes, 48 seconds is but our overall sense is that market cannot afford the sort of prices which are there from a digits perspective uh I 41:58 41 minutes, 58 seconds would say u we would try and drive ourselves uh with the loss ratios in a manner that overall motor loss ratio 42:06 42 minutes, 6 seconds doesn't go up this year compared compared to last year. Now how this will translate to growth. The good news is we 42:13 42 minutes, 13 seconds have a very good uh renewal base. We have other channels which are doing but uh I think uh the present economic 42:20 42 minutes, 20 seconds situation I would not want to take a guess as to how the new vehicle sales will look like which were very strong in 42:27 42 minutes, 27 seconds X2 of last year. So I think that is something we'll have to wait and see. 42:35 42 minutes, 35 seconds That's very clear. Thanks a lot Kamish. 42:36 42 minutes, 36 seconds Just one last followup. Could you give us a break up of you know in the motor insurance what is the contribution from new vehicles versus uh older vehicles? 42:47 42 minutes, 47 seconds So in case of two wheelers um I would say first of all let me give you the breakup between uh four-wheeler two-heer 42:55 42 minutes, 55 seconds and commercial vehicle which we also did uh uh in the last call. So on a 2-year 43:01 43 minutes, 1 second basis now private car is 44% of our business and the two-heer is 32 43:08 43 minutes, 8 seconds commercial vehicles unfortunately is down to 24 uh and uh as you know we were known as a commercial vehicle company 43:16 43 minutes, 16 seconds and uh I feel sad when I see this that in commercial vehicle it is now lower than two wheelers. Uh when we look at 43:24 43 minutes, 24 seconds ODTP mix uh our ODTP mix is uh 38 for OD while industry is at 41 and uh TP is 62 43:32 43 minutes, 32 seconds industry is 59. So I had said this in the last call also that our ODP mix is moving in that direction. What I understand is that our two-heer mix is 43:42 43 minutes, 42 seconds substantially higher compared to others as a proportion of business which obviously impacts the EU and that uh is 43:50 43 minutes, 50 seconds more a line of business mix change than anything else. Then we look at two wheeler business I would say in case of two-heer business new vehicles would be 43:59 43 minutes, 59 seconds substantial but as you know due to one by end the business we rode 3 years or four years back also flows in. So if you 44:07 44 minutes, 7 seconds look at it from only from one particular year's perspective, my guess is in 25 26 44:14 44 minutes, 14 seconds two-heer new business would have contributed maybe about 40% of the total business. I'm again saying my guess I 44:22 44 minutes, 22 seconds don't have these numbers in case of private car this number again out of 44% it would not be more than 25% to 30% of 44:30 44 minutes, 30 seconds new car business. rest would be renewals for us is now emerging as a fairly decent base in CV. The new vehicles uh 44:40 44 minutes, 40 seconds uh would be less than 10% uh contribution in the premium. So our dependence on new vehicles uh because of 44:49 44 minutes, 49 seconds one by in case of two wheeler is actually not that much because whatever premium we have written the last four years will continue to flow this year. 44:59 44 minutes, 59 seconds That's right. That's right. Yes. Thank you. Thank you. 45:04 45 minutes, 4 seconds Thank you very much. We have next question from the line of Nijit Jan from Invest. Please go ahead. 45:13 45 minutes, 13 seconds Thanks for the opportunity. The first question is the motor OD loss ratio. 45:16 45 minutes, 16 seconds There has been an increase in that uh on a Y basis for full year. So what is driving that? It is comp intensity or mix change is also driving that. 45:26 45 minutes, 26 seconds So NIH um I don't know if my memories are right whether somebody had asked me this question was it you also in the last quarter? Yes. Yes. 45:35 45 minutes, 35 seconds No. Yeah. So that's ah I'm not getting old. So basically when we look at ratio I had told last 45:44 45 minutes, 44 seconds time that we consciously delayed taking some corrective action in motor home damage loss ratio. One we wanted to 45:52 45 minutes, 52 seconds experiment and see whether our premium retention remains high. So I think that was one very big area. Second, I would 46:00 46 minutes say because new vehicle sales were fairly good in 2425. 46:05 46 minutes, 5 seconds So we also try to see can we focus more on the SEO business which comes with a higher loss ratio. So in the last 46:12 46 minutes, 12 seconds quarter I had said that we had start we have started taking corrective actions in motor home damage loss ratio and from July quarter we should see some impact. 46:24 46 minutes, 24 seconds uh if you look at only quarter 4 uh we have actually seen reduction in our quarter 4 loss ratio compared to quarter 46:32 46 minutes, 32 seconds 3. But my sense is that uh we should really see impact of this uh loss ratio 46:41 46 minutes, 41 seconds in a way stabilizing first in July to September and then actually reducing. 46:46 46 minutes, 46 seconds Secondly, we have to keep this in mind that uh as a renewal base increases uh what will happen is that loss ratios 46:54 46 minutes, 54 seconds will increase while the commission will reduce. So on a loss ratio plus commission basis which is how we always 47:02 47 minutes, 2 seconds look at uh any product or any line of business uh we should be seeing some improvement anyway. 47:14 47 minutes, 14 seconds Sure. Uh can you share some data on the retention in motor segment? Uh we had been focusing on retention for last I think one one one year. 47:21 47 minutes, 21 seconds Retention also I think last Yeah. Yeah. 47:24 47 minutes, 24 seconds The retention also last time I had mentioned clearly that our retention in motor has actually reduced this year 47:31 47 minutes, 31 seconds overall retention in motor this year is 89.6% 6% compared to 95.9 and last year I had mentioned last 47:39 47 minutes, 39 seconds quarter I had also mentioned I don't know whether this was a claim from you or somebody else that for some segments like scooters and uh school bus uh we 47:49 47 minutes, 49 seconds are uh trying to take some reinsurance uh to ensure that uh during floods etc 47:57 47 minutes, 57 seconds uh one is not hit badly due to the accumulation and this we started doing after the calcata incident. I had also 48:06 48 minutes, 6 seconds mentioned last time that it actually has no impact on the AUM because this reinsurance has been done on a funds 48:14 48 minutes, 14 seconds withheld basis. So investment income continues to come to us. We are paying a small cost for this reinsurance 48:21 48 minutes, 21 seconds uh that is uh more like a tail sort of a event for which we are protecting ourselves. So it doesn't really have any 48:31 48 minutes, 31 seconds impact on the EU. Lastly, I would also say under uh um Indian accounting standards, the new accounting standards, 48:39 48 minutes, 39 seconds the impact of reinsurance deal would also not flow in into the results because your reinsurance commission also 48:47 48 minutes, 47 seconds gets deferred along with the unearned premium. So this does not in any way change our uh Indian accounting 48:56 48 minutes, 56 seconds standards. Uh so slightly longest answer m to your question on motor retention. 49:03 49 minutes, 3 seconds Yeah. So on motor actually I wanted to get some data on the renewal rates. So customer customer retention and uh 49:10 49 minutes, 10 seconds renewal rates on the motor side. Uh so retention rates would differ from channel to channel and product to product. So two wheeler obviously has 49:18 49 minutes, 18 seconds much lower uh renewal ratio uh because five year third party payment comes uh up front. So lot of uh owners don't 49:26 49 minutes, 26 seconds really take own damage insurance. Uh then second would be commercial vehicles and then the highest is in private car 49:34 49 minutes, 34 seconds and within highest uh agency normally has very good uh renewal ratio agency and retail brokers and also B2C for us. 49:43 49 minutes, 43 seconds So uh last year we have seen increase in renewal ratio in private car across all channels. 49:52 49 minutes, 52 seconds Sure. And uh last question is on EUM. So though you have explained that EUM on a line of business basis is very well 49:59 49 minutes, 59 seconds placed but uh probably regulator look at on an overall company basis. So how are we planning to uh manage the regulatory requirement on EM? 50:10 50 minutes, 10 seconds So uh here I think uh as we have said u in our previous calls that regulator uh 50:16 50 minutes, 16 seconds is also very conscious that uh EUM objective was to reduce the cost for the 50:23 50 minutes, 23 seconds end customer and the idea was to reduce the acquisition cost and even if you see 50:29 50 minutes, 29 seconds the interview of say present uh DSS uh secretary or of finance minister or if 50:36 50 minutes, 36 seconds you read economic survey everywhere. I think the focus is on reducing the cost for customers and uh 50:44 50 minutes, 44 seconds if you see what uh some of these very senior people have been saying they have been saying that the overall cost of 50:51 50 minutes, 51 seconds insurance is actually going up to the extent where people have even suggested say uh the DSS secretary when I was 50:59 50 minutes, 59 seconds listening to his interview he suggested that regulations would come or should come to reduce this finance minister 51:06 51 minutes, 6 seconds herself has spoken about it. So the way we see this is that uh uh government and 51:13 51 minutes, 13 seconds regulators uh intention is to reduce the cost of insurance for the benefit of the customer and the last year the 2-year 51:21 51 minutes, 21 seconds trend has not gone in that direction. So our expectation is that some sort of regulations will come in the next 2 3 51:29 51 minutes, 29 seconds months. time frame we obviously don't know and uh till that time uh we obviously do not want to write uh any 51:36 51 minutes, 36 seconds loss making business to match the EUM because the regulator's objective was not to reduce the EUM that you actually 51:44 51 minutes, 44 seconds subsidize uh more larger business like group health and crop and etc and the cost of the retail customer keeps going 51:52 51 minutes, 52 seconds up. So regulators objective uh we have always said is very good and uh we would expect them that they'll take corrective 52:00 52 minutes action so that the objective of government coming directly from the finance minister herself and the regulators is actually achieved. 52:11 52 minutes, 11 seconds Sure. So uh the issue of EO is largely because of the acquisition cost. Do you see that equation cost in India is significantly higher than other 52:20 52 minutes, 20 seconds countries on a national basis or because that is the case and there is a room to improve that but when I look at Europe etc it is 52:28 52 minutes, 28 seconds substantially higher uh when I was in Asia and I have not followed in recent years uh what exactly the acquisition 52:36 52 minutes, 36 seconds cost is now in recent years but when we look at and forget about other countries just look at what the acquisition cost was just four years back in India and 52:45 52 minutes, 45 seconds what is it Now we don't have to look at uh no let's look at acquisition cost from 2001 till 201920 52:55 52 minutes, 55 seconds so for 20 years what was the acquisition cost and what is the acquisition cost now I think all of us have answers in all these numbers nman actually 53:03 53 minutes, 3 seconds published in the media I have not tracked them separately all these numbers are published in the media and people are also saying that the growth 53:11 53 minutes, 11 seconds of the industry is actually not going up even during this period based on this basis this penetration of insurance as a 53:18 53 minutes, 18 seconds percent of GDP actually has fallen in the last 5 years compared to where it was. So all this macro pictures and all 53:25 53 minutes, 25 seconds we have to do is maybe read the economic uh the financial stability report of uh RBI which was published I think in 53:32 53 minutes, 32 seconds February March and the economic survey uh which came a day before budget uh in 26 and uh you'll get the gist 53:41 53 minutes, 41 seconds of this situation. This is the first time in at least my memory where economic survey RBI financial stability 53:48 53 minutes, 48 seconds report finance minister finance secretary regulator in the last 3 months 53:54 53 minutes, 54 seconds everyone has spoken this language. So my assumption is they are looking at the numbers lot more seriously 54:02 54 minutes, 2 seconds than we in the industry are seeing and I also know industry's reaction will be nothing is going to change and I'm 54:09 54 minutes, 9 seconds sure lot of analysts also feel that but for the sake of customers I hope something changes again my personal view 54:16 54 minutes, 16 seconds not view of digits sure sure thank you com thank you thank you 54:24 54 minutes, 24 seconds thank No question. Accounting standards, IFRS. 54:33 54 minutes, 33 seconds We have investments. 54:37 54 minutes, 37 seconds I think the topics are changing compared to previous calls. 54:44 54 minutes, 44 seconds We have next question from the line of praise Jan from Motila Los Financial Services. Sir, please go ahead. 54:56 54 minutes, 56 seconds Mr. R Jan, your line is unmuted. Please uh go ahead with your question. 55:01 55 minutes, 1 second Yeah, I can hear me. Yes, we can. Parish, please go ahead. Yeah, so there's a couple of questions. 55:08 55 minutes, 8 seconds Firstly, from a strategy perspective, how do you see the product shaping up for us in FI27? where are we 55:16 55 minutes, 16 seconds concentrating you know like uh two wheelers was one growth area focus area for us in FI26 how do you see uh that 55:25 55 minutes, 25 seconds you know mix across categories changing in FI27 which are the areas that we'll be focusing on second question uh again 55:34 55 minutes, 34 seconds from the motor side what do you really think that will kind of uh bring out a motor TP price hike because you know 55:43 55 minutes, 43 seconds across some of the key players I think motor TP loss ratios have improved in this year but what really can push the 55:50 55 minutes, 50 seconds regulator to you know towards the motor deg so I think on the TP price like we are 56:00 56 minutes not privy to what the regulator is uh thinking and uh secondly I personally feel if the regulator is 56:07 56 minutes, 7 seconds thinking for reducing the cost of insurance then it might be better from their perspective to achieve that objective uh rather rather than increase 56:16 56 minutes, 16 seconds the price. Uh and for the industry also they should be looking at it seriously to say uh which I answered the two 56:23 56 minutes, 23 seconds earlier questions of nites as to where we are on the product mix side. I think we have always said that we actually don't know uh where things stand and if 56:31 56 minutes, 31 seconds you go to even 1920 at that time if I remember offense 70% of our business would come from motor and out of 70% 23 56:40 56 minutes, 40 seconds of that was actually coming from CV. So 19 20 40% of our business came from CV and today as you would have heard me now 56:50 56 minutes, 50 seconds this number has unfortunately dropped to 13 and a half%. Now somebody would have asked me and lot of our analysts and 56:57 56 minutes, 57 seconds fund manager they will say digit is a CV company and I used to say we see opportunities in CV today we are doing 57:04 57 minutes, 4 seconds well. Now later on industry became lot more aggressive on CV uh despite no hike in TP premium despite heights in TP 57:12 57 minutes, 12 seconds claims and a C business is reduced so substantially we were told that fire business you can't do because uh this is 57:21 57 minutes, 21 seconds driven by larger insurance companies etc you see the growth of fire for last year and last two years for digit uh I think 57:30 57 minutes, 30 seconds lastly if I look at we were also told that in OEM business very difficult to go and make a mark because it's a small 57:37 57 minutes, 37 seconds club of six insurers or eight insurers and what will digit do and you actually see a private car growth in motor has been the highest now I'm saying all this 57:47 57 minutes, 47 seconds is because nobody really knows what will happen in the market and from day one our focus has been to keep building the 57:55 57 minutes, 55 seconds distribution not depend only a few distributors and secondly to be agile so we can actually move where we see 58:03 58 minutes, 3 seconds opportunity Now market changes we change our view. 58:08 58 minutes, 8 seconds So we don't drive ourselves to a line of business mix because we don't think there is an ideal line of business mix. 58:15 58 minutes, 15 seconds And similarly for the distribution channels got that. Thank you so much. Thank you. 58:24 58 minutes, 24 seconds Thank you very much. We have next question from the line of Deepenjan Gosh from CT. Please go ahead sir. Hi uh good 58:33 58 minutes, 33 seconds evening uh so a few questions from my side uh firstly if I look at your uh group health insurance business and also this business has seen some uh pressure 58:42 58 minutes, 42 seconds on pricing over the past uh quite some quarters now I mean just wanted to get some sense of how you are seeing the uh employer employee business kind of 58:50 58 minutes, 50 seconds evolving and second thing is within the group health business it would be great if you can uh split the business between non-employer employee and employer 58:58 58 minutes, 58 seconds employee especially let's say for the fiscally 26 and five or at least give some color on how the non-employer employer uh portion is growing. So those 59:07 59 minutes, 7 seconds are two questions on the group side. Uh the third question u uh you know you know we have had some discussions on the 59:14 59 minutes, 14 seconds commission uh part during this call. Uh but what I read from media articles is that a lot of new companies are interested in entering the non-life 59:22 59 minutes, 22 seconds space. uh some backed by private equity uh some backed by uh a strong parent and uh my understanding is that some of 59:30 59 minutes, 30 seconds these companies do will get a progence on EOM uh uh over the next uh 5 years when this commence operations. So uh 59:39 59 minutes, 39 seconds given the environment um I mean do you expect the B2C uh or the more retail businesses to kind of uh face higher 59:48 59 minutes, 48 seconds competition at least from a medium-term perspective? 59:53 59 minutes, 53 seconds So Jupitin I think let me answer this question first. So one is I think there is a discussion already going on uh I 1:00:00 1 hour believe uh people are representing this to the IDA and uh maybe regulator is also thinking I don't have that information that uh in EUM commission 1:00:09 1 hour, 9 seconds and management expenses should be split because a new company whether it is digit and we also have a new company say 1:00:16 1 hour, 16 seconds on the life side uh management expenses are higher in the first few years so they should get le on the management expenses but you don't need a le on the 1:00:25 1 hour, 25 seconds commission under EOM framework you actually end up getting uh leeway which is used more for the commission and less from a 1:00:33 1 hour, 33 seconds management expense perspective. So my sense is that this would get fixed as and when the regulations come. So that 1:00:41 1 hour, 41 seconds is I think one. The second is the way we see competition is that when we started digged from scratch from zero and we 1:00:50 1 hour, 50 seconds were competing against really the big companies and uh all of you know that the chances of success for a new company 1:00:59 1 hour, 59 seconds how much success uh chances were given even to a company like digit. Now today when new companies are coming obviously 1:01:08 1 hour, 1 minute, 8 seconds you have to take competition very seriously but if you could compete when we were nothing against the big boys at 1:01:16 1 hour, 1 minute, 16 seconds that time I'm sure we will be able to compete with the new companies also and uh market basically decides where the 1:01:25 1 hour, 1 minute, 25 seconds competition is and uh I think survive for the fittest our job is to stay fit uh am I losing sleep because of no new 1:01:33 1 hour, 1 minute, 33 seconds competition Not really. Uh I would say the opportunities for us to improve was so much that uh I actually internally 1:01:42 1 hour, 1 minute, 42 seconds when we discuss and I would Sunday was and I were having a longer conversation uh she was saying that people are 1:01:51 1 hour, 1 minute, 51 seconds feeling too much pressure because uh there is so much one can improve. So just imagine that we feel there is so 1:01:58 1 hour, 1 minute, 58 seconds much more we can improve. So I would say an improvement the competition is within and new players are coming. We wish them 1:02:08 1 hour, 2 minutes, 8 seconds a lot of luck. Uh I also hear from some investors that uh some of them are inspired by digit. Uh I'm very happy to 1:02:16 1 hour, 2 minutes, 16 seconds hear I hope we inspire many more companies. As for the growth rate in health which is a great question. So if 1:02:24 1 hour, 2 minutes, 24 seconds you look at health and I think let me try and give numbers roughly uh for 25 26 if you look at 100 uh out of u uh 1:02:34 1 hour, 2 minutes, 34 seconds health business including group etc uh retail as you know is less than 67% out of 100% in health then the employer 1:02:42 1 hour, 2 minutes, 42 seconds employee business in this would roughly be about 73% or so and the non-employer employee business would probably be 1:02:51 1 hour, 2 minutes, 51 seconds about 22%. % Now Depand you know the loss ratios of each of this better than I do. Whatever you think is the best 1:03:00 1 hour, 3 minutes company you put their loss ratios under these three or whatever your assumption is and then you will reach a conclusion 1:03:07 1 hour, 3 minutes, 7 seconds whether our loss ratio in health even with this mix. 1:03:11 1 hour, 3 minutes, 11 seconds Is it better than the industry or worse than the industry? And if you feel that our loss ratio would be worse than anyone else in the market, we'll be more 1:03:20 1 hour, 3 minutes, 20 seconds than happy to learn and put them more pressure on our management team including this team to improve. 1:03:31 1 hour, 3 minutes, 31 seconds Did I answer your question to your no absolutely absolutely sir? So just maybe a small followup I mean you know given the fact that this is this is my point 1:03:39 1 hour, 3 minutes, 39 seconds you know that you're probably operating at an underwriting um um profitability or rather marginal loss on a net net 1:03:47 1 hour, 3 minutes, 47 seconds premium on the group health or overall health business uh and obviously you'll be getting some float income also. So do you see a scope for kind of uh gaining 1:03:56 1 hour, 3 minutes, 56 seconds momentum in this business let's say the next year or the year after that I mean what's the medium strategy the point and again great question so if you actually 1:04:04 1 hour, 4 minutes, 4 seconds think about the narrative and I'm not saying it's right or wrong but let's assume the narrative mortal own damage 1:04:11 1 hour, 4 minutes, 11 seconds pre premium rates and severe competition no hike in TP premium rates people becoming aggressive in group health and 1:04:19 1 hour, 4 minutes, 19 seconds all this business to manage the EUM fire premium under pressure. Now tell me one line of business which is actually seeing strengthening of rates. 1:04:30 1 hour, 4 minutes, 30 seconds Now in this situation if we are able to manage loss ratios and I am saying uh no one is more conscious than us to say 1:04:38 1 hour, 4 minutes, 38 seconds areas where we need to improve and even in health we are very small player with the overall market share maybe of about 1.3 1.4%. 1:04:49 1 hour, 4 minutes, 49 seconds If you look at our loss ratios based on this mix, I don't think we are doing badly. So the way we see is that and I 1:04:58 1 hour, 4 minutes, 58 seconds have always said this if pricing becomes too tight, we don't have to go for that additional 5 6% growth which will destroy profitability. 1:05:07 1 hour, 5 minutes, 7 seconds If pricing is good, we'll go substantially more than the market and we demonstrated that in fire last year for example. Uh so the way we want to 1:05:16 1 hour, 5 minutes, 16 seconds drive business is when everything is under pressure and the results have started coming in uh for companies we 1:05:23 1 hour, 5 minutes, 23 seconds would actually see things improving and in growth health for example if pricing improves just by 5%. 1:05:31 1 hour, 5 minutes, 31 seconds Just by five and we are able to through the initiatives we are working on are able to reduce our loss ratio by 2%. 1:05:39 1 hour, 5 minutes, 39 seconds This business can easily grow by 50 60%. 1:05:44 1 hour, 5 minutes, 44 seconds All right. Um, thanks for the uh explanation and all the best. Thank you so much. 1:05:51 1 hour, 5 minutes, 51 seconds We have next question from the question. Yeah, we we have next question from the line of Ana Rana from A91 Partners. Please go ahead sir. 1:06:02 1 hour, 6 minutes, 2 seconds Hi. Um, I unfortunately have a couple of questions from the IFRS numbers part. Uh so first is how should 1:06:10 1 hour, 6 minutes, 10 seconds how should we think about this claims discount benefit going forward? Is it like a recurring benefit that will keep acing to us or is it something that will 1:06:18 1 hour, 6 minutes, 18 seconds go away as our growth maybe moderates a bit. Um and secondly uh how should we think about investment yields on IFRS as 1:06:26 1 hour, 6 minutes, 26 seconds well because of course there'll be a lot of quarterly fluctuations due to marktom market but on a long-term average basis will it be like roughly similar to what 1:06:35 1 hour, 6 minutes, 35 seconds we were uh we were delivering on our IGAP numbers is that how we should think about it 1:06:41 1 hour, 6 minutes, 41 seconds so great question so first I would say I think when we look at IFRS or Indian accounting standards now results we 1:06:50 1 hour, 6 minutes, 50 seconds don't look at discounting of reserves in our KPI what we look at is uh combined 1:06:58 1 hour, 6 minutes, 58 seconds ratio on a net earned premium basis plus debt. 1:07:04 1 hour, 7 minutes, 4 seconds So in IGAP combined ratio is on net hidden premium basis. So if you take 1:07:10 1 hour, 7 minutes, 10 seconds everything on net on premium basis plus you are you are deferring your income on 1:07:18 1 hour, 7 minutes, 18 seconds reinsurance along with the unearned premium that actually gives the best possible KPI and 1:07:26 1 hour, 7 minutes, 26 seconds that is how we have been driving ourselves from day one. So I would not suggest that you look at discounting. 1:07:34 1 hour, 7 minutes, 34 seconds Now discounting typically would always be there because the reserves are there. 1:07:39 1 hour, 7 minutes, 39 seconds Now if the discount rate changes say by 3% for example from one year to another 1:07:46 1 hour, 7 minutes, 46 seconds year then your discounting reserves will be more if it so ultimately you see abrupt movement in the interest rates 1:07:55 1 hour, 7 minutes, 55 seconds the discounting in reserves would be fairly be stable and I think we showed here uh this year it was 7.09 09 last 1:08:02 1 hour, 8 minutes, 2 seconds year was uh 6.9 but imagine if this moves from next year to 5%. 1:08:09 1 hour, 8 minutes, 9 seconds So now the discounting in fact will be a lot less but if it moves to 8 and a half then your discounting would actually 1:08:17 1 hour, 8 minutes, 17 seconds become even more. So we don't take this into account at all when we drive business on mark to market. I would 1:08:24 1 hour, 8 minutes, 24 seconds actually say two things in fixed income don't worry about uh what the market 1:08:31 1 hour, 8 minutes, 31 seconds losses are. Uh I think the way we declare duration you may be uh all of you should push the insurance companies 1:08:38 1 hour, 8 minutes, 38 seconds to declare duration also so that you have a decent idea about the sensitivity to the interest rates. I think when we 1:08:46 1 hour, 8 minutes, 46 seconds come to equity then we hitch risk based capital whenever it comes. So under solveny to for example in Europe if I 1:08:54 1 hour, 8 minutes, 54 seconds remember correctly equity investments attract 40% capital. 1:08:59 1 hour, 8 minutes, 59 seconds Now today they don't attract any additional capital. So if somebody is having 20% uh asset allocation in equity 1:09:08 1 hour, 9 minutes, 8 seconds they would have to provide more capital under risk risk based capital. So the re the way I would look at is not really 1:09:17 1 hour, 9 minutes, 17 seconds worry about marktomarket movement and I think Warren Buffett had said this and he has been saying this for 25 years but 1:09:24 1 hour, 9 minutes, 24 seconds actually start again focusing only on ROE because if your risk based capital goes up then your available capital will also have to go up. So if it is not 1:09:34 1 hour, 9 minutes, 34 seconds resulting in that extra yield then you would actually have a drain on the RO. 1:09:40 1 hour, 9 minutes, 40 seconds The better method which some of the European analysts do is they also try and calculate return on risk adjusted 1:09:48 1 hour, 9 minutes, 48 seconds capital basis which I think will lead to a similar sort of a solution. So I'm sharing with you the way we see the 1:09:55 1 hour, 9 minutes, 55 seconds business. uh you obviously uh you know have your own way to look at but uh we would not look at these two things to 1:10:04 1 hour, 10 minutes, 4 seconds try and uh look at or change the way we do business but obviously when this based capital comes uh as I said earlier 1:10:12 1 hour, 10 minutes, 12 seconds we feel that we will actually benefit uh some other companies which are at more than 17 18% in terms of uh a set 1:10:20 1 hour, 10 minutes, 20 seconds allocation towards equity would actually see a bit of a capital going up and in 1:10:27 1 hour, 10 minutes, 27 seconds that situation uh it'll also help a company like digit that uh on a similar capital basis the return can actually be 1:10:35 1 hour, 10 minutes, 35 seconds seen uh on that uh basis and uh then it'll be more like appletoapple comparison which unfortunately is not 1:10:43 1 hour, 10 minutes, 43 seconds possible based on today now equity gains all of us know look very good when the market are sharp uh we know what 1:10:51 1 hour, 10 minutes, 51 seconds happened as of 31st March with a bit of a market down we are still not at 10 year average on the uh nifty or 15 year 1:10:58 1 hour, 10 minutes, 58 seconds average near nifty we are still more than that. So if we see it from that perspective and god forbid things go bad 1:11:06 1 hour, 11 minutes, 6 seconds god forbid we are not wanting it and markets drop by 10% how many companies will actually have the capital and the appetite to put more money and I already 1:11:15 1 hour, 11 minutes, 15 seconds said in case of digit based on our asset allocation of 8 and a half% on equity based on our solveny of 240% plus we can 1:11:22 1 hour, 11 minutes, 22 seconds easily move to 12 and a half so I hope I have answered your question yes yes um thanks that was quite here. 1:11:34 1 hour, 11 minutes, 34 seconds Thank you. 1:11:37 1 hour, 11 minutes, 37 seconds As as no as there are no further questions from the participants, I now had conference over to management for closing comments. 1:11:44 1 hour, 11 minutes, 44 seconds So, thanks everyone for uh joining the call. Really appreciate uh and uh I think all these questions also uh tell 1:11:52 1 hour, 11 minutes, 52 seconds us as to where we are. uh we would be more than happy to publish uh information which help you understand 1:12:01 1 hour, 12 minutes, 1 second the results better and uh I'm sure uh you guys will be able to push the industry to start declaring the from 1:12:08 1 hour, 12 minutes, 8 seconds first quarter the IGAP regard the in Indian accounting standards the new IFRS standards results and also push people 1:12:17 1 hour, 12 minutes, 17 seconds to uh also ask questions or at least qualitatively answer how risk capital etc could change their risk appetite on 1:12:25 1 hour, 12 minutes, 25 seconds the investment side. So uh I think uh uh we are really looking forward to the next uh two years because uh with the 1:12:33 1 hour, 12 minutes, 33 seconds new international norms coming and new standardization happening it will help everyone for better benchmarking and in 1:12:41 1 hour, 12 minutes, 41 seconds case of digit we have always looked at uh uh neb based combined ratio plus deck 1:12:49 1 hour, 12 minutes, 49 seconds and on a post tax basis if you see uh despite such a tough environment we have our team has delivered uh roe of 17.3%. 1:13:01 1 hour, 13 minutes, 1 second And uh as uh the government and regulators direction what they suggest on uh controlling the acquisition cost 1:13:09 1 hour, 13 minutes, 9 seconds etc bears fruit I would say uh I am personally uh actually very bullish about the growth of the industry which 1:13:18 1 hour, 13 minutes, 18 seconds uh something has suffered in the last couple of years. So thanks everyone for joining and please do connect with Puse 1:13:27 1 hour, 13 minutes, 27 seconds uh Dia and Sansa uh if you have any uh any questions uh relating to our results. 1:13:35 1 hour, 13 minutes, 35 seconds Thanks everyone. Bye. 1:13:38 1 hour, 13 minutes, 38 seconds On behalf of ICA securities that conclude this conference call. Thank you for joining us and we may not distract lives. Thank you.