Bajaj Finserv Limited (NSE: BAJAJFINSV) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Ramandeep Singh Sahni — cfo
Analysts:
Raghavesh — Analyst
Nishant Chavate — Analyst
Satwik — Analyst
Dilich Punjabi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Bajaj Finsour Limited Q3FY26 analyst conference call hosted by GM Financial. 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 conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raghavesh. Thank you. And over to you Mr. Raghavish.
Raghavesh — Analyst
Thank you, Ranju. Good morning everyone and welcome to the Q3FY26 earnings conference call of Bajaj Sense of Limited. First I would like to thank the management of Bajaj Finsav for giving us the opportunity to host this call. As always, we’ll have opening comments from the management team post which we’ll open the floor for Q and A. On the management side Today we have Mr. Sri Nivasan, President, Insurance and Special Projects, Bajaj Finserve Ltd. Mr. Ramandeep Singh Sahni, CFO Bajaj Finserve Ltd. Mr. Tapan Singhal, MD, CEO Bajaj General Insurance Ltd. Mr. Taran Chob, MD and CEO Bajaj Life Insurance.
Mr. Avesh Karmali, CFO Bajaj General Insurance Mr. Vipin Bansal, CFO Bajaj Life Insurance. Mr.— Ashish Panchar MD and CEO Bajaj Finsav Direct. Mr. Devang Modi, MD and CEO Bajaj Finav Health. And Mr. Ganesh Mohan, MD, Bajaj Finser Asset Management Ltd. With this I would hand over the floor to Ramandeep sir for his opening comments. Thanks. And over to you sir.
Ramandeep Singh Sahni — cfo
Thank you. Good morning everybody. We welcome you to the conference call to discuss the results of Bajaj Finserve Limited BFS for Quarter 3 FY26. As before in this call we will largely be concentrating on the consolidated results of bfs. The results of our insurance operations through Bajaj General Insurance Ltd. And Bajaj Life Insurance Ltd. Our emerging companies which include Bajaj Finserve Health, Bajaj Finserve Direct and Bajaj Finserv Asset Management Company and lastly, we are material the standalone results of bfs, Bajaj Finance, BFL and Bajaj Housing Finance bhfl, other major subsidiaries of ours have already had their conference calls and hence we would pursue only very high level questions on BFL and bhfl.
To start with a few hygiene points as usual. As a word of caution, we affirm that any statements that may look forward looking statements are just estimates and do not constitute an assurance or indication of any future performance result. Let me also give you an update on the basis of accounting which we follow across the group as required by the regulations, Bajaj Finserv prepares its financials in compliance with Indian accounting standards. India’s the insurance companies however are not covered under NDAs. They prepare India’s financials only for the purpose of consolidation. Accordingly, for Bajaj General and Bajaj Life, standalone numbers reported are based on non indes accounting standard referred to as Indian GAAP as applicable to insurance companies.
I’ll start by giving you an update on our joint venture with Aliar. I am happy to confirm that on 8th January 26th, Bajaj Finserv Limited along with its promoter group companies namely Bajaj holdings and Investment Limited and Jamnallal Sons Private Limited successfully completed the acquisition of 23% equity stake held by Allianz SE in the two insurance subsidiaries. Consequent to this transaction, the Bajaj Group collectively holds 97% equity stake in each of the two insurance subsidiaries and the JV between us and Allianz SE stands terminated. As regards the remaining 3% equity stake held by Allianz SE in each of the insurance companies, the boards of the respective companies have approved to offer a buyback to its shareholders subject to applicable law and necessary approvals.
This buyback on one hand will conclude the buyout of Allianz stake and on the other hand will also strengthen the ROE and ROEB of both our insurance subsidiaries going forward. Post the buyback, the holding of the insurance subsidiaries by the Bajaj Group is expected to be as follows. 77.33% by Bajaj Finserve, 18.1% by Bajaj holdings and the remaining 4.57% by Jamnah Lal Sands Private Limited. I will now jump into the high level update on the consolidated results for the quarter. The same has also been put in our press release dated 4th February 26th. Before we get into the results we would like to call out on two exceptional items which color the results for the quarter.
The first one being the one time impact of the new Labor Code which impacts the bottom line by close to about 300 crores at a gross level across all our companies. However, this has a net consolidated PAT impact for bfs of about 167 crores. The second one off is the accelerated ECL provision made by Bajaj Finance during the quarter to enhance its balance sheet resilience by implementing a minimum LGD floor across all its businesses. This has an impact of about 1406 crores on BFL’s results on gross basis with a net consolidated PAT impact of about 540 crores for Bajaj Finserve.
As for the results now, the consolidated total income grew 24% to about 39,708 crores versus 32,042 crores for the same period. For the same quarter last year the consolidated profit after tax before accelerated ECL provision of BFL and the one time charge of new labor code grew by 32% to about 2,936 crores versus 2,231 crores for the same quarter last year. The consolidated profit after tax before the accelerated ECL provision, the one time charge of the new labor code excluding the MTM gains and losses and including the realized equity gain booked under OCI by the insurance companies, the pad grew by 13%.
Let me now deep dive and give you further texture on the performance of each of our subsidiaries. To start with Bajaj General for the quarter Bajaj General ranked first amongst private players on GDPI basis while maintaining its market share. The GWP for the quarter three increased by 11.5% to about 7389 crores versus 6626 crores for the same quarter last year. Excluding the bulky tender driven crop and government health business, the GWP increased by 17.2%. In terms of GDPI growth the growth was a healthy 17.7% largely in line with the industry growth. The growth is largely attributable to the motor and health segments partially offset by degrowth in crop insurance largely arising from pricing pressures which we’ve discussed in the past.
The underwriting loss for the quarter was at about 137 crores versus a loss of 43 crores for the same period last year largely impacted by the one off impact of labour wage quote of 42 crores and higher acquisition cost during the period attributable to focus on preferred business segments being written by the company. The combined ratio stood at a very very healthy 97.9% for the quarter as against 101.1% for the same quarter last year. We believe that this combined ratio for Bajaj General will be amongst the lowest in the multi line market with roe reasonably above 22% excluding the surplus capital at 200% solvency.
The adjusted PAD before the impact of new labor code for the quarter stood at 430 crores versus 400 crores for the same period last year. A growth of about 8%. AUM for Bajic stood at about 36,417 crores versus 32,633 crores for the same period last year, an increase of almost 12%. In summary, these operating results, including combined ratio and ROE, underscore Bajaj General’s disciplined focus on delivering balance and profitable growth supported by strong risk selections, robust distribution capabilities, prudent underwriting and a continued emphasis on exceptional customer service. I’ll now move to Bajaj Life. Bajaj Life 2.0 was initiated in the second half of Life last year with a focus on sustainable and profitable growth.
Happy to confirm that the financial outcomes are as planned in the course of Bajaj lives 2.0. The impact of change in strategy is now reflected in the third quarter results wherein Bajaj Life registered the highest ever value of new business and the new business margins on YTD basis over the last decade. The retail weighted received premium growth has now been reinstated with a growth of 19.9% from 1549 crores last year for the quarter to about 1856 crores largely in line with the industry growth. This was backed by a retail protection contributing to 9% of the overall retail business with a growth of 47% for the quarter.
Group protection has also registered a healthy growth of about 29%. The BNB for the quarter grew at a healthy 59% up from 254 crores for the same quarter last year to about 405 crores during the quarter. The new business margin is up at 19% for the quarter as against 15.1% for the same quarter last year on the back of continued strong renewal Premium growth of 20.9%. Bajaj Life’s GWP grew 23.5% during the quarter. Persistency dips were however observed across a few cohorts in line with the industry which are being worked upon by the company on overall retail receipt premium basis.
The product mix for the quarter was well balanced and stood as follows. PAR was at 23%, non par, savings at 14%, term at 9%, annuities at 11% and Ulips at 44%. The profit after tax was impacted during the quarter largely by the new labor code to the tune of 43 crores and the loss of input tax credit from the GST change which we saw during the last quarter. Bajaj Life ended the quarter with AUM of 1:38,000 crores, up at about 13% from the same period last year. The company is also in the process of setting up a pensions fund management business and a branch in the Gibbs City for which a process of regular approvals has been initiated.
Overall, the quarter for Bajaj Life is in line with the expectations and on the right trajectory of sustainable and profitable growth. Finally, both the insurance companies are financially amongst the most solvent in the industry, Bajaj Life with 333% Solvency and Bajaj General with about 344% and hence are well poised to weather any external adversity. We must however reiterate that insurance is a long term business and we remain steadfast in our commitment to drive profitable growth, create sustainable value and always prioritize the interest of our policyholders. I’ll now move to our lending businesses Bajaj Finance and Bajaj Housing Finance.
To start with Bajaj Finance the core performance remained robust across business volumes. Aum OPEX Credit Cost and Profitability Number of new loans booked during the quarter was at about 1.39 crores as against 1.2 crores in the same period last year, a growth of 15%. The company’s diversified business model has enabled its AUM to grow at a strong 22.1% at about 4.85,883 crores. The net total income grew by about 19% to 13,817 crores as against 11,673 crores for the same quarter last year. The profit after tax before the impact of the new labour codes and accelerated ECL provision grew by a very healthy 23.3% during the quarter from about 4,246 crores to 5,227 crores.
The opex to net total income improved to 32.8% as against 33.1% for the same period last year. The net loan losses and provisions for the quarter before the accelerated ECL provision of 1406 crores was at about 2219crores in the quarter as against 2042crores for the same quarter last year, an increase of only about 9% in quarter three. Net decrease in stage two and three assets were at about 93 crores reflecting significant improvement in portfolio quality and a positive outlook on credit cost. Year on the GNPA and NNPA stood at 1.2% and 0.5% respectively as of the December end as against 1 1.2% and about 0.48% for the same period last year.
Capital adequacy remains strong at 21.4% as at 31st December with a Tire 1 capital of about 20.6%. Moving now to Bajaj Housing Finance Ltd. The mortgage subsidiary of DFL. It was a stable quarter with AUM growth of 23.2% driven by good momentum and disbursem amidst higher portfolio attrition. Growth was very well distributed across all the business segments. The home loans AUM grew 18%, loan against property grew 32%, lease rental discounting grew 39% and developer finance by 18%. Net interest income grew 19% to 1153 crores as against 933 crores for the same quarter last year. Operating efficiencies continued with OPEX to net total income at healthy 19% as against 19.8% for the same quarter last year.
Healthy asset quality was maintained with the GNPA and NPA at about 0.27 and 0.11 as of December 31. Pact before impact of new labor codes grew 23.2% to a healthy 675 crores for the quarter. Capital adequacy ratio stood at 23.15% as at December end with a tier 1 capital of 22.69%. In summary, another very strong quarter for both our lending companies BFL and bhfl. Now I’ll quickly give you an update on our emerging companies. To start with, Bajaj Finserve health in quarter three carried out about 6.2 million healthcare transactions as against 2.1 million transactions for the same quarter last year.
Bajaj Finserve Health continued to expand its provider network which includes about 134,000 doctors, about 16,000 hospitals and upwards of 6,300 lab touch points. Utilizing this network strength and its tech platform, Bajaj Health is able to offer integrated opd, IPD and wellness experience to both retail as well as corporate customers. During the quarter the revenue from operations of Bajaj Finserve Health grew at a healthy 22% moving to Bajaj markets during the quarter. The lending in the BFSI space in the form of disbursements stood at about 1800 crores for the quarter as against 1549 crores for the preceding quarter which was quarter 2 of FY26.
The company ended with a total unique partner count of 101. Top line for the company was impacted during the last few quarters and was down from about 156 crores for the same quarter last year to about 94 crores in the current quarter. This was due to a planned transition of software where we are moving to SFDC for frontline sales. Now with the migration likely behind us during the quarter three we are likely to see the growth resume Year on and from quarter four onwards, we are hopeful that the revenue growth should get reinstated. There has been no capital infusion however in the company since March of 22.
Showing capital efficiency of the company moving to Bajaj FINSERV Asset Management Co. Ltd. The AMC Company continued its good run recording a AUM of upwards of 30,000 crores as of 31st December and moving to the 26th spot amongst all the mutual fund companies in India. In terms of aum, we believe that Bajaj Finsav AMC is the fastest to cross the 30,000 crores mark in about two and a half years of operations. The equity mix of the AUM stands at about 56% and the non group share of AUM constitutes about 87% of the total AUM. This summarizes the performance on all our companies.
That’s from my side on the performance. Before we open for the questions, considering the paucity of time, I would request the audience to keep their questions brief so that we can cover more queries during this call. With this, I invite questions from the audience.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchscreen telephone. If you wish to remove yourself from the question queue, you may press star and toes. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Nishant Chavate with Codex Securities. Please go back.
Nishant Chavate
Hi. Thanks for taking my questions. Just maybe to begin with, on the life side, there has been a fairly strong and impressive growth in the institutional business. If you could give some color and texture in terms of which are these partners or you know, is it addition of new partners, is it faster growth with the existing one, which is, which has contributed to this growth? Secondly, I think on the agency side, you know, after multiple quarters we are able to see some positive growth there. So is it fair to say that now we have bottomed out? I have some more questions, but this is, you know, on the, on the left side.
Ramandeep Singh Sahni
Thanks Vistant. You track us too closely, man. Institutional. So specific questions, so specific answers. I’d say that the growth in institutional is widespread. It is not necessarily coming from the, it is not necessarily coming from the big partners. We were possibly the first ones to experiment with a bevy of smaller partners and that strategy is paying off. Work. Well for them and us. And I must say that the couple of new partnerships that we’ve got, significant size, medium, significant if you may say and which is largely AU Fed. And yes, I think there’s a lot more yet to be seen. So those should give than the median, much more than the median that you will see in terms of growth for various partnerships for agency. Yeah, while the growth has been good, I think the one thing I’d like to point out to all the analysts on this call is that we’ve seen something even better in agency.
We’ve seen a doubling of their VNB in this nine month period. As you all know that we took some significant calls on agency in terms of commissions, in terms of efficiencies, in terms of tweaking on the models, in terms of cost, in terms of the air hierarchy cost a lot, many things that we’ve been doing there in terms of how we add our branches and all of that. We are encouraged and we may not necessarily focus just on growth on agency. And this is just the strategy is getting cooked as we go. As you know, agency is a very involving and very training intensive, relationship intensive business.
We will continue to work on the bottom line more than the top line. Hence the growth on agency is not necessarily something I shall be saying we’ll just buckle up and start popping up from next quarter. It is really a little bit more number of quarters as we continue to work on some more parameters on agency to set it right directionally on VNB once and for all. You don’t want to do this too often in your history with an agency channel and hence top line growth is not going to be the key thing. The bottom line growth is what is going to be the key thing in agency.
I hope I’ve answered your nishant.
Nishant Chavate
That’s perfect. And just extending from here in terms of product mix, is it fair to say that agency will probably be more traditional and protection heavy and the institutions will be banker heavy? I think that’s a trend we have seen in some of your other peers.
Ramandeep Singh Sahni
No, not necessarily. Not necessarily. Our agency is unique. When we moved, and I’ve said this earlier as well, when we moved from a MAS to a mass affluent base of customers in the last six, seven years we used uleip products. Significantly, the uleps we used to sell earlier weren’t necessarily very profitable. Now our uleps themselves are looking quite healthy and that is what the agency team has done brilliantly. I would say the pickup of term has been wholesome, systematic and I’d say something that can only just give us more and more confidence in the future.
PAR remains a healthy mix for agency as well as far as institutional is concerned it really is bank by bank and every bank is uniquely positioned. And I always say that we are possibly among the top five six companies, the only one which is truly diversified and that remains core of our strategy. It’s been a consistent method you possibly been hearing from us last three years. And we drive business based on what is good for our partner and for us. And hence is that may still yes be in line with what you see for other bank shorelines businesses.
Only thing please account for the fact that we don’t have one bank which would take 50% of our business and that ratio would hence not be akin to the ratio you see with other bank assurance led companies.
Nishant Chavate
I got it. And just quickly on VNB margins if you would want to you know, kind of, you know re highlight your guidance because I think mathematically as I see it your VNB margin would have been closer to around 23% but for the sorry 21% you know but for the GST hit and you know a how do we see this going forward and probably the GST get continues or neutralizes and hence where did the margin settle?
Ramandeep Singh Sahni
Yeah, so I guess you are asking for more details but I’ll just answer give you the top line message and ask Vipin to continue with a little bit more details so that we can be transfer transparent to everybody. Because I know the GST bit is something that everybody worries about. But I must say that this is a reset of the VNB and the NBM margin from earlier. Something we weren’t very proud of. But I think now you see the trajectory is positive and this one has been more a huge bump up. I don’t think this kind of bump up is going to be there in the future.
But yes the trajectory will be positive because as a company we as I said moved on this journey of efficiencies, cost corrections, tailor making products, tailor making our commission rates way before anybody else. Because being a multi distribution company we are sensitive to these matters and we had to get more and more efficient sooner than others. On the GST bit I’ll just pass it on to Vipin so that he can transparently answer. Sure.
Ramandeep Singh Sahni
So you would recall that last quarter when we spoke our estimation was that we’ll have about 4 and a half percent 450bps impact of GST. I think that number largely holds good. What is reflected in this quarter’s P and L is a mitigation of about 1.75%. What we know today, what we have executed decisions Taken I think as we exit next quarter another, you know we would have mitigated close to about, you know, so on aggregate basis we would have mitigated by about 325 bips, 3.25% as we exit March against 450 that we had. I think thereafter we believe that Delta 125 is a reset first April New Year.
I think that will be part of our base and we continue to work on that. I think that’s how we look at it in terms of guidance. I think while we don’t give guidance but Tarun called out, I’ll reiterate, you know, last 4/4 quarter for large 3/4 this year we have seen margin expansion of 4 to 6, 6.5% consistently VNB growth close to, I mean on an average of about 50%. I think having done here the base effect does start kicking. So obviously the kind of margin expansions and VNB growth will definitely taper down from here on.
I think that’s the way to look at it. Having said that, our, our strategy on 2.0 is still WIP. We continue to exit that, execute that and I think GSE just moved that back by about two to three quarters. I must say had that not been there to the point you made, yes, the numbers would have been a bit different, but I think that’s a reality. So I think it’s a pushback of two to three quarter but I think we are confident that we will be on track to execute in line with the strategy that we had called out.
Nishant Chavate
Got it, got it. Thank you. Just one tiny question on the general insurance business. You know, if I look at motor OD loss ratio, you know, it remains sort of elevated this quarter as well. Now in this backdrop, you know, why really grow at 21%? You want to take it?
Ramandeep Singh Sahni
Sure. Overall, if you look at the situation, the elevated loss ratio is not something that is just experienced by our organization. It is something that is experienced across the industry. Now this can be broken down into multiple parts. But one of the leading, I would say leading indicators is the pricing pressure. And of course due to GST there’s been a certain impact as well on the IDVs. Both of these. The pricing pressure is something that is being corrected and we continue to do so as a daily operation. Within this backdrop we continue to grow with our long term view, which is sustainable growth.
And hence you see that is something that we endeavor to do going forward as well.
Raghavesh
But fair to say that in this environment you might just mellow down a Bit given the way the loss ratios are trending. I mean for the industry, not for you. I’m saying if you look at it in terms of how the loss issue is trending it always corrects in its own way. The point you said the industry also react to it and it corrects as it progresses. So this is in, in the generations business. It’s always cyclic. You will never like if you look back now 25 years for us there, you’ll never find that it remains the same forever.
No, it goes up for the whole industry. Like I always mentioned right now look at motor loss ratios I think for everybody would have moved out. No. And then I think correction happens. It comes on its own. These are part of a business model. This is something that we have been doing for so many years and we’ll do that. You’ll see that how it balances out that it progresses. Perfect. Thank you very much. All the best. Thank you.
operator
Thank you. Next question comes from the line of Satwik with Jeffries. Please go ahead. Hi. Thank you for the opportunity. Just on Bajaj General wanted to get a sense on how competition is actually playing out in motor and both the group and retail health segments. And second, could you please help us with your retail health loss ratios for 3q versus 3q last year and the last one. You know how has the motor TP release been this year versus last year.
Satwik
And you know how. How has the experience been. Thank you.
Ramandeep Singh Sahni
Okay, so I’ll just give you first thing. We don’t talk of competition. No. We respect all our competitors and I believe they’re all doing very good. So we don’t get into how. No, but we can talk about the industry as a whole. Industry as a whole. If I look at is intense right now, the combined ratio for the industry actually has moved up. If you look at for the third quarter, if I just picked up the multi line insurance companies both public and private it will be touching close to 128% now in that combined ratio.
If you look at the performance of Bajaj General now it has a combined ratio which is close to 100. So it’s a phenomenal performance in terms of delta to the industry. And still as someone mentioned in the call in the beginning we are the largest private player in terms of total volume business for this quarter. I think that is what the industry perspective is and that is why I was so confident and when I mentioned earlier that this sustainable level of this combined rational industry is not there, the industry would move to a correction mechanism to bring it Down.
But Baja General in that context continues its philosophy of a combined ratio which is much better than industry and this time it’s about 20 know, upward of 20% better in terms of being then also not losing market share and, and, and being there. That is the industry perspective. Second, on the retail health perspective we don’t give exact loss ratios but we tell you that it is better know compared to what was in the same period last year. So it has improved on that basis. On the tpv, I think we give the triangle and it is in line with the reserving the way it has progressed further.
I want to add something to this.
Satwik
No, I think, I think you’ve covered it primarily structurally. If there’s any other detailed questions, I’m happy to check it. No, no, that covers it. Thank you so much and congrats on a good day. Thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Uday Pai with Investec. Please go ahead. Thank you for taking my question. A couple of questions on the general insurance side. First, if I look at your motor TP loss ratios, they are been on for the first three quarters. It is comparatively very low compared to the last year, same three quarters. So is there any impact of reserve releases or. This is the normalized loss ratio for. Motor DP going forward.
Satwik
That’s the first question. The second question is on the underwriting profit. While our combined ratio has improved both on a YY and a KOQ basis. But our underwriting losses have actually increased. And I believe that is because our NEP growth is slower. Is that the correct understanding? First of all, and how do we think about the absolute underwriting losses going forward? So these are the two questions from me, okay?
Ramandeep Singh Sahni
Now if you look at TP and I think this question keeps on coming the way to look at TP businesses, what is the release per claim settlement? I think no. So let us say when you do reserving it is based on all the current judgments which is happening. And on that you reserve on the past record also. But when the claims get settled, no. And if the settlement happens much better than what the claims are reserved, there’s a release which happens. So it’s a continuous process. No, the TP release is not something that would happen.
But the quantum of it varies in terms of how the claim trends is happening, how the settlement is happening, because it’s a long book and that is why this happens. If, let us say, if you start seeing strengthening of reserves then there’s a worry because that means that the claim reserves which were kept was at a lower place and the settlement happened at a much higher pace. But as long as release is happening, it’s a. It’s a good sign. That means the company has been adequately reserved in terms of the claim which had been there.
And that’s why you would see that on a continuous happen. But let us say if. If there’s certain judgment which comes in in which it changes the way the court decides a TP claim. And we have had this. We have a lot of judgments. We decide when that decision changes then something will happen based on all the past record based on what the judgment comes into picture. So this is how TP would move going forward in terms of your nap. It is because we have a whole account treaty.
Satwik
No. And I think if you want details others can take it offline and explain to you. And because that the NEP looks low. It is not about any structural issues about reinsurance treaty that we have on. On that basis. And for the combined issue, as I said we always maintain that we would be close to 100. No is our ambition. That is what we have been doing for so many years while maintaining or growing a market share. And that is how we have organically grown. And this I point, I always mention that Bajaj General from that first we look at for no compared to some of our peers is a complete organic grown company bricks built brick by brick over time.
And we continue to do that structurally what we have been doing for so many years. Everest, want to add something to this?
Ramandeep Singh Sahni
No, I think you got it as well. The point on the underwriting project I could just add one point is that we’ve had the company has experienced quite a bit of market share increase on motorcycle specifically on the two wheeler side. And therefore as you know that business comes with a certain amount of acquisition costs. And therefore you would see the underwriting profit at the level that it is overall. We still believe and we continue to believe as we mentioned earlier that this business is good from a long term perspective. Hence we do it. That’s the only thing I would like to add.
Thank you.
Satwik
Also the underwriting loss for the quarter will have an impact of the labor wage code one time hit of about 42 crores. That’s also adding to the loss.
Ramandeep Singh Sahni
Sure, sir. So in all if you actually see the underwriting loss moving up. I’ll just summarize from what Tapan and Avez said. One is the impact of the new labor code 42 crores hit coming from there. The other is also we are writing more and more of fresh two wheeler and four wheeler business which is the new cars. And there if you see our market share both for the quarter and nine months has moved up significantly in new motor sales. And like Kavesh said the commissions are upfronted for 3 year and 5 year and hence it gives a big hit on the underwriting result.
But on combined ratio basis it evens out. So that’s the way we look at it. The other issue also is that for the quarter the NEP is looking a little depressed is because there was a change in the seeding percentage on the government health business which we did last year for the same period versus this year, same period. If we actually exclude the impact of that, the underwriters NEP growth actually improves for the quarter to about 5, 6% is what I recall. So there are few of these elements which are leading to reflecting a higher underwriting loss.
But the combined ratio is operating at a very healthy level.
Satwik
Sir, that’s helpful. Thank you. Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Shobhit Sharma with HDFC securities limited. Please go by.
Nishant Chavate
Yeah. Hi sir, thanks for the opportunity. Congratulations to the Life team on a phenomenal set of numbers. So guys, our first question is on your product mix. This quarter we have seen a very sudden spike on the annuity mix. So what has led to this? Have we done some product interventions on this side and like your peers have seen a significant growth on the retail protection side. But we have seen this growth has been kind of muted. I would say 18, 19% for you for this quarter. So what has led to that? Moderation. And lastly on the channel and product mix, if you can help us understand what’s our product and channel specific strategy to understand on that.
And I will have one question on magic side I will ask later.
Ramandeep Singh Sahni
Thanks for that question. So I think on the product mix I would say if you look at our mix for last five to six quarters it’s largely stable. Obviously there’ll be some noise depending on the quarter that you are looking at but it’s largely stable and that is something we also called out as part of our 2.0 strategy and I think we are directionally heading there. So yes, you would see annuity going up. That was the case even last quarter as well. I think what we need to understand is we, we were the ones who started deferred annuities.
About four or five years back this market tends to be intensely competitive and when the pricing was not right we actually retreated back and then hence our annuity would hover around 4 to 5%. Last quarter we actually changed our product proposition on annuity brought in newer products and that actually increased the annuity mix to about 9 to 10% is what you are seeing now. So I think on your question on annuity reflected in last quarter and that continues this quarter in respect of retail protection I think there is a small difference. GST has helped everybody.
It helps us also because retail protection does become cheaper. But in our case, you know as part of our strategy we had been actually focusing on retail protection for almost last two years. So if you go back last two years every quarter our retail growth on production has been significantly high. Now obviously once the base kicks in the growth will obviously come down and I think that’s where it is reflected at. Does that answer your question?
Satwik
Sure. And vipin on channel and product specific strategy if you want to highlight anything on that.
Ramandeep Singh Sahni
So I mentioned that shup in the first answer that agency has got a fair good mix now. They’ve got term up and center now ulips which are profitable help us with. Our. The very high HNIs wealth customers. We are present in the mid segment and tier 2 tier 3 cities a lot more than our peers in agency having 600 branches and still our top 10 cities would not be the same. Top 10 cities of the let’s say the top five companies in the life sector largely because of our agency spread that makes it more pertinent for having power plans. There are some states we are particularly big so that it’s a lot more strategy if you get the whiff of the direction I’m going. It’s largely driven by the market as well which we operate and hence the customer segment in the case in in agency and proprietary sales largely has remains ULIP heavy.
It is ULIP heavy but a profitable uleip heavy now and selling a far higher premium paying term now which is exceedingly helpful is going to be transitioning more to term and riders as we go ahead overall as a company our enhanced risk cover so term and riders put together contributes to between 44 to 47% of our customer base depending operator. Request has been initiated. If you’d like to cancel this request. Please press Star zero Again, huge transition.
Satwik
That we’ve made as far as the institutional business is concerned. I answered the first one that Nishinth had asked where we are largely tailor made to the partnership because we want it to be mutually beneficial to both players. And the customer segment for each of these partners is extremely difficult and different. I would say say different is the word and hence to be able to predict difficult. But largely as you see where we are today, you should consider this on aggregate settled as a product mix because we’ve got everybody to the right percentage of contribution which we wanted and the diversification is now kind of stabilized.
So what you see is what you have and that’s how it will remain in institutional business. Did I answer that?
Nishant Chavate
Sure, sir, sure. Thank you. Now coming to Bajik sir, on motor OD loss issue. Now if I see you mentioned that for the peers also a motor OD loss ratio has been rising. So is there industry wide phenomena or is there something which has changed all across the industry which has contributed to this spike? And should we expect this to be a new normal now? And is it primarily because of the pricing environment which is there on the OD side?
Ramandeep Singh Sahni
I think mentioned it earlier. If you look at with the GST collection, the IDV dropped. No. And motor OD is calculated as a percentage to idv. No. And then drop happens. Obviously that leads to lower premium relation for the same vehicle which would have been there earlier. Also with inflation the cost of no repairs goes up. So the only difference this year has been compared to previous year has been the drop in IDV because of the gst. So the value of car comes down and because the premiums have the percentage of the value of car.
So that obviously has a lesser reliation coming together. And as I mentioned that the industry would know look at correcting it as it progresses.
Nishant Chavate
So is pricing is the only metrics because of which we’ll be able to correct this?
Ramandeep Singh Sahni
Let us look at a loss ratio. How do you. What exactly defines a loss ratio? You have premium collection and you have claim outgo. No, that is loss issue. Is that simple as that if the premium collection goes low, your losses will go up. Second, if your claim outgo is more your losses will go up and claim outgo as I mentioned, which happens because of inflation, the repair cost, the spare part cost that moves up, will that move up? Then the claim it should go up. Or if the premium drops when two both have happened simultaneously.
No, at a point of time then the loss ratio moves out. That’s why it moves up for the industry which has happened. Now if you have a correct loss ratio, what do you do? There are only three steps. One I’ll increase premium. Two no negotiate better on claim outgo and three, start making your unwriting no mix stronger to get in that range which is what companies would know I’ll be doing. So it is this process which corrects the loss issue going forward. So it’s not very complicated. It’s very similar business. But the reason that you ask me why did the industry move up? It is because of this reason.
Nishant Chavate
Okay, sir, got it. Thank you. And all the best.
operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Dilich Punjabi with Penultry Advisors. Please go ahead.
Dilich Punjabi
Yeah, hi. Thanks for the opportunity. I had one question on the gender insurance side. What does the pricing intensity look like on the fire and the other commercial lines of business and how is it expected to be going? I just wanted to get a better understanding on that.
Ramandeep Singh Sahni
So India is a free market minus motor third party price which is regulated by the government. No, every other pricing is dependent on the company’s underwriting understanding and they would calculate that and then the movement of price which goes on. So in, in a, in a price free market, the movement will happen. Sometimes the price gets stiffer, a loss usually goes up, then the price again starts correcting itself. But I said this is the nature of the general insurance business, a PNC business globally, you’ll hear this word. Market softens, market hardens. No, it’s cyclic in nature.
So this, this, this is as I said earlier also this part of our business. So right now to answer your question, specifically on the FIRE portfolio, the price has softened which will be there because again if you look at the results earlier, the commercial line business had a better loss ratio. And if you look at this year, there has not been a major natcat event. There has not been something which has led to no huge losses for the industry. So when the loss ratio comes up, the prices come down. As I explained to a motor, as the loss issue goes, the prices starts moving up, it moves in sync.
No is how the industry is moving. So because of good loss ratios and no major catastrophe even this year, obviously the prices are right now no moving down. But as they move down, the loss ratio starts moving up and then the price are correcting. So when you look at this scenario, you should also see it is a cyclical nature. It will happen. It’s a continuous process. And right now if you see past, if you look at the good loss ratios means then the pricing starts correcting. If the loss goes bad, the prices are correcting the reverse side.
So right now fire the Loss issues had been good. So the price has no come down. To answer your questions specifically.
Dilich Punjabi
Sean, thank you.
operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Raghavish from GM Financial. Please go ahead.
Dilich Punjabi
Hi sir, thanks for taking my question. I had a couple of questions first on the general insurance side. So our OPEX to NWP has materially, you know, cooled off as compared to all the peers who have actually based our estimates on, you know, I mean, minor and street estimates. So do we think of it as maybe you are going slow on the new business and focusing more on the older business? Because we have also seen our it’s on the motor side, the OD loss ratio go up. How do we see this trend? The optics getting controlled with the same ratio are pretty riveted.
Ramandeep Singh Sahni
Now if you look at the issue for the industry broadly has been most companies not complying with the regulations. No, in terms of the 30%. But Bajaj General has been complying with it very well. It has been, it has managed its cost. I think it’s one of the lowest costs in terms of the companies put together in the private space consistently for quite some time. So growth business and cost are the two, three levers that are there and we have been managing that very, very well. And we have been in compliance with the regulations comfortably compared to most of the players in the private space.
Nishant Chavate
Also, just to answer the question you indicated, see on new versus existing business, we’ve been growing heavily on the new sales both on retail health and motor. Motor I already articulated that on two wheeler and four wheeler we have indeed gained market share for the quarter and nine months both. And even on retail health, new sales have been very, very healthy growth compared to last year. So that’s not the reason. I think the real reason is what Tapan articulated. We’ve been conscious on controlling costs and that’s why our OPEX ratios look better than the others in the market.
So the commissions have gone up for.
Dilich Punjabi
No.
Ramandeep Singh Sahni
Again, if you look at it, why do we look at commission? The regulation, I would say the very progressive regulation which came in, in which it said that we don’t worry on commission expenses put together, you should be below 30. Why it is progressive? Because let’s say earlier times the model of doing business was one agency dependent direct, you open branches so everybody has the same model. So fixed commission made sense. In today’s time you can decide whether you want to be high variable or you want to do businesses also with low cost, no or you want to know, go direct.
And this fungibility allows people to experiment with the business models. So what should be seen is the total number, not standalone, that as commission moved up or come down, no expenses come down. This fungibility allows business models to be created. And that’s why I always mention that it has been a very progressive regulation. And globally the number is around this number expense and commission put together. If you Google search and just put this, that for US market, how much does it come to? So this is, I think this, I saw in the media these kind of no questions coming up.
But the question is that you have to put the two together to see no where does it stand and then to see globally where does it stand. And if it is close to the global benchmarks, then I think the industry and the regulations have been in the right place.
Dilich Punjabi
Okay. Okay, thanks for this. A final question on the amcp. So now that we are at a scale of around 30,000 crore AUM, are we still looking to be focused on the mutual fund space or are we looking at alternates, sips and all of these asset classes to grow incrementally?
Ramandeep Singh Sahni
Yeah, so for us in the last couple of years we’ve actually been focused on building out the mutual fund product suite and we still have a little bit more work to do over there in terms of additional products that we launched. So we’ll be certainly continuing on that path. But there’s also additional opportunities that come up, particularly with regard to SIS EMS as well as Gift City. So these are on our plan for this coming financial year and you’ll see us active on these fronts as well. If I can add to that, I’m Srini here. We have also now set up Bajaj ALS as a separate company and that company now has been staffed. We will be looking sometime towards the end of FY27 subject to of course regulatory approvals to start off a set of one or two alternative funds and possibly PMS operation targeting that segment of the market which is where the minimum required for an AIF is 1 crore and above. So this is currently under plan and it’s our hope that we hope that will commence by end of FY27. Separate from the mutual fund. Because mutual fund will handle the retail market and the higher end of the retail market through the distribution channels will be a separate alternative.
Dilich Punjabi
Okay, thanks.
operator
Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments.
Raghavesh
Thank you for your time, everybody.
operator
Thank you. On behalf of Bajaj Finserve limited that concludes this conference. Thank you for joining us. You may now disconnect your line.