Niva Bupa Health Insurance Co Ltd — Q4 FY26

Niva Bupa Health Insurance Co Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=bLy3jK5Vb84 Published: 5 days ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to NEWA Bupa Health Insurance Company Limited Q4 and FY26 earnings 0:10 10 seconds conference call hosted by ICIC Securities. 0:14 14 seconds Please note that any statements and comments made in today's call that may look like forward-looking statements are based on the information presently 0:22 22 seconds available to the management and do not constitute any indication of any future performance. as future performing 0:30 30 seconds involve risk and uncertainties which could cause results to defer materially from the current view being expressed. 0:38 38 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation 0:45 45 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. 0:56 56 seconds I now hand the conference over to Mr. Rashad Kapadia from ICICI securities. Thank you and over to you sir. 1:03 1 minute, 3 seconds Thank you. Good evening ladies and gentlemen. It is a privilege to host the management team of Levaupa Health Insurance Company Limited for their Q4 1:12 1 minute, 12 seconds FY26 results conference call. We have from the management Mr. Krishnan Ramachandran MD and CEO. Mr. Vishnuat 1:20 1 minute, 20 seconds Mahendra ED and CFO. Mr. Ankur Karbandha Ed and Chief Business Officer, Mr. 1:28 1 minute, 28 seconds Babosh Mishra, Chief Operating Officer and Mr. Vikas Chen, Chief Investment Officer. So without further ado, I would now like to hand over the call to Mr. 1:39 1 minute, 39 seconds Krishna Ramachandran. Thank you and over to you sir. 1:42 1 minute, 42 seconds Thank you uh and thank you to all of you who have gathered this evening, Friday evening to to be with us. Much 1:49 1 minute, 49 seconds appreciated. I'll divide my update um into two parts. Uh the first um is some 1:56 1 minute, 56 seconds perspectives on what's going on uh in the industry and the second of course is NEA BUA. 2:03 2 minutes, 3 seconds Um as far as the industry is concerned um you know an on there are a number of ongoing positive developments. 2:11 2 minutes, 11 seconds Um the awareness campaign achia insurance uh you know in Q4 as well uh the G 2:19 2 minutes, 19 seconds industry led by health uh executed on an awareness campaign which is now an awarded campaign and and all of the KPIs 2:27 2 minutes, 27 seconds for the campaign in terms of uh specifically around reach and awareness uh are certainly very encouraging and 2:34 2 minutes, 34 seconds this is a campaign as you all know that we will continue. It's a multi-year campaign. 2:40 2 minutes, 40 seconds Uh the second um uh update is GST continues to be a positive uh continues to be a positive or a tailwind for the 2:48 2 minutes, 48 seconds industry. Uh indeed now with the benefit of the entire H2 uh behind us uh you know the retail 2:56 2 minutes, 56 seconds health growth if you looked at health H2 for the industry uh was about 30%. Um and you know with NEA bupa our retail 3:05 3 minutes, 5 seconds health growth for the same period was in excess of 40%. So uh continued strong 3:12 3 minutes, 12 seconds volume and value growth on the back of what has been a transformational uh policy reform. 3:19 3 minutes, 19 seconds Um the industry initiatives around uh hospitals uh you know collaboration 3:26 3 minutes, 26 seconds around healthcare continue a pace. uh the common empowerment initiative um has 3:34 3 minutes, 34 seconds now reached 2,500 hospitals where the MOU has either been signed or is ready to be signed. Um you know the last time 3:43 3 minutes, 43 seconds we spoke I I mentioned that standard treatment protocols for eight infections sorry seven infections are live. Uh work 3:51 3 minutes, 51 seconds is at a very advanced stage in in terms of adding uh guidelines for modern cancer treatments as well as robotic surgeries 4:01 4 minutes, 1 second uh and uh you know going live with the standard treatment workflows and there's 144 of them. uh all of these initiatives 4:09 4 minutes, 9 seconds help uh bring about higher transparency and standardization uh of care of care pathways and you know 4:18 4 minutes, 18 seconds uh claims cost is embedded in these care pathways. So I think these are great initiatives uh to bring about transparency and 4:27 4 minutes, 27 seconds improve affordability uh as far as health insurance is concerned. 4:32 4 minutes, 32 seconds The other big recent positive development which happened in Q4 is the notification of um the uh indash 4:40 4 minutes, 40 seconds standard or the you know the IFRS 17 global standard uh which is now effective April 2026 4:49 4 minutes, 49 seconds um you know as NAVA we've always been reporting or leading with the the IFRS accounts uh and this is something that 4:57 4 minutes, 57 seconds we will be uh we will be going live with starting uh this quarter itself. Uh and we we do view this as an extremely 5:05 5 minutes, 5 seconds positive development in terms of bringing about uh transparency as well as standardization in terms of how accounting is looked at uh within the insurance industry. 5:15 5 minutes, 15 seconds Uh coming on to NEA Bupa um when I look at look back at the financial year um we 5:24 5 minutes, 24 seconds closed at a strong 27.4% 4% overall growth rate uh for a GWP of uh 9,433 5:33 5 minutes, 33 seconds crores and I still continue to um you know talk about these numbers on a N 5:40 5 minutes, 40 seconds basis. Um so in a similar vein retail growth was 35% uh for the full year. Um 5:49 5 minutes, 49 seconds our profit after tax uh on an indash basis was 366 crores on a full year basis up from 203 crores uh last finan 5:59 5 minutes, 59 seconds the prior financial year and our return on net worth uh crossed uh crossed 6:05 6 minutes, 5 seconds double digit uh for for you know for an uh for a 10.7% uh roe number. Our market share on 6:14 6 minutes, 14 seconds retail health uh closed at 10.1% on a full year basis up from 9.4% and in Q4 specifically 6:23 6 minutes, 23 seconds uh we moved our market share to 10.4% up from 9%. 6:27 6 minutes, 27 seconds On talent we continued to continue our journey uh of emphasizing and placing a 6:35 6 minutes, 35 seconds lot of important in all of the talent management processes. Um and once more we got reertified as a great place to 6:43 6 minutes, 43 seconds work. Uh we continue to figure in the top 25 in banking and financial services. 6:49 6 minutes, 49 seconds uh while we still don't know our rank but we'll we'll certainly figure in the top 100 of all companies uh uh of all 6:56 6 minutes, 56 seconds sizes uh in in India on customer uh you know a few KPIs that we monitor 7:02 7 minutes, 2 seconds specifically NPS uh across more than 25 pivotal customerf facing touch points uh 7:10 7 minutes, 10 seconds on a weighted average basis this number moved up to 60 uh up from 55 the prior year we continue to hold strong on claim 7:19 7 minutes, 19 seconds settlement at 94% plus on a on a full year basis and our journey uh on 7:28 7 minutes, 28 seconds analytics uh generative AI and technology across the entire value chain uh continues and 7:35 7 minutes, 35 seconds we have more than 30 pilots or projects underway uh across the entire value chain um using some of these modern u 7:45 7 minutes, 45 seconds modern technologies two other customercentric as well as um you know health cost management 7:53 7 minutes, 53 seconds measures. One is our preferred provider network which is now present in 49 cities more than thousand hospitals and 8:00 8 minutes 20% of claims in these cities go through these uh these hospitals and we continue to be a strong health partner of choice 8:09 8 minutes, 9 seconds for for an increasingly large number of Indians you know as as evidenced by the increased utilization metrics on our 8:16 8 minutes, 16 seconds customer app whether it's doctor consults health checkups or any of the new services that we have launched in the last pan financial year with that 8:24 8 minutes, 24 seconds I'm going to hand over to Vishnad for an update on our financial performance. Thank you sir and good evening everyone. 8:31 8 minutes, 31 seconds So like Mr. Kishan mentioned our profit for the year grew by 80%. Uh the same 8:37 8 minutes, 37 seconds number for the quarter 4 is 90%. So 90% increase over last uh last year Q4. Uh 8:46 8 minutes, 46 seconds the combined ratio for FI26 and IFS has improved by 160 basis point to 101.4%. 8:52 8 minutes, 52 seconds 4%. While there is increase in over loss ratio by 1.1% primarily due to mix change this has been more than offset by reduction in expense ratio by 2.7%. 9:05 9 minutes, 5 seconds Resulting in improvement in combined ratio. The expense of management ratio for FI26 improved to 33.7% from 39.2% 9:14 9 minutes, 14 seconds last year. Uh this improvement is primarily driven by operating leverage and economies of scale. The allowable 9:22 9 minutes, 22 seconds EUM including additional allowance comes to around 36%. So we have comfortably complied with regulatory prescribed EUM limit. 9:32 9 minutes, 32 seconds Annualized investment yield for FI26 is 7.2% with AUM of 9,670 9:39 9 minutes, 39 seconds K. Solveny ratio is uh at healthy level of 2.49 as on 31st March 2026. 9:48 9 minutes, 48 seconds So these were the financial highlights for FI26. Uh we are open to question. 9:58 9 minutes, 58 seconds Thank you very much sir. 10:01 10 minutes, 1 second We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. 10:10 10 minutes, 10 seconds If you wish to withdraw yourself from the question queue, you may press star and two. 10:16 10 minutes, 16 seconds Participants are requested to use handset while asking a question. 10:21 10 minutes, 21 seconds Ladies and gentlemen, we'll wait for a moment while the question queue assembles. 10:29 10 minutes, 29 seconds First question is from the line of supratim duta from Please go ahead. 10:35 10 minutes, 35 seconds Um thanks a lot for the opportunity. I have three questions starting with the growth rate. Um you know again you know 10:43 10 minutes, 43 seconds this has been a very strong year like you articulated at the start. Now thinking of you know the next two to three years assuming that you know you 10:51 10 minutes, 51 seconds grow at somewhere around that 25% level you know which you have tried to to meet and you know successfully done over the 10:59 10 minutes, 59 seconds past few years assuming that you go at 25% you would get to somewhere around the 15 16,000 crWP 11:07 11 minutes, 7 seconds now that I wanted to understand what would you know you what would you require to go from you know current 11:14 11 minutes, 14 seconds 9,000 to that you know 15 16,000 GWP what would be the building blocks here if you could get some color around that 11:22 11 minutes, 22 seconds secondly when you reach this scale what kind of operating uh expense ratios can you operate at at an IFRS level because 11:31 11 minutes, 31 seconds your FRS lo expense ratio has come down significantly since FY23 wanted to understand what would be the steady 11:38 11 minutes, 38 seconds state ratio here that's the second and lastly uh there has been a lot of discussion around commission and 11:46 11 minutes, 46 seconds commission regulations. Um, obviously everything is speculation. Wanted to understand if there are, you know, caps 11:53 11 minutes, 53 seconds or an absolute reduction in commission, how would you go about mitigating the impact? Would you pass it on to distributors or, you know, how would you 12:01 12 minutes, 1 second go about, you know, addressing that situation? Yeah, those are my three questions. Thank you. 12:11 12 minutes, 11 seconds Uh, thank you. Uh so uh in terms of building blocks uh look there is going to be continuity in terms of what's 12:20 12 minutes, 20 seconds historically been the levers for our growth. Um one of our sources of strength uh we feel as a management team and it's a strategic choice is our 12:29 12 minutes, 29 seconds multi- channelannel distribution architecture. 12:32 12 minutes, 32 seconds uh last year um uh you know as you would have seen we've considerably increased our distribution 12:40 12 minutes, 40 seconds spread uh you know net addition of 58,000 agents um addition of 50 plus brokers 12:48 12 minutes, 48 seconds uh I think 23 additional financial institutions that are now part of our distribution strength so certainly one 12:57 12 minutes, 57 seconds part of the growth uh is going to continue or a major part of the growth is going to continue to 13:03 13 minutes, 3 seconds come from the distribution that we already have and we will continue to invest and grow that uh distribution. Uh 13:12 13 minutes, 12 seconds now layer onto that um this distribution we will use to tap newer and newer customer segments. 13:22 13 minutes, 22 seconds uh for example you know we now have a product portfolio that covers practically every income segment except 13:30 13 minutes, 30 seconds uh you know poor or near poor uh people across the country. So using the same distribution to tap into more and more 13:37 13 minutes, 37 seconds customer segments is a layer that will add that is a is a is a building block if you will on top of the distribution. 13:44 13 minutes, 44 seconds So product uh you know products for segments is definitely a building block that will add on top of the distribution. 13:52 13 minutes, 52 seconds Uh the third one I would add is our strategy uh on barat uh you know to our to our own 14:00 14 minutes virtual agency as well as our bank distribution. We have access to every pin core in the country. And one of the 14:07 14 minutes, 7 seconds strate distribution strategies that we've been doubling down on uh for the last two years is our bat strategy which 14:15 14 minutes, 15 seconds takes us into tier tier three cities and below. You know we have doubled down in a in a couple of geographies last year 14:23 14 minutes, 23 seconds that's given us success and the idea this year is to expand to more geographies. So broadly uh and of course 14:30 14 minutes, 30 seconds we will continue to experiment with new distribution archetypes or models but I given what we know and you know of 14:38 14 minutes, 38 seconds course there is a continued inflection towards digital channels we've seen uh significantly faster rates of growth in 14:46 14 minutes, 46 seconds in you know in our own digital channels whether it's our own or through uh through third parties. So I'd say that's 14:53 14 minutes, 53 seconds where our that's been our source of growth. We continue to believe that that will that will be the source of growth or the building blocks as you refer to 15:01 15 minutes, 1 second it for us. Um and of course we will continue to pilot and experiment uh on on variance or new models within this. 15:10 15 minutes, 10 seconds Um bar is one example that there but there are many other examples across and within channels that we will uh test 15:17 15 minutes, 17 seconds pilot and scale as we see success. So that's the first part of your question in terms of where will the growth come from. on the IFRS part I'm going to 15:25 15 minutes, 25 seconds request Vishnuat and then and then I'll come back along with Ankur on the commission part. 15:30 15 minutes, 30 seconds Yeah. So Katim uh in case of our long-term view on these ratios so what 15:37 15 minutes, 37 seconds we can share with you is uh combined operating ratio or in case of IFSCR 15:44 15 minutes, 44 seconds uh our model says it should be let's say 99% or so in FI29. 15:52 15 minutes, 52 seconds Now the break up of this in loss ratio and uh expense ratio it may vary of course depending on what is the channel 15:59 15 minutes, 59 seconds mix uh product mix etc. uh but broadly uh to indicate the loss ratio may remain 16:08 16 minutes, 8 seconds stable or may inch up uh by 150 basis point and entirely the saving will come 16:15 16 minutes, 15 seconds from expense uh ratio and that 99% combined ratio will translate to mid to high teens ROE which is close to 11%. correctly. 16:28 16 minutes, 28 seconds Got it. Okay. 16:30 16 minutes, 30 seconds And on on commission, you know, Super to your point, um um you know, we we await guidance from the authority in terms of 16:38 16 minutes, 38 seconds uh uh how they would like to move forward. Uh but our um our belief is that the expense the single limit on 16:47 16 minutes, 47 seconds expensive management has been uh an important and transformational change uh in the insurance industry. It's line 16:55 16 minutes, 55 seconds it's in line with what happened in the asset management industry where they have a total expense ratio and they manage costs including acquisition costs 17:03 17 minutes, 3 seconds within that. Uh so our belief and prayer to the authority uh you know continues to be um around keeping a single limit 17:13 17 minutes, 13 seconds of expensive management and maybe a glide path to to lower that. That is our belief. Uh but look um I think um what 17:23 17 minutes, 23 seconds we have seen with the GST experience is that um lower price our affordability does translate into 17:32 17 minutes, 32 seconds volume and value growth and more robust production for for customers. So you know we are confident that whatever the authority comes up with will make sure 17:41 17 minutes, 41 seconds that the distribution is uh appropriately reminerated uh for the efforts that they make and net net it 17:49 17 minutes, 49 seconds will translate into uh you know continued strong momentum uh you know if the answer is it makes the product more 17:56 17 minutes, 56 seconds affordable you know we have clearly seen that volume growth more than compensates for uh for for um you know for other 18:04 18 minutes, 4 seconds other aspects what Okay, thanks for not for that. You know, just 18:11 18 minutes, 11 seconds one last question. So on the EUM growth, it seems to have slowed down in FI26 versus the kind of growth that we have 18:18 18 minutes, 18 seconds seen in the last two years. Want you to understand is there anything you know that needs to be taken into consideration when we looking at EM growth for the upcoming years? 18:29 18 minutes, 29 seconds Not really. It has to do with the raise of capital. So uh that's all otherwise in terms of business uh if you keep that aside it is uh study group. 18:40 18 minutes, 40 seconds Understood. Okay. Thank you. Thank you. 18:47 18 minutes, 47 seconds Next question is from the line of Pra Jen from Motila Los Financial Services. Please proceed. 18:54 18 minutes, 54 seconds Yeah. Hi congratulations. Great set of numbers. Uh first question is just on the numbers fund there's some reversal 19:01 19 minutes, 1 second of expense could you explain that on the shareholders account which one you are referring to br you 19:10 19 minutes, 10 seconds are referring to uh no no gap Indian gap Indian gap and uh you are referring to 19:19 19 minutes, 19 seconds which statements shareholders account oh okay you are okay understood so what 19:26 19 minutes, 26 seconds happened uh till 31st December uh we were slightly u more than allowed so we transferred 19:34 19 minutes, 34 seconds from policy holder to shareholder account now for the whole year we met that uh you know em limit so now that 19:41 19 minutes, 41 seconds was reversed so now for the whole year there is no movement from policy holder to shareholder and that's why the uh 19:48 19 minutes, 48 seconds December number has been uh you know reversed that's all but this this is optical only uh there's a contra entry Okay. So, it doesn't change anything. 19:59 19 minutes, 59 seconds Got that. Got that. The other question was on you know grow the long-term policy, right? What is the contribution 20:08 20 minutes, 8 seconds of long-term policy to the overall retail premium today and uh how do you see that going ahead? 20:18 20 minutes, 18 seconds So long-term uh for us has been similar to what it was earlier years. In the last 2 three years, we have been steady 20:26 20 minutes, 26 seconds around 20% of our business comes from a long-term policy and it's steady from we've not changed our strategy on 20:33 20 minutes, 33 seconds long-term uh policies about that and uh you know uh we have 20:40 20 minutes, 40 seconds seen a phenomenal growth for the industry uh in the in the you know in the for in the second half of this year 20:48 20 minutes, 48 seconds uh in in FI26 you know on that base uh you know what kind of growth momentum uh should we see 20:57 20 minutes, 57 seconds a normalized level growth of uh you know for the industry which will stabilize at about 20%. So just thoughts out there 21:05 21 minutes, 5 seconds you know once this base comes into picture how should we think about growth uh for the industry you know over a medium term. 21:16 21 minutes, 16 seconds So u at least our view on this has not changed u priish which is that you know 21:23 21 minutes, 23 seconds on the retail side 17 to 19% kagger if you take a 5year view so broadly um 21:30 21 minutes, 30 seconds that's where we think uh the industry growth rate will continue to be at okay and and the last question is on the 21:39 21 minutes, 39 seconds you know uh channel mix uh you know banka is again has been at the at the 21:47 21 minutes, 47 seconds you know regulators uh key focus areas uh and bank decently contributes to our premium. Uh do you 21:55 21 minutes, 55 seconds see any challenge there in the medium term? 22:00 22 minutes No, in fact, uh what we have today is a very diversified channel mix. 22:07 22 minutes, 7 seconds Uh in fact, if you would look at the numbers, uh our overall agency uh has mix has gone up by one and a 22:16 22 minutes, 16 seconds half% banker remaining a little lesser than what our own overall digital business has gone up in terms of our overall mix. 22:27 22 minutes, 27 seconds uh we feel uh whatever changes uh one of the changes exposure draft had already been there from RBI space is that there 22:36 22 minutes, 36 seconds are no changes which are happening on the banka side uh commission sides I don't think so much change will happen 22:44 22 minutes, 44 seconds on the business so to say specifically because we have large amount of retail business coming which we are sourcing 22:53 22 minutes, 53 seconds along with the bank uh which should not change there. In fact, our growth rate on uh retail business on bank is around 46%. 23:03 23 minutes, 3 seconds uh new business and we have been consistently uh doing that and I mean just to add P to what Ankur 23:12 23 minutes, 12 seconds said one is of course with banks we you know our emphasis is on retail to either 23:18 23 minutes, 18 seconds branch banking or teley and asset is cross-ell uh you know so that the point which made 23:27 23 minutes, 27 seconds on RBI guidelines since a lot of what we do on asset is cross-ell Um again to that extent it is derised. 23:38 23 minutes, 38 seconds Got that. Thank you and wish you all the best. Thank you. 23:44 23 minutes, 44 seconds Next question is from the line of Shank Gora from Aventispath. Please proceed. 23:50 23 minutes, 50 seconds Yeah thank you for the opportunity. Uh so so the first question uh uh if you can quantify your group health loss 23:58 23 minutes, 58 seconds ratio for the year or the quarter would be useful and um second is uh is is 24:06 24 minutes, 6 seconds whether whether in the fourth quarter whether there is any change in in group health mix uh towards more indemnity uh 24:14 24 minutes, 14 seconds which which expedite or corporate health which expedate your um compliance related to compared to 9 months and and lastly 24:22 24 minutes, 22 seconds uh if from an IFRS point of view if you can give your outstanding back number in the balance sheet broken down into both retail and group if possible. 24:34 24 minutes, 34 seconds Uh Sit uh first group health loss ratio is uh around 60 and a half uh for the year FI26. 24:43 24 minutes, 43 seconds Uh the actually entire IFS accounts along with an schedules will be 24:52 24 minutes, 52 seconds available on our website most of the next week. So there we'll have all those details which we have mentioned in third 25:00 25 minutes question. But what was the second question? Second second was more on on group health uh uh composition uh whether it has changed in in the fourth 25:09 25 minutes, 9 seconds quarter. Uh typically we have two/3 one/ird that is one third is corporate health uh and and 23 is retail sorry banker based health. So, so whether that 25:18 25 minutes, 18 seconds number has changed or or it is broadly the same similar no uh no changes uh as such 25:26 25 minutes, 26 seconds similar to what it was in previous years as well and the earlier quarters. 25:32 25 minutes, 32 seconds Uh understood, understood. And and and lastly uh lastly, if you if you can uh uh maybe maybe you're just wondering uh 25:40 25 minutes, 40 seconds there is there is a uh uh kind of improvement in the retail health loss 25:46 25 minutes, 46 seconds ratio uh every quarter. Uh so so basically it is it is better at around uh around around 66.8 8 and it has been 25:56 25 minutes, 56 seconds improving every quarter from from uh when you reported in 1 it was 68.1 then then 66.9 and 66.8. So any anything to 26:05 26 minutes, 5 seconds read there whether whether this trend will continue is it more to do that you you are growing a little more new business and mix changing in the in the 26:14 26 minutes, 14 seconds favor of new is driving that number or or in general have you seen frequency severities or even your claim management 26:22 26 minutes, 22 seconds from hospital point of view played a role for for this uh consistent improvement from 1 to FI26 26:32 26 minutes, 32 seconds one is Mrs. Krishnan and I'll request Vishnat and doc to add uh but broadly there is seasonality to our uh claims 26:40 26 minutes, 40 seconds ratio driven by the post monsoon infections. 26:44 26 minutes, 44 seconds Um I see broadly the way I would characterize our approach to uh claims ratio in general and specifically retail 26:52 26 minutes, 52 seconds is you know we do have a plan uh that we work off uh right and that plan as 27:00 27 minutes Vishnat often says uh does factor in for you know basis points 27:09 27 minutes, 9 seconds worsening if you will or retail claims ratio but more than compensated by operating leverage. Yeah. 27:14 27 minutes, 14 seconds So broadly, you know, we're fairly comfortable with the level at which we are operating. Uh and we, you know, in terms of target, I don't think we want 27:23 27 minutes, 23 seconds to target the claims ratio that uh that operates below where we are because, you know, you also have to understand that 27:30 27 minutes, 30 seconds um you know, there has to be value to customer. There's a lot of uh regulatory and policy um you know, oversight around 27:38 27 minutes, 38 seconds making sure that products are affordable, there's value to customer, etc., etc. So we are quite comfortable with where uh this is uh operating and 27:47 27 minutes, 47 seconds in terms of the underlying incidence rates claim sizes all of those you know are in line with our plan assumptions 27:54 27 minutes, 54 seconds that's how I would characterize it so the reason I asked sir is that um uh maybe maybe on year basis it deteriorated 80 bits I understand there 28:03 28 minutes, 3 seconds is seasonality uh but uh but given given deterioration is not that huge but the kind of saving you made on cost is 28:10 28 minutes, 10 seconds meaningfully very high uh so I understand that point that on renewal the cost started meaningfully very low compared to loss uh uh so so overall 28:18 28 minutes, 18 seconds combined might not change but but eventually you ended up reporting a better combine so so just wanted to understand whether the quality of loss 28:26 28 minutes, 26 seconds ratio compared to what you wrote last year uh in general in the product is improving or or it is sharely because because the new grew very fast and and 28:34 28 minutes, 34 seconds that led to that improvement because because opex also improved along with it that's that is the reason I was asking that 28:41 28 minutes, 41 seconds Oh, look in terms of uh quality you know our approach has been consistently around driving a lifetime value approach 28:50 28 minutes, 50 seconds to every policy we write. Uh so in terms of uh quality um nothing significant to 28:57 28 minutes, 57 seconds to indicate uh in fact the quality only continues to get refined and improve over time. Uh second 29:04 29 minutes, 4 seconds uh understood understood uh that's that's and and and lastly I I don't know whether you will be comfortable giving this data point or not. Uh out of the 29:12 29 minutes, 12 seconds total um 6,582 course of retail health uh how much is 29:19 29 minutes, 19 seconds fresh fresh uh uh and and within that fresh how much is long-term? 29:26 29 minutes, 26 seconds So look um in terms of new let me call it new and 29:33 29 minutes, 33 seconds and uh renewal that mix is roughly 40 60 and in terms of 29:42 29 minutes, 42 seconds port that ratio has been stable uh between 20 and 25%. 29:49 29 minutes, 49 seconds Uh understood and and and sorry uh in that 40 of fresh fish fresh how much would be long-term? Uh you said for the 29:57 29 minutes, 57 seconds overall premium it is 20. So so just just wanted to cut the on on on on fresh long term 30:05 30 minutes, 5 seconds broadly in that ballpark only. Uh okay. Okay. Okay. Okay. Thank thanks for your answer. That's it for me. 30:14 30 minutes, 14 seconds Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. 30:22 30 minutes, 22 seconds Next question is from the line of Hitendra Pradhan from Maximal Capital. Please go ahead. 30:30 30 minutes, 30 seconds So I hope I'm audible. Uh so my question is uh again on the same uh as for the 30:37 30 minutes, 37 seconds previous participant. I mean um uh because you know the growth is also led by the fresh kind of premiums. So just 30:47 30 minutes, 47 seconds wanted to understand you know how the denual book is performing in terms of claims ratio I mean those vintages uh what has been the performance in terms of the claims ratio. 31:01 31 minutes, 1 second So overall renewal uh book we can share with you and uh we have shared earlier also that the combined ratio of renewal 31:10 31 minutes, 10 seconds book uh is more like 97 98%. 31:15 31 minutes, 15 seconds Uh and we are comfortable with that number and that's been study uh this year last year. So that's something that we can share. 31:26 31 minutes, 26 seconds Got it sir. Uh so sir like you you guided that uh the claims ratio would be more or less will be in the you know 31:34 31 minutes, 34 seconds similar level going forward. Um so hence the question I mean because you know growth is also led by you know fresh 31:43 31 minutes, 43 seconds premiums. So can we you know see that kind of you know inching up you know going forward. So you know that's why 31:50 31 minutes, 50 seconds the question um but yes I I will you know wait for your uh data and all. Uh sir the second question is on the 31:58 31 minutes, 58 seconds expense ratio you mentioned like uh the benefit will come from the exper expense ratio side uh that would be in the order 32:05 32 minutes, 5 seconds of 2 to 2.5%. So what are the levers for for those improvement that would be on operating like leverage side or you know 32:13 32 minutes, 13 seconds um something else if you want to call it. 32:16 32 minutes, 16 seconds Uh yeah two three levers one uh is you know the business mix change like you 32:23 32 minutes, 23 seconds also mentioned new renewal. So the renewal has uh much lower cost both cost 32:31 32 minutes, 31 seconds of acquisition and uh cost cost of administering policies. So that's one 32:38 32 minutes, 38 seconds lever. Second is sheer economies of a scale uh the overheads fixed overheads 32:44 32 minutes, 44 seconds grow by inflation let's say 6 7%. While uh GWP have seen we are growing it at you know last year was 27%. 32:56 32 minutes, 56 seconds Uh so that's second and third lot of investment has been made in uh technology in analytics ji so that's 33:04 33 minutes, 4 seconds also something which is helping uh to bend the cost curve. So these are the three major levels. 33:11 33 minutes, 11 seconds Got it sir. The final one uh is on uh accounting. uh if you can you know just 33:18 33 minutes, 18 seconds explain a bit on the IFRS MEP like uh accounting versus you know the NEP accounting as per 1 by N. Uh so there 33:27 33 minutes, 27 seconds seems to be like you know divergence and you know if you can give some qualitative color on how the how to think about the NEP or the service 33:35 33 minutes, 35 seconds revenue as per IFRS I mean that would be really helpful. 33:40 33 minutes, 40 seconds Sure. Sure. I can [clears throat] very broadly cover. So under IFRS uh the top line is gross earned premium. So they 33:48 33 minutes, 48 seconds don't have net earned premium. So it is gross premium and gross incurred claims and cost of acquisition uh as insurance 33:56 33 minutes, 56 seconds service expense. uh and the entire cost of reinsurance uh is given in one line 34:03 34 minutes, 3 seconds uh which includes uh the premium we see uh the earning on that uh it includes the commission we receive uh again 34:11 34 minutes, 11 seconds amotized and third the claims we receive or going to receive on that premium. So this is how it works. So we have uh 34:19 34 minutes, 19 seconds insurance service revenue which is equivalent to gross and premium. Uh second is uh gross in u insurance 34:28 34 minutes, 28 seconds service expense which includes gross incurred claim and amotized commission or cost of acquisition and third is uh 34:37 34 minutes, 37 seconds cost of the insurance and that leads to insurance service result and then we have overheads and uh investment results. 34:47 34 minutes, 47 seconds All right. Okay sir. Okay sir. Thank you. That's all. Okay. Thank you. 34:56 34 minutes, 56 seconds Next question is from the line of show Sharma from HDFC Securities Limited. Please go ahead. 35:02 35 minutes, 2 seconds Yeah. Hi sir, thanks for the opportunity. Uh so I have three questions. Firstly on your average ticket size. If I look at your average 35:10 35 minutes, 10 seconds ticket size has grown by 4% uh at the overall level uh which is lower than the overall growth in the agency average ticket size. So just wanted to 35:19 35 minutes, 19 seconds understand this at the channel level as as we've seen the one by so as as you can see the long-term policies and the 35:27 35 minutes, 27 seconds long-term policy seems to have taken toll on this. So and one of the large distribution partner has been focusing more on the rider attachment increasing 35:34 35 minutes, 34 seconds some assured. So ideally this growth should have been in line with the agency channel growth or should have been ideally higher. So what has led to this 35:43 35 minutes, 43 seconds company level ATS being lower than the uh ATS growth being lower than the agency channel growth. Secondly, if I look at your number of lives which has grown by very good 25 odd percentage. 35:54 35 minutes, 54 seconds Can you split that growth into retail and group businesses? Just wanted to see understand that how much of the retail business growth has been driven by the 36:02 36 minutes, 2 seconds new life. And sir lastly on your FRS numbers if uh when I went to your 9 month schedules you had recognized losses from the on contracts on the 36:10 36 minutes, 10 seconds group side. I'm assuming uh you would have again recognized those losses on the 12 months number when the schedule comes out. So can you help us understand 36:18 36 minutes, 18 seconds what's what's our approach or the strategy on or the need for underwriting these on contacts? Sure. 36:25 36 minutes, 25 seconds Uh let me answer the first two questions and I'll ask uh wish to answer the third one. Let me first attempt to answer the 36:33 36 minutes, 33 seconds second question first. Uh overall growth for the organization was 35% and volume growth out of this is 24%. 36:42 36 minutes, 42 seconds So we have not just grown on value growth has been very consistently up and it is at uh 24%. 36:51 36 minutes, 51 seconds on ticket size on your question uh you are relating it to some other data point but let me tell you uh one more data 36:59 36 minutes, 59 seconds point last 6 months versus first 6 months the ticket size has grown by 37:08 37 minutes, 8 seconds almost 14 14 12%. That's the big ticket size jump largely contributed by GST 37:17 37 minutes, 17 seconds both on fresh business and renewal which ultimately helps us uh with a better 37:24 37 minutes, 24 seconds premium per life uh and helps us in better overall uh profitability for us. 37:30 37 minutes, 30 seconds Uh has it grown in some channels? In all retail channels it has grown consistently. not looking at uh you know 37:38 37 minutes, 38 seconds I do not have the split of channel buys but if you just [clears throat] look at the retail channels all of all of our 37:46 37 minutes, 46 seconds channels have grown in the ticket size uh both on fresh and renewal business I'll ask Chris to the [clears throat] 37:52 37 minutes, 52 seconds third point sure and uh again just to add uh the average ticket size and GWP 38:00 38 minutes per policy sold by agent the difference is not only other channel it is also group and retail So the first line is uh all put together which has B2B B2B T2C. 38:11 38 minutes, 11 seconds So more relevant is the GWP sold by agent which is primarily which is 38:18 38 minutes, 18 seconds actually retail and ANOR has anyways clarified uh the growth in ticket size. 38:24 38 minutes, 24 seconds Uh on 31st December yes there was loss component uh and around equal amount was 38:31 38 minutes, 31 seconds there last financial year also. So as such uh there is no impact of that in 38:38 38 minutes, 38 seconds last financial year because previous financial year also similar number was there and there was no loss component uh 38:45 38 minutes, 45 seconds in last quarter in fact if at all uh it was unwound. 38:55 38 minutes, 55 seconds So which just wanted to understand what what what's the strategy what is requiring us to write these homeless contracts. 39:01 39 minutes, 1 second Yeah. So actually these uh if we create loss component on owners contract it is 39:09 39 minutes, 9 seconds not necessarily that these are unprofitable. 39:13 39 minutes, 13 seconds So the concept is we need to consider expected loss ratio all expenses and 39:19 39 minutes, 19 seconds risk adjustment. So uh assume that you are writing an account at 100% core and investment income is your uh profit. 39:30 39 minutes, 30 seconds Let's say in this example still you need to create loss component. Let's say if you are taking risk adjustment of 5%. So 39:38 39 minutes, 38 seconds anything which is let's say 95% or above you need to create loss component on that. So it's not necessarily that this 39:45 39 minutes, 45 seconds is uh loss making. It is just that uh IFS says if uh you know it is after risk 39:54 39 minutes, 54 seconds adjustment more than 100% then you upfront create uh provision for that and during the policy cycle uh you keep 40:04 40 minutes, 4 seconds unwinding that uh that helps show. Yeah. Yeah. Thanks. Thank you. 40:13 40 minutes, 13 seconds Thank you. 40:16 40 minutes, 16 seconds Next question is from the line of Njin Chawat from Kota. Please go ahead. 40:21 40 minutes, 21 seconds Hi. Uh you know on the incurred claims uh you know uh amount of around 5,000 odd crores uh can you break this between 40:29 40 minutes, 29 seconds actual claims and claims man claim management expenses. 40:34 40 minutes, 34 seconds So cleans management expenses generally is uh 3% of uh 1 by NGWP 40:43 40 minutes, 43 seconds initially and the ratio remains similar this year is it? 40:48 40 minutes, 48 seconds Yeah it's similar see that number has changed it so if I now sort of you know look at 40:55 40 minutes, 55 seconds the uh you know net claims ratio uh you know that kind of moves up from around 59.4 4 to around 61.3 for the year. So 41:05 41 minutes, 5 seconds you know how should we read this ratio you know any specific reason why uh you know h how would you interpret this ratio and uh you know the rise and how 41:13 41 minutes, 13 seconds do we see this going forward uh and you are referring to IFS numbers or if all all FRS numbers yeah 41:20 41 minutes, 20 seconds so uh if result uh loss ratio yes I'm just saying look at net net 41:28 41 minutes, 28 seconds claims ratio that is net of claim management expenses I'm saying you know that sort of you know moves on from from 59.4 last 61.3. Yeah, sorry. 41:37 41 minutes, 37 seconds I think the better thing is to look at retail because you know the mix between retail and group can explain uh you know other changes. 41:46 41 minutes, 46 seconds Mhm. 41:46 41 minutes, 46 seconds So you looked at retail per se that's the better answer explanation for you to give Vishnu. 41:52 41 minutes, 52 seconds Yeah which is not really increasing uh that much. It is similar just that in 41:59 41 minutes, 59 seconds quarterfold uh yeah uh the increase in reported number may be higher but uh the 42:07 42 minutes, 7 seconds way you are calculating that should show uh very small increase. 42:16 42 minutes, 16 seconds Sure. Got it. And the entire claims management can be I mean it has to be sort of approached equally as not equally on a pera basis between uh you 42:24 42 minutes, 24 seconds know retail and uh corporate or or would you kind of allocate everything to retail? 42:30 42 minutes, 30 seconds No no uh we allocate in uh the proportion of claims in in the proportion of claims. Got it. 42:36 42 minutes, 36 seconds Got it. Great. Thank you very much. Thank you. 42:45 42 minutes, 45 seconds Next question is from the line of P Chen from Motilos Financial Services. Please go ahead. 42:51 42 minutes, 51 seconds Hi, thanks for the opportunity again. Uh just you know on the hospital bit you mentioned that you know the I think uh 42:58 42 minutes, 58 seconds some 2,000 plus hospitals have kind of empanled on the uh various measures on protocols and infections standard 43:06 43 minutes, 6 seconds procedures for infections that have been taken. uh you know uh are these large hospitals or could you give a give us 43:14 43 minutes, 14 seconds some color as to you know what kind of hospitals have these tied up with any large chain has uh kind of come on board because I'm since the number is still 43:22 43 minutes, 22 seconds too small uh you know what are the large chains talking about this and uh when do you see the benefits of this kind of 43:30 43 minutes, 30 seconds coming in for the industry and for so as um you know as I mentioned when we first started this initiative 43:39 43 minutes, 39 seconds Um broadly the common empanelment what we wanted to drive as an industry is a critical mass of hospitals to be 43:48 43 minutes, 48 seconds signed up uh and we consciously chose to leave out the top 20 groups uh you know uh and maybe we 43:57 43 minutes, 57 seconds will have a different strategy uh for the top 20 groups. So the emphasis is on outside of top 20 and the 2,500 that I 44:06 44 minutes, 6 seconds referred to um would you know would be outside of the top 20 odd. Um and the idea is to get to maybe 5,000 in the 44:14 44 minutes, 14 seconds next uh four five months. Um we have ironed out all of the operational topics 44:22 44 minutes, 22 seconds around common implement. We now have a tech platform etc etc. In terms of benefits, u look the industry will to 44:30 44 minutes, 30 seconds the extent that we have claims flow to these setups, the industry already is seeing benefits um uh from this 44:38 44 minutes, 38 seconds initiative and also certainly benefits from the initiatives around standardization because as I mentioned 44:46 44 minutes, 46 seconds a good part a good part of the cost when it comes to claims is captured on the care pathway. So the treatment choices 44:53 44 minutes, 53 seconds that get made fundamentally fundamentally determine what will be the length of stay and the average claim 45:00 45 minutes size and as we standardize that uh you know that is a significant positive 45:06 45 minutes, 6 seconds impact uh to the industry. So I just want to reemphasize how important that is. Dr. Babosh wants to say something. 45:13 45 minutes, 13 seconds Yeah. [clears throat] Uh thank you uh for your question. uh the the first expectation and a big 45:21 45 minutes, 21 seconds mandate is to enhance access to hospitals for every insured person and 45:28 45 minutes, 28 seconds from that point of view in phase one the midsize and other hospitals have been focused on so that excess goes up 45:38 45 minutes, 38 seconds because the top 20 as you know are already a part of almost uh every insurers's network or TPS network it's 45:45 45 minutes, 45 seconds the mid segment who has more focus has been done to enhance access to claimments insured population. 45:53 45 minutes, 53 seconds The protocols that Mr. Krishna mentioned about and which you asked are applicable to all providers 46:01 46 minutes, 1 second whether you know across the length and breadth of segment of providers in the country which basically in interest of 46:07 46 minutes, 7 seconds consumer in bringing transparency in getting right treatment for right conditions at right severity. It would 46:15 46 minutes, 15 seconds be very very beneficial to markets in general and specifically it would also have a bearing on cost optimization when 46:22 46 minutes, 22 seconds it comes to clean cost by rationalizing the treatment optimizing the treatment protocols. 46:29 46 minutes, 29 seconds Doc, maybe you can make that real um with robotic as an example, right? U yeah uh and robotic for example with 46:38 46 minutes, 38 seconds advancement of uh uh modern medicine robotic is available. However, globally 46:44 46 minutes, 44 seconds what is followed is very robust what you call as health technology assessment or health economic evaluation basis that 46:53 46 minutes, 53 seconds robotic gets incremental health benefits but at appropriate cost when that 47:01 47 minutes, 1 second protocols are applied globally and now increasingly in India as we discussed and Kashnan mentioned earlier would mean 47:09 47 minutes, 9 seconds that how much incremental benefit robot usage against conventional Laproscopy usage in a particular surgery is gained 47:17 47 minutes, 17 seconds and what is an appropriate cost for that for the gain in many surgeries you'll find for example small small surgeries 47:25 47 minutes, 25 seconds like you know fibroid removal etc robot incrementally does not add much health benefits but it costs comes at possibly 47:34 47 minutes, 34 seconds significant cost which is not appropriate to the benefit gain those are the issues and protocols through HD 47:41 47 minutes, 41 seconds and HA that are getting addressed gradually. 47:47 47 minutes, 47 seconds Yeah, it does. But just to follow up on that, uh does do you think this would lead to kind of you know more uh 47:55 47 minutes, 55 seconds challenges with customers on uh uh the kind of treatment that the hospital would suggest and what uh or what the 48:02 48 minutes, 2 seconds customer would want and what the insurance company is going to uh settle for. 48:09 48 minutes, 9 seconds In fact uh press I think this is in interest of consumer mostly because then the consumer would be very much aware 48:17 48 minutes, 17 seconds that what is the appropriate care and treatment for him or her and transparency in healthcare practices will set in helping consumers make the 48:26 48 minutes, 26 seconds right health decisions for self and look this is a this is something that's uh you know globally a journey that many 48:35 48 minutes, 35 seconds many mature markets you know now practice uh to a very large level of maturity. This is a journey that has begun in India. 48:46 48 minutes, 46 seconds Uh for example, the initiative on infections where we standardized admission criteria for seven infections. 48:54 48 minutes, 54 seconds Um you know, it has now been live for 9 months. uh and I think there's been a 49:00 49 minutes net benefit in terms of transparency and see customers understand what customers don't want is surprise. I 49:10 49 minutes, 10 seconds think this eliminates surprise uh all sides right theos so in all these initiatives clearly there's 49:17 49 minutes, 17 seconds communication out to hospitals there's communication out to customers and when there's a claim you know then you know 49:24 49 minutes, 24 seconds there's less and less surprise um when we when we take a position on why we because you know everybody's been informed on why we're doing what we're 49:32 49 minutes, 32 seconds doing and then of course some customers may still choose to pay out of pocket and undergo a certain treatment But then it's not a surprise. 49:45 49 minutes, 45 seconds These are very evidence based. There is enough and more literature even within the country that is available and all 49:52 49 minutes, 52 seconds these are based on very very scientific evaluations by very appropriate government and non-government authorities. 50:02 50 minutes, 2 seconds Got that. any any development on the national digital health mission that was that was you know that was picking up some momentum some until some time back 50:10 50 minutes, 10 seconds now we don't hear anything about it uh what's happening on that and in fact that was supposed to help the uh you 50:17 50 minutes, 17 seconds know uh outpatient uh insurance as well so how where is that and how is that kind of shaping up for the industry 50:27 50 minutes, 27 seconds uh thank you pre in fact there is renewed focus and energy around some components in a phrase manner on the 50:35 50 minutes, 35 seconds national digital health mission. I would perhaps give you an example of the national health claims exchange where 50:43 50 minutes, 43 seconds both payers providers have come together to adopt it in a meaningful in a in a 50:49 50 minutes, 49 seconds very big way. those works uh with various industry bodies through the regulator and other agencies including 50:59 50 minutes, 59 seconds NHA GIC is on and uh there's lot more work that is being done which is likely to see very positive results fairly sooner than later. 51:11 51 minutes, 11 seconds Got that. Uh last question from uh if I look at commissions on the Indian gap numbers that commission ratio has come 51:18 51 minutes, 18 seconds down sequentially in spite of the mix moving towards uh retail health and 51:25 51 minutes, 25 seconds fresh business. Uh what explains that largely this is uh towards two things. 51:37 51 minutes, 37 seconds one the senior uh which uh we rolled out from 1st of April last year the reduction in pre uh 51:45 51 minutes, 45 seconds the reduction in commission on the senior and second is on the GST uh impact as well. So both of these are the reasons why this has gone down. 51:54 51 minutes, 54 seconds Okay. Thank you. 51:57 51 minutes, 57 seconds [clears throat] 51:59 51 minutes, 59 seconds Thank you ladies and gentlemen. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. 52:09 52 minutes, 9 seconds Thank you very much. Appreciate uh you're taking time on a Friday evening uh and for all your questions. If there's anything further, please do feel 52:17 52 minutes, 17 seconds free to get in touch with uh with us through Iman show um happy to address any further questions any of you may 52:24 52 minutes, 24 seconds have. But thank you once more and have a happy week. 52:29 52 minutes, 29 seconds Thank you sir. On behalf of ICICA securities, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.