ICICI Lombard General Insurance Company Limited (ICICIGI) Q2 FY23 Earnings Concall Transcript

ICICI Lombard General Insurance Company Limited (NSE: ICICIGI) Q2 FY23 Earnings Concall dated Oct. 18, 2022

Corporate Participants:

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

Analysts:

Swarnabha Mukherjee — B&K Securities — Analyst

Prayesh Jain — Motilal Oswal — Analyst

Shreya Shivani — CLSA — Analyst

Nidhesh Jain — Investec — Analyst

Sanketh Godha — Spark Capital — Analyst

Neeraj Toshniwal — UBS India — Analyst

Avinash Singh — Emkay Global — Analyst

Anshuman Deb — ICICI Securities — Analyst

Deepika Mundra — JP Morgan — Analyst

Dhruvish Pujara — Mirabilis — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen. A very warm welcome to ICICI Lombard General Insurance Company Limited Q2 and H1 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, 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 involved risks and uncertainties which could cause results to differ materially from the current views being expressed. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Bhargav Dasgupta, MD and CEO, ICICI Lombard General Insurance Limited. Thank you, and over to you, sir.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Thank you, and good evening to each one of you. Thank you for joining the earnings conference call of ICICI Lombard General Insurance Company Limited for the second quarter and half year of FY ‘3. I will give you a brief overview of the industry trends and developments that we have witnessed in the last few months. Post this, our CFO, Mr. Gopal Balachandran will share the financial performance of the company for the quarter and half year ended September 30, 2022.

Domestically, the economic activity has been gathering pace and the recovery is evidenced by the high frequency indicators in the industrial and the services sector. The improvement in consumption spending is expected to be sustained by strong festive demand and possible improvement in rural consumption in the second half of the year. The systemic credit is quite robust and borad-based. At the same time, headwinds from geopolitical tension, tightening global financial conditions, strong dollar, and elevated global inflation is slowing global demand resulting into lower imports, which may have an adverse impact on the economy — Indian economic growth in the near-term.

As per the data published by SIAM, the new vehicle sales witnessed strong growth for Private Car segment amid easing supply chain constraints and festive demand. The Commercial Vehicle segment grew robustly, supported by underlying demand, while the Two-wheeler segment continued to remain low compared to the pre-pandemic levels. Health insurance continued to drive the overall industry growth. The commercial lines witnessed growth in-line with the current market environment. We remain optimistic that the industry will continue to grow given the low insurance penetration, positive consumer sentiment and enhanced risk awareness.

As a result, the GI industry delivered a GDPI growth of 15.3% for the first half of this year over the first half of last year. Excluding crop insurance, this growth is at 18% for the same period. However, we continue to see pricing aggression in certain segments like motor. While there is some improvement in Group Health segment. For motor business, combined ratio for the industry was 124.5% in quarter one of FY’23, as compared to 107.1% for quarter one of FY’22 as per public disclosures. Overall, the combined ratio of the industry improved from 111.4% in quarter one of 2023 as compared to 124.0% in quarter one of 2022.

In the recent past, the authority has announced several reforms to increase insurance penetration in the country. During the quarter, the authority has issued and proposed following changes. One, the exposure draft and extensive management and payment of commission regulation proposing an aggregate limit at a company level. Two, master guidelines on AML, including KYC requirements along with establishing internal policies, procedures controls and compliance arrangements effective November 1st 2022. Number three, increase in the number of tie-ups from three to nine in case of corporate agents for each category of insurer. Number four, other forms of capital, wherein insurers can raise capital by way of preference shares or subordinate debt without having to avail prior to approval of SEBI. Number five, amendments to the regulatory sandbox — the sandbox regulations, eliminating time limit to facilitate innovation and products and solutions and to increase the experimental period up to 36 months. These are all under consideration and we believe that these and many other changes have been made or are being proposed, which will have a significant positive effect on product innovation, ease of doing business and insurance penetration.

Moving to business impact for us during the quarter, the company grew by 22.6% as compared to the industry growth of 15.3%. Coming to the growth of key segments during the quarter. In motor growth remains tepid at 4.5%. We continue to come combat challenges like heightened competitive intensity in the motor own damage side. We remain focused on growing our market share in certain key profitable subsegments within motor. Overall new vehicle sales have been strong and demand sentiment also continues to be positive. We are optimistic that with the improving pricing environment, we will be able to consolidate leadership position given our strength of distribution in the segment.

Our investment in retail health distribution resulted in a growth of 15.8% as against 8.0% in quarter one of FY’23. Within the quarter, we have outgrown the industry and standalone players for the month of September with a growth of 21.1%. This was driven by growth of business score by retail health agency vertical of 30.7% in the quarter two of FY’23. I would also like to share that our one-stop solution for all insurance and wellness needs, ILTakeCare App, has surpassed 2.7 million user downloads till date. The incremental download for the quarter was 1 million.

Our bank issuance and key relationship grew at 36.1% this quarter. Within this, ICICI Bank distribution grew at 33.9% and non-ICICI Bank distribution grew by 37.6%. Post pandemic, the recovery in credit along with the increase in wallet share in distribution partners acquired through the demerger has been the key growth driver. Our business sourced through our DigitalOne team grew by 24.5%. Overall, our digital focus has enabled us to increase our digital revenues from — to INR2.26 billion, which accounts for about 4.4% of our overall GDPI for the quarter. As as far as the commercial lines are concerned, we experienced robust growth, driven by 26.9% growth in the SME segment. We remain on track and our focus on growth levers such as launching new products, strengthening our distribution engine, digital enhancements, realizing synergy, rationalizing costs while scalingup our preferred lines of business.

I will now request Gopal to take you through the financial numbers for the recently concluded quarter.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

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 two and H1 FY 2023. The results presentations are already put up on the stock exchanges and we are in the process of putting it on the website of the company. You can access it as we walk you through the performance numbers.

The gross direct premium income of the company was at INR105.55 billion in H1 FY’23 as against INR86.13 billion in H1 FY’22, a growth of 22.6%. This growth was higher than the industry growth of 15.3%. GDP was at INR61.85 billion in Q2 FY’23 as against INR44.24 billion in Q2 FY’22, a growth of 17.2%. This growth was higher than the industry growth of 10%. Our GDPI growth was primarily driven by growth in preferred segments. The overall GDPI of our Property and Casualty segment grew by 16% at INR32.13 billion in H1 FY’23, as against INR27.69 billion in H1 FY’22.

On the retail side of the business, the GDPI of the Motor segment was at INR37.09 billion in H1 FY’23, as against INR32.46 billion in H1 FY’22, registering a growth of 14.3%. Our agents, which include the point-of-sale count for the first time crossed 1,00,636 as on September 30, 2022 from 94,559 as on June 30, 2022. The advance premium was INR34.34 billion as at September 30, ’22, as against INR33.68 billion as at March 31, 2022. Resultantly, the combined ratio was 104.6% in H1 FY’23 as against 114.3% in H1 FY’22. Excluding the impact of cyclone and flood losses of INR0.28 billion, the combined ratio was 104.2% in H1 FY’23, as against 113% in H1 FY’22, excluding the impact of cyclone and flood losses of INR0.82 billion. Combined ratio was 105.1% in Q2 FY’23, as against 105.3% in Q2 FY’22. Excluding the impact of flood and cyclone losses of INR0.28 billion, the combined ratio was 104.3% in Q2 FY’23, as against 103.7% in Q2 FY’22, excludes — that again exclude the impact of cyclone and flood losses of INR0.5 billion.

Our investment assets rose to INR400.96 billion as of September 30, ’22, from INR398.34 billion as at June 30, ’22. The investment leverage net of borrowings was 4.08 times as at September 30, ’22, as against 4.18 times as at June 30, ’22. Investment income was at INR13.94 billion in H1 FY’23 as against INR16.05 billion in H1 FY’22.

On a quarterly basis, investment income increased to INR7.39 billion in Q2 FY’23 as against INR7.16 billion in Q2 FY’22. Investment income of quarter two FY’23 includes impairment on equity investment assets of INR0.89 billion as per the company policy. Our capital gain net of impairment on equity investment assets stood at INR1.43 billion in H1 FY’23 as compared to INR4.71 billion in H1 FY’22. Capital gains net of impairment on equity investment assets in quarter two FY’23 was lower at INR1.11 billion as compared to INR1.44 billion in quarter two FY’22.

Our profit before tax grew by 26.1% at INR10.75 billion in H1 FY’23, as against INR8.52 billion in H1 FY’22. Whereas, profit before tax grew by 2.7% at INR6.1 billion in quarter two FY’23 as against INR5.94 billion in Q2 FY’22. Consequently, profit after tax grew by 46.6% at INR9.40 billion in H1 FY ’23 as against INR6.41 billion in H1 FY’22. Whereas profit after tax grew by 32.2% at INR5.91 billion in Q2 FY’23 from INR4.47 billion in quarter two FY’22. Profit after tax for Q2 FY’23 includes reversal of tax provision of INR1.28 billion. Excluding this, growth in profit after tax was 26.5% and 3.4% for H1 and Q2 FY’23 respectively.

Return on average equity was 19.9% in H1 FY ’23, as against 15.2% in H1 FY’22. The return on equity for quarter two FY’23 was 24.5% as against 21% in quarter two FY’22. Excluding the reversal of tax provisions, the return on average equity for H1 and Q2 FY’23 was at 17.3% and 19.3% respectively. Solvency ratio was at 2.47 times as at September 30, ’22 as against 2.61 times as at June 30, ’22, continue to be higher than the regulatory minimum of 1.5 times.

The Board of Directors of the company has declared an interim dividend of INR4.5 per share for H1 FY2023. The company has exercised the call option to redeem the debentures of INR2.20 billion in full, along with the final interest due post receipt of necessary regulatory or statutory approvals on July 7, 2022. The record date for the same was August 7, 2022. Thus, the outstanding debentures stands at INR0.35 billion as at September 30, 2022.

As I conclude, I would like to reiterate we continue to stay focused on profitable growth, sustainable value creation and safeguarding the interest of policyholders at all times. I would like to thank you for attending this earnings call and we’ll be happy to take any questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.

Swarnabha Mukherjee — B&K Securities — Analyst

Yeah. Hi. Thank you for the opportunity, sir. I have three questions. First of all, the flow-through from gross written premium to net earned premium, so I can see that there has been a sequentially higher retention level during the quarter. And also sincether is some unexpired risk reserve reduced that has happened, if you could highlight what explains this that would be my first question. Secondly, is on motor book. So the GDPI mix shows that there is a higher share of private vehicles again. If you could throw some light of what is going on there and what is the reason behind the TP loss ratio — the outcome of TP loss ratio. And thirdly, on the crop portfolio. So we have reached at INR800 crore kind of number in first half. I think You had mentioned earlier that you want a run rateof what Bharti AXA used to do in crops. So does that mean that there would not be any further premium including crop going ahead in the second half? So these are the three questions, sir.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Thank you. Let me take the 3rd question and I’ll ask Gopal to answer the first and we’ll — jointly we’ll handle the second. On the crop business, it’s a seasonal mix, kharif is usually bigger. And the point that we had made earlier was that crop business will remain about, plus-minus 5% of our portfolio. I do think there’s going to be any change in that. So second-half of the year, the amount of crop business will be significantly lower than this number that you see in the first half. Again the principle that we are following is that business that came from [Indecipherable] which has had a 3-year commitment, that we are maintaining. And apart from that, the new business that we’ve written is largely — entirely on the 80:110 model. Certain states, as you know, have shifted to 80:110 model, where the cost of reinsurance for us is significantly lower because of the natural limit of loss 110, so that’s what we have written. But the mix of the business will be — will be much more in the first half compared to the second half. Overall guidance that we had given in terms of composition of the mix of portfolio, that doesn’t seem. I’ll ask Gopal to answer the first and we’ll come back on the second questions.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

So the first question, I think there are a couple of eElements in that. One is sequentially while the retention ratio higher. So if you look at, I think ouarter one typically is a period of commercial policy renewals where the extent of reinsurance support are relatively higher and that’s the reason why you find quarter one retention ratios to be relatively lower than Q2. Q2 is more a book where you also get to see a higher proportion of retail business coming through, and hence to that extent sequentially is why you find the retention ratios for quarter two to be higher than quarter one. Otherwise, in that sense there is largely to do with the kind of distressed mix that we have for Q2 relative to Q1.

To your second point on — in terms of unexpired risk releases being slightly elevated, I think that primarily again a function of — so again, no change in the way we kind of earn revenues, it’s over the period of the contract. As one of your questions was in the context of crop booking. Given the fact that kharif season typically has a shorter time cycle when it comes to earning of revenues, and hence to that extent you will obviously find an elevated levels of earnings coming through in quarter two. Having said that, obviously you also kind of — given the fact in-line with what we have explained, in so far as the loss experiences are concerned, unless and until we don’t have the complete estimate of the claims experience, till that point of time we obviously continue to provide for losses at 100% of the earnings that has happened. So that’s primarily the reason why you get to see slightly elevated earnings as compared to, let’s say, maybe the relative period that you are looking at.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

On the motor, let me maybe take it. The mix of the business is in-line with what we had indicated at the beginning of the year and in the last conference call. I don’t know where you got this point about private car increasing, actually it is come down. If you look at last year first half, private car was about 56.5% of our mix. As we speak for this year first half, 56.5%. The sale is about 49.6%. The increase is largely in CV. Two-wheeler is also steady, 26.5%, has gone to 27.1%. And CV has increased from 17.1% to 23.4%, in-line with what we had been saying for the last couple of quarters. The CV mix will be in the mid 20s range.

So given the loss dynamics that we’re seeing in the private car particularly — particularly private car motor OD is we believe significantly under price at this point in time. We’ve been a bit more cautious on the Private Car segment, and any case as part of our strategy of increasing our very selected CV business, that strategy is playing out. And if you see the growth for CV, we have had a very good growth for the first half. The CV business has grown at about 56% for us this first half.

Swarnabha Mukherjee — B&K Securities — Analyst

Sir, just to follow-up on that.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

Sorry, go ahead.

Swarnabha Mukherjee — B&K Securities — Analyst

Yeah. So, actually in terms of the mix I was talking about what happened sequentially. So in Q1 I think the CV mix was 47.7% and in the first which was 49.6%. So from that point of view, he was asking whether you are seeing more traction on the private vehicle side?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah, I understood your point. Related to Q1, yes. But if you again compare with Q2 to Q2, last year — and you have to look at Y-o-Y numbers because of seasonality. There are festive periods where private care does more. So if you look at last year Q2, we had about 57% of mix coming from private car. This year is 51%. In spite of the fact that the festive season has been a bit preponed. So actually the relative drop is even higher.

Swarnabha Mukherjee — B&K Securities — Analyst

Okay, Okay, got it. Gopal, sir, please go ahead. I interrupted you.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

For you last point — your last question on with respect to motor third-party loss ratios. Again, fundamentally as we keep saying, you should look at loss ratios more in the context of, let’s say, year-to-date numbers or actually full year numbers, particularly for motor third-party, given that it’s a long-tail line of business. In a particular quarter, there are various elements that goes into it. We would continue to reiterate that you have to look at the portfolio experienced more on a year-to-date or as I said, more on a financial year basis.

Swarnabha Mukherjee — B&K Securities — Analyst

Okay, sir. Got it. Thank you. Thank you, sirs. That’s all from my side. Thank you.

Operator

Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Prayesh Jain — Motilal Oswal — Analyst

Yeah. Hi, everyone. Just a few questions from my side. First is on the health claims. Health claim ratios have increased significantly on a sequential basis. So could you break it down as to what was the reason? Secondly, could you throw some light on the implementation of Vehicles Act and how is it panning out across the country and do we see some benefits of it coming down or coming in the near — in the next couple of quarters or it’s a more driven from an extra perspective, how do we see that happening? And lastly, could you sight the reason for the dip in solvency on a sequential basis? That would be my three questions.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So maybe let me take the last part first. The decline in the solvency is purely a function of what kind of growth rates that you’ll see and the mix of business that you write. So as I said, I think quarter two generally tends to be a portfolio mix which is relatively more also in favor of retail. And as per the current factor-based solvency regulations that are in-place, the relative capital requirement for a retail business is far higher than, let’s say, the commercial line of businesses. So hence that’s purely a function of what kind of business volume that you write. But otherwise if you see, I think we are quite comfortable with the level of solvency that we are operating at, which is at about 2.47 times.

The second element what you also look at in terms of impact on solvency, I think this is something that you will get to see more or less in every quarter two, is post — I mean we declare dividend in so far as final dividend declarations happen towards the end of the year, which gets confirmed at the AGM and the payment happens in quarter two. And to that extent there is also an outflow on account of dividend payout, which tends to have an impact in so far as solvency numbers are concerned. So otherwise it’s a minor sequential decline, but these are the two key factors with respect to solvency outcome.

To your first point on the loss ratio numbers. I think when you look at health, for example, the loss ratios for the corporate book, I’m giving you quarter two numbers — quarter two FY’23 numbers. The corporate, or lets say, the employer, employee loss ratios are at about 99.1%, and the retail indemnity numbers and that’s broadly the kind of range that we’ve spoken about on the corporate health side. And on retail health indemnity, I think the loss ratios for quarter two is at about 64.4%. The benefit also is kine of relatively profitable. So hence I think this is within our acceptable levels of loss numbers [Speech Overlap]

Prayesh Jain — Motilal Oswal — Analyst

Yeah, so just on the health book, sequential increase in the loss ratios can be attributable to what factors, because the intensity, or is it monsoon related or what would be the factors for driving or increasing sequentially?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So there are some seasonality impact of monsoon and medical acute cases, the dengue malaria health, and there is usually a spike that we always see in this period. And the second point about sequential is that the previous quarter there could have been some released that we got in that quarter. But overall the number is not going to be as high as as the number that Gopal talked about for the whole year. Our sense is that group — and this is the group of the employer, employee, not the B2B2C, the Banca business is separate, but the group employer, employee loss ratio will remain in the ballpark number that we had indicated, which is in the mid 90s for the year as a whole. What we’re also seeing is that even as we speak on a base, if you remember last year we used to talk about the fact that we had asked for — we had gone back to our clients — corporate clients and taken price increases, premium per life had increased post COVID and we — this year also on top of that we are seeing some price increases. So we are quite comfortable with the group health portfolio as we see it. Just one quarter numbers, we may not be fully reflective of the book that we writing.

Your last point on motor third-party. Again, there are some early signs, but it’s too early for us to call. We would want to watch this for couple of quarters before we take a final view on whether the Motor Vehicle Act impact is across the nation. We are seeing some early signs here and there, but that’s not — it’s too early for us to take a call that it’s a — it’s happened at a national scheme.

Prayesh Jain — Motilal Oswal — Analyst

Thank you. Thank you so much.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Thanks, Prayesh.

Operator

Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.

Shreya Shivani — CLSA — Analyst

Thank you. Sir, I have two questions. First is on the overall growth. I wanted your opinion on — how should we, sorry, how should build in growth for the full year given that for first half you guys have grown at 23%, and particularly your health book, I mean on month-on month basis you guys are writing INR400 crores that. So I want to understand how sustainable this 23% is, or particularly the group, sorry, the health book of INR400 crores per month is. First is on that.

Second, I wanted to understand maybe a little bit better insight on why is there is so much cyclicality or movement in your investment yields between 1Q and 2Q. Like, the quarterly move is quite high. If I see it over previous years, the quarters of previous years it wasn’t this wide, so I wanted to understand that as well.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Shivani, on the first one. Clearly, the growth momentum is higher than what we anticipated or indicated at the beginning of the year. In the first half if you see, we’ve been significantly more careful about debit card business. in spite of that, we’ve been able to deliver the growth numbers that you are seeing. So my sense is that the health numbers are sustainable. The investment that we’ve made on the agency distribution, we are beginning to see that play through. If you see, as we mentioned in our opening remarks, the agency — retail health numbers are picking-up. Group health, we are seeing some improvement in pricing. Some of the large players who have been in the past very aggressive, they are toning down there aggression on pricing and getting a bit more disciplined. So even on a group as an employer, employee portfolio, we are seeing conversions at prices that we are comfortable with. So I don’t see any constraint. And the last thing on the on the health side, ICICI Bank has restarted distributing the indemnity policy on the home home side, so that’s why the bank numbers are high and the Banca overall numbers are also high for, given the tie-up that we’ve got through the acquisition. They are performing really well. And the credit disbursal are higher, so our attachment business has also picked up. So on the health side, we remain reasonably optimistic and confident about maintaining our performance and growth.

Motor actually, as I said, market has been over aggressive and I don’t believe it’s sustainable. We are again seeing some players recalibrate on the CV side further, having reduced discount and increase prices. We want to see — we are seeing quite a few players taking similar decision on the private car side. Equally, there are few players who are still aggressive. So if pricing aggression gets muted on the motor side, it may give us an opportunity to grow even faster than what we’ve grown in this quarter. That, again we got to be watchful. But I don’t see the numbers going below the current growth numbers that we are seeing. So overall we remain reasonably confident about the growth trajectory that we’ve set. I think the only concern that remain about the market is the pricing on the motor own damage side. That is something that we would want to watch a bit closely.

Shreya Shivani — CLSA — Analyst

Got it. Understood, sir.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

So, yeild on investment, Shreya, I think is purely a function of what kind of interest rate environment that you see in the market. I think at this point of time we are seeing an increasing interest rate regime and therefore to that extent you will obviously find the yields to kind of fluctuate between periods. So otherwise it’s purely a function of what kind of mix of investments that we’re making, and largely to do with the interest rate environment that’s operating. To that extent you will always find cyclicality in terms of outcome. So that’s one.

And secondly when you look at the overall yield on the aggregate, assuming on the entire investment income when you look at, obviously it’s a function of both interest accruals as well as capital gain, and you will never find evening of capital gains across periods. For example, if you look at, let’s say, the half year numbers, the capital gains for, let’s say, first half is just about INR1.43 billion, this year. This may look at — H1 of the previous year is at about INR471 crores. So when you look at the yield on the overall portfolio including on a realized basis, and youj will obviously find fluctuating outcomes. But at this point of time, when we look at it from an overall portfolio standpoint, higher interest rate regime actually augurs well in so far as our interest accruals are concerned because typically when you look at our overall investment income breakdown, on an average roughly about 70% to 75% of our investment income is through accruals, and typically on an average balance 25% to 30% is capital gain on an annual basis. Within quarters, obviously there can be cyclicality with respect to what the actually yeilds are.

Shreya Shivani — CLSA — Analyst

Okay, okay. I’ll get back-in the queue. Thank you.

Operator

Thank you. The next question is from the line of Nidhesh from Investec. Please go ahead.

Nidhesh Jain — Investec — Analyst

Thanks for the opportunity, sir. Sir, two, three questions. Firstly, what is the number of — number on the sales that we have done from the ILTakeCare App, you shared that number last quarter. What is the number that we have achieved in this quater?

Secondly, the downloads that we have done, which been done on the ILTakeCare App have been quite strong this quarter. So how are we driving that downloads? Are we incurring any cost to to make our customer download with that? That is second question.

Third is, your commentary on the competitive intensity that few players have become RV calibrating, that is on motor TP or motor OD segment that you are seeing a greater inflection in competitive intensity? And what are your sense that in — by what time period we may start seeing motor own damage competitive intensity coming down, given that it has been quite intense for last couple of years.

And lastly, sir, any comment on the management succession planning given that there is a possibility of cap on CEO tenure of 15 years?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Well, let me get the last one out. The exposure draft is there for 15 years. It’s an exposure draft. If it becomes a final regulation, then obviously something will have to be done. But we’ll wait for that exposure draft to come through.

The second question on aggression. We are — as we mentioned, I think the real problem is in the OD segment. I mean, you know we, in our opening remarks we talked about the overall combined ratio for motor. The combined ratio for motor OD is even worse than that. So TP is actually going to be better at this point in time. So the aggression is in certain segments and agression gets played out in terms of — since you can’t do anything with the TP price, people kind of do higher discounting in OD or incur higher cost in getting that business. So the problem is more in the OD side.

The other question that you had on ILTakeCare. Just to give you the — so one is the — how we are driving it. What we’re doing is — initially if you remember, ILTakeCare App was largely setup to engage our corporate customers. What I mean by corporate customers is the employees of corporate customers. So when we sell a group health insurance policy, it’s a policy sold to a corporate, but the health insurance is for the employees, and really there was hardly any engagement with them, so that was the original thought process when we launched it about a bit more than two years back. As we speak today, more than 50% of the employees of our corporates have downloaded the app and used tha app. And this percentage has been increasing quarter-on-quarter. So that’s one area where — how we’ve driven this.

The second is, gradually we’ve now putting a lot of effort on the on the Bancassurance and the agency — the retail side and there — it is not as easy to bring about change because there is a behavior shift, and what with distributors and agents, etc. But even there we are seeing very good traction largely because people are seeing value in that engagement. So overall there is — there may be some cost on material, but overall we driving it through, basically when you think about it, we have roughly over last 10 year about 30 million policies that we sold, right? So, let’s say 2.7 million download still gives us a lot of revenue and growth. A lot of those numbers maybe small ticket or two-wheeler policies, but still we see that as an opportunity. So that’s what we’re driving.

Your last question on sales. Sales is something that we started only last year. So it is beginning to pick up. And when we talk about sales, it includes the renewals that people do on their own on the app. That number in Q1 was about 9.8 crores. That number has grown roughly three times in this quarter. So it’s become 27.4 crores for this quarter and for the month of September it was about 10 crores. Ao we are seeing very-very good traction in terms of adoption engagement. Even in terms of the what we track monthly average users, daily average users on a Y-o-Y basis, those numbers have grown about 4 times. So we are seeing very good traction with that app as originally as we had talked about this being a potential game changer for our engagement model with customers.

Nidhesh Jain — Investec — Analyst

My last question on investment yield. If I look at the accural investment deal, that has increased almost 80, 90 basis point sequentially, so at around 7.3%. So going forward, this will be the base yeild and it will continue to increase, right? Is that that’s the right understanding?

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

Very difficult to comment on that, Nidesh, because I’m saying — we will have to wait and see in terms of how does the interest rate cycle play out. As, I kind of mentioned, an increasing interest rate regime obviously augurs well for us in so-far as interest accruals are concerned. But equally you should be mindful of the fact that correspondingly to that exchange from an aftermarket perspective on the fixed income book, you will obviously have a mark-to-market negative. And therefore the ability of us to possibly realize any amount of capital gain, you may not see that happening. So when I kind of gave the broad split of, let’s say, 70%, 75% interest accural and 25%, 30% to be your capital gain, that could possibly see some kind of a change. But if this momentum of, let’s say interest rate cycle sustains, then an overall as close continue to accrue from business realization, which should definitely help in overall increase in the yield of the portfolio.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So, Nidhesh, your point is,absolutely. I mean, the carry deal should keep on increasing given the and is a very positive from a longer-term perspective. But on a quarterly basis, the point that Gopal is making on capital gains, that may layout in the opposite of territory.

Nidhesh Jain — Investec — Analyst

I was trying to understand the adjusted for capital gains. There is no one-off accrual yields because accural yields in last two quarters have increased quite significantly, almost 130 basis-points, while our tenure of the book is four years and we were of the opinion that it will improve but it will improve soon, but it has improved quite significantly in these two quarters. But I was trying to understand there is no one-off in the accural yeild.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

There is no one-off at all. The duration of the book has actually kind of increased. The duration at March ’22 was roughly around 3.96 years, that number at June was 4.4 years. When you look at September, the duration is at almost about 4.8 years.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

[Indecipherable] some equity, not from — if that is your question.

Nidhesh Jain — Investec — Analyst

Sure, Sure. Thank you, sir. Thank you. That’s it from my side.

Operator

Thank you the next question is from the line of Sanketh Godha from Spark Capital. Please go ahead.

Sanketh Godha — Spark Capital — Analyst

Yeah. Thanks thanks for the opportunity. The motor OD loss ratio at 74.3…

Operator

Sir, sorry to interrupt. If you can take the phone on handset?

Sanketh Godha — Spark Capital — Analyst

Sure. The motor OD loss ratio where were at 74.3 in the current quarter, it it just because of the price discounting or to some extent we can believe — is it true that the new policies, that is pay-as-you-go and the other policies which industry has introduced has also contributed to the loss ratios. And if you believe this pay-as-you-go kind of policies are going to increase in the contribution, are we seeing structurally higher loss ratios in motor OD business going ahead?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So the answer to your first question is no because the contribution of those policies is negligible as we speak, so that is going to move the needle not just now, for a long period of time in our estimate. The second part of your question, on the long-term what will it do. Look, logically what it should do, we’ll have to wait to see what happens is to price the risk more granularly for better customers. So if better customers get a cheaper price, logically the not so good customer should pay a higher price. Now whether the second thing will happen or not, that time will tell. But that is how it should play out. It should give us more ability to price appropriate. In the past, we done secondary measures of rising behavior, like NCB and what not. This gives you ability to price based on driving behavior and driving distance. So you should price risk better. Doesn’t mean that it should overall become cheaper for the whole category.

Sanketh Godha — Spark Capital — Analyst

Okay. Got it sir. And second, personal accident cover business which is highly profitable has seen a very strong growth and I look at 1H and second quarter number which, even getting reflected in the — so in the banca channel numbers what you have mentioned. Just wanted to understand sir that these numbers are sustainable beyond FY ’23 because these channels initially started has started doing business for us and therefore this delivered the growth? And and then just wanted to know the sustainability of this particular numbers that given it has been very strong.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah. So Sanketh, as you recollect, what we’ve been saying is that the credit disbursal is picking up. Q1, in the — first quarter we had a base effect of the previous year’s first quarter, right? That was the second, the delta wave and the business numbers are very, very low last year first-quarter. So on that basis, the first quarter of this year looks very, very elevated. So as a percentage it may not sustain, but in terms of absolute terms, yes, we are reasonably optimistic that is accepting.

Sanketh Godha — Spark Capital — Analyst

Okay, sir. And finally a fundamental question. If I look at the historical trend for the industry as a whole, the AUM of growth of the industry or even for your company is always being higher compared to GDPI growth. But if you look at the current year trend, it is almost the opposite because GDPI growth is very strong but AUM growth somehow is struggling, because of just 8% on year-on year basis for our company. Just wanted to understand what is that missing link which is not driving the AUM growth compared to what we have witnessed in the past.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

So AUM growth, again it’s a function of, let’s say what kind of business outcome there you’re operating at. Now at this point of time, Sanketh, as you would have seen and what you ave been talking through is that, in so-far as our combined ratios are concerned I think it is currently slightly at elevated levels than what we would expect it to operate at. So for example, you saw the numbers for Q2, let’s say 105.1, half year was lets say 100.6%. So hence to that extent, obviously, the relative accretion to cash flows or let’s say the assets under management will be relatively lower. So that’s one component that will be a function of what you see relative to growth.

Second, when you specifically look at in the context of quarter two, you will always find the flows to the overall assets under management to be lower. That primarily it happens because, as I mentioned in response to one of the earlier questions, Q1 is a period where you see bulk of the corporate renewals taking place wehere you end up getting the premiums in quarter one. However, given that where I mentioned also that the corporate book generally tends to have higher proportion of reinsurance. As per the reinsurance arrangements, those settlements takes place in quarter two. So bulk of the outflows again happened in Q2, and hence to that extent and not just this quarter two. If you look at historically in any of the quarter twos, you will find relatively the flows that get accrued in so far as the overall investment book is concerned to be lower. And hence as we kind of continue to improve in bringing down the overall combined ratios within acceptable threshold over the next couple of years is what we have indicated, you should logically get to see a higher proportion of flows getting accrued to the investment book. So that’s the second component.

The third, in line with what we have indicated, I think relative to, again, what kind of business mix that you write. For example, health. As we indicated, it will not have as much of a long-tail of flow compared to, let’s say, motor. And at this point of time, I think in so far as the motor book is concerned given the relative competitive intensity that we see in the market, we are a bit cautious. Our health is doing reasonably well for us and hence that’s also a function of what kind of accurals that happenes to the overall asset central management. As we get to see pricing improve in motor over the next, let’s say few quarters and growth comes back, then obviously you will start seeing a relatively higher proportion of accruals happening for the overall asset central management.

Sanketh Godha — Spark Capital — Analyst

Got it got it, sir. And the last one.

Operator

Mr. Godha, sorry to interrupt. But for any follow-up, may we request you to rejoin the queue, please. [Operator Instructions] The next question is from the line of Neeraj Toshniwal from UBS India. Please go ahead.

Neeraj Toshniwal — UBS India — Analyst

Hello, sir. Congrats on good set of numbers. Wanted to understand, post July I think there have been some pressure on motor OD in terms of market-share. Have some players again started to kind of become more competitors? And that is impacting or how one should read about it?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah, so as I mentioned, we are seeing some green shoots. In CV, we are seeing some moderation from some of the larger traditional players. In OD, we are seeing some of the players now rationalize the agression. However, at the same time there are still few players who are very agressive. Our sense is that this will not sustain. But that is the reason why we been saying that we are a bit cautious in the own damage segment.

Neeraj Toshniwal — UBS India — Analyst

Got it. So any on-ground trends because September for the industry was also weak, not going particularly for us ICICIC Lombard. Anything which has changed or just a one-off one should think about it.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So it’s been the trend that we’ve been talking about for last — actually couple of years, there has been aggression but it’s sustained. I mean, generally as — I think we’ve mentioned this many times, but generally we see this agression tone down after about a year, year and a half. This time its sustained probably because of the COVID benefit that we people saw last year. We were probably expecting this to come down — moderate sooner this year, it’s taking a bit more time. But the early signs are — early signs are quite better — early signs are positive. So we are optimistic — second half will be a bit better than what we’ve seen in the first.

Neeraj Toshniwal — UBS India — Analyst

And sir, second half definitely we can seen benefit of lower fees also in terms of premium. So how how actually overall given the commercial, it already doing well and this already picked up in health. What kind of growth are we kind of internally for the full year. Any color on that?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

I think I answered that question earlier. Our sense is that, vis-a-vis what we indicated at the beginning of the year, we remain optimistic that it will be higher.

Neeraj Toshniwal — UBS India — Analyst

Got it, got it. Okay, sir. Thank you so much.

Operator

Thank you the next question is from the line of Avinash Singh from Emkay Global. Please go ahead.

Avinash Singh — Emkay Global — Analyst

Yeah, hi. Good evening. Couple of questions. First, if I look at the overall commercial lines, particularly the liability, that is quite profitable but you seem to have lost market-share. So either market has gone too fast and you have been cautious. So what is driving sort of your market share loss in that highly profitable line, that particular liability. So that’s one.

And second would be more on what is — I mean, again the media reporting around this Bima Sugam initiating. Considering that this is more targeting health, particularly retail, what are — do you see some kind of a channel conflict there?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So, Avinash, in terms of liability, last year there was launch of a product by one company last year, which is classified as a liability product, which the authority has now asked the industry not to write. So if you look at our growth as it is, our growth for for Q2 is roughly about 36.4%. So our business continues to do well. In terms of the market share, it is only because of that — that one company’s one product which we believe right now is not there in the market, that’s the reason that you are seeing market share drop. But the traditional liability business which is profitable, the one that you’re talking about, that’s something that we continue to do well and we are going and we remain number one in traditional liability. If you keep out this product that we are taking about.

Your second question was.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

We didn’t get your second question, Avinash. If you can just repeat your second one?

Avinash Singh — Emkay Global — Analyst

Yes, it’s around Bima Sugam, that the direct distribution initiative that — media report has only come. So, will there be a channel conflict, because I mean, this is — I’m trying to reach retail customer, retail health is something where you or anyone else drive business a lot through agency. So will there be some kind of a channel conflict, because I mean, you need to have differential pricing, otherwise I mean, this Bima Sugam is kind of obtained from day one.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

So our sense is that this is the — this is something that the authorities are also very keen on. So this will pick-up and take off and our sense is that it will actually increase penetration rather than creating channel conflict. We will have to wait to see what the governance of that entity. The understanding that we have at this point in time is that we are industry controlled entity as in the shareholder will be largely distributed across the players with maybe technology partner will also have some stake. We’ll have to design the governance mechanism of that entity and the product that goes there, we will have to see what goes there and which segments of customers it focuses on. Overall, we believe it it’s a great positive in terms of creating greater awareness because everyone will talk about it and the fact that it’s something that the regulatory is endorsing, it should create a fair good to distribution online that we’ve been kind of hoping for or waiting for. So we are quite optimistic about this.

Avinash Singh — Emkay Global — Analyst

Okay, quickly. On motor [Indecipherable] that’s moving parts. Of course, you have seen 3%, 4% blended price hike or maybe in the CV maybe higher. Second part, of course, you have this motor vehicle Act implementation, that probably kind of a revisit fraud and all. And third-party, of course, in-station, cleaning station, that is typically double retail pump are very extreme of what [Indecipherable] So all these things put together, you sort of — your trend for the first half is that you are still seeing a lot of improvement or scope for improvement because ultimately at this point its estimation and you have been typically very, very conservative. What makes you feel sort of, okay that motor TP with this three moving parts is going to improve.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

I got most of the part of what you said, Avinash, but I just missed the last line. What do you think that — why do you think it’ll improve. Was that the question?

Avinash Singh — Emkay Global — Analyst

Yeah. So I think the price hike has happened, but this is muted, but claimn inflatin are very, very strong, I mean in motor TP, particularly some extreme claim awards. And then of course motor vehicle Act will have positive impact. So there are multiple moving parts. But if I see your motor TP kind of claims ratio for first half, there is improvement. So I mean, because I mean, my claims — yeah so claims is typically double-digit, close to double-dight. So what is sort of your view, I mean you facing this to go down.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah. So,Avinash, your your point is right. There are multiple moving parts and that’s why it’s very difficult to predict. But if you go back to what Gopal said. Don’t look at a quarterly number for TP loss ratios, look at an annualized number. If you look at last year, and that’s what we had kind of indicated at the beginning of this year to a similar question. If you look at last year, our TP loss ratio was 74. For the half year, its about 70.1, but it’s better to look at an annualized number rather than just this quarter 66.6. To give you a sense of what we believe is a more reasonable and accetable number.

Having said that, think the point that you’re making in terms of claim inflation. This is the point that we’ve always been making and accordingly we’ve held reasonably high claim inflation numbers in our reserving. We believe that lot of companies hold significantly lower percentage of inflation and In a sense that may be inadequate. But we are quite comfortable with the inflation number that we are holding. What we want to observe is the frequency drops that we anticipate because of the new motor vehicle act that we earlier responded to. But the frequency drop we have to watch for before we conclude that it’s actually come through and the reduction in for, etc., that you’re talking about is coming through. My sense is that we’ll give it some time to to develop for us to build confidence and talk about a reduced number. I hope that explains you what — the short-term thinking is and what we believe can happen in the long-term.

Operator

Thank you. The next question is from the line of Anshuman Deb from ICICI Securities. Please go ahead.

Anshuman Deb — ICICI Securities — Analyst

Yeah, hi. Good evening, and thank you for the opportunity. My question was regarding the comment that you made on the ICICI Bank restarting some of the attachment chains for home loan. So is this the — the kind of benefit product that we used to sell earlier because that was very profitable and used to contribute a decent amount to our profit. If you could clarify on that? Thank you.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Anshuman, I mentioned that it’s indemnity product and it’s not just this quarter, even last quarter we had indicated that the bank had restarted selling attachment of health indemnity. So that’s where the growth is very strong. Obviously, the product concept is very different from the original benefit construct and accordingly profitable — profitability will be very different.

Anshuman Deb — ICICI Securities — Analyst

Understood, sir. Thanks a lot.

Operator

Thank you. The next question is from the line of Deepika Mundra from JP Morgan. Please go ahead.

Deepika Mundra — JP Morgan — Analyst

Thank you. Thanks sir for taking my question. So jsut following-up on that ICICI Bank loan linked product. In terms of scale, is there scope to go back to the earlier scale of premiums that were being done EBIT wise and indemnity product?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Look, at an aggregrate relationship with the bank there are many things that we do, right? It’s not one product that we sell with the bank. So there is SME business that we do with them. There is the corporate business that we would do with them. There is health business across different lines, be it attachment or it does indemnity that we do with them. In aggregate, the relationship is becoming — has become bigger. The reason why you want to talk about the health number that we talked in the opening remarks was because this last year was a bit of a drag because the health business — the attachment business had been stopped. The point that we are making is that the attachment business has started, though the sort of construct is different from what it was last year — not last year, prior to last year.

Deepika Mundra — JP Morgan — Analyst

Understood, sir. And sir on the retail health portion, could you tell us a little bit about the experience on renewals that are coming in from the older books, so what would be the renewal rate of older customers? And in terms of loss experience between new and old customers, what would be the differential?

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah, I’ll ask Gopal to give you the numbers. But before that, I’ll just give you the contribution since you asked the question about can we go back. Just to give you a sense of the numbers in aggregate. ICICI Bank contribution, if you go to two years back before they took that call, was about 5.9%. Last year It dropped to about 5.3%. Even though that big business which we are sourcing until the attachment went away, we built other — we grew other segments, other product categories. For Q1 this year, sorry Q2 this year, we kind of about 6.1%. For the whole year it’s about 5.8%. So in a sense for the half year we are back to a similar number that we had in 2021 in terms of our contribution. Now we see all business has grown, so ICICI Bank business has also grown with us.

Coming to your question on renewals, I’ll ask Gopal to answer.

Gopal Balachandran — Chief Financial Officer and Chief Risk Officer

On the health renewal percentages, that number is at — it ranges between 75% to 80%, that’s the kind of retention that we get to see. Your other point on what kind of split do we see in so-far as the loss ratios and the new portfolio and the older portfolio. On the new, I think the portfolio loss ratio could range again anywhere between 45% to 50%. And the old portfolio loss ratios could range between 75% to 80%.

Deepika Mundra — JP Morgan — Analyst

Got it, sir. Sir, one last question.

Operator

Deepika, I’m sorry to interrupt. The next question is from the line of Dhruvish Pujara from Mirabilis. Please go ahead.

Dhruvish Pujara — Mirabilis — Analyst

Yeah. Hi, thanks. So I have three questions. First is that 48% of the GDPI comes from broker channel and I think, couldn’t find anything about number of brokers or how has been the growth on the broker. So can you talk about that. And also do we have a separate listing.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Yeah, so there are two segments of business where brokers play a big role. One is the motor business. all the OEMs. That MIC business largely comes through brokers. This could be an OEM control or OEM owned broker, like Maruthi has their own broking entity through which you get access to the dealerships, or some of the OEMs work with other brokers but it’s still a broking business in terms of the business coming through and how we reflect in our numbers. So one is the motor business which is OEM driven MIC business, so that’s one. The second is the corporate business. Corporate, we are one of the few companies which has a direct sales team. So we have direct relationship management teams which does business development, goes to corporate, but we equally work with brokers, particularly for the SME segment and also for corporate customers. Now for the SME and corporate customers, we have a separate booking team which is dedicated in looking at the booking channel.

Operator

Thank you. Ladies and gentlemen, due to time constraint we take that as the last question. I now hand the conference over to Mr. Bhargav Dasgupta for closing comments. Over to you, sir.

Bhargav Dasgupta — Managing Director and Chief Executive Officer

No more comments this late night. Thank you very much for staying up to listen to us, and let me wish you — wish all of you a very Happy Diwali on behalf of the entire management team of ICICI Lombard. Thank you, and look forward to our interactions over the quarter. Thank you so much.

Operator

[Operator Closing Remarks]