ICICI Lombard General Insurance Company Ltd

NSE:ICICIGI

Earnings Call Transcript 2023-Q3

[Operator]

Good evening, ladies and gentlemen. A very warm welcome to ICICI Lombard General Insurance Company Limited Q3 and 9 Months FY '23 Earnings Conference Call. From the senior management, we have with us today Mr. Bhargav Dasgupta, MD and CEO of the company; Mr. Gopal Balachandran, CFO and CRO; Mr. Sanjeev Mantri, Executive Director; and Mr. Alok Agarwal, Executive Director. Please note that any statements or comments are made in today's call that may look like forward-looking statements are based on information presently available to the management and do not constitute an indication of any future performance as future involve risks and uncertainties, which could cause results to differ materially from the current views being expressed. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call please signal the operator by pressing star then zero on your touch tone phone. I now hand the conference over to Mr. Bhargav Dasgupta, MD and CEO, ICIC Lombard General Insurance Limited. Thank you, and over to you, sir.

[Bhargav Dasgupta, executive]

Thank you, Faizan. Good evening to each one of you. Thank you for joining the earnings conference call of ICICI Lombard General Insurance Company Limited for Q3 and 9 month 2023. As always, I'll give you a brief overview of the industry trends and developments that we've witnessed in the past few months. Post this, our CFO, Mr. Gopal Balachandran, will share the financial performance of the company for the quarter and 9 months ended December 31, 2022. During the quarter, the Indian economy was largely driven by domestic consumption, with activity across the industry and services sectors in expansion mode. Credit growth has been showing double-digit growth since April 2020, supported by both retail and wholesale lending. However, the synchronized tightening of policy rates by global central banks has been slowing down global demand and international trade. Global slowdown has been putting pressure on the current account and can adversely impact domestic growth going forward. For the quarter, as per data published by CM, the new vehicle sales continued to deliver strong growth year-on-year for private car segment with continued momentum in the underlying insurance demand. The commercial vehicle segment growth was supported by robust growth in individual industries, such as infrastructure and e-commerce. While the 2-wheeler segment grew on a smaller pace, however, in volume terms, the segment continues to remain below pre-pandemic levels. Health insurance continue to drive the overall industry growth. The commercial lines witnessed growth in line with the current market environment. We remain optimistic that the insurance industry will continue to grow given the low penetration, favorable regulatory changes and positive consumer sentiment. Speaking of the performance, the GI industry delivered a GDPI growth of 16.2% for 9 months FY '23. Excluding crop, the growth of 17.5% for the same period. At the same time, the underwriting performance remained poor with a combined ratio of the industry at 116.6% as on half year 2023. For motor business, combined ratio for the industry was 123.5% for half year 2023 as compared to 110.4% for half year 2022 as for public disclosures. The authority in the current financial year has introduced various reforms seeking to expand the market and increase the penetration of insurance products towards its mission of insurance for all 247. During the quarter, the operating mandated QIC requirements we defer from January 1, 2023, notifying the increase in number of tiers from 3 to 9 in case of corporate agents for each category of insurance. Notified regulatory sandbox regulations eliminated in the time limit to facilitate innovation in products or solutions and to increase the experimental period up to 36 months. Pursued working committee to put in place effective regulatory framework post the notification of existing tariff wordings under fire engineering and Motor OD. Further exposure drops has been issued for long-term motor insurance products covering Motor OD and Motor TP and long-term fire insurance products. The operator is also issued registration of insurance company regulations, simplifying process of registration for insurance companies and to promote either those business. We believe that these changes will be disruptive in the short term, but we'll have a positive effect on the insurance penetration over the long term. Moving to business impact for us during the quarter. The company grew by 16.9% as compared to the industry growth of 18.1%. Excluding crop, the company grew by 17.1%. Coming to the growth for key segments during the quarter in motor OD because in motor, the growth remain muted at 4.7%, the competitive intensity continues on the motor OD side, especially on the private car segment. We continue to focus on profitable subsegments using historical granular data and rebalance our portfolio resulting in CV mix at 22.2% for 9 months of FY '23. Similar to the previous year, Health segment continued to be the fastest-growing segment for the industry. During the quarter, we grew at 47.9%, which was significantly higher than the industry growth of 24.9%. As a result of our continued investment in health and retail health distribution, we have outgrown the industry in stand-alone players with a growth of 24.2%. This was driven by business source through retail health agency vertical, which grew at 40.1%. I would also like to share that our one-stop solution for all insurance and wellness needs, I'll take care app has our past 3.7 million user downloads in rate. The incremental download for the quarter was 0.9 million. ILTakecare app contributed $347.9 million to the GDPI of Q3 FY '23. Our bank essence and key relationship groups grew at 39.3% this quarter. Within this, ITC Bank distribution grew by 30.9% and non ICICI bank distribution grew by 44.2%. Post pandemic, the recovery in credit growth, along with increase in wallet share and distribution partners acquired through the demerger has been the key growth drivers. Our business was through our digital on team grew by 2.3%. Overall, our digital focus has enabled us to increase our digital revenues to INR 2.62 billion, which accounts for 4.8% of our overall GDP and GDP for this quarter. This excludes revenues from ILTakecare app mentioned earlier. As far as the commercial lines are concerned, we experienced robust growth driven by growth of 27.2% in the SME segment. We remain on track and are focused on growth movers is innovation, digital advancements, new products, strengthening distribution engine, rationalizing costs while scaling up our prefer liner business. I will now request Gopal to take you through the financial numbers for the recently concluded quarter.

[Gopal Balachandran, executive]

Thanks, Bhargav, and good evening to each one of you. I will now give you a brief overview of the financial performance of the company for quarter 3 and 9 months of FY '23. We have uploaded the results presentation on our website. You can access it as we walk you through the performance numbers. The GDP of the company was INR 16.48 billion in 9 months FY '23 as against INR 13.11 billion in 9 months FY '22, a growth of 20.6%, which was higher than the industry growth of 16.2%. Excluding crop, GDP growth of the company was at 19.9%, which was higher than the industry growth of 17.5% in 9 months FY '23. -- was at INR 4.93 billion in quarter 3 FY '23, as against INR 46.99 billion in quarter 3 FY '22, a growth of 16.9% as against industry growth of 18.1%. Excluding crop, GDP growth of the company was at 17.1%, which was higher than the industry growth of 16.6% in quarter 3 FY '23. Our GDP growth was primarily driven by growth in the preferred segments. The overall GDP for our Property & Casualty segment grew by 17.8% at INR 46.3 billion in 9 months FY '23 as against INR 39.34 billion in 9 months FY '22. On the retail side of the business, GDP of the motor segment was at INR 64 billion in 9 months FY '23 as against INR 48.15 billion in 9 months FY '22, registering a growth of 1.1%. Our agents, including point of sale, or POS count was at INR 106,119 as on December 31, 2022, up from 100,636 as on September 30, 2022. The advance premium was INR 32.79 billion as at December 31, 22 as against INR 34.34 billion as at September 30, 22. Resultantly, combined ratio was 104.6% in 9 months FY '23 as against 11% in 9 months FY '22. Combined ratio was 104.4% in quarter 3 FY '23 as again 104.5% in quarter 3 FY '22. Our investment assets rose to INR 414.5 billion as at December 31, '22, up from INR 400.96 billion as at September 30, 2022. Our investment leverage net of borrowings was 4.16 times, as at December 31, 2022, as against 4.08 times as at September 30, 2022. Investment income was at INR 21.6 billion in 9 months FY '23, as against INR 22.9 billion in 9 months FY '22. On a quarterly basis, investment income increased to INR 7.66 billion in quarter 3 FY '23 as against INR 6.9 billion in quarter 3 FY '22. Our capital gain, net of impairment on equity investment assets stood at INR 2.94 billion in 9 months FY '23 as compared to INR 6.01 billion in 9 months FY '22. Capital gains in quarter 3 FY '23 was at INR 1.52 billion as compared to INR 1.31 billion in quarter 3 FY '22. Our profit before tax grew by 21% at INR 15.4 billion in 9 months FY '23 as against INR 12.73 billion in 9 months of the previous year, whereas profit before tax grew by 10.5% at INR 4.65 billion in quarter 3 FY '23 as against INR 4.21 billion in quarter 3 FY '22. Consequently, profit after tax grew by 34.8% at INR 12.92 billion in 9 months FY '23 as against INR 9.59 billion in 9 months FY '22. -- whereas profit after tax grew by 11% at INR 3.53 billion in quarter 3 FY '23 from INR 3.18 billion in quarter 3 FY '22. PAT includes reversal of tax provision of INR 1.28 billion in quarter 2 FY '23. Excluding this, growth in PAT was 21.4% for 9 months FY '23. Return on average equity was 18.1% in 9 months FY '23 as against 15.1% in 9 months FY '22. The return on average equity for quarter 3 FY '23 was at 14.3%, as against 14.6% in quarter 3 FY '22. Solvency ratio was at 2.45 times as at December 31, 2022, as against 2.47 times as at September 30, 22 continue to be higher than the regulatory minimum of 1.5 times. As I conclude, I would like to reiterate we continue to stay focused on driving profitable growth, sustainable value creation and safeguarding interest of policyholders at all times. I would like to thank you for attending this earnings call, and we will be happy to take any questions that you may have. Thank you.

[Operator]

Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to withdraw yourself from the question queue you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants. Anyone who wishes to ask a question may press star and one. The first question is from the line of Swarnabha Mukherjee from B and K Securities. Please go ahead.

[Swarnabha Mukherjee, analyst]

Good evening, sir. Thank you for the opportunity and congrats for the numbers, your retail segment number seems to be coming out very nicely. So just wanted to understand on that segment a bit more detail you have shared that we will see the segment in retail has grown by 40%.

[Operator]

Sorry to interrupt you Mr Mukherjee, the audio is not clear from your line. Please use the handset.

[Swarnabha Mukherjee, analyst]

Yes. Just give me a minute. Yes, is this better?

[Operator]

Yes, it's better. Yes sir.

[Swarnabha Mukherjee, analyst]

Okay. Okay. So on the retail health agency side, if you could give some color on what would be share in the mix? And how do you anticipate this to be going ahead? That would be very helpful because that growth of 40% must have come on a slightly smaller base. So will that growth rate sustain? Or how will it pan out? That is the first question that I have. Second is on the motor TP loss ratio. So this quarter, the number is very, very strong. So how should we think about that, particularly that this quarter, I'm seeing that there has been some amount of change in the GDP mix between two wheeler and season. So is that also a quarterly kind of a thing which would reverse because I thought that you wanted to keep CV around 24%, 25%. So broadly, these are my questions.

[Bhargav Dasgupta, executive]

So maybe the specific the loss ratio profile to answer. But to answer your first question on the retail health business. As we've been saying, when you invest in the scale that we are doing relative to our current size, it takes time for people to come and stabilize higher agents for the ages to become active and then productive, it takes some time. So we've been saying it will start building up maybe 3 to 6 months from the time that we started talking about it. So this quarter is the first quarter where we are beginning to see real impact of the investment that we are making. But this is still early days. We are very confident that this growth number for the retail health agency channel will sustain going ahead overall health growth will be given by multiple other factors. You will have to look at what happens in the bancassurance share side because if you look at our group health number, that's also growing quite fast compared to the industry. That's driven by 2 reasons. One, the bancassurance channels that we've talked about, both in terms of what came through through the acquisition as also in terms of our existing partners, they're going really well. ICICI Bank has been growing well in this quarter. So those other channels are largely driven by a slight share of wallet increase, while largely -- and -- but however, largely driven by credit growth. So that will be the dynamic for that segment of the group health business And commercial corporate group, which is a B2B 2E for employees, GMC or GAA, what do we call it, -- that segment is largely driven by pricing. So right now, we are increasing pricing. We are still winning accounts because I think the market is slightly stabilizing in terms of pricing. So that growth will come through as long as the pricing is to our satisfaction. So that's to give you an overall perspective on health, but specific, if your question is on retail health agency growth, can we sustain 40%... We believe we can.

[Swarnabha Mukherjee, analyst]

Okay. Okay. Sir, any color on the mix? How much would be retail health agency now in your overall retail health? Some ballpark number would be helpful...

[Gopal Balachandran, executive]

So I think relatively, Swarnabha, I think it's kind of doing well. If you look at our overall retail health indemnity, that number for the quarter would have kind of grown by almost about 25%, 26%. Within that, I think the agency vertical has kind of grown at about 40%. So hence, I think, as Bhargav mentioned, one of the other things that we've been talking to the market, is should try and sustain whether on retail health indemnity can we sustain growth numbers, which is faster than not just the industry but even the stand-alone end companies. But at least for the last 4 months in September onwards, I think we have been able to kind of demonstrate that. I think the key will be to sustain it as we kind of look forward. But clearly, we are kind of optimistic and we're continuing to make those investments in the retail health distribution franchise. To your second point on the TP loss ratios and let's say, relative -- and corresponding to that, let's say, the CV mix. As far as the thought process is concerned, at least on the selection of business mix within motor, there is no change in thought process, which is to say that while the market continues to remain competitive, at least on certain segments of private car for sure, and therefore, we continue to take a calibrated position. Wherever we see opportunities, whether it's on 2-wheeler or CV, I think obviously, we have been writing those profitable segments as what we indicated as a part of our opening remarks. In the process is what we had indicated that possibly our mix of commercial vehicles could stay range bound within, let's say, around that 24%, 25% threshold. In that quarter, that number going down to, let's say, 22% mix, I think, obviously, it's a function of what kind of business mix that one is able to source in a particular quarter And given the fact that Q3 generally is a seasonal quarter. when it comes to, let's say, writing of risks between private car to wheelers and commercial vehicles. So in so far is the thought process is concerned, I think so far as the year-end mix is concerned, we should get to see the CV around that range of 20%, 24% kind of levels is what one would say. So this is a quarter where there's a lot of festive demand for private current 2-wheelers. So those numbers that delivered in this quarter. That's the reason why the mix is a little bit smaller for CV. Nothing else.

[Bhargav Dasgupta, executive]

And to your other point on the TP loss ratio, again, that's what we keep saying. I mean you have to obviously look at loss ratios, again, not between quarters. Obviously, you have to look at it more over longer periods. -- ideally at a year-to-date year-end basis is the best way to kind of look at the TP loss issues because in some quarters, you will obviously see the effect of some of the, let's say, positions that we have taken from a reserving perspective that we would start to see getting played out in so far as actual loss development experiences are concerned. So in sense in that particular quarter, you may possibly see some kind of release of reserves that would have kind of been given effect to. And corresponding to that is what you get to see the outcome in so far as the TP loss ratio numbers are concerned. But otherwise, in so far as the reserving philosophy is concerned, I don't think we have -- there is any change in the reserving philosophy. It kind of pretty much remains the same. And hence, you should look at more the TP loss ratios over not just on a quarter-on-quarter basis, but look at it more over longer periods of development.

[Swarnabha Mukherjee, analyst]

Sure, sir. Got it. Very approved. Can I squeeze in one quick question on the expense ratio side. if you could throw some light on how to think about it in terms of maybe CapEx and OpEx and think about it going ahead still for the next 3, 4 quarters, how it will pan out because it continues to remain elevated close to around 30%.

[Gopal Balachandran, executive]

Which is what we had indicated, Swarnabha, I think that's what we have been kind of talking through. What essentially happens is, particularly when you are continuing with your investments in various areas of opportunities that we have spoken about in terms of long-term growth potential, whether it is with respect to the opportunity that we see on the digital side or even for the matter of fact, the continued investment that we are making on building the retail health distribution franchise, where it's not just a one-off addition to manpower that we did last year. That's a continuing one even as we speak in the current period as -- now all of this is something as what we have been explaining in our earlier calls, will entail an upfronting of expenses. The benefit of revenues is obviously something that we get played out over a period of time. Now as I mentioned in response to the earlier one, clearly, we are seeing early signs of some of those investment leading played out in terms of our growth percentages reflecting those investments, And hence, given the fact that this is a continuing one, we will obviously get to see the expense ratio stay at the current levels at where we are kind of largely operating at. Having said that, we will obviously monitor and come back to the market and give an update in terms of how those investments are playing out in each of the areas. So that's something that will be a continuing one. Obviously, revenue will catch up. Your other point on, let's say, some of the investments between CapEx and OpEx, I think that's something that we -- it's again an ongoing one. As we have been talking through, we do undertake various transformational projects, which will keep the organization future-ready in terms of our ability to deliver products and services to the market. And hence, to that extent, you will obviously see continuing investments, whether it is on CapEx or whether it is for the matter of fact, any operating expenses. The only aspect that I will add is from Q4 onwards, in line with what we have been again talking about. We have been able to successfully complete the technology migration, which we had kind of indicated that we will complete it by quarter 3 of this year. That's pretty much kind of done. And hence, to that extent, the benefit of whatever amount of synergies that we were expected to realize out of those technology expense is something that we will start to see from Q4 onwards.

[Gopal Balachandran, executive]

Just one more comment to add what Gopal has mentioned about synergy. So as we shared with you last year, we moved our entire technology stack to the cloud, right? So all our applications are a cloud. So that's the call that we've taken not from a CapEx versus OpEx perspective because all of that part of the CapEx in the future will be converted into OpEx. So that's the call that we've taken in the interest of business from a longer-term perspective. It gives us more agility, more elasticity, more scalability. So all of that factors go in our decision. From a longer-term perspective, rather than looking at whether you want to keep that expense on-prem and kind of amortized cost over period and look at CapEx versus OpEx to manage the financials.

[Swarnabha Mukherjee, analyst]

Thank you

[Operator]

Mr. Mukherjee may we request that you return to the question queue for follow-ups question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference. Please limit your questions to 2 per participant. Should you have a follow-up question -- we would request the question queue -- the next question is from the line of Avinash from Emkay Global Financial Services. Please go ahead.

[Avinash Singh, analyst]

Yeah, Hi good evening, A couple of questions and both looking at mines data just to sort of a year out the noise of quarter-to-quarter. Firstly, I mean, now the combined ratio at around, say, 100%, 400%, 500% that where you have indicated. Now because of the investment side volatility and if I were to remove the tax refund, this 125% combined is leading to a more about 16% kind of ROE -- now is that where, I mean, you are comfortable? Because I mean if the investment yields continue to be at this level, providing this combined ratio means that the ROE is at 16% level. So are you comfortable with this thing? I mean, you can argue that timing vis-a-vis where industry in the sector, you are much better than that I have. But I mean, of course, you don't have the advantage of not being listed, listed compose the return an -- so that question on sort of your balancing your combined ratio growth and profitability, that's number one. And number two, again, if I look at motor as a combined portfolio, what I see there is like on a year-on-year basis, your loss ratio will have more or less fine. I mean, that's 100 basis points movement. But if I just go and sort of turndown into underwriting results, it suggests that, I mean, overall, there will be kind of a material increase on the exciting motor. So if you can just help understand what is the OpEx that is driving perhaps that a higher underwriting losses on a 9 basis on overall motor portfolio to elaborate the question. Thank you.

[Bhargav Dasgupta, executive]

So Avinash, let me take the first one, and I'll ask Gopal to give you a breakdown of where that is coming from in terms of motor underwriting. On the first, as we've articulated since the time that we continue transaction, we have said that the diverse synergy benefits that we were -- we had assumed, but in reality, we have seen higher synergy benefits. We felt that it was appropriate from a longer-term perspective to invest that for growth, and that is what we did. I mean it was really a capital allocation call of looking at the longer term versus some short-term efficiency. We also said that in the first couple of years, maybe the combined ratio will be elevated, but endeavor will always be to reduce it and bring it closer to maybe 102 in a couple of years. So to that extent, our view or our outlook hasn't changed. If that happens, obviously, our ROE, as we've indicated in the past, will be in the high teens. Now you can calculate the way for your terms, it will probably be higher than 16% if we achieve the objective that we set for us. It is also a fact that during this period, we only did not anticipate the pricing session on the motor OD side, to the extent that we've experienced in the last 6 months that has had some impact on us this year. But what we are seeing is that finally, we are seeing some calibration, some moderation. We are seeing some early signs of improvement. And if that happens, that will help us in achieving the objective that we've talked about. So hopefully, just to explain your answer your question, it is not about being comfortable at where we are. This is really a short-term journey to achieve something which is more value-creating for the longer term. objective in the longer term is -- continues to be improving combined and improving ROEs.

[Gopal Balachandran, executive]

And to your second point on the motor underwriting experience, Avinash, I think it's a function of 2 things. One is, obviously, you will have to look at it in the context of what kind of growth are we exhibiting. So relative to, let's say, the market, yes, you would have seen clearly on motor in the aggregate, we have kind of underperformed, which is a conscious call that we are kind of taking in order to kind of stay focused on risk selecting portfolios, which is from a profitability perspective. And to that extent, obviously, there is a denominator effect that ties to play out when it comes to the expense ratios. And two, given the fact that at the end of the day, there is obviously a set of expenses that you can identify with a particular segment. But equally, there are large expenses, which are of, let's say, of a fixed nature, which typically gets allocated between various product lines. And therefore, to that extent, that will also be a function of, let's say, what outcome that you see in so far as the overall expense ratios for a particular segment is concerned, which is why instead of maybe specifically looking at individual lines of businesses from an expense ratio standpoint, it is rather better to look at the overall expense ratios for the company as a whole, which, if you look at it, at least on a -- whether you get it on a 9-month to 9-month basis, I mean -- or let's say, even for the matter of fact, when you look at those numbers on a quarter-on-quarter basis, the expense ratios have kind of largely stayed around the threshold of around 29.5% to around which is 30% thereabout. So hence, as growth gets revised, particularly in the context of motor and the fact that we have kind of indicated the market at this point of time is obviously competitive, which is why as a part of the opening remarks, we also specifically put out for motor, the industry combined ratios continue to stay elevated at almost about 124%. And hence, once we start to see as what Bhargav has also mentioned, some bit of easing is what we have seen. But once we start seeing the cycle completely turning back, we will be obviously able to get the growth back. And therefore, to that extent, you will also see maybe the expense ratios getting allocated to that segment, reflecting better numbers.

[Operator]

Thank you, Mr. Avinash may we request that you return to the question queue for follow-up questions. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.

[Shreya Shivani, analyst]

Hey, Thank you. I have 3 questions. My first question is on the yield of investment -- sorry, the realized investment yields. So that came in at about 1.88 for this quarter. And if we sort of plot your yields versus the 5-year GSEC yield performance, this, your yields have sort of range between 1.7% to 2% on a quarterly basis. Since even during FY 2021, when the GSEC were at its lowest in the recent past, right? So I'm trying to understand where are we missing on the yields bit, if you can help me understand that? Because my main question is that we were expecting this to be higher than what it has turned out to be. First is on that. Second is on the crop book. So for the 9-month period, the loss ratio sort of ended up to 90%. Now last time, you had mentioned that you've written a big chunk of this business with Maharashtra government, which has some cap loss program at 80, 110 or something like that. So how is the performance of that book and whether this inching up of the loss ratio is from the Bharti AXA book. So just trying to understand where the higher loss ratio is coming from. And on third is on retail health, the last -- you had mentioned that you guys have hired 1,000 retail health sales managers, and each one of them will go out and onboard more agents, et cetera. So if you can give us an update on whether all those thousand onboarding is finished, are we hiring more sales manager and how is that process going?

[Bhargav Dasgupta, executive]

So Shreya, let me respond in the same sequence. So if you look at the realized yield, it's an annualized number. So for the -- on an annualized basis, that reflects roughly about 7.52%, which, given the current interest regime is we would think is pretty good in terms of realizing yield on the portfolio. On the second one, in terms of the crop. So our entire crop book is on Bharti AXA book. So there is no Bharti AXA book or our book. Everything that we have is the Bharti AXA book. There is no change in terms of what we are seeing with the book performance. In Q2, which is last quarter, based on actual realization of the experience, we had some releases -- we push that we do is that till we get the complete results, we tend to reserve conservatively. And then once we actually get the final data, then we release, if at all, there is a scope for release, we released that. So this quarter, we reserved as a practice in a conservative manner. Our belief is on the underlying why it is what we get to see the current -- the Kharif, you know the Rabi losses are well within our comfort level and Kharif crop production -- sorry, Kharif has been well within our comfort level, Rabi crop production also, we think should be good given the ground rainfall that we've had. So crop looks comfortable for us at this point in time. But again, these are uncertain businesses. We'll see what happens in Rabi. But the Rabi proportion of our business is also very small. So we don't think it will have a material impact even if it goes against our anticipated losses. On the last one, yes.

[Gopal Balachandran, executive]

So on the retail health, Shereya, just to answer, yes, we have kind of pretty much onboarded all the 1,000 retail health agency managers that we have kind of spoken of to be hired. That's pretty much kind of done. And as I said, this is the continuing one. It's not that it's a one-off investments that we wanted to do in -- that we spoke of it since quarter 2 of last year. So that's a continuing one. And as I had indicated, obviously, early signs of early signs of it getting paid out is what I spoke about. Since September onwards, we are getting to see month-on-month traction in us clearly exhibiting outperformance relative to even the stand-alone end companies. I think the key will be for us to kind of sustain this momentum as we kind of build up this distribution. For the end of the day, as we have kind of also indicated in the past, the market share of retail health for us is still at sub 3%. It's a bit of about 2.9% to 3% in that range. So there's clearly an opportunity for us to kind of stay invested and possibly try and increase market share on this.

[Shreya Shivani, analyst]

Sure. Just one clarification. So the Maharashtra crop book was also a part of the Bharti book or I thought that was a new contract that you guys have entered into?

[Bhargav Dasgupta, executive]

So yes, in the sense, yes, but this is basically Bharti AXA had a Maharashtra business. We've kind of renewed it this year based on the 8000 and more. You're right. But the crop business came with Bharti AXA.

[Operator]

Thank you Mr. Shivani may we request that you return to the question queue for follow-up question. Next question is from the line of Hitesh Gulati from Haitong. Please go ahead.

[Hitesh Gulati, analyst]

Thank you for giving me an opportunity. Sir, firstly, I wanted to understand on agency in retail health, how many agents would have been added. So for instance, we have 1,000 new sales force, how many agents would be active in health. So I think in the past, we had about 6,000 agents selling health. So what would that number be right now?

[Bhargav Dasgupta, executive]

We'll just give you a number, is. We'll come back to you with the numbers.

[Hitesh Gulati, analyst]

Sure, sir. And sir, the second question was, so the benefit policies, I assume other than the ICICI bank, the other partnerships that we have, we are doing attachment products with them. And these policies generally tend to be quite profitable. So is that this scenario? And should we expect that combined ratio in this segment will be good with all these distribution partnerships that we are working on.

[Bhargav Dasgupta, executive]

Absolutely, Hitesh. I think if you recollect, while the mix currently on health for us is skewed more in terms of indemnity as compared to benefit. But if you look at historically, the mix was actually the opposite where we had a relatively large proportion of health premium contributed more by the benefit product. And relatively at that point of time, we were building up the indemnity franchise. For the last couple of years from the Benefits segment because of market constraints in terms of credit disposals being significantly lower and also what we have explained in terms of the decision that one of our bank distribution partner has taken. So all of that is behind us, which is by now as we speak, the credit dispersals is back. And this segment is obviously a profitable one. And that's, and yes, you are right. It's something that will kind of contribute to our underwriting outcomes. And in general, the product segment is positive.

[Hitesh Gulati, analyst]

Sure yes, So just one last thing, sir. investment income on a Q-o-Q basis is lower. But I think on capital gains, it's not materially different. Can you just guide on that, sir?

[Gopal Balachandran, executive]

So there is no specific consideration behind that Hitesh because I think between quarters, in so far as capital gain numbers are concerned, that could also kind of vary between period to period. But otherwise, it is pure. As we have always indicated, in general, when you look at the breakup of our overall investment income, roughly about 3/4 of that investment income tends to be through invest through accruals. And roughly about 14 happens to capital gains. So it's quite possible that in some quarters, you have a capital gain number, which is slightly higher in mix. But otherwise, between quarters, there is no specific change in the underlying investment thought process. In general, I think, obviously, we are changing this opportunity of higher interest rates, which obviously kind of augurs well in so far as higher accruals are concerned. And hence, to that extent, is what you get to see the income between quarter-to-quarter, more as an outcome as compared to anything that is specifically contributing to it.

[Operator]

Mr. Gulati may I request that turn to the question queue for follow-up question -- the next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

[Prayesh Jain, analyst]

Yeah, Hi Sir, Just a couple of questions from my side. Firstly, Gopal, if you could mention how do we think about the unexpired risk reserve for the full year of effect that we have gone into 9 months? And I understand that it depends on what kind of growth we see in the remainder in fourth quarter, but assuming a ballpark growth account that you've seen around 15%, do we see the non-dinity growth to be better going ahead? That is one. Secondly, so from a reserve, sorry, sorry, the motor segment, I would like to view that when do we really see growth coming strongly for you guys. What would be the point or what are the factors that can really drive this growth back to a high -- like in line with the industry or even better than the industry. And in the past, you've been alluding to the fact that past few quarters that the motor OD pricing has become more or less is getting some cognizance and it's getting better, but we don't see that in the numbers yet. So any further thoughts there, that would be helpful.

[Gopal Balachandran, executive]

Yeah so Prayesh, on the first one. Honestly, what you said is what it is. When it comes to an unexpected reserve, it's purely a function of what kind of business mix that you write. And the earnings is purely a function of the contract term for which, let's say, the policies were issued. And hence, to that extent, like, for example, if a large part of our qualities are predominantly have a 1-year duration. And then to that extent, the earnings will typically kind of get earned over the contract period. So hence, to that extent, given the fact that, let's say, for example, this particular year, we have seen, let's say, the growth being relatively better than what we had seen, let's say, in the past 2 periods, which is why you get to see in whichever period you're writing the higher quantum of business. To that extent, for the period at which we are ending up reporting numbers, you end up carrying a higher amount of unexpected reserve, which will obviously get released in the future periods, abetter outcome will be to look at more, because corresponding to that, you would also have, let's say, the loss experience getting played out as well. rather it is better to look at more either the loss ratio numbers for the company as a whole or more importantly, I think combined ratios will be far more and better reflection rather than just looking at NEP on a stand-alone basis because it has got multiple factors as you rightly mentioned, in terms of mix of business, at what point of time are you kind of writing those risks and so on and so forth. So hence, a better way to kind of look at it is more, let's say, the loss ratios and the combined ratios. So that's in response to the first one. To your second point on when do we see, let's say, our changing stance, I think, obviously, we have, this is not the first time that we have been kind of taking a calibrated call with respect to going a little slow in writing certain segments of business. Now that's the reason why just to kind of repeat what we had put out as a part of the introductory opening remarks, is what you get to see as an outcome for the overall market with respect to the motor combined issues. Clearly, you see this is public information. So which is why -- I mean, the industry as a whole is operating at a combined of 124%. So obviously, does not make viable sense for us to kind of significantly go after that segment, which is going to exhibit a very adverse underwriting outcome. That's the reason why we have been taking calibrated calls in the segments where we think the competitive intensity is far more elevated. But our sense is, given that now we are seeing maybe continued quarters of combined ratio staying elevated for the market, we don't think this can is something that can continue to sustain for maybe a further longer period of time. Already we are seeing, which is what Bhargav mentioned, we are clearly seeing signs of some of the players in the market starting to become far more rational when it comes to underwriting this particular segment. So our services, we will obviously watch out for the development over the next couple of quarters. And then -- but at least in so far as our investment is concerned, I think they're pretty much staying on course in the sense that we are kind of expanding investments in expanding distribution even on the motor side, whether it comes to working with OEMs in terms of the number of dealers who we have access to. -- or for the matter of fact, even with the number of agents that we are working with, which is what you would have seen for the company as a whole, again, the aggregate number of agency count has kind of gone up. So we are continuing to make those investments in writing those businesses. As and when we see the opportunity turn up, we are kind of better placed to write this particular segment of business.

[Operator]

Mr. Jain may request that you return to the question queue for follow-up questions. The next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.

[Sanketh Godha, analyst]

Thank you for the opportunity. Can you give me the loss ratio breakdown for retail health benefit-based health and group health and PA if possible? Just to understand how it is panning out given the large part of the business will be new in nature, just wanted to understand whether it be substantially below 60 or 65, especially it cannot redeem eternity.

[Gopal Balachandran, executive]

Yes, Sanketh, I think I'm just giving you right now quarter 3 numbers. Quarter 3 loss ratios for the corporate health book, which is a JHI portfolio, that number is 98.9%. And insofar as the retail indemnity book is concerned, that number is at about 68%.

[Sanketh Godha, analyst]

Okay. Okay. But at 68%, I'm just just telling 68, which means it might be an equal of 30% ROE products which you are changing the product which will rundown the entire ROE of the company. So I just wanted to understand the 68% is like a sustainable number, what you look to the kind of growth you are delivering? Or it could come down in your view?

[Bhargav Dasgupta, executive]

So again, there are a couple of factors. One is the mix of new versus old. So our new mix is increasing as we are, of the fresh business is increasing, but the NEP of that book hasn't flown in as much. So as that happens, the loss ratio is expected to come down a bit. Second is we are also looking at repricing the reinsurance, sorry, the renewal book, which is something that we will do in this quarter itself. So overall, we expect the loss ratio to further come down going ahead.

[Sanketh Godha, analyst]

Got it. And in health, it has been a phenomenal year for us this year, at least for 9 months. So out of the entire health, if I look, the PA benefit-based health and group health are driven by some kind of factors which are not repeatable in nature like 3D growth being very strong and group help pricing being better, so I just wanted to say whether the group pricing, you have already seen a correction. And if on a higher base, the credit growth slows down, then the highly profitable products like Genfit based and PA might contribute lower in the next year. So just just wanted to know retailings you highlighted might do well because of the investments you have made. But the kind of growth that you have reported 100 helps plus overall for 9 months, what IT number you expect it to moderate in 2024?

[Bhargav Dasgupta, executive]

If you go back to our -- before, let's say, the NBFC crisis, we used to have roughly 75% of our business in the health coming from the bancassurance, the retail benefit structure. So this year, it looks like suddenly, it's increased because of the low base of the last 2 years. Going ahead, do we expect credit growth to -- I mean, particularly for, let's say, retail product, retail credit growth to come down significantly. That's the call if it comes on significantly for me some other macroeconomic regions, of course, it will come down. In terms of, but we believe that we are, one, gaining market share in most of the bancassurance partners that we are working with. We are looking at opening up other streams of businesses from each one of these partners, which we believe there's an opportunity. So we're even reasonably confident of growing the bancassurance business may not be at the same rate given that we have a very high growth this year. On that base, maybe it will not be the same rate of growth, but we remain confident of growing that channel. The second question that you had in terms of group health pricing Look, at the end of the year, of course, it is driven with pricing and someone could come in and get very aggressive. That is a possibility. But if you go back to the reason why the group had pricing was the level where it was, it was largely a few large companies who were doing it in an aggressive level. Most of them today have some solvency channel challenges, and we really don't anticipate them coming back and doing the same thing right now. There is still a capital concern there. So we believe that the market for Group health structurally is getting better, and we believe that this growth should sustain for some more time. And in terms of price increase, we took a price increase, as we discussed last year, we had talked about post-core are taking 15% to 20% price increase. On that base, we are able to get further price increases, not at the same pace, but we are still able to get small price increases and hold on to the business. The other thing that is happening in health is that in Q2, we had talked about the fact that the claims frequency had got elevated, we are seeing that rationalize and kind of come down to normal levels. So from all of those perspectives, we remain reasonably confident about the health business as of now.

[Operator]

Thank you Mr. Godha may I request that you return to the question queue for follow-up questions. Ladies and gentlemen. antimitotic. Should you have a follow-up question you would to rejoin the question queue -- the next question is from the line of Nidhesh from Investec. Please go ahead.

[Nidhesh Jain, analyst]

Thank you for the opportunity sir, Sir, In your opening comments, you mentioned that there have been multiple regulatory drops and proposed changes, and that could have a disruptive impact on the company on the sector in the short term. So can you elaborate what sort of disruption you are expecting because of those changes?

[Bhargav Dasgupta, executive]

Look, any -- when there are changes, there will be some consequential impact on the ground, right? And what we are seeing is a method of changes happening at the same time. So it's just that let's look at a couple of things that could create the amount of disruption. One is fresh licensing. It may not come in by next year. But if that comes in, there's a lot more capital coming into the sector, that could create some competitive question. That's a possibility. I'm not think it will happen, but these are things that you need to be conscious of the era. Secondly, for example, commercial lines, there is a talk of complete devarification. If that happens, there could be a round of competitive question. We don't believe that it will have dramatic changes because if you look at the overall combined ratio of the sector and some of the players who were very aggressive last time when this happened, they may not have the capability or the capital to continue with that upward this time. But still, there is always a probability of some amount of disruption. That's a point that I want to make. But I think the larger point is that these are all, in our opinion, very positive changes from a longer-term perspective. And we believe should help disciplined underwriters, players like us who have capital, brand and presence across multiple lines of business at scale. I think it should benefit us. But we just wanted to kind of tell you that there is also probably the amount of destabilization given the amount of changes that are happening, that's always a possibility.

[Nidhesh Jain, analyst]

Sure. And there's a follow-up on that. There is also talk of deregulating the commission rate across all lines of business while the expense of management will be capped at a particular level. So do you see as a multi-line insurance company, we will have advantage in the retail health insurance segment because of that regulation?

[Bhargav Dasgupta, executive]

I think the advantage for us is if you look at the proposed expensive limit that is being talked about, we are within that number as a company. So we are comfortably placed. Some of the companies which have been aggressively growing spending a lot of money, they may have to calibrate. To that extent, yes, there could be an advantage.

[Operator]

We'll take the next question from the line of Madhukar Ladha from Neama Wealth Management. Please go ahead.

[Madhukar Ladha, analyst]

Hi Good evening, Most of my questions have been answered. Just a couple of them. One, on the motor TP segment, we're seeing a lot of improvement in the loss ratio. So I'm not sure whether you've clarified this year or not. But has there been some improvement taken from the 6 months restriction on the period of reporting any accident. So has -- what have been the developments on that? And if you could give us some guidance in terms of how the codes are ruling and whether there can be any benefit flowing through more and better, we have accounted for any sort of reserve releases because of that. And second, on the group others business, which is excluding the employed employee business, what is the source of that? I believe they're not doing that business more with ICICI bank. So what are the other -- what are our other partners broadly, if you can help us within the banks and B and C some sort of classification and against what products are these attachments.

[Bhargav Dasgupta, executive]

On the first on Madhukar, the first answer is no. We have not taken benefits of the shortening of the tail as yet. What we've seen happen is there's been a recent Madras High Court judgment, which is reaffirming this point that you have to find claims within 6 months. So now we have case supporting the change in the regulation or low the land, which is a positive. What we are beginning to see is some signs -- for first 6, 7 months, we see we see a big change in terms of frequency or acceleration of claims. But as we speak, early signs of some acceleration happening in some states, we will have to study this for some more time to tell you that it's happening at a national level, but early signs are positive. And we will have to -- if that happens, then it could be a positive for the sector. But as of now, we've not taken any benefit of that in our numbers because it's too early to take a benefit. In terms of your second question, this was always our strength, working with multiple bancassurance companies, NBFCs, HFCs, we work with digital lending companies. We work with a whole host of entities, which provide retail credit with whom we sell some of these group other category of health products, which is what has come by, which is the point that we were making that last couple of years, that was no that -- and we had a relatively higher share of that business. So to that extent, it was negative for us, but that has now come back this year, and that's where this is going from. ICICI Bank business on that account, what gave previous -- last year, they stopped selling. They haven't restarted that. However, what they've done is they have started selling indemnity products, retail indemnity products, both through the branches as also as attachments for their mortgage customers. So that's why the number from the bank side is also positive. If you look at the percentages, we gave that in the opening remarks. ICICI distribution grew by about 30.9%. And non-ICICI distribution, which includes multiple other banks. So most of the large private system banks, we are their partners. Most of the large NBFCs and HFCs, we are their partners. And that segment, that is non-ICICI distribution grew at 44.2%.

[Rishi Jhunjhunwala, analyst]

Thank you. We'll take the next question from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Yeah, Hi thank you for the opportunity. Can you hear me clearly?

[Gopal Balachandran, executive]

Yes, Rishi.

[Rishi Jhunjhunwala, analyst]

Yes. So sir, I just wanted some color on how do we look at the expense ratio trajectory, right? So there are 2 parts to it. Over the past 15 months since the acquisition of Bharti AXA, there was one trajectory which suggested that the gap between the expense ratios between Partisan should converge over a 2.5-year period, and that is something that will drive the overall combined ratio down, on the other hand, we had intended to basically invest in retail and digital retail health and digital in order to gain some of the shares and you know market share there. Now if I look at both these aspects, it would be great to just understand one on the Bharti AXA rationalization, has the progress been slower than expected? And two, we see like even on a 9-month basis, significant growth in sales, sales loans and expenses or even overall OpEx, excluding commissions, but it doesn't seem to reflect that it is going into retail health, looking at the combined ratio of retail as it seems to be going into quarter. So just wanted to understand on the second part, how the expenses are getting allocated to. And as a result, what should be the trajectory going forward?

[Gopal Balachandran, executive]

So Rishi, I think your second part of the question with respect to the progress of the Bharti AXA integration in line with what we have been communicating. I think that is pretty much, we have kind of realized whatever synergies that we spoke about. I think the only large synergy which we had said is something that we will realize in this financial year is the technology synergy. Consequent to once we get the applications integrated or merged, we should start realizing the benefit of the synergy play out from quarter 4 of the current year onwards. Happy to note that even that particular aspect in respect of integration between the two companies have kind of been done. And hence, to that extent, you may start to see the synergy of the technology costs play out from Q4 onwards. To your first part on with respect to what could be the trajectory that the expense issues could take. Yes, you are right. I think there are multiple aspects that goes so far as determination of the loss expense ratio trajectory is concerned. One is a function of what kind of revenue growth opportunity that one sees, which is what I had explained, certain lines of businesses, while there are costs that we kind of continue to incur. However, the revenue is something that we have not been able to completely realize it is polish potential. -- segment in reference is motor, for example. Clearly, we have not been able to kind of realize the complete potential of what we would like to see that segment operate at. Now as and when, let's say, the growth comes back, that itself will be a function of, let's say, some form of efficiencies or mass some form of improvement that you will get to see in so far as the expense ratio trajectory is concerned. The second is, obviously, as I mentioned, the investments in retail helps to your other point was not just a one-off investment. It's a continuing one. We continue to hire, let's say, the number of retail health agency managers, whom as we have explained, will obviously go and add more number of agency distribution. But those costs, again, comes in itself today in our P&L because there's an actual number of employees who are getting onboarded in so far as retail health distribution is concerned. So which is why you will continue until the time, let's say, the benefits in the form of incremental revenue play out, which is what -- which is in the past also, which we have explained, it roughly takes about 12 to 18 months for the cycle to completely get efficient is when you will start seeing, let's say, incremental revenues being contributed. But in so far as early signs are concerned, I think the investment seems to be kind of playing out in line with our expectations. And hence, to that extent, I think we are quite happy with the way how things are playing out. But finally, in terms of what number the expense ratio trajectory could take, I think, rather, we would look at it more from a combined issue perspective, which is a combination of both expense and loss ratios because different segment executes current outcomes in terms of the way businesses will get sourced. There, clearly, what we had indicated was over a 2-year period, we would want to see a declining slope on the combined ratio front. And we are pretty much staying on course with respect to that particular thought process of ours. I mean, already in line with what we have spoken about for FY '23, we had said the combined will stay range bound in that 10% level. And in FY '24, you will start seeing a declining slope. We are pretty much on course in order to kind of getting that reflected. And hence, that's the trajectory that one would see in so far as the combined ratio is concerned.

[Operator]

Ladies and gentlemen, we'll take that as a last question. I now hand the conference over to Mr. Bhargav Dasgupta for closing comments.

[Bhargav Dasgupta, executive]

One question, I think...

[Gopal Balachandran, executive]

I think there was one question which Hitesh had asked in the context of how many agents did we had a consequence of the 1,000 agency managers. That number is at about 10,000 agents what we have been able to add.

[Bhargav Dasgupta, executive]

By these agency managers that we have had. So again, so thank you, everyone, for joining the call. Pretty late for all of you. I look forward to our interaction during the quarter. Thank you.

[Gopal Balachandran, executive]

Thank you so much.

[Operator]

Thank you. Ladies and gentlemen on behalf of ICICI Lombard General Insurance Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.