Bajaj Finserv Limited — Q4 FY25 earnings call

On retention if it makes sense, then it's good to retain. If you look at the overall results, I think it is perfectly fine as of now, the balance is pretty good in terms of what we retain, but as you rightfully said, if there is a shortage of capacity because of strong capital base, Bajaj Allianz will still continue doing good and will be able to handle this very well.

Analyst questioned if BAGIC's strong capital and regulatory changes would alter its retention strategy, impacting underwriting profits. Management confirmed flexibility to retain more if it makes sense.

Asked by Avinash Singh

Regulatory changes are largely behind us. In terms of product mix, you'll see more in line with what you saw in Q4 with a higher growth in protection. As far as group protection is concerned, we believe we are all waiting and watching how the interest rate change impact happens and whether we have higher growth in lending, and that is what is going to decide how credit life really grows and that will impact the industry equally.

Addressed the impact of recent regulatory changes on BALIC's product strategy and future VNB margins, highlighting a shift towards protection and careful monitoring of credit life growth.

Asked by Avinash Singh

what you're seeing as elevated combined ratio is actually an outcome of GWP not being there in the quarter because of the 1/N regulations and the anomaly in the crop and government health distribution of premium during the year. So, I think that's causing a stress on the expense ratio for the quarter because that's the way the combined ratio is calculated. But I think when you see the underwriting loss, it's a Rs.3 crores.

Clarified that the elevated combined ratio was primarily due to accounting changes (1/N regulation) and timing variances in bulky crop/government health business, rather than underlying operational issues, with underwriting loss being nominal.

Asked by Swarnabh Mukherjee

So, in terms of profitability, obviously, international is significantly higher, but actually it's not a very apple-to-apple comparison. The investment in creating capabilities is completely absorbed by domestic business. So, it's not an apple-to-apple comparable. It's like international business for us is actually cream part of the overall business architecture and profitability in longer term also will always remain higher in international business.

Provided insights into the strategic rationale and profitability expectations for BALIC's nascent international business, emphasizing its long-term higher profitability despite initial domestic investment absorption.

Asked by Swarnabh Mukherjee

But you should expect overall for us a higher growth in VNB in this coming year, and I think that's the message I would like to leave you with. Your second question is on variances. Although very clearly Vipin has touched on it, but just to mention because you were specific, there is no impact of mortality or expenses on these variances.

Sought clarity on BALIC's future growth trajectory for VNB and APE, and confirmed that recent variances were not due to mortality or expense issues, but rather strategic shifts.

Asked by Madhukar Ladha

we now have 100%, a lot more leeway to look at strategic opportunities which may involve dilution, maybe we can look at other business initiatives including for example in the GIFT City, we can look at the pension business, potentially, we can look at international foray as well because this is a sign of a very large amount being put up as domestic capital and we have fair confidence that this capital will yield the shareholders a very good return over the years to come.

Explored the strategic implications of Bajaj Finserv's move to 100% ownership of its insurance businesses, revealing potential new avenues for growth and capital deployment.

Asked by Manish Dhariwal

The value may/may not come from the traditional way of measuring profits in terms of profit and equity, but in the long run value will emerge because of the size of the opportunity and how long we remain invested in the business and our intention is to be remaining invested in the business.

Questioned the timeline for BFH to become a significant contributor, with management emphasizing the long-term opportunity and strategic investment in building capabilities rather than immediate traditional profitability.

Asked by Manish Dhariwal

If the tender business is close to about 30% - 35% business and you have 25% tender-based business I think it's perfectly fine. Because you can't be a large Company and say that I will not have tender-based business at all. Now the second part of the question is that how will it play out? Now, we have been doing it for so many years. I don't think that something is new, some tenders we win, some tenders, we lose, its inherent part of business.

Addressed concerns about the volatility and predictability of BAGIC's tender-based business, clarifying it's an inherent part of the industry and managed strategically.

Asked by Sanketh Godha