NATCAT/flood impact on Bajaj General — motor, commercial and crop exposure estimate?
Globally the insurance business, goes through cycles - there are times when the rates are hard, and times when rates are soft. In Indian market because there were no major catastrophe losses earlier, the market is soft right now, which means the pricing is much lower than what the average pricing would be in all lines of businesses, be it crop, be it fire, be it motor, be it health. That's why you look at the first quarter results across quite a few companies, the deterioration in combined ratio has been upward or close to 5% or more. But if you look at Bajaj General, it is not much - its only about a percentage or so. What it shows is that the company has always been picking up the right kind of business and has been able to shift the lines of business depending on how the market has behaved. And this is nothing new, Mayur. We have been doing it for 25 years now. If you look at the performance, I think at all points of time, our combined ratio compared to the market is always better by at least 16% to 18%.
GST impact at 290 bps — margin expansion despite it; are you passing on pain to distributors?
We have taken a structured approach there, depending on the kind of channel. And the bulk of the sector has also just done that, where we've been able to add riders to our products for the same commission . While the commission remains the same, the profitability goes up. And depending on wherever we could find avenues of passing it on, we have passed. But there is no need for us to get too specific around that, though. But I think what will be different from Bajaj Life versus the rest of the sector is that we were on a path, as you're aware, for the last 21 months on cost reduction and cost savings. I think Bajaj Life 2.0 has been able to give us that operating leverage.
Reinsurance company setup — capital requirement called out?
Like I said, Nischint, we are at the drawing board stage, and we are putting in a plan together . But I think the way we are going to structure it; we will divide it in a few parts. I think Phase 1 will largely focus on doing domestic where we may not need too much of capital. And then Phase 2, once we get the ratings in place, which will be a 3-year process, then we will move into the international market, which is where we will need a larger chunk of capital. But we've not quantified it as yet, while internally, we have done some scenarios, but we are still to firm up the exact numbers on that.
Motor OD segment — which particular cohort is driving higher loss ratios and FY2027 strategy?
The increase in the motor own damage claims is, what you're seeing is essentially an industry-wide phenomenon. So, you see similarly the impact at Bajaj General. No, our strategy is very clear. We focus on risk selection. We have a return on risk-adjusted capital model that we use for our selection basis, and we will continue to do that. As you see that we've slowed down on motor a little bit. When the time is right, we will increase again. These are all tactical shifts that we do, as we've been doing for the past 25 years.
Which specific segment in motor OD is driving higher loss ratio — new private cars, 2-wheelers or other cohort?
This is Tapan here. It is not that simple. For that, you have to sit down together to see our rule engine. We micro-segment the segments geography-wise, so you can't really bucket it as the segment 1, 2, or 3. So that it will be too simplistic to look at this business.
Supreme Court ruling on motor TP for homemakers — impact on reserving and industry measures being taken?
Now when you look at the Supreme Court judgment on Third Party motor insurance, there are 2 subsequent judgments from Punjab and Haryana High Court. They did not fully say that it's INR 30,000 and actually one applied lower version of it. So fundamentally, one has to first wait and watch how these developments evolve. I don't think that the amount of INR 30,000 mentioned may be really applicable as of now, based on what I see. Second, as a company, our ultimate loss ratio that we assume for Third Party in the initial phase is actually a bit conservative, which actually leads to release on TP as the TP book develops. Which means that we already have enough buffer to absorb any such increase, if it does happen subsequently. So that's already built in the reserving that we do. Thirdly, if you look at the books of accounts, the number of such cases are very few. It is not that we have a majority of such cases of housewives in the portfolio.
On Bajaj Direct platform — digital/fintech aggregated loan trends and asset quality?
Yes, you're right that credit quality at industry level was a bit of a concern, and it was not only for the last few quarters. It was sustained for two or three years. However, over a period of time, we have seen our partners moving the needle towards a better position of risk metrics. The whole industry has moved for better. Starting with Bajaj Finance, many of the lenders have taken appropriate measures. While we have 50-plus lenders on Bajaj Markets – each with different risk return equation, and hence, different thresholds, they are growing their business in general, and they are growing their business with Bajaj Markets. So yes, we see that the position has improved. And wherever we have trail revenue deals with our partners, we have far more direct insight into the portfolio behaviour, and we are happy with the results.
Path to profitability and breakeven for emerging subsidiaries over next 18 months?
From a Bajaj Finserv Direct perspective, I think we've been very clear that we will break even in Q3 or Q4 of this year. Hence, as the outcome of that, we are certain that in Q3 or Q4, on a quarter's results basis this year, we will break even. And on a full year basis, we will break even in the coming year. And from our Health company perspective, again, I think we had called out that in Q3 or Q4 of next year, which is FY2028, we should break even and full year basis, the year after that. We believe that in the next 3 years, we should hit the INR 1 lakh crore AUM mark and that should be the path to profitability for AMC. From a Health company perspective, they'll probably need capital for next 6 quarters is what we believe. But the amount will not be as material. I think INR 200 crore to INR 300 crore is at best we may need.
Bajaj Life group protection 95% growth — MFI revival or new banking partnerships?
It's a combination of both, Sanketh. Yes, there is a revival of the MFI business across the industry. We've had a significant growth there. And as you know, it's one of our larger books. In terms of new partnerships in the last 15 months, we've added more than 20 partners. So if you roll back almost about a year or 18 months ago, at that point in time, we started on the journey of de-risking ourselves from relying on the few number of partners we had because at that time, we had a set of 2 to 3 partners, which contributed significant percentage, at that time more than 50% of our business . That is no longer the case . And the other is in terms of diversifying across each of these subsectors within the lending sector.
Bajaj Life product mix — do annuity and non-par compete? How to look at them?
On the product mix, yes, annuity and non-par are similarly structured, but the focused markets are very different, Sanketh. One, and we should acknowledge the fact industry is picking up annuities because the risk of living longer is getting to be a significant risk. And I would bet a lot of money on that and say that over a longer period, the 50-plus age group which is a significant part of the customer segment in the country and usually wants to start planning at that stage- is picking this up, which is a good bit. As far as non-par savings is concerned, of course, we haven't yet hit the numbers that we achieved last year. We've reconfigured and closed that product, because we do not want to really be experimenting with something like that. And now it should be on an upswing -- and yes, these two buckets contribute to the same chassis, but non-par saving will also grow and so will annuities.
Trajectory of tender-based businesses — crop and government health for current year?
Now if you look at the crop business, I think this year, as per the tenders that we have got, it would be more than the last year. Now the government health actually was a 2 plus 1 contract. So, we should be getting the renewal for this year because that is how the contract was when we picked up the business. But business of government health will also depend on the number of lives that are covered plus the overlap that happened last year in terms of building that. So, it may be a bit less than last year in terms of base, but since the contract is 2 plus 1, so we'll be getting that.
Bajaj Life product mix at Q1 — is this optimal or more scope for enrichment?
If you look at about last 4 to 5 quarters, our mix has been largely stable, except for retail protection, which has been growing. So, if I just go a year back, retail protection for us was about 8% to 8.5% same quarter last year, 12% this current quarter. So, I think other than this, our mix has been largely stable. So, I mean, par has been in the range of 22% to 25%, non-par plus annuity, again in 22% to 25%. Retail protection has grown and ULIP has been at about 45%. I think this is a mix that we believe is sustainable. Should it get better, should it improve or move towards products with higher margin, I think that's the intent. And if we are able to get our non-par mix a little higher, I think that would be an ambition.
Sharp decline in Bajaj Life earnings — specific reason?
That's essentially on account of two things that, as Raman mentioned in the opening remarks. Because this is Indian GAAP financials, the investment income is on a realized basis. Because the equity markets were subdued, so we didn't really have any equity gains that were realized and recorded in the P&L during this quarter. I think that's the largest reason. Obviously, the GST cost gets written off upfront. So that's the other reason. I think these two were the reasons. Otherwise, it is BAU.
BAGIC well-provided for Supreme Court TP ruling versus peers making large provisions?
Yes. Tapan answered . Also, given that the homemakers do not constitute a very material proportion, it's an immaterial number in both the settled and outstanding claims for us. That is one reason we don't see the impact to be material. And second is clearly that when you see our trajectory of reserve releases. We have always been very conservative. So given both of these, we do not see any need at this stage to strengthen any reserves.
Ind AS timeline and impact for life and general insurance subsidiaries?
As per the IRDAI regulations, the effective date of Ind AS adoption was 1st April 2026. However, they allowed a forbearance of one year. And both our insurance companies had applied for forbearance and have got forbearance from IRDAI. So, for us, the effective date becomes 1st April 2027. Now in terms of implications, I think the biggest one comes from the amortization of acquisition costs. As you know, currently, under Indian GAAP, the acquisition costs are upfronted, and hence, there is a new business strain, that one sees, which will go away. It will get amortized over the contract duration. Specific to general insurance, currently, the long-term liabilities, which are essentially from the Third-Party portfolio are accounted for on undiscounted basis. Given they are long term in nature, as per the Ind AS, they are supposed to be discounted. So, you could see a big release coming on that front. Third is, which is relevant more from a GI perspective, and it could be an arbitrage for us is there is this concept of onerous contracts under Ind AS.
Bajaj Life rider attachment percentage and aspirational level?
On rider, I indicated in Nischint's answer about the impact that riders are already having. Just to give you a little bit of more specific data; now if I look at riders that go on term plans and riders that go on saving plans, put together, that number actually comes to 22% of our NOPs having some rider or the other. For both term and savings, the number is 22%. And that's how we measure it. And the intent is to keep increasing that. And I guess that's the way you will keep hearing from us, and that's the guidance we'll possibly only provide in terms of how we look at riders.