Bajaj Finserv Ltd

NSE:BAJAJFINSV

Earnings Call Transcript 2022-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Q2 FY '22 Earnings Conference Call of Bajaj Finserv hosted by JM Financial Institutional Securities. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. [Samir Bhise] from JM Financial. Thank you, and over to you, sir.

[Unknown Attendee]

Thank you, Margaret. Good morning, everyone, and thank you for joining this Second Quarter FY '22 Earnings Conference Call of Bajaj Finserv. I would like to thank the management of Bajaj Finserv for giving this opportunity to us to host this call. From the management team, we have Mr. S. Sreenivasan, Chief Financial Officer, Bajaj Finserv; Mr. Tapan Singhel, CEO, Bajaj Allianz General Insurance; Mr. Ramandeep Singh Sahni, Chief Financial Officer, Bajaj Allianz General Insurance; and from the Life Insurance business, Mr. Tarun Chugh, CEO, and Mr. Bharat Kalsi, CFO, of Bajaj Allianz Life. Without much ado, I would want to transfer this call to Sreenivasan sir. Over to you, sir, on the call. Thank you.

[S. Sreenivasan, Chief Financial Officer]

Thank you. Good morning, everybody. Let me welcome all of you to this conference call to discuss the consolidated results of Bajaj Finserv Limited for Q2 FY '22 and the first half of the financial year FY '21, '22. I hope all of you are safe and vaccinated. As before, in this call, we will largely be concentrating on the consolidated results as well as the results of our insurance operations through Bajaj Allianz's General Insurance BAGIC and Bajaj Allianz Life Insurance BALIC, and where material, the stand-alone results of our company. Bajaj BFS, which is our company. Bajaj Finance BFL, which is another major subsidiary of ours, has already had its conference call. However, if there are any high-level questions on BFL, we would be glad to take that as well. We will not be taking any questions on the status of Allianz's stake in our insurance company. The status has remained the same as at the end of the previous quarter, and there is no change there. Any statements that may look like forward-looking statements are just estimates and do not constitute an assurance or indication of any future performance result. Remarks on Ind AS as required by regulation, BFS has adopted Indian accounting standards from FY '19. The insurance companies, however, are not covered under Ind AS. They have prepared Ind AS financials only for the purpose of consolidation. Accordingly, for BAGIC and BALIC, the stand-alone numbers reported below are based on non-Ind AS accounting standards for Indian GAAP as applicable to insurance companies. Our results, the press release accompanying the results and our investor deck have been uploaded on our website yesterday evening. First, let me start with an update on the performance for Q2. After the disruption caused by the second wave of COVID-19 in the first quarter of this year, recovery gathered momentum in Q2 on the back of reopening of the economy in more states, rapid vaccinations and continued policy support. Under these improved conditions, our businesses have shifted focus to growth while closely monitoring these parameters. The company and its subsidiaries took the initiative in arranging vaccinations for employees and their families, apart from ensuring well-being of our employees and their near and dear ones. This also ensures better preparedness for us, and our businesses in the event of a third wave. I will now touch on each of our major businesses. Let me start with BAGIC. Overall, an excellent quarter for BAGIC on growth and profitability. Gross domestic premium income of GDPI grew 21% in Q2 FY '22 versus the industry growth rate of 10.7% and a private sector growth rate of 13.7%. After excluding bulky tender-driven businesses like crop insurance and government health businesses, GWP grew by a healthy 14.4%. During H1 FY '22, the growth rate was 16.8% versus the industry growth rate of 10.9% for the composite companies. BAGIC continues on its approach to calibrated growth, that is seeking to grow in preferred segments, which are private cars, two-wheelers, commercial lines and retail health, while remaining cautious yet opportunistic on group health, predominantly the employer-employee group health. To give some more details, growth in quarter 2 was driven by motor, 7.6%; fire 30%; marine 52.9%; travel and government health schemes. During the quarter, despite the auto industry showing declining trend on account of shortage of semiconductor chips and tepid new sales of 2-wheelers, BAGIC has shown growth in the motor segment. So it is heartening to see the commercial vehicle segment starting to recover growth and we see it trending towards pre-pandemic levels in the coming few quarters. Overall, BAGIC had an industry-beating motor growth both in Q2 FY '22 and H1 at 7.6% and 7.4% respectively, which is about -- the industry growth was about 6.3% and 4.9%, while it is expected that the auto industry will continue to face supply side constraints in the near term, the performance in Q3 will also depend on how the demand shapes up in the festive season on year. In commercial lines, with the aid of its strong bancassurance and agency channels as well as underwriting and reinsurance capacity for covering large risks, BAGIC continued its strong performance across retail, commercial and industrial risk categories. Fire & Marine segments continued their growth momentum, while engineering, which is depending on new projects or some slowdown and liability growth was flat. Overall commercial lines continue to do very well with Q2 FY '22 and H1 FY '22 growth of 20.9% and 16.8%, respectively, against the industry growth rate of 17.4% and 12.9%. Within health, retail health has seen a muted growth on account of higher base from Q2, which was boosted last year by strong demand for corona coverage policies. Overall, in H1 of this year, retail health growth of 8%, in line with the multiline composite insurance growth of 8%. While BAGIC continues to be cautious on group health, growth is driven at right pricing for each relationship. During the quarter, BAGIC underwrote government health business of INR 753 crores of Gujarat government under the PM Jan Arogya Yojana scheme. So recovery from the second wave of COVID-19 led to significant quarter-on-quarter reduction in COVID-19 claims on severity. There has been an increase in severity of non-COVID health claims. With the economy opening after lockdowns, motor OD claims frequency, own damage, claims frequency and severity are almost back to pre-COVID levels. Moreover, heavy rains in Maharashtra witnessed in this quarter had some negative impact on claims. These factors did impact results for the quarter, but notwithstanding this, the combined ratio increased only marginally to 98.5% as against 97.4% in Q2 of FY '21, and it is well below 100%, on account of lower expense ratios. In a market which is intensely price competitive, the result, we believe, is highly encouraging. Just to put this in perspective, last year, when there were lower claim frequencies, we had indicated the need to strengthen reserving for potential interest on third-party claims and higher expected ultimate losses for the health portfolio arising out of COVID. We have also sounded caution on group health employer employee businesses, which seem profitable in the short term at that time, but turned out to be a losing business when the second wave of COVID-19 emerged, as more employed people got affected. The general insurance business is dynamic and volatile, and tactical decisions are as important as strategic initiatives in preserving the opportunity for long-term profitable growth. In short, BAGIC has had an excellent quarter with a 28% growth in profit after tax, which was also boosted by higher investment income and realized gains. The non-annualized ROE for the quarter at about 5.5% is in line with the 20% plus ROE on an annualized basis. BAGIC is cautiously optimistic on growth as it enters H2 of FY '22. In summary, it has been a very positive balanced quarter for us. Coming to Life Insurance next. After the slowdown witnessed in May and June on account of strict lockdowns, the industry is now back on its month-on-month growth trajectory. Q2 was a good quarter for the life insurance industry as a whole with individual rated new business growing by 21%, with private players growing by 35% on the back of lower base for the industry. BALIC had a relatively high base given the industry leading growth in every quarter of FY '21. Nevertheless, BALIC continued the strong performance of FY '21 and delivered an individual rated new business growth of 52% in Q2 of this year. BALIC was the second fastest-growing life insurer among the top 10 players in H1, the growth of 51% in terms of individual rated premiums. When compared to the pre-pandemic period, by taking a 2-year CAGR for the quarter 2, individual rated new business BALIC has delivered a CAGR of 34%, which is the highest in the industry. The annuity product launched by BALIC in Q4 of FY '21 continues to be very well received in the market. During the quarter as well as in H1, 12% of the individual-rated NB was from the annuity segment. In line with the industry, demand for retail -- in line with the industry, demand for retail protection continues to be sluggish. And hence, contributed only 3% and 5% of the product mix in Q2 and H1, respectively. Given the steady equity market, the risk appetite for the retail savers seems to be higher as evidenced by the strong demand for units. BALIC's unit contribution to product mix was 38% in the quarter versus 36% in Q2 FY '21. Net inflows into AUM have been positive, offsetting an increase in surrenders. If you recall in Q4 of last year after the budget, there was a little bit of uncertainty, whether the new tax changes in that units. But in hindsight, it seems to be -- it seems to us that -- that is not the case. The demand continues to be strong and is more driven by demand for equity as an asset class. Guaranteed non-par savings had some slowdown with contribution to IRNB terms or individual rated NB terms dropping to 25% versus 36% in Q2 FY '21. The Q2 contribution was high given the low -- last year, the Q2 contribution was high given the low fixed deposit rate, uncertainty due to COVID and volatile equity market. And therefore, the customer's preference was for guaranteed products such as the non-par savings. While contribution to the mix has come down in absolute terms, the non-par savings has grown by 5% during the quarter. Despite the steady equity market, which typically one would feel is not a very favorable one for the participating on the par segment. It continues to maintain contribution in the mix at 22% versus 23% last year. In absolute terms, though, par segment has shown solid growth of 45% and 75% in Q2 and H1. Group Protection business continued to display a strong growth of 46% Q-o-Q. That is compared to Q1 of this year, which was INR 338 crores and INR 494 crores in the last year. Overall group new business grew by 62% from INR 830 crores in Q2 of last year to INR 1,345 crores in Q2 of this year. You may recall that group business was muted in H1 of FY '21 as lending by banks and NBFCs had slowed down considerably. During the quarter, growth was driven by all our main channels with Agency, Institutional business and BALIC Direct growing at 56%, 37% and 51% respectively. Renewals saw a strong growth of 22%. And on the back of strong new business growth and renewal growth, the GWP grew by 42% to INR 3,813 crores. One point I would like to highlight here is the strong year-on-year increase in persistency across vintages. 13-month persistency increased by 5% to 82%, while 61st month persistency increased by 4% to 45%. The effort of the management to increase contactability, enhanced digital offerings and focus on customer value have been key to delivering this increase. On the claims front, during the quarter, BALIC in line with industry trends experienced deviation in expected mortality across the businesses on account of COVID-19. In the group protection and on the retail side, stress was observed with the surge of claims from May to August on account of some segments having some delayed reporting. However, we witnessed gradual month-on-month improvement in claim experience during Q2. By September, the factor seems to have dropped off considerably. On the retail side, BALIC has settled around 2,800-plus claims pertaining to COVID-19 amounting to INR 146 crores on a gross basis in Q2 alone. BALIC has reserved for probable future claims and the results for the same as at 30th September stands at INR 105 crores net of reinsurance. The total impact of COVID claims in Q2 on the shareholders' PBT was INR 60 crores as against INR 288 crores in Q1 of FY '22 and INR 15 crores in Q2 of FY '20. Similar to the previous quarter, we have continued making quarterly disclosures of NBV. In addition to the NBV for the quarter, we have also indicated the new business value for the 12 months ended 30th September 2021. Due to high variations in seasonality of business across quarters, I would advise investors to exercise caution by reading into Q2 NBV and margins. We had mentioned in our earlier call, the quarterly NBVs and NBMs may not reflect the possible year-end results. Investors may be aware that a significant portion of the life insurance business comes in the second half and especially in Q4. And therefore, most of the fixed cost burn during the year gets absorbed in the second half. Please note that NBV on a rolling 12-month basis, which we have indicated, does not indicate a forecast or expectation from us for FY '22 as it is only intended to show what a 12-month trend with seasonal variations looks like. New business value, net of expense overruns, the key metric of profitability increased by 82% from INR 75 crores in Q2 of last year to INR 136 crores in Q2 of this year. For the 12 months ended September 2021, the NBV was INR 461 crores as against INR 258 crores for the 12 months ended September 2020, and INR 361 crores for the whole of FY '21. profit after tax for Q2 FY '22 at INR 104 crores or 6% higher than Q2 of FY '21 of INR 98 crores, largely because of the additional cost of the COVID claims and the new business trails cause by better-than-expected group. In addition, as indicated in earlier call, we continued to report embedded value for BALIC on a half yearly basis. From this quarter, we have also started reporting the embedded value movement on half yearly basis, and you'll find the details in our investor deck uploaded on our website yesterday after our Board meeting. The embedded value for BALIC as at 30th September 2021 was INR 16,616 crores, which is a 4.4% increase quarter-on-quarter over June '21 and a 14% increase over September 2020. To summarize, overall, a very good quarter for BALIC. Finally, both the insurance companies are financially among the most solvent, BALIC with 626% solvency and BAGIC with 350% and hence, are well poised to weather any external adversity. All our businesses have further augmented their digital capabilities, which, along with greater digital acceptance by customers should we hope, help overcome challenges and deliver a strong performance in the second half of this year. Both BAGIC and BALIC have seen an increase in the utilization of their digital properties by customers and intermediaries. BAGIC has also started the initial phase of the implementation of their core policy administration system with the new Maximus platform being launched on retail health towards the end of Q2. Further details regarding BAGIC and BALIC's digital capability are covered in the investor deck uploaded on the website. Let me move on lending businesses, BFL and BHFL that is Bajaj Finance and Bajaj Housing products. BFL already had its investor call. And therefore, we'll only broadly touch upon the BFL results. In the second quarter, we witnessed a sharp revival across growth, risk, debt management and financial metrics. After witnessing a slight drop in the number of new loans booked in Q1 on account of the second wave, the number of new loans booked have increased to 6.33 million in Q2,this is more than Q4 of FY '21, but only marginally below the pre-COVID time. That is Q2 of FY '20 and 75% increase from Q2 of FY '21. The company's diversified business model has enabled it to record a strong AUM growth as seen from the total AUM standing at INR 1,66,937 crores (sic) [1,669, 366 crores] as of 30th September of this year versus INR 1,37,090 crores (sic) [1,370,902 crores] as of 30th September of last year. In absence of the third wave, BFL expects quarterly AUM growth rate for the second half of the year to be strong. To support this growth stance, we have increased employee strength by over 2,000 during the quarter. While last year's approach to staffing was to strengthen collections, this year, we are more into supporting growth and new capabilities. In Q2, BFL made loan loss provisions of INR 1,300 crores as compared to INR 1,700 crores in the same quarter of last year. It has increased its management overlay provision by INR 349 crores to INR 832 crores as of 30th September as a protection from a potential third wave. During the quarter, the company saw strong improvement in debt management efficiencies across all products. It expects that in absence of a third wave, loan losses and provision should normalize to pre-COVID levels by Q3 of FY '22. BFL continues with its estimate of total credit cost for FY '22 to be around INR 4,300 crores. Gross NPA and net NPA recognized as per RBI prudential norms and provisions are using the Expected Credit Loss method prescribed under Ind AS, as of 30th September 2021 stood at 2.45% and 1.10%, respectively. For Bajaj Housing Finance, 100% market subsidiary of BFL. It continues to do well. AUM grew by 33% to INR 44,429 crores as of 30th September, '21. The profit after tax grew by 100% to INR 166 crore in Q2 on account of higher net interest income. The capital adequacy ratio for Bajaj Finance continues to be strong at 27.6% as against -- out of which the Tier 1 capital itself is 24.9%. BHFL also has a high capital adequacy ratio, including Tier 2 capital of 20.3%. In summary, we believe BFL is well positioned to navigate any temporary stress. And I would request investors wanting to add more information to please go through the BFL's investor presentation uploaded on their website. A few other developments you mentioned herein in Q2 FY '22, BFS has received an in-principle approval from SEBI to set up an asset management company to enter the mutual fund business. In this regard, the Bajaj Finserv Asset Management Company Limited and the Bajaj Finserv Mutual Fund Trustee Company Limited has been incorporated for taking this forward. Also during H1 FY '22, BFS has incorporated a wholly owned subsidiary, Bajaj Finserv Ventures Limited, which will focus on alternative investments, including investments in start-ups and limited real estate. These are only the first stages of setting up these ventures, and it may well be 12 to 18 months or more before the first products are launched by the AMC and these . The consolidated results and financial numbers are already indicated in our press release, and therefore, I would not dwell upon them. I will now conclude my opening remarks with some final comments. The gradual reopening post second wave of COVID-19, we are witnessing a return on growth and steady economic recovery. Even though risk of a third wave exists, the future outlook remains positive. Under these circumstances, our businesses have shifted focus to regaining growth while continuing to manage risk. Backed by strong solvency, well above the required capital supported by healthy liquidity, continued focus on risk and collections, digital processes and improved cost structures, we are confident that we are in a strong position to maneuver through these difficult times. I now open the floor for questions and answers. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Prakash Kapadia from Anived Portfolio Managers.

[Prakash Kapadia, Principal Officer]

Yes. A couple of questions from my end. On the health side, we've seen increase in GDP. You mentioned about the government scheme from the Gujarat government. So what excites us in this segment over the long run? And also on the retail side, what are we doing differently to scale this business? Obviously, post COVID, the awareness has increased and there is room for penetration. But what are we trying to do differently to scale this business? And lastly, on life insurance, any major claims in terms of backlog, which is pending and are the reserves of INR 1.05 billion enough for any future claims?

[S. Sreenivasan, Chief Financial Officer]

I will just take the question on the reserves first. We have an extensive method of tracking. This is on the life side. We have an extensive method of tracking the delays on claims. And death claims, as you know, do not -- there's not much of a gap between the date of death and the reporting. It only happens largely on some of the group side where the partners where also we have a very robust system of tracking the claims closely with the partners. So as of now, based on those trends, this seems to be adequate for the second wave. But if there is a third wave, we do not know. It depends on what, as it evolves, we will keep reviewing that. The same applies to BAGIC as well. The question on government health and retail health and retail business, I would pass on to Tapan, who will take it.

[Tapan Singhel]

Thank you, Sreeni. I think if you look at it as one of the large companies in the Indian market, we are present in all segments of business. And government health also in the segment of business. So -- and we are aware that we are not either overweight on any particular business or underweight in any particular business. So that is what our philosophy has been. And as for our overall market share, close to that, most of our lines of business, we would be either a bit above or a bit lower in -- that's how we grow the business holistically. So it is not about getting excited. We want and we will do all businesses to understand better over time and get better with a holistic picture. Government health business is an important part of business if we look at it. I think government's focus on governmental business is pretty high. It's good for the country also. And so where is it a tender-based business. So wherever we get at of pricing, we are happy to do that. On the retail health also, if you watch, I think it is predominantly in terms of product offering that you will want at BAGIC. We've been all in products and segments that you could think of. We also have very exciting products like unlimited sum insured for our customers, again, unique to the country. So we have lot of exciting products from that perspective for all segments of customers, be it HNIs, be it the middle line or be it for below poverty line. So it would be having a huge spectrum. And we would keep on focusing on growing our retail health business in a manner which is spread across the country into different geographies and different segments which is there. So it's a very simple strategy, ensure the business of large numbers spread evenly across. And that's what we keep on doing, and we'll focus and do that as we progress with them. We also have been aware of the approval from regulator in terms of wellness be part of it. So you look at one of our companies in Bajaj Finserv, EVH. So we also have a product now launched, which has wellness as part of the product plan, be for retail or for group. So from that perspective, if you look and scan our product portfolio, you'll find that at all segments. And whatever approvals we have from regulation in terms of -- you'll find us in that space. In a sandbox, you'll find us that we are using trackers, devices in terms of how do people live healthier. That is our strategy. It's holistic. It's all across, and that's what we'll continue going forward.

[Prakash Kapadia, Principal Officer]

Okay. And on the retail health side, is there a room to upscale existing customers because post COVID, the awareness seems to be very high for having a higher sum assured or higher policy or a family floater. So is that one area also which we are focusing on?

[Tapan Singhel]

Yes, it is clearly not only post COVID. I think it's a philosophy which most companies would do because see, sum insured for health, let's say, if I take you back 7, 8 years, maybe a INR 2 lakh sum insured would have been very reasonable for a normal person. Today, INR 2 lakh doesn't make sense, know. You have an inflation in health, which is about 14% to 15% per year in terms of health treatment. So if you are not upscaling your sum insured and we're not advising you. I don't think -- on both sides is the right thing to be done. So that's a normal business philosophy, which I don't -- all good companies will be falling.

[S. Sreenivasan, Chief Financial Officer]

Let me just add something on top -- to supplement what Tapan said. While scale is important in retail health, there are also customer segments. So the March or the lower end of March segment, as we call is largely done through group business through the government schemes or through other schemes. Really, our products are mostly into the -- our middle class and the mass affluent and above segments. And in terms of servicing, that is something BAGIC is reputed in the market for, and that is something we will not give up. If you take the way the claims are handled or the demand ratios or any ratio by which you would want to measure. I think BAGIC's reputation in the market is very strong. So we believe that in the long run, BAGIC is a better strategy to approach group health, not mindless top line. And secondly, a combination of employer-employee health, retail health and government health gives us payment volume to the hospitals. India as a market has still not reached the level where insurance companies have enough clout together to actually get reasonable rates from all the hospitals. So each company has to build its payment capability. And we believe that Bajaj Allianz General, along with our Bajaj Finserv Health, which is still in the nascent stage and this are growing fast. We would be able to, over the next few years, become a strong payer in the market, which should enable us to control this, has a better handle on this business related to competition.

[Prakash Kapadia, Principal Officer]

Understood. That is very clear. I'll join back the queue if I have more questions, and wish you a very happy Diwali and a prosperous New Year.

[Operator]

[Operator Instructions] The next question is from the line of Hasmukh Gala from Finvest Advisors.

[Hasmukh Gala]

Yes. And congratulations for a really good set of numbers for both BAGIC as well as BALIC. Bajaj Finance of course, we have already covered. With formation of these new subsidiaries like Bajaj Finserv Health Limited, et cetera, do you think that eventually the health-related business will get transferred from say BAGIC or BALIC, wherever it is taking into this particular subsidy or future business? That is my first question.

[S. Sreenivasan, Chief Financial Officer]

Yes. Is that it? Hello?

[Hasmukh Gala]

Yeah.

[S. Sreenivasan, Chief Financial Officer]

Yes. No, Bajaj Finserv Health Limited is not an insurance company, and that is predominantly in the health care space and the health care ecosystem, where they connect providers of health care, which includes hospitals, doctors, pharmacies, diagnostic centers, laboratories, with the users of health care, which are the patients through a digitized platform and also provide financial solutions to those who need it. Today, it sort of covers predominantly only hospitalization. There is a whole gamut of health care services that people use including finding a doctor for their outpatient treatment for their regular smaller types of accidents or illnesses. And through their products, they will eventually address a holistic solution for our customer, that whether I want to find a doctor or whether I want a second opinion or do I want -- I mean, if I have hospitalization, I need insurance or if I'm running short, I need a loan, the entire thing will be provided under this platform. That's a long-term goal. Today, we have just started that business. I think we at least another year or two before we start talking about it. But together with the BAGIC, we see a tremendous amount of synergy because the issue of healthcare, supply demand mismatch is very much there that quality healthcare is in short supply in India. And access to quality healthcare is also not easy with cities growing bigger and the population increase. We believe it's a very good long-term bet, and that's why we have invested in that.

[Hasmukh Gala]

Okay. Okay. That's very clear. My second question is all the companies in the group have been taking a lot of digital initiatives, development of apps, et cetera. So can you just give us a brief overview of where exactly do we stand? And once the app, et cetera, are launched, maybe the what they told will be done in probably next year, et cetera. How much incremental business can we expect to get because of all these initiatives?

[S. Sreenivasan, Chief Financial Officer]

Broadly, I will say that I'll hand it over to Sapan and Tarun to talk about their companies. Each company has got its own in our business. I mean the way lending business is done is not the way insurance business is done or the way the customers buy insurance, even today or in the foreseeable future. Lending is a transactional business. You buy an asset, and therefore, you need to borrow money, and therefore, you go to a lender. If you're not buying any assets, you probably won't borrow money. Whereas insurance business is a journey, it's a lifelong journey that is not something I need today and say tomorrow, I don't need it, a health insurance or a car insurance. So therefore, the digital initiatives are different for each of these companies. The Bajaj Finance initiative is largely related to the lending business, where they are giving customers multiple options in terms of do you want to now first take the loan and then go and find the product or you want to go the store, buy the product and then get the loan, whichever the way the customer wants to come, whether coming directly or through a store, I think it is across all challenges at the same holistic experience through a single app and the preferred customer segment, which for different segments of business, they will be able to buy any of the products, which is loans or any cross-sell product with 3 clicks. That is the goal which Bajaj Finserv will strive. Now I'll hand it over to Tapan to talk about BAGIC and then Tarun about BALIC.

[Tapan Singhel]

Thank you, Sreeni. I think on a digital initiative, we look at insurance, you have to broadly look at 3, 4 big parameters. First is how do you look at the core. I think all insurance companies would have legacy systems in which it would be on-premise service. At BAGIC, I think we are among the first, if not the first in the world in generation company, we decided to shift the entire core and do a transformation and taken it to the cloud. And very happy to say that this journey is going very smooth, and we have shifted quite a bit on to that. So why shift to cloud, the core? If you look at all innovations happening, all start-ups from a cloud-based applications coming through. And the volumes are now shifting when you have partners, big partners in e-commerce space. So someday, you have policies which run into millions and someday it may drop again. An on-premise server would not be serving that kind of solutioning and innovation capability, which would be there. So we have done that. And as I mentioned, it's going good. And that gives us a lot of capabilities for innovating faster, giving solutions faster and also handling any amount of load irrespective of what the transition would be, and we have very powerful partners who deliver that kind of load also. So I think we would be first in the industry to do so. The second, which comes to all the touch points. Insurance companies are distribution based, largely distribution based and very strong there. So the initiative on the distribution front in terms of the ease of not being able to either issue a policy or in COVID times do a touchless sale over a video call or in terms of claims settlement, touchless settlement on the spot. So we look at BAGIC as the forefront of these innovations. For a motor claim, you can actually get down click pictures, upload, get your claim on the spot. For health also, we have CDC or if you look at mobile claims. So anything to think about on retail, I think most of our settlement would happen at the consumer end, completely touch-free and it will be completely through. So -- and this would be, again, what you're doing with some of -- most of it with the industry first that we have done. Then comes from a consumer perspective, he should -- and she should have always have the choice. So we have modular products, they can go to the web, decide what they want to buy, what price range they're looking at in terms of what combination they can have. Then you have the fraud analytics which should happen because the insurance company are subject to a lot of frauds. So we have strong usage of fraud analytics, which we have set up. Then you would be doing character recognition, you will be building a case. So it's a huge plethora of initiatives. It is not that now. There's a single point of focus or one thing. A combination of all this is what gives a cutting-edge position to the company. And as I mentioned that if you look at most of our initiatives and go through detailing of it, you will see that most of it we are the industry first in terms of what we are delivering and in terms of redefining the customer experience and even redefining how the customer should be getting his experience and transparency, its simplicity and as I said, completely touch-free as it can happen. And luckily, the regulator has allowed the dissolutions of policy and all that also is making it very convenient for us to be in that direction. It would take a lot of time for me to explain the entire detail of it because there's huge plethora of initiatives. But to give you some idea, at all touch points, you would find we'll be innovating and redefine the customer experience in terms of using distributors. Tarun, over to you.

[Tarun Chugh]

Yes, yes, thanks, Tapan. So I think Tapan touched on a few critical points and maybe I'll go from there and add further. So the way I look at technology and it's not just digital, it's digital and data. It becomes very critical in terms of our strategy. And that's what the BFS Group has been known for, and that's exactly what the T2 insurance companies including us are clearly focusing on. So let me just split this up into 2, 3 parts on the digital side and data side. So the digital largely Tapan touched upon the BAGIC core system and similarly in our sales as well the policy admin system, which is the core -- it's like equivalent to our banking, the core banking system of -- you can call it the core banking or life insurance. It is a clunky legacy-based system present all across the industry. So we took the, I'd say, the initiatives of implementing an entirely fresh cloud-based Indianized system. This doesn't exist anywhere in India. And I would also dare say globally, fully implemented yet. So we've had we tied up with Infosys and systems call engine. It is a company that they had bought called McCamish in the U.S., which is working on this system, and we have a launch of our unit-linked plans entirely through this cloud-based system, somewhere around the first quarter of next year. That should be changing the entire way the policy admin systems will work in the industry. So nobody else has done it. We've taken the call. But if your policy admin system remains a clunky system, that itself is usually a problem. Typically, a project like this would take 3 to 4 years to implement. We've undergone about 2 years of work already. On this sits a lot of -- so this is like the core and this, like I said, the process is already 50% underway, and then it's a huge transformation. The second one is on the mid-office layers, which is the CRM layer and -- which is the customer relationship management layer, so we had invested in CRMNEXT a few years back, and that is already becoming a lot -- already showing up in terms of our customer service. The other piece is on customer communication management. Today, we have lots of communication with those 2 that go to customers. That mid-office system, which provides the backbone of how customers get serviced. And could there be an element of omnichannel possible in that, becomes a critical set, the CCM goes live somewhere early next year, and that is when we'll have the mid-office getting ready to be an Agile life insurer, which I don't think yet exists in India. The -- all of this has to eventually show up in the front end with the customer. And there are about 3 elements which become very critical, and I'll just broadly touch on them. One is the front-end onboarding of the customer. Second is the use of data and being able to profile and upsell smoothly to existing and maybe get more data moats around the prospect database. And third is the digital culture of the organization, which usually, if you ask me, precedes or rather in terms of importance, the other two but of course, without the first two, you can't do the third. So that is the process by itself. Turning a legacy company into an Agile digital company is the way we are looking at things. And I'd say we are committed strongly like the rest of the BFS book and pretty much moving in that direction. I'll quickly touch on the 2 core bits on the front end. So as the sent forward in any case, you see the approach has been the front-end approach has been more doing contextual innovation, which makes sense, and touches lives of customers and solves clear problems. We're not going digital for the heck of it. So you see 3 initiatives that were clearly mentioned. WhatsApp is we've had a significant growth. This was launched February of 2020. And we've only just seen significant traction. Now this is -- today, you don't need any other platform, but WhatsApp to deal with. So we do not invent new pipe, but we use existing WhatsApp pipe. The Smart Assist which has been a inverse co-browsing, it has been an innovation of its first kind in the world, I would say. That has gone quite well. I would -- I know your question was around what percentage of business and this and that. It becomes very difficult, of course, for us to say because these are technology, process, culture are to each other. Having said that, I'd say I give a lot of credit to the way we've been able to perform during COVID as Sreeni said, on a CAGR, 34% growth. I would give a lot of credit to the way we handle the front-end innovation. The Smart Assist, for example, allowed us to get form filling done, whether we were sitting 5 meters or 500 meters of 5 miles or 5,000 miles of it from a customer. So the face-to-face challenge, which was there and everybody was facing it, to this contextual innovation and very unique by itself, we were able to handle it quite well. So you see a lot of these things. In terms of the data side, there's a lot of profiling, smoothen -- easy processes on onboarding, upselling. I can go on and on. And as Tapan said, this is like a never-ending exercise. And we just have to take slivers of the company and keep on transforming them because all of us have been largely long-term legacy driven companies. So that transition is well underway.

[Hasmukh Gala]

Correct. I understood. So basically, what we are trying to say that if we ease the transactions and improve the relationship with customers, et cetera. Then I hope that it helps both BAGIC and BALIC to be more innovative in launching the new products which the market wants. And at the end of the day, I think it should reduce the expense ratio, which we currently have. Do you see these 2 objectives also can be achieved because of all these initiatives?

[S. Sreenivasan, Chief Financial Officer]

This is not both companies, I will take that. See, the objective of all this is to build a capability which is future-ready. To provide a platform in which customers can easily buy and own an insurance policy over a number of years and make a claim as well. So the customer making a claim on a company is unique to the insurance customers. And therefore, we believe that creating these are very important and essential, and we have to be ahead of the market in terms of innovation, and both companies have demonstrated that, as explained by Tapan and Tarun.So in terms of new products, that is not -- is -- in this industry, any product has a shelf life of less than 3 months before the competition catches on and launches a me-too product. Real product means is your ability to settle claims in certain cases, the kind of reinsurance support available, the kind of tech platform you have -- and of course, the kind of distribution strategy you have to distribute that product to the particular segments for which the product appeals. And I think in terms of product, neither of our companies are wanting in terms of products or any type of customer, any type of customer need, and many has been, I think, innovative as well in the market. If you look at BAGIC, particularly for the first to launch a cyber crime product for individuals. Now they have a pet dog insurance program. There are many like that. Similarly in the case of Life, the return of mortality charges, whether industry first, I don't think either of our companies are any way behind in terms of launching innovative products. The only thing is there has to be long-term sustainable visibility of growth and profitability from that product.

[Operator]

The next question is from the line of Avinash Singh from Emkay Global.

[Avinash Singh, Senior Research Analyst]

A couple of questions. So firstly on BAGIC. So on BAGIC, two questions. First, that with this sort of a new generation of players coming in with a different kind of objective and funding a structure where do you see competition in the motor segment heading? So secondly, related to BAGIC only. In terms of the customer acquisition and owning the customer and your relationship building, of course, I mean you are omnichannel but you would have certain sort of preference in your strategy around channel. And in that context, I mean what sort of strategy do you have toward the web aggregators class, online broker platform where, I mean, it's a lot about being just a price taker. And post BAGIC, on BALIC, my question is particularly what sort of current situation or your experience is with your reinsurance on the term plans? I mean you have been growing in terms, strongly in 10 years only. I mean so far, I mean, on a relative basis, you are not been that bigger in term space, but you've been growing quite well there. So what sort of a all around, what sort of updates you have on that pricing and your part.

[S. Sreenivasan, Chief Financial Officer]

Tapan, would you like to take that?

[Tapan Singhel]

Yes. Okay. So when -- let's say, when you talk of new players and what impact does it have? I think what we should think is two things. One, for a country like India, there's room for more players. It is not that not limited because India, before nationalization of insurance company in the year 1970 had over 100 insurance companies, just in a generation space. me also like that we are 500,700 insurance companies in our country and India still has about 30, 40 currently. So I don't think that is a major issue. I think the more players, the merrier, the better. I always have felt that the more players are there in the industry, the better is for customers because the option increases and choice is increased. So on that perspective that is it.Now if you look at it from a strategic perspective, one should look at what is it that the new players are doing, which will inform what would be existing in BAGIC. And when we do a scan, you'd actually find that BAGIC would be cutting edge on everything, be it digital. I think our entire agency onboarding is 100% digital, policy issuance would be over 90% completely straight through digital, our claims settlement is completely digital, simplification, the TAT, grievance ratio is the least -- among the least in the industry, if we look at. And it's all idea figures with claims settlements ratios among the best. So even if you scan the market and see that do you find if new players have been able to do something differently from what a company like BAGIC is doing. As of now, you'll find that BAGIC could be way ahead in terms of the delivery, which you would be doing in terms of what is happening in the market. So one, more players, very good for customers, good for the industry. So India should have more players. Two, if I look at the company like BAGIC, which is always like we talked about digital initiatives, always pushing ourselves to the next level or user data lake or data management or simplification or to the delivery to the customer. And there is NPS scores. If you look at NPS score, it is on the highest in the industry. If you look at our grievance it is lowest, settlement ratio the best that is there. When it comes to price point, that's the next question you asked. And I asked this question to many people. If I ask...

[Operator]

Ladies and gentlemen, we lost his line. So I will just connect him back.

[Tapan Singhel]

Yes. Sorry. Sorry, I got dropped out. So the other thing, if I look at price point, and I asked this question to many people that who amongst us would say that whatever we were, whatever we eat, wherever we go to is the cheapest in the market. And my answer is not a single thing that we actually do is the cheapest market. I think somewhere the obsession of the cheapest is not right. Obsession of the value that we give to the customers, and value has a price point where the customer feels at this point, this is the best value that I'm getting. And that is why even aggregators we look at, and we have partnered with them, and we don't want to be the cheapest in the market with the value that we give to the customer. We don't want to be a company which offers the cheapest product and has the highest claim settlement ratio. I don't think that is an option, then we are not delivering to the customer. The promise that we have made that we stand by the customer when things go wrong. And that is why we are in the aggregator space also, and we have a good market share there also. It's not that, I think when you ask the question, the cheapest will also be there, it is not so. I think a company like us also has a good market share in the aggregator space. And I said it early on, with any lines of business, be it any geography, be it any channel, be it any distribution or , you'll find Bajaj Life Insurance company to be one of the major players in that. And the way we get a space also we are major. And we're not a price cutter, we are a value giver to the customer, and that we are very, very clear. I hope that would have answered your question.

[Avinash Singh, Senior Research Analyst]

Yes. So I mean you answer is . But somehow, I mean the web aggregator platform is something that is considered to be that, okay, we have to -- it's have that, okay, you're not doing this sort of a cut your prices just to get that -- yeah that is why I particularly asked this question.

[Tapan Singhel]

Okay. I said in the web aggregator space also a good market share. And if you look at it, people prefer value. And that's why in a platform in which you have a transparent price display also, people prefer to buy Bajaj financial products for the value that we give to the customer. And the value is reflected in data and statistics, which is on a regulatory website. As I mentioned, if you look at the grievance ratio, you'll find it's not lowest in one quarter, consistently over years, you pick up a data for any quarter, any year, you'll find BALIC has a least grievance ratio. You look at the settlement ratio, we are one of the best, which is there. Which clearly demonstrates the value we bring to the customer and the customer respects that. And that's why in our platform on a web aggregator also, we have a decent market share, with our position there. So I think -- so when we look at different channels, so I think it's wrong to classify them as only a place where people would go for the least price, I mean people value value. And that's why if all of us will look at -- if I ask this question, who among us is wearing the cheapest shirt in the market right now? Or who among us going to cheapest restaurant in the city for food. I've yet to be a person who would say, yes. So we don't take the cheapest. We always buy what we feel is valuable for the price that we feel is right and that is right for insurance also.

[S. Sreenivasan, Chief Financial Officer]

See if I can just add to what Tapan said, in the risk business, especially where there is financial risk, and long-term solvency, I'm not aware of any company where it has just appeared in the market by discounting prices and taking losses consistently over the years. That may have happened in distribution businesses where some businesses online, they have disrupted the distribution where distribution inefficiencies have been exploited. But in the risk business, even in terms of industry where there are people coming with disruptive models, we have found that discounting as the model has not really worked anywhere in the long run, either they get taken over or they bring in some practices in terms of technology or cutting out processes, which are needless, which anyway, the larger companies like us will adopt. If you see any good practice, we will adopt. So discounting as a way to gain market share is clearly -- we do not think in the long term if the insurance company can do that without seriously impairing their solvency.

[Avinash Singh, Senior Research Analyst]

Okay got it. And my question on BALIC.

[Tarun Chugh]

Yes, I'll just come to that. So yes, of course, the some business and the reinsurance situation is at a little of a loggerheads, I would say. We're just talking about the retail market here. The reinsurers have been facing losses from various companies. And as a result, they've gotten stricter in underwriting. They have -- it's become like a changing goal post. So every month or two, we do have new prescriptions coming in underwriting, which is actually causing a lot of pain to the customer and to the distributor as well. Since we've taken a little bit of a calibrated approach -- so you would have seen that our term plans have come down in terms of mix. And I expect it to remain low. And in a way that serves us well because we are trying to understand the market, we've been one of the late entrants. But we did shoot up in terms of our term percentage like everybody else last year. But this year, with the second wave, and we're just being cautious until the end of the third wave, and then we will be coming out with a lot more, I say, clarity in terms of how the prices are going to stabilize. Currently, we've been one of the lowest prices with tight underwriting among the bigger brands. And that's the cohort we intend to belong in, in the bigger brands. Will we increase prices? Yes, we will. I think we are very clear we will. We've had mixed marks -- mix things coming from everybody else, but these will be increasing prices because we are -- we have headroom. And we are currently low price anyways, and we do expect that the reinsurer we've already got a letter. So there is going to be an increase in pricing from reinsurers as well. But for the short term, we remain cautious on term and underwriting shall remain strict. It's the mid and the long term that is we are keen and confident. And I would say COVID has brought in addition to health the term business right in the midst of the reckoning of the customers portfolio. We shall be appropriately responding to the market. But I'm not going to be overly cheap, and I'm not going to be overly risk-averse, we'll have to take a calibrated approach. I think more clarity on the future will come after the third wave if there's any.

[Avinash Singh, Senior Research Analyst]

Yes. So on this, a quick one. I mean, particularly on the medium ticket size, retail term, I mean, they get sort of that when it comes to the medical it's like the cost involved, cost, time and all. So -- but at the same time, the understanding of risk becomes very different. I mean what sort of a strategy we will be following going forward here. I mean it's going to definitely medical underwriting or like telemedical or like for some small ticket retail can go without medical . So there is a sort of element of cost and terms will be cost sensitive. So what kind of underwriting in medical are you following so far, any history on that?

[Tarun Chugh]

Yes. No, that's a very good question, but I'll respond to your last one first. See, I think Tapan and Sreeni also kind of adjusted to some extent. I think this obsession of low price is I think sometimes more in our mind than the customers. Yes, aggregators do play to customers who want and that's -- there is a significant market there, I agree. -- who would just want low price. But I mean, who would you want to work with? Would you want to work with a large company who has a lot of surety and comfort from the brand. Or would you -- or the other way around. So I think that becomes a pretty critical part because you are not just doing retail term for -- it's a longer term. It's not like group term. It's not like something that is going to be there for a year or 2. This is going to be there for the next 30, 40 years with you. And there will be -- it becomes a little bit of a high involvement product, if I can just use that jargon. So that's one thing I'd like to bring in. At the same time, India is various Indias. There is a India, which wants to go for low price there is India which wants to go for value and go for the right price to brand. So that's my first response to your last point. But see, the way we've been looking at it is we also believe from a risk perspective, the various Indias. So what we -- our data analytics comes in very handy in this. So we have a lot of profiling that we have done based on which -- we've seen some good success and then we've segmented into 4 segments, where the first 2 segments, we find that despite COVID, we've had a good response in terms of the risk markets that we've taken on here. And then we feel fairly confident that for these buckets, there is not going to be any miracle. And that's why you want to build up volume. Usually, these are salaried employees, and they are working in multinationals or large companies like ourselves and so on and so forth. And the process has to be smooth and here medical is not important because the volume gain kicks in here. But for live, which are maybe requiring medicals, appropriate medicals have to be done and that we are very clear of and we do not shy away because you are talking about a 30- to 40-year product. In terms of the cost of the medical, it is an element for sure, but we get the benefit of using bulk and that benefit is passed on to the customer. At the same time, usually, the NBV of a product like term for medical products usually medical policies comes out far better than nonmedical because experience is more important sometimes in the medical cost. So that balancing act one has to get right. And it's -- I think that's the way to...

[Operator]

Sorry about that. Someone has placed the call in.

[Tarun Chugh]

Sure. So I think I'm probably done with the answer. So that's what I wanted to say.

[Operator]

The next question is from the line of Mr. Nischint Chawathe from Kotak Securities.

[Nischint Chawathe, Director of Research & Senior Analyst]

A couple of questions from my side. To begin with, in BAGIC, Sreeni, you mentioned in the opening comments that you are cautiously optimistic on the business for the next 6 months. So I was wondering what would be the reason for this? I know we discussed competition from new players at length, but any other points that are there in your mind.

[S. Sreenivasan, Chief Financial Officer]

The real cautiously optimistic is because even after 2 years, I think we're only looking at businesses where things are trending towards pre-pandemic levels. There are certain segments where we are seeing solid growth like life insurance, auto sales are being hit by this. There is some concern on inflation. And more importantly, I think the risk of a third wave is still there. Like yesterday one was hearing that in Germany and Russia, there has been a slight increase in cases and they are going to look at it seriously. In Singapore, we are seeing that some restrictions have started again. So the efficacy of the vaccinations and whether you need boosters is always there at the back end. So as the market evolves, we will look at it. And therefore, we have put the word cautiously optimistic. We're optimistic on growth. If the economy grows, we will definitely participate in it, but we see there is an underlying risk both on the macro side as well as from the third wave. And that is why we have used cautiously optimistic.

[Nischint Chawathe, Director of Research & Senior Analyst]

Sure. This is actually a question for Bajaj Finance. Bajaj Auto in their call yesterday said that they're setting up a separate subsidiary for captive, captive financing of 2-wheelers. So we were wondering whether -- how should we really think of it? I mean, is it something that both Bajaj Finance and their subsidiary will coexist? Or is it kind of a sign for us to read that Bajaj Finance will gradually move out of financing Bajaj auto vehicles?

[S. Sreenivasan, Chief Financial Officer]

No, I think they will coexist because Bajaj Finance historically has predominantly financed only Bajaj vehicles. But now they will be free to finance other vehicles if they choose to. And Bajaj Auto will also use that to further their sales as their subsidiary. So it is not that it -- it will have both ways, both will coexist.

[Nischint Chawathe, Director of Research & Senior Analyst]

Why do you need 2 companies in that case?

[S. Sreenivasan, Chief Financial Officer]

It is Bajaj Auto is an independent company as an auto manufacturer. We are a financial services company. And we will have to go -- I mean, look at it differently, right? Because we are purely a lender, we have only to see whether the loan will get repaid or not whether we get adequate margins or not. Bajaj Auto will also have to look at the sales of 2-wheelers. So the two will have to look at it. Secondly, Bajaj Auto has got a lot of money with them. So they are looking to invest. I mean that's the call of that company.

[Nischint Chawathe, Director of Research & Senior Analyst]

Sure. On -- again, on BAGIC, we saw the motor loss ratios in motor third-party going down on a quarter-on-quarter and year-on-year basis? And what is the outlook out here, given the fact that we've not really seen a tariff hike for the last 2 years?

[S. Sreenivasan, Chief Financial Officer]

Tapan, would you like to take that?

[Tapan Singhel]

So let me take that, Sreeni. If you look at the third party when COVID hit us, and we had mentioned that in the call that we have strength in the reserves because you're not sure how this is going to be from a third-party perspective. So the COVID hit towards less use of car. OD, yes, there was a significant drop there. On third party, the courts were closed, some months were not coming. So you were not sure in terms of what is lying, which is you're not aware about on how things are going. Uncertainty was very high. And it's a long time, the courts are closed, even now, it's not fully open. And the second thing which we also realized is that there are a lot of judgments are coming through, which are increasing the severity of the existing cases also. We had court judgments, which were redefining that. So we strengthened our provision. And as time progressed, we are seeing that what is -- as the court opens up as the summer starts coming through, as you're seeing what the cases are going through, obviously, that is getting calibrated. So we added for spending or reserves for the new judgments that are there. And we had also tracked in uncertainty in the earlier level, and that uncertainty is getting now more and more clarified. So that's why you see this shift happening. Now having said that, the other thing which is also happening good is if you look at on the highway, and you must have read all the reports, the frequency is also coming down as it progresses. So it's a reflection of that. I think this would stabilize more as courts completely open up and the judgment starts coming through. And that is why you see this new shift happening.

[Nischint Chawathe, Director of Research & Senior Analyst]

Sure. Perfect. Just one last data keeping question. This is on BALIC. If you could give us a number of gross and net COVID claims for the first half.

[S. Sreenivasan, Chief Financial Officer]

Bharat, you could take that.

[Bharat Kalsi, Chief Financial Officer]

Yes. So Nischint, if you look at that, our total specifically for COVID claims, what we have taken in Q2. So in the beginning of the quarter, we were carrying at INR 284 crores of reserves. What we have got an extra hit in Q2 is around INR 254 crores, but we have released only INR 194 crores from those reserves. So we have taken a hit of INR 60 crores extra in the books in quarter 2, and we are still carrying a INR 90 crore number. These all numbers are without par, because par is obviously, as you know, it's 90-10, and this is net of RI. So on a gross basis, this INR 90 crore is good enough for INR 115 crores and with par of INR 105 crores, this is good enough for INR 131 crore kind of claims.

[Nischint Chawathe, Director of Research & Senior Analyst]

And what was the gross and net claim quantum and number, if you could share?

[Bharat Kalsi, Chief Financial Officer]

So in terms of gross claims overall, we saw the -- so I'll just cover the complete numbers in H1, we have taken a gross claim of INR 1,128 crores and net claims were INR 897 crores. And in Q2, the number is INR 642 crores and INR 528 crores. This is the total claims, the number earlier, which I showed was only for the COVID impact.

[Operator]

We'll take our last question, which is from the line of -- the next question is from the line of Nidhesh Jain from Investec.

[Nidhesh Jain, Lead Analyst of NBFC and Insurance]

Firstly, in the general insurance, there has been a decline in the expense ratio in this quarter, versus our normal uprate in the previous quarters that we have been seeing. So is it a structural decline that we have seen our cost ratio? Or do we expect that to reverse in the future?

[S. Sreenivasan, Chief Financial Officer]

Tarun, would you like to take that? or Tapan?

[Tapan Singhel]

I'll take it. Yes. So if you look at our cost ratios, I think over the last 6 quarters, they have been going down. And as we've mentioned in the past, there are some structural changes, which we had made on manpower and infrastructure, especially because that constitutes about 70% of our cost. We had taken a lot of initiatives, especially last year, and you're seeing an annualized impact of that flowing through this year. And as we had mentioned in the previous calls, there were a lot of curtailment on manpower deployment, which we had done given the stress we were seeing on the bottom line. So a result of that also is flowing through on an annualized basis this year. However, to answer your question whether it's structural and will it continue? I think what you'll have to understand is that while we did a lot of curtailment in the last 1.5 years, I think if things start stabilizing now, we will start investing a bit more on expenses, because like I mentioned earlier, we were curtailing costs to protect the bottom line. But if we see a turnaround in top line, we will now here on start investing. So that's where we stand.

[Nidhesh Jain, Lead Analyst of NBFC and Insurance]

Sure. Secondly, can you share a product per customer in Bajaj Life and Bajaj General, because what I see that there is a significant cross-sell opportunity with existing customers, but at least the experience from some of the other insurance companies doesn't indicate that companies have been able to successfully cross-sell a customer -- a same product for the customer, especially in the life insurance side.

[S. Sreenivasan, Chief Financial Officer]

As for the numbers, we do not disclose. But in general, both companies have separate verticals driven by analytics and cross-sell, which focuses on 2 things. The general insurance business, renewal is very important because every renewal is a new business. We have separate initiatives for cross-sell and upsell. It's a bit different in general insurance from life insurance. Life insurance there are not far too many products. There are small sachet products right up to expensive products or full indemnity products, there are cash benefit products and the same customer, they buy multiple products through multiple channels as well. So it's a little bit more complex in general insurance. In life insurance, clearly, it is more -- there is clearly the opportunity for upsell and cross-sell. And we are very much on top of that. And we have separate -- I mean, that's why the Bajaj FinServ Direct is a very good example of a channel, which did not exist 5 years ago. Today, it is a very strong contributor to our top line. It's a proprietary channel. And almost all of their business is majority -- a large chunk of the business is cross-sell as well.

[Nidhesh Jain, Lead Analyst of NBFC and Insurance]

And what percentage of business in the life insurance came from Axis Bank, if you can share that percentage this quarter.

[S. Sreenivasan, Chief Financial Officer]

Tapan, do you want to add that?

[Tapan Singhel]

Yes, I can. So -- one second let me just. Bharat, you have the number, handy.

[Bharat Kalsi, Chief Financial Officer]

Yes. Nidhesh, it is 19% for Q2.

[Nidhesh Jain, Lead Analyst of NBFC and Insurance]

Sure. And sir, lastly, on the Bajaj Finserv Direct, the EMI store that we have on the Bajaj Finserv Direct is the same store that Bajaj Finance also has? And how the economics will work if we acquire a customer on our Bajaj Finserv direct and if he dies when he buys our product...

[S. Sreenivasan, Chief Financial Officer]

Bajaj Finserv Direct is evolving. As of now, they create the platform for EMI store for Bajaj Finance. So in that sense, they are present in all the stores. They will also be selling new EMI cards to those customers. But over time, they will create their own alternate products, which maybe Bajaj Finance is not offering today as well. So the EMI score will evolve differently going forward for Bajaj Finance and Bajaj Finserv Direct, but the platform and the technology and the capabilities will be provided by Bajaj Finserv.

[Nidhesh Jain, Lead Analyst of NBFC and Insurance]

And lastly, if you can share some customer data on the Bajaj Finserv Direct and Bajaj Finserv Health.

[S. Sreenivasan, Chief Financial Officer]

No, we are not ready to say it because the business is still evolving. And it has not reached a scale or a stability where we feel we can do that. As and when it reaches, we would be disclosing that. But that's probably 1 year, 1.5 years away, but let us wait. We'll see we keep monitoring that every quarter and discussing that before we decide to disclose it.

[Operator]

Thank you. Ladies and gentlemen, due to time constraint that was the last question for today. I now hand the conference over to Mr. [Anuj Narula] for closing comments.

[Unknown Attendee]

On behalf of JM Financial, I would like to thank Sreeni sir, the top management of the insurance businesses and all the participants for joining us on the call today. Thank you, and have a good day.

[S. Sreenivasan, Chief Financial Officer]

Thank you all, and happy Diwali to everyone. Thanks a lot.

[Operator]

Thank you. On behalf of JM Financial Institutional Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.