The New India Assurance Company Limited analyst Q&A

Thank you very much. The first question is from the line of Uday Agarwal, SBI Capital Securities. Please go ahead.

Yeah. Good afternoon, Sir. Thank you for your opportunity, Sir. I had a couple of questions. So first one is that earlier, you know, we had mentioned in our con-calls that we are trying to improve our banking partnerships to increase our sales. So, Sir has there been any progress on that front?

Yes, there has been considerable progress on that front. In fact, in this current year also the strategy remains with the increased focus on increasing our Banca partnerships and also trying to make products and you know, make them available across Banca channels in the way our customers would like to receive them. We are in discussion with several banks, rural the RRB's, the cooperative banks as well as the commercial banks and they're forging new ties with couple of PSU banks. It will soon come into play in this current year. With this we are expecting that this year the banking, the bancassurance premium will go up considerably and all our products which are catering to the Banca channel are also being, you know promoted and training is being given to require people at the bank to enable them sell this product. So, with all these efforts, we hope to see a lot of traction, the bancassurance channel.

OK. Thank you for the detailed answer. Ma'am, my next question is that could you just give us an indication you know about our profitability and the margins going forward, like how it will pan outgoing ahead? Will we see any improvement on that front? Yeah. So, which as regards profitability, we are profitable at the moment and we will continue to be profitable going forward also because our strategies are we have had a very close granular look into our operations across offices we have realigned our targets. This year we have got increased thrust on our retail segment where we feel there is a more subject to pricing that is possible for us to have and also where we're able to hold on to customers in a big way. So, we will be going very aggressively on the retail channel and therefore the profitability seems to be more on a positive note more achievable. Going forward, we plan to bring down the combined ratio significantly in the medium term so that they're able to be competitive in this current environment as well as have a very win- win situation for the company. And if I could just, you know, squeeze in one more question. So, it was like I wanted to know like what is the internal international insurance market panning out as we have presence in 25 countries. And the last question is, could you just give us the breakup of the domestic and international gross return premium? Yeah. So, our overall premium consists of 10% foreign and 90% domestic. OK. And how is the international insurance market panning out as we are present in 25 countries? Yeah. The insurance market internationally is also very competitive Most of our branches and other offices are located in much developed nations which have and they have seen a lot of experience across many years and they are very steadily their operations and they are able to stand alone on their own without any capital support from us at the moment. And if we want to grow aggressively in those markets, we'll have to infuse a lot more capital. Therefore, the strategy has generally been to mean remain profitable and relevant and you know, not with a very aggressive growth margin. In any case, those markets are developed markets where it is very strictly regulated, so being compliant with the regulations and having a very relevant existence there itself is a challenge which New India has very successfully managed for many years across 25 countries.

OK. Thank you. That's it from my side. Best wishes. The next question is from the line of Aditi Joshi from JP Morgan. Please go ahead ma'am. Yeah. Thank you for taking my questions. I have a couple of questions. The first is just I want to follow up on the ma'am's comment that they are trying to that you are trying to avoid this loss making business lines. So, can you please get some more details as in which specific business lines or product segment that is? Second is can you please share your ROE target if you have for this year and the next year? And the third question is on the health insurance underwriting. In the presentation comments you have mentioned that some higher loss ratios were seen in the government health scheme, so I'm just trying to understand is it just one off or how do we see the loss ratios panning out in the government scheme segment and how should we overall think about the health insurance loss ratios because you've said that the retail and the group side is sort of improving in the underwriting. So yeah, those are from me. Yeah, to answer your question, #1 which was on which lines of business we are avoiding which are loss making. So, the comment that we made was we're not avoiding any line of business. We are present across all lines of business, will continue to be present. The only thing is our strategies have changed within the line of business so that we focus within the segment on better business on wherever we've had bleeding accounts like in group medi-claim business where we had a lot of heavy ICR because of group certain groups not performing well, we have hiked up the price and we have lost businesses because of that. So, there is I mean wherever we have lost business on account of increase in price so that it becomes viable for us, we have lost the business and therefore de-growth in those lines. Otherwise, we are very aggressive on the retail side across all lines of business where we intend to grow with much more aggression in the coming quarters. Now the second question was are we target, which our Executive Director, Mr. Titus will answer.

Good evening once again and thank you for joining us. So is regarding the question regarding ROE. So, I would like to just inform you that we are committed to have double digit ROE in the short term. So, anything about 10 is what we are targeting to be above 10 in the short term or the medium-term range. So, this is our target because we have a good amount of net worth, so we require a good amount of profit to have that ROE. So, this is what we target in the short term so probably in a year of one to three years. So, we have targeted that we will be going about.

So on the third question regarding health loss issues, we have our GM — Mrs. Sushma Anupam who will answer that question.

Moderator

Good evening and thank you for the question. Actually, related to the government loss issue, I will first answer that usually in any policy, the claims would be panning out in different times of the year and they are more or less cyclical and seasonal so what happens is that the entire picture, the loss ratios will stabilize by end of the year. So, if we look at it at any one point of time, it could vary from time to time. But over a period of time, it stabilizes so we see stability that will come by end of the year in the government's loss ratios. And as regards the other balance, health portfolio, as CMD Ma'am has already mentioned that we are forging ahead into the retail segments which are profitable and we are strategizing to have more and more business in that, at the same time we are concentrating on the group businesses which have been profitable and some of them which have not been profitable, we have tried attempting the price correction wherever the customers have supported us in this initiative. We have gone ahead with them wherever it has not been mutually acceptable, there we have let go of some accounts and definitely the effort as we have also recruited a large number of doctors. So, we are making all efforts to make the portfolio sustainable, at the same time, we are actually having some constraints in the form of the medical inflation that is coming year on year. So as much as the efforts are being made, we are even having to face the medical inflation and the newer additions and the treatments and the modern treatment cost, which is going up, that actually is on the other hand making all the calculations and estimations a bit stormy, so nevertheless it is a journey which we have begun and I think that with the strategy we are very hopeful of bringing down our loss ratios in the health segment as well in the group segment, I meant to say, thank you. The next question is from the line of Aditi Joshi, JP Morgan. Please go ahead. Yeah. Sorry. Thank you for taking the question again, I could not catch your comments on the last question. Actually there was some issue with the line. So, just briefly on the health insurance segment, again, if you can.

OK, sure. So actually, as I was mentioning that as far as the government loss ratio, I would address that query first. Actually, the policy which is there is for a year and in usually in all such policies as the awareness increases and as we encounter different seasons, the claims do change in the numbers and the exposure that is there changes in the time of the year that we talk about; so, usually all such policies they stabilize by end of the year. So, even in this policy currently though, we see a spike in the loss ratio, we are very hopeful that by end of the policy year we will be able to have a repeat performance of the previous years and the loss ratio would stabilize there also because the seasonal impact will be neutralized by then. And coming to the other part I mentioned that in the retail segment as our CMD Ma'am has already mentioned that we are really going strong and we are making all efforts to increase our portfolio there and we are coming out with the new products and simplifying the processes and making it more customer friendly and easier for the customers to onboard various products that are being offered and we see a good traction and we are hopeful that there the portfolio is going strong and as far as the corporate group policies are concerned, we have attempted lot of price correction and we have a very huge book. It is well known by all of very large portfolio client. So, there we have all along attempted at a price correction and wherever we had challenges and there it was not mutually acceptable, we have let go such accounts and we have also recruited a large number of doctors. So, we are working very closely on monitoring of the claims and other processes that are there, but at the same time, another challenge or a problem that we encounter all along is the high medical inflation. So, initially it was felt that after COVID the medical inflation would come down, but it has sadly not come down and then to add to it, we also have lot of modern treatments coming up, which are actually quite costly and the estimations what are done usually on account of these sometimes do go a bit stormy because of various things in the short duration. But we are hopeful that even in the corporate health segment as the year progresses; we will make better improvement in the loss ratio. Thank you. Sure, got it. Thank you so much. The next question is from the line of Aditi Joshi, JP Morgan again, please go ahead ma'am. Yeah. Thank you so much for taking questions again. Just a couple of follow-ups actually. So, when we say that in the retail segment you have mentioned that you're going aggressive and you're trying to grow aggressively, aggressively aggressive on pricing means that cutting the prices or aggressive on gaining the market share and combining with hike in the pricing?

Thank you. Aditi. Actually, it's a very good question. I really like to getting this opportunity to clarify that actually when we talk of aggressiveness, it is not the price alone. Price definitely has to be one of the important features because we are working in a competitive market where we can't price the product in isolation. But when we talk of aggression here, we were trying to make out a significant strategy where we are identifying the different sections of the population and coming out with different products that would attract different sections of the population. We are coming out with the features that would be more appreciated by the customers where the customers can easily onboard. And by the policies, so all these features, the ease of buying insurance and increasing the market penetration, that is what we were trying to mean when we say the aggressive. Thank you. OK. And I think in the past couple of quarters, we have seen some pricing hike in both retail and the corporate segment. So, is this trend continuing in both the segments, is it what's going on? Yeah. So actually, you know if you see in our flagship products, particularly, we had come out with the price revision after six years. So, because we could not come out with the price revision due to the pandemic being in force and after the pandemic, we came up with the price revision thereafter, we also made some changes in the pricing strategy because there was a lot of feedback around it that when the pricing is as per the age banks, then people who are having you know double impact as much as the price has gone up even the age has gone up. So, both the case, they have to pay a higher premium, so to take care of that as we had the in the previous meeting, we had informed and which we have implemented also that we came out with age wise pricing and also to take care of the normal differences, certain sections, certain areas of the country with higher medical inflation and the traction is more towards the usage in terms of the footfalls in the hospitals and all. So, taking care of that, the pricing was modified. So that was the price rise which we had in those products. And then now after the master circular, which has come in, there are some 5-6 changes which are introduced and mandated by the regulator for which we have to be compliant by 30th of September'24 to take care of that in some of our products which we had not touched the pricing for maybe over five years or so and which products are actually not very, I would put it this way that they form part of almost some 15% of our premium coverage kind of. In those policies we have come out with the increase recently, which has been received well, I think

and which will be effective only in the later part of the year. Thank you. OK, sure. So when we talk about flagship products, it's, is it on the retail side? Yeah. So actually, you know in retail, we have to come out with a price revision because it is on a book basis. It has to be applicable to all simultaneously. And there are certain norms to be followed that we have to give the notice to the customers before we make any price revisions. Whereas on the other hand, you know, for group policies, it is always on each renewal we keep doing the price correction and for whatever features are getting added, they are factored and then accordingly the pricing is done so there we don't come out with a pricing strategy or like a particular percentage or some price because each policy has its own experience and it is an experience based pricing. OK, sure. Got it. And just one last question. Can you share the reason for a weaker investment income on a year-on-year basis in this quarter, in last quarter? Actually, in the first quarter or that profit on sale, we have not sold much equity. Due to that dividend, we received in the first quarter. In the after first quarter also. So we sold less equity after the first quarter and our due to that we realized less profit on sales of equity, OK, got it. Thank you so much. Thank you. Thank you very much. The next question is from the line of Jayesh from Harshad Gandhi. Please go ahead Sir. Actually have joined little later. Whether I don't know whether you have answered this question or not, what are we doing to bring down our combined ratio? It is for my first question and the second question in in the last three years on an overall basis how much your increase in prices have we have we done across all our products whether it be health or whether it be fire. What are we anticipate in the price increase? So as far as the combined ratio goes, it's a multi-pronged approach that we are you know trying out unless that we are changing our strategy towards our business, we are going more retail now because across the industry even I mean if you examine the performance of products across various insurers, retail business has done better across all lines of business most of the time so therefore, we are also going retail and we are, you know, putting our distribution strategy in place to match with our aspirations on

this front and we are activating most of our Bancassurance channels getting into more tie up, having more engagement with our intermediaries agencies agency, with our agents in order to ensure that the products that we have customized for our retail segment are sold and they reach the masses. Moreover, we have put internal targets of you know getting some chunk of premium, either to uninsured areas, so getting some new business which has never been insured before, which is one of the targets of our company this year and this will go a long way in ensuring that the combined ratio comes down significantly. We are you know reviewing our pricing on corporate businesses wherever they have bled or in in tune with the current market trends in that line of business, we are improving that price in those accounts and all of this collectively will surely bring down the combined ratio we believe. We are improvising heavily on our systems and processes. We are investing a lot into skill set development of our employees in order to be able to address issues, you know quickly bring around faster turnaround times in terms of claim service, see that less number of claims you know are delayed and we give better value for the customer and all of this because the risk selection itself, I think there has been a huge difference in the way the risk selection strategy has been because we have inducted a lot of risk engineers, automobile engineers, we have inducted doctors into our workforce and they are working tirelessly and gaining experience each day as we go and we are also, you know, training them into the peculiarities of this, you know, each of these lines of business, they're able to give better service and do a better job of the risk assessment at the time of selection itself. This also we believe will bring a big traction to the results at the end of the year. And in the medium term, we expect to bring down the combined ratio significantly. That's great to hear. And, Madam, what about the price rises that we have taken in, say, last three years on an overall, I mean all the businesses?

Yeah. On this, I would like our Appointed Actuary, Mr. Sharad to explain.

So, price rises, we cannot give a figure to across the board how much price increase was taken because it depends on a lot of factors including what segment of the market we are talking about. So, coming to specifics in retail health, there has been a price increase of close to 25 odd percent, which we rolled out last year and this year also because of some zoning related changes, there has been price increase in some zones which has been rolled out. Again, for the regulatory purpose, there is a 10% hike which is rolled out across various different retail health products. On group health, pricing is done on a case-to-case basis depending on how the behavior of the group works and as Mrs. Sushma mentioned earlier, the pricing has been made much more prudent and wherever the price we want is not available, we are happy to walk away. Coming to motor because there has been no price increase on the motor third party front, we have rolled out some price increases on the motor own damage front in order to cushion the impact so that has been done and that has been done across segments, particularly on the commercial vehicle side. The price increase has been on the higher side on the own damage. Coming to property because of data repeat, there has been some pricing pressure, but here the focus is more on risk selection. So, that for the price which is available in the market, we are choosing the right. So, like that for every product line, the strategy has been different depending on the market conditions. So, across the board, whether price has increased decrease that is I don't think we can really be able to pinpoint the figure to you.

I get it, Sir. Thank you and good luck for future.

Moderator

Moderator

Thank you very much. Ladies and gentlemen, that was the last question. I now hand the conference over to Mrs. Girija Subramanian — CMD, New India Assurance Company Limited for closing comments. Yeah, I would like to, you know, take this opportunity to thank all our investors, our business partners, our employees and everybody connected to New India one way or the other, mainly our customers who are constantly deposing trust, trust in this institution, which proves the existence for 106 years and we will be there strong leading from the front across many more years to come and we would put every effort that is there. The entire management team and the workforce to ensure that we deliver on the promises that we have given to our customers at all times. Thank you so much for this opportunity. Thank you very much. On behalf of Concept Investor Relations, that concludes this conference. Thank you for joining us and you may now disconnect your lines.