On BAGIC: strong growth in motor TP and fire - what are you seeing in the market in terms of competitive intensity? And on BALIC, the agency channel seems to be degrowing on a year-on-year basis for third consecutive quarter. How has the underlying product mix on the agency side kept VNB growth healthy?
Tapan Singhel: Competition has always been there since free pricing in 2007. There's nothing called winner takes it all. There will always be enough micro segments. On fire, we are one of the dominant players in the large space. On TP, for past 3 to 4 years, there has been no price hike at all. We believe in some time some details should be there on the price hike. Tarun Chugh: We have very clearly taken a stand after the surrender value related changes to focus largely on profitability-driven growth. Agency has a 5-year CAGR of 25%. Agency did most of the heavy lifting of changes in terms of cost reduction, product shift, focus on term, including deferment of commissions and span increase. In terms of specific product mix, we don't talk about channel-wise product mix. The significant shift in agency is more focused on term plans, remain focused on mid-market India. We expect for agency another 3 months impact on the growth because of this change.
BAGIC combined ratio has been creeping above 100%. Should this be considered steady state or can we go back to below 100% over the next 2-3 years?
As an endeavour for our company, we always seek to maintain a combined ratio close to 100% is what I've always mentioned over time. And that's what it remains. Companies with high discipline serve customers very well. Our grievance ratio has been among the lowest continuously every quarter, every decade. Will it be below 100? Will it be over 100? As the business and things progress, which will be there. But will always be close to 100. That has been our endeavour.
BALIC product mix shift with protection share going up by 300 bps, but margin delta corresponding to that seems 400 bps. Is it only product mix driven or have product structures changed? On motor TP: growth came back and loss ratios better than expected - what's happening and can this trend sustain?
Tarun Chugh: The margin delta is healthy and we're going to be one of the highest deltas in the industry this year. First quarter is the least productive quarter as there's fixed cost that sits on it. With term coming in, it's a very useful piece from profitability perspective. 30% of our customers in agency now are added through term. We have changed product structures significantly whether it's ULIPs or non-par plans. That is what is going to aid the further delta. Tapan Singhel: When you're a large player in GI business and into all lines, there will be times when you move some business up and some will slow down. Lines of businesses would fluctuate based on how we see markets move. Motor TP market share has moved up. At the same time, crop market share over time will come down. If things change, we'll change our strategy.
On BAGIC health side, can you give us a breakup of loss ratios between group and individual?
No, we don't do that. I don't get into micro loss ratio declaration because that will give away our business strategies. When you understand loss ratios, look at retail loss ratios across the industry, look at GMC loss ratios, look at government health loss ratios, look at percentage of businesses and then you can figure out broadly why loss ratios would move up and down. But if you ask me to give micro details or exact loss ratios, I never do on a call.
On BALIC: second half reversal should happen in growth given favorable base. How much growth can we expect for the full year? And on life insurance margin delta of 4% in first quarter - is it fair to say we can experience a similar delta for full year?
The H2 growth, yes, will be significantly comfortable. The industry has slowed down. We grew upwards of 31% to 34% in first half last year. That growth rate has been impacting our growth trajectory. I expect our growth to be in full bloom in H2. I cannot give a forward-looking statement. Group protection has been a struggle largely because loan disbursals in the MFI space - which is almost one third of our credit protection business - that degrowth has been substantial. From one third, it's down to about 20%. We expect all lines to now pick up as we see the second half even for group protection. On the delta, all the impact we've taken on cost reduction and product structures should help. I think you should expect Term to largely remain in this ballpark and not go up any further.
On BAGIC: outlook on tender-based businesses in current year. Can INR 5,000 crore tender business be expected similar this year? And can you quantify capital gains in the quarter?
Tapan Singhel: Our endeavour is always to be at the right price. If we get a tender, good. If we don't, so be it. We are not somebody who in desperation would do business just for the sake of pushing up top line. Whether it will happen or not depends on how other players look at it. If you look at the crop business, the price at which some tenders are going, we are not comfortable. So we're perfectly fine to let it be. Anckur Anil Kanwar: On capital gains, we have booked a capital gain of around INR450 crores coming from both debt and equity. The larger part of the growth is from the debt book. Unrealized gains are around INR 1,200 crores.
On BAGIC: what has led to significant increase in net commission and expense ratio? On motor TP, significant reduction in loss ratio - was there a one-off? On crop, do we expect loss ratio to revert to historical levels?
Tapan Singhel: On crop, loss ratio depends on weather performance. If weather was good, loss ratios are lower. On acquisition cost movement, when you acquire business which is comfortable and profitable, there would be a strain on acquisition costs. As retail business moves up, you see that happening. On TP, you should look at TP loss ratio in a year, not on a quarterly basis. Ramandeep Singh Sahni: The commissions have gone up because of our preferred businesses going up. On motor new mix, it's improved on 4-wheeler - from market share of 7.3% last year, we moved to about 8.7%. And on 2-wheeler from about 8.9%, we moved to closer to 12%.
What is the rider attachment rate now versus last year?
We have largely focused significantly on the shift to term. The rider attachment is going to be a phased growth. But it is already quite healthy. We were near zero, but now it is at 17% attachment of riders across all businesses.
On term business - your term business margin is probably 2x, 3x of what some other peers are reporting. Which channels are you selling this product through and what is the ticket size?
We moved up our average premium for the face-to-face channels, which is very different from online channels at approximately INR 30,000 to INR35,000 depending upon which channel is selling it. In terms of which channels are selling, it is agency and institutional business. We are significant players on aggregators as well. The proprietary sales channel is relatively focusing more on non-term but is now starting off a specific term vertical. There is a 9% increase in ticket size.
On BALIC: what measures have been taken on cost rationalization? Why is there a drop in the 13- and 49-months persistency?
On cost side, the action taken has been a 360-degree action. There has been commission deferment and reduction. There has been a reduction in variable spends. There has been reduction in fixed costs, particularly the non-productive, non-producing layers of businesses. We have relooked at processes in head office. We're going to renegotiate with our vendors. On persistency cohorts, we run experiments where we are always trying to expand our presence in mid-markets. Some experiments where the second premium did not come, those have moved on. Our 25th-month persistency is up, our 37th-month persistency is up, and our 61st-month persistency is also improving.