BAJAJFINSV Q3 2024-2025 Call Highlights: AUM Surge, Insurance Strategy & Leadership Moves!

Bajaj Finserv Limited., an Indian non-banking financial services company, in its Q3 earnings call covered major updates across Bajaj Finserv’s businesses. For Bajaj Allianz General Insurance Company Ltd. (BAGIC), discussions focused on motor TP loss ratios, health insurance commission structures, and maintaining the Expense of Management ratio below 30%, while highlighting the company’s position as a top-three organically built insurance company. Bajaj Allianz Life Insurance Company Ltd. (BALIC) detailed its product mix restructuring affecting ULIPs, par, and non-par products, leading to temporary growth moderation. The Bajaj Finserv Health app reported strong traction with 180,000 monthly app users and 450,000 web users. The company also discussed its talent development strategy, monitoring 200 top-level employees for potential transitions.

Bajaj Finserv showed moderate financial growth with a 3% increase in net profit to INR2,231 crore and 10% revenue growth to INR32,042 crore. The company’s AUM demonstrated robust expansion, growing 28% to INR3,98,043 crore, with Bajaj Housing Finance contributing INR1,08,314 crore. While Gross NPA increased slightly to 1.12%, the company saw mixed performance across segments – its subsidiary Bajaj Finance showed strong growth, and insurance premiums increased overall by 46%, though some segments declined. The company made organizational changes with Ramandeep Singh Sahni’s appointment as CFO. Company’s future projections remain positive with expected revenue growth of 17% annually over the next three years, outpacing the industry average of 12%.

Continue Reading: Discover the Vital Insights from Bajaj Finserv Limited’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: INR32,042 crore, up 10% YoY.
• Net Profit: INR2,231 crore, up 3% YoY.
• EPS: INR14, up 3% YoY.
• Total Expense: INR26,233 crore, up 11% YoY.
• Customer Additions: 5.03 million new customers.
• AUM: INR3,98,043 crore, up 28%.

Outlook:

• Bajaj Finserv Health: Growth focus on payer network (insurers, govt., employers).
• Bajaj Finserv AUM: Reduce reliance on group funds, launch new funds.

 

 Analyst Crossfire:

• Motor TP Loss Ratios & Health Insurance Pricing Cap Impact (Mahek – Emkay Global): The increase in motor third-party loss ratios is due to a lag in claims reporting and Incurred But Not Reported (IBNR) adjustments, but on a 9-month basis, loss ratios have improved from 79.5% to 77%. IRDAI’s 10% cap on senior citizens’ health policy price hikes is a balanced move to ensure affordability. Insurers can adjust overall pricing across portfolios to maintain profitability (Ramandeep Singh Sahni – CFO, Tapan Singhel – CEO, BAGIC).

 

• BALIC Growth Outlook & VNB Growth vs. Margins (Madhukar Ladha – Nuvama Wealth): While growth slowed due to product mix changes, a return to strong growth is expected as the new product strategy stabilizes. Agency business retraining has impacted Q3 but should recover gradually. The focus is on growing absolute VNB rather than just VNB margins. Structural product changes will drive sustained profitability, with ULIP and protection products contributing more to overall margins (Tarun Chugh – CEO, BALIC).

 

• Distributor Commission Payouts & EoM, Health Insurance Competition & Pricing (Madhukar Ladha – Nuvama Wealth): Bajaj Allianz operates well below the 30% EoM cap, making new commission regulations less impactful. However, industry-wide, companies with high EoM may face pressure to adjust. Competitive intensity remains high, but insurers with higher EoM will need to adjust. The IRDAI directive to negotiate standardized hospital rates should help control medical inflation and improve industry margins (Tapan Singhel – CEO, BAGIC).

 

• Surrender Value Guidelines Impact & BAGIC Long-Term Policy Accounting (Nischint – Kotak): BALIC has adjusted commissions and deferred payouts in collaboration with distributors to largely neutralize the impact of new surrender rules, supporting long-term profitability. Commissions on long-term policies are matched with inflows to maintain accounting balance. The industry-wide shift to deferred payouts has seen limited success (Tarun Chugh – CEO, BALIC, Ramandeep Singh Sahni – CFO, BAGIC).

 

• Bajaj Finserv Health App Usage & Leadership Transition at Bajaj Finserv (Shubhranshu Mishra – Phillip Capital): The app has 171,000 monthly active users (MAUs) and 450,000 web transacting users, with a total of 600,000 monthly health transactions. The platform integrates with insurers to provide OPD benefits. No immediate senior management shifts are planned from Bajaj Finance to Bajaj Finserv, but internal leadership development remains a priority (Devang Mody – CEO, Bajaj Finserv Health, S Sreenivasan – CFO, Bajaj Finserv).

 

• Two-Wheeler Market Share Recovery & Motor Third-Party (TP) Loss Ratios (Nidhesh Jain – Investec, Sanketh Godha – Avendus): BAGIC’s two-wheeler market share rebounded from 3.5% to 12% over three years, driving 24% premium growth in 9M FY25. Higher loss ratios are due to conservative reserving and claim reporting lag. BAGIC follows a prudent reserving strategy, ensuring long-term stability (Ramandeep Singh Sahni – CFO, BAGIC, S Sreenivasan – CFO, Bajaj Finserv).

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