ICICI Lombard General Insurance Company Limited (ICICIGI) Q3 FY23 Earnings Concall Transcript

ICICI Lombard General Insurance Company Limited (NSE: ICICIGI) Q3 FY23 earnings concall dated Jan. 17, 2023

Corporate Participants:

Bhargav Dasgupta — Managing Director and Chief Executive Officer

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

Analysts:

Swarnabh Mukherjee — B&K — Analyst

Avinash Singh — Emkay Global Financial Services — Analyst

Shreya Shivani — CLSA — Analyst

Hitesh Gulati — Haitong — Analyst

Prayesh Jain — Motilal Oswal — Analyst

Sanketh Godha — Spark Capital — Analyst

Nidhesh Jain — Investec — Analyst

Madhukar Ladha — new Wealth Management — Analyst

Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst

Presentation:

Operator

Good evening, ladies and gentlemen, a very warm welcome to ICICI Lombard General Insurance Company Limited Q3 and Nine Months FY ’23 Earnings Conference Call. From the senior management we have with us today; Mr. Bhargav Dasgupta, MD and CEO of the company; Mr. Gopal Balachandran, CFO and CRO; Mr. Sanjeev Mantri, Executive Director; and Mr. Alok Agarwal, Executive Director.

Please note that any statements or comments are made in today’s call that may look like forward looking statements are based on information presently available to the management, and do not constitute an indication of any future performance as future involves risks and uncertainties which could cause results to differ materially from the current views being expressed. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

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 & CEO

Thank you, Faisal [phonetic]. Good evening to each one of you. Thank you for joining the earnings conference call of ICICI Lombard General Insurance Company Limited for Q3 and Nine Month 2023. As always, I’ll give you a brief overview of the industry trends and developments that we have witnessed in the past few months. Post this, our CFO, Mr. Gopal Balachandran will share the financial performance of the company for the quarter and nine months ended December 31, 2022.

During the quarter, the Indian economy was largely driven by domestic consumption with activity across the industry and services sectors in expansion mode. Credit growth has been showing double digit growth since April 2020, supported by both retail and wholesale lending. However, the synchronized tightening of policy rates by global central banks has been slowing down global demand and international trade. Global slowdown has been putting pressure on the current account and can adversely impact domestic growth going forward. For the quarter as per data published by SIAM, the new vehicle sales continued to deliver strong growth year-over-year for private car segment, with continued momentum in the underlying insurance demand. The commercial vehicle segment growth was supported by robust growth in end-user industries such as in infrastructure and e-commerce, while the two-wheeler segment grew on a smaller base. However, in volume terms, the segment continues to remain below pre-pandemic levels.

Health insurance continue to drive the overall industry growth. The commercial lines witnessed growth in-line with the current market environment, and we remain optimistic that the insurance industry will continue to grow, given the low penetration, favorable regulatory changes and positive consumer sentiment.

Speaking of the performance, the GI industry delivered a GDPI growth of 16.2% for 9 months FY ’23. Excluding crop, the growth was 17.5% for the same period. At the same time, the underwriting performance remained poor with a combined ratio of the industry at 116.6%, as on half year 2023. For motor business, combined ratio for the industry was 123.5% for half year 2023 as compared to 110.4% for half year 2022 as a public disclosures.

The authority in the current financial year has introduced various reforms seeking to expand the market and increase the penetration of insurance products towards its mission of insurance for all by 2047. During the quarter, the authority mandated KYC requirements with effect from January 1, 2023. Notified the increase in number of tie-ups from three to nine in case of corporate agents for each category of insurer, notified Regulatory Sandbox Regulations, eliminating the time limit to facilitate innovation and products or solutions and to increase the experimental period up to 36 months, consider working committee to put in place effective regulatory framework post de-notification of existing tariffs wordings under fire, engineering and motor OD.

Further exposure draft has been issued for long-term motor insurance products covering motor OD and motor TP and long-term fire insurance products. The authorities also issued registration of insurance company regulations, simplifying process of registration for insurance companies to promote ease of doing business.

We believe that these changes will be disruptive in the short term, but will have a positive effect on the insurance penetration over the long term.

Moving to business impact for us during the quarter, the company grew by 16.9% as compared to the industry growth of 18.1%. Excluding crop, the company grew by 17.1%. Coming to the growth for key segments during the quarter, in motor OD, growth in motor — growth remained muted at 4.7%. The competitive intensity continued on the motor OD side, especially on the private car segment. We continue to focus on profitable subsegments using historical granular data and rebalance our portfolio resulting in CV mix at 22.2% for nine month of FY ’23.

Similarly, to the previous year, health segment continued to be the fastest growing segments of the industry. During the quarter we grew at 47.9%, which is significantly higher than the industry growth of 24.9%.

As a result of our continued investments in health — retail health distribution, we have outgrown the industry and standalone players with a growth of 24.2%, this was driven by business sourced through retail health agency vertical which grew at 40.1%.

I would also like to share that our one-stop solution for all insurance and wellness needs — ILTakeCare app –has surpassed 3.7 million user downloads till date. The incremental download for the quarter was INR0.9 million. ILTakeCare app contributed INR37.9 million to the GDPI of Q3 FY ’23.

Our Bancassurance and Key Relationship Groups grew at 39.3% this quarter. Within this, ICICI Bank distribution grew by 30.9%, and non-ICICI Bank distribution grew by 44.2%. Post pandemic, the recovery in credit growth along with increase in wallet share in distribution partners acquired through the demerger has been the key growth driver.

Our Business sourced through our Digital One team grew by 28.3%. Overall, our digital focus has enabled us to increase our digital revenues to INR2.62 billion which accounts for 4.8% of our overall GDPI for the quarter. This excludes revenues from ILTakeCare app mentioned earlier. As far as the commercial lines are concerned, we experienced robust growth, driven by growth of 25.2% in the SME segment.

We remain on track and are focused on growth levers such as innovation, digital advancements, new products, strengthening distribution engine, rationalizing cost, while scaling up 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, 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 three and nine months of FY’23. We have uploaded the results presentation on our website, you can access it as we walk you through the performance numbers.

The GDP of the company was INR160.48 billion in nine months FY ’23, as against INR133.11 billion in nine months FY ’22. a growth of 20.6% which was higher than the industry growth of 16.2%. Excluding crop, GDPI growth of the Company was at 19.9% which was higher than the industry growth of 17.5% in nine-month FY ’23.

GDPI was at INR54.93 billion in quarter three FY ’23 as against INR46.99 billion in Q3 FY ’22, a growth of 16.9% as against industry growth of 18.1%. Excluding crop, GDPI growth of the Company was at 17.1% which was higher than the industry growth of 16.6% in quarter three FY ’23.

Our GDPI growth was primarily driven by growth in the preferred segments. The overall GDPI of our Property and Casualty segment grew by 17.8% at INR46.35 billion in nine month FY ’23 as against INR39.34 billion in nine months FY’22.

On the retail side of the business, GDP of the Motor segment was at INR64 billion in nine month FY’23 as against INR58.15 billion in nine months FY’22, registering a growth of 10.1%.

Our agents, including point of sale or POS count was at INR106,119 as on December 31st, 2022, up from INR100,636 as on September 30, 2022. The advance premium was INR32.79 billion as at December 31, ’22 as against INR34.34 billion as at September 30, ’22.

Resultantly, combined ratio was 104.6% in nine months FY ’23 as against 111% in nine months FY ’22. Combined ratio was 104.4% in quarter three FY ’23 as against 104.5 in quarter three FY ’22. Our investment assets rose to INR414.51 billion as at December 31, ’22, up from INR400.96 billion as at September 30, 2022.

Our investment leverage, net of borrowings was 4.16 times as at December 31, 2022 as against 4.08 times as at September 30, 2022.

Investment income was at INR21.6 billion in nine months FY ’23 as against INR22.95 billion in nine months FY’22.

On a quarterly basis, investment income increased to INR7.66 billion in quarter three FY’23, as against INR6.9 billion in quarter three FY ’22.

Our capital gains net of impairment on equity investment assets stood at INR2.94 billion in nine months FY ’23, as compared to INR6.01 billion in nine months FY ’22.

Capital gain in quarter three FY’23 was at INR1.52 billion as compared to INR1.31 billion in quarter three FY’22.

Our profit before tax grew by 21% at INR15.4 billion in nine months FY ’23 as against INR12.73 billion in nine months of the previous year. Whereas, profit before tax grew by 10.5% at INR4.65 billion in quarter three FY ’23 as against INR4.21 billion in quarter three FY’22. Consequently, profit after tax grew by 34.8% at INR12.92 billion in nine months FY’23 as against INR9.59 billion in nine months FY’22. Whereas, profit after tax grew by 11% at INR3.53 billion in quarter three FY’23 from INR3.18 billion in quarter three FY’22.

PAT includes reversal of tax provision of INR1.28 billion in quarter two FY’23. Excluding this, growth in PAT was 21.4% for nine months FY ’23.

Return on average equity was 18.1% in nine months FY ’23 as against 15.1% in nine months FY ’22. The return on average equity for quarter three FY’23 was at 14.3% as against 14.6% in quarter three FY ’22.

Solvency ratio was at 2.45 times as at December 31, 2022, as against 2.47 times as at September 30, ’22, continued to be higher than the regulatory minimum of 1.5 times.

As I conclude, I would like to reiterate we continue to stay focused on driving profitable growth, sustainable value creation and safeguarding interest of policyholders at all times.

I would like to thank you for attending this earnings call, and we would be happy to take questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Swarnabh Mukherjee from B&K Securities, please go-ahead.

Swarnabh Mukherjee — B&K — Analyst

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

Operator

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

Swarnabh Mukherjee — B&K — Analyst

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

Bhargav Dasgupta — Managing Director & CEO

Yes, it’s better.

Swarnabh Mukherjee — B&K — Analyst

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

Bhargav Dasgupta — Managing Director & CEO

So, maybe the specifically the TP loss ratio, I will ask Gopal to answer, but to answer your first question on the retail health business, as we’ve been saying, when you are [Indecipherable] at the scale that we are doing relative to our current size, it takes time for people to come and stabilize, higher regions for the agents to become active and productive, it takes some time, so we’ve been saying it will start building up maybe three to six months from the time we started talking about it. So, this quarter is the first quarter where we are beginning to see real impact of the investment that we are making. But this is still early days. We are very confident that this growth number for the retail health agency channel will sustain going ahead. Overall, health growth was driven by multiple other factors, you will have to look at what happens with the Bancassurance side, because if you look at the group health number, that’s also growing quite fast compared to the industry. That’s driven by two reasons, One the Bancassurance channels that we talked about both in terms of what came through the acquisition and also in terms of our existing partners. They’re going really well. ICICI Bank has been growing well In this quarter. So, those other channels are largely driven by slight share of wallet increase, but however, largely driven by credit growth. So that will be the dynamic for that segment of the group health business. And corporate group, which is B2B, [Indecipherable] for employees, GMC or GSA, whatever we call it, that segment is largely driven by pricing. So right now, we are increasing pricing, we are still winning accounts, because the market is finally stabilizing in terms of pricing, so that growth will come through as long as the pricing is to our satisfaction. So that to give you an overall perspective on health, but specifically if your question is on retail health agency growth can we sustain 40%, we believe we can.

Swarnabh Mukherjee — B&K — Analyst

Okay, so okay, sir. Any color on the mix? How much would be retail health agency now in your overall retain health? Some ballpark number would be, Thanks.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

So, I think relatively, Swarnabh, I think it’s kind of doing well. If you look at our overall retail health indemnity, that number for the quarter would have kind of grown by almost about 25% to 26%. Within that, I think the agency vertical has kind of grown at about 40%. So hence, I think, as Bhargav mentioned, one of the other things that we’ve been talking to the market is should try and sustain whether on retail health indemnity, can we sustain the growth numbers which is faster than not just the industry, but even the standalone health companies. But at least for the last four months in September onwards, I think we have been able to kind of demonstrate that. I think the key will be to sustain it as we kind of look forward. But clearly, we are kind of optimistic and we’re continuing to make those investments in the retail health distribution franchise.

To your second point on the TP loss ratios, and let’s say relative — corresponding to that, let’s say, the CV mix. In so far as the thought process is concerned, at least on the selection of business mix within motor, there is no change in thought process. Which is to say that while the market continues to remain competitive, at least on certain segments of private car for sure, and therefore, we continue to take a calibrated position. Wherever we see opportunities, whether it’s on two-wheeler or CV, I think obviously we have been writing those profitable segments as what we indicated as a part of our opening remarks. In the process is what we had indicated that possibly our mix of commercial vehicles could stay range bound within let’s say around that 24% to 25% threshold.

In the quarter that number going down to let’s say 22% mix, I think obviously it’s a function of what kind of business mix that one is able to source in a particular quarter, and given the fact that Q3 generally is a seasonal quarter when it comes to, let’s say, writing off risks between private cars, two-wheelers and commercial vehicles. Insofar as the thought process is concerned, I think, so far as the year end mix is concerned, we should get to see the CV around that range of 23% to 24% kind of levels, is what one would say. So, this is a quarter where there are lot of festive demand for private car and two-wheeler, so those numbers get elevated in this quarter. That’s the reason why the mix is similar to the smaller [Indecipherable] and nothing else, yeah.

And to your other point, on the TP loss ratios, again that’s what we keep saying. I mean, you have to obviously look at loss ratios again not between quarters. Obviously, you have to look at it more over longer periods. Ideally, at an year-end basis, these are the best way to kind of look at the TP loss issues, because in some quarters you will obviously see the effect of some of the, let’s say, positions that we would have taken from a reserving perspective. That we would start to see it getting played out in so far as actual loss development experiences are concerned, so hence, in that particular quarter you may possibly see some kind of a release of reserves that would have kind of been given effect to.

And corresponding to that is what you get to see the outcome in so far as the TP loss ratio numbers are concerned. But otherwise, in so far as the reserving philosophy is concerned, I don’t think there is any change in the reserving philosophy. It’s kind of pretty much remains the same. And hence you should look at more the TP loss ratios over not just on a quarter on quarter basis, but look at it more over longer periods of development.

Swarnabh Mukherjee — B&K — Analyst

Sure, sir. Got it, very helpful. Can I squeeze in one quick question on the expense ratio side? If you could throw some light on how to think about it in terms of maybe capex and opex, and think about it going ahead for the next three-four quarters, how it will pan out, because it continues to remain elevated close to around 30%.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

Which is what we had indicated, Swarnabh, I think that’s what we have been kind of talking through. What essentially happens is particularly when you’re continuing with your investments in various areas of opportunities that we have spoken about in terms of long-term growth potential. Whether it is with respect to the opportunity that we see on the digital side or even for that matter of fact, the continued investment that we’re making on building the retail health distribution franchise. There, it is not just a one off addition to manpower that we did last year, that’s a continuing one, even as we speak in the current period as well. Now, all of this is something as what we have been explaining in our earlier calls, will entail an upfronting of expenses. The benefit of revenues is obviously something that we get paid out over a period of time.

So, as I mentioned in response to the earlier one, clearly we are seeing early signs of some of those investments leading played out in terms of our growth percentages reflecting those investments. And hence, given the fact that this is a continuing one, we will obviously get to see the expense ratio stay at the current levels at where we are kind of largely operating at. Having said that, we will obviously monitor and I’ll come back to the market and give an update in terms of how those investments are playing out in each of the areas. So that’s something that will be a continuing one. Obviously, revenue will catch it.

Your other point on, let’s say, some of the investment between capex and opex, I think that’s something that, its again an ongoing one. As we have been talking through, we do undertake various transformational projects which will keep the organization future ready in terms of our ability to deliver products and services to the market, and hence to that extent you will obviously see continuing investments, whether it is on capex or whether it is for the backdrop at any operating expenses. The only aspect that I will add is from Q4 onwards, in-line with what we have been again talking about, we have been able to successfully complete the technology migration, which we had kind of indicated that we will complete it by quarter three of this year, that’s pretty much kind of done, and hence to that extent, the benefit of whatever amount of synergies that we were expecting to realize out of this technology expense is something that we will start to see from Q4 onwards.

Bhargav Dasgupta — Managing Director & CEO

Just one more comment to add what Gopal said so, as we shared with you last year, we moved our entire technology stack to the cloud. So, all our applications are in cloud. So that’s the call that we’ve taken not from our capex versus opex perspective, because part of the capex in future will be converted into opex. That’s the call that we’ve taken in the interest of business from a longer-term perspective. It gives us more agility, more electricity, more scalability, so all of that factors go in our decision. From a longer-term perspective, rather than looking at whether we want to keep that expense on-term and kind of amortize cost over period and look at capex versus opex to manage the financials.

Operator

Thank you. Mr. Mukherjee, may we request that you return to the question queue for follow-up questions. [Operator Instructions] The next question is from the line of Avinash Singh from Emkay Global Financial Services, please go-ahead.

Avinash Singh — Emkay Global Financial Services — Analyst

Yeah, hi, good evening, a couple of questions and both looking at nine months data, just to sort of clear out the noise of quarter-to-quarter. Firstly, I mean, now the combined ratio at around say 104% — 105% that is where you have indicated. Now because of this Investment side volatility and if I were to remove the tax refund, this 104% — 105% combined is leading to a more of a 16% kind of ROE. Now, is that where, I mean you are comfortable, because. I mean, if the investment yields continue to be slow and predominantly, this combined ratio means that the ROE is at 15 odd percent level. So are you comfortable with this thing? I mean you can argue that this is where industry sector is, you are much better and that I admit, but I mean, of course you don’t have advantage of not being listed. You are a listed company, so of course you are monitored on all the return characters. So that’s question on sort of your balancing your combined ratio, growth and profitability, that is number one.

And number two, again if I look at motor, the combined portfolio you know, but what I see there is like on a year-on-year basis, your loss base are more or less fine, that’s 100 basis-point movement. But if I just go and sort of delve down into underwriting results, it suggests that overall there is a kind of material increase on the opex side. So, if you can just help understand what is the opex that is driving perhaps that a higher underwriting losses on a nine months basis, on motor portfolio, [Indecipherable]. Thank you.

Bhargav Dasgupta — Managing Director & CEO

Avinash, let me take the first one, and I will ask Gopal to break down about where there is coming from in terms of motor underwriting. On the product as we’ve articulated since the time that we [Technical Issues] transaction, we had said that the dividends in synergy benefits that we had assumed, but in reality, we are seeing higher synergy benefits. We felt that it was appropriate from a longer-term perspective to invest that for growth, and that is what we did. It is really a capital allocation call up looking at the longer-term versus some short-term efficiency. We also said that in the first couple of years, maybe the combined ratio will be elevated, while our endeavor will always be to reduce it and bring it closer to 102 in a couple of years. So, to that extent our view, our outlook hasn’t changed. If that happens, obviously our ROEs as we have indicated in the past, will be in the high-teens. Now you can calculate the ROE for yourself, it would probably be higher than 16% if we achieve the objectives that we set for ourselves.

It is also a fact that during this period we probably did not anticipate the pricing aggression on the motor OD side, to the extent that we’ve experienced in the last six months. That has had served us some impact on us this year. But what we’re seeing is that finally we are seeing some calibration, some moderation, we are seeing some early signs of improvement, and if that happens that will help us in achieving the objectives that we’ve talked about. So, hopefully just to explain your — answer your question, it is not about being complement at where we are, this is really a short-term journey to achieve something which is more value-creating for the longer-term. Objective in the longer-term continues to be improving combined and improving ROEs.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

And to your second point on the motor underwriting experience, Avinash, I think it’s a function of two things. One is obviously, you will have to look at it in the context of what kind of growth are we exhibiting. So relative to, let’s say, the market, yes, you would have seen clearly on motor in the aggregate, we are kind of underperformed, which is a conscious call that we’re kind of taking in order to kind of stay focused on selecting portfolios, which is from a profitability perspective. And to that extent, obviously there is a denominator effect that tends to play out when it comes to the expense ratios.

And two, given the fact that at end of the day, there is obviously a set of expenses that we can identify with a particular segment, but equally there are large expenses which are of, let’s say of a fixed nature, which typically gets allocated between various product line. And therefore, to that extent, that will also be a function of let’s say what outcome that you’ve seen so far as the overall expense ratios for a particular segment is concerned, which is why instead of maybe specifically looking at individual lines of businesses from an expense ratio standpoint, it is rather better to look at the overall expense ratios for the company as a whole. Which if you look at it at least on a — whether you look at it on a nine-month to nine-month basis, I mean, or let’s say, even for the matter of fact, when you look at those numbers on a quarter-on-quarter basis, the expense ratios have kind of largely stayed around the threshold of 29.5% to around 30% thereabout.

So, as growth gets revived, particularly in the context of motor, and the fact that we have kind of indicated the market at this point of time is obviously competitive, which is why as a part of the opening remarks we also specifically put out for motor, the industry combined ratios continued to stay elevated at almost about 124%. And hence, once we start to see, as what Bhargav also mentioned, some bit of easing is what we have seen. But once we start seeing the cycle complaining back, we will be obviously able to get the growth back, and therefore to that extent, you will also see maybe the expense ratios getting allocated to that segment, reflecting better numbers.

Operator

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

Shreya Shivani — CLSA — Analyst

Yeah, thank you. I have three questions. My first question is on the yields of investment ‘ sorry, the realized investment yields. So that came in at about 1.88 for this quarter, and if we sort of plot your yields versus the five-year G-SEC yield performance, your yields have sort of ranged between 1.7% to 2% on quarterly basis since even during FY 2021, when the G-SEC yields were at its lowest in the recent past, Right? So, I’m trying to understand where are we missing on the yields bit, if you can help me understand that because my main question is that we would be — we were expecting this to be higher than what it has turned out to be, first is on that.

Second is on the crop book. So for the nine-month period, the loss ratio has sort of eased up to 90%. Now last time you had mentioned that you have written a big chunk of this business with Maharashtra government which has some cap loss program at 80 or 110 or something like that, so, how is the performance of that book, and whether this inching up of the loss ratio is from the Bharti AXA book. So just trying to understand where the higher loss ratio is coming from.

And, third is on retail health, the last you had mentioned that you guys have hired a 1,000 retail health sales managers, and each one of them will go out and onboard more agents, etc. So, if you can give us an update on whether all those 1,000 onboarding is finished, are we hiring more sales manager and how is that process going? Thank you.

Bhargav Dasgupta — Managing Director & CEO

So, let me respond in the same sequence. So, if you look at the realized yield, it’s an annualized number, so on an annualized basis that reflects roughly about 7.52%. Which given the current interest rate, we would think is pretty good if [Indecipherable] realizing on the portfolio. On the second one, in terms of the crop, so our entire crop book is Bharti AXA book, so there is no Bharti AXA book and our book. Reason that we have the Bharti AXA book, there is no change in terms of what we’re seeing with the book performance in Q2 which is the last quarter based on actual realization of the experience, we had some releases. We suppose that you know we do is that till we get the company’s results, we tend to reserve conservatively, and then once we actually get the final data, then we release if at all there is a scope for release, we released that. So, this quarter we reserved as a practice in a conservative manner. Our belief is on the underlying, it is what we get to see. The Ravi losses are well within our comfort level and kharif crop production — and kharif has been well within our comfort level, Ravi crop production also, we think should be good given the bountiful rainfall that we’ve had. So, crop looks comfortable for us at this point in time, but again these are uncertain businesses. We will see what happens in Ravi. But the Ravi proportion of our business is also very small. So, we don’t think it’ll have a material impact even if it goes against our anticipated losses. On the last one, Gopal, you want to take it?

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

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

Shreya Shivani — CLSA — Analyst

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

Bhargav Dasgupta — Managing Director & CEO

So, yeah, in that sense, yes, but there is basically Bharti AXA hired a Maharashtra business, we’ve kind of renewed it this year based on the 80, 100 [Indecipherable] you’re right. But the crop business came with Bharti AXA.

Operator

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

Hitesh Gulati — Haitong — Analyst

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

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

We’ll just give you the number, Hitesh. We’ll come back to you with the number.

Hitesh Gulati — Haitong — Analyst

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

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

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

Hitesh Gulati — Haitong — Analyst

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

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

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

Operator

Thank you, Mr. Gulati. May we request that you return to the question queue for follow-up questions. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Prayesh Jain — Motilal Oswal — Analyst

Yeah, hi, sir. Just a couple of questions from my side. Firstly, Gopal, if you could mention, how do we think about the unexpired risk reserve for the full-year of FY ’23 now that you’ve gone into nine months, and I understand that it depends on what kind of growth we see in the remainder in fourth-quarter, but assuming a ballpark growth of around what we seen around 15%, do we see the NEP of growth to be better going ahead, that is one.

Secondly, so from our reserve — sorry, the motor segment, I would like to views as to when do we really see growth coming strongly in the end for you guys. What would be the following or what are the factors that can maybe drive this growth back to high like in-line with the industry or even better than the industry. In the past, you’ve been alluding to the fact that past few quarters that the motor OD pricing has become more or less is getting some cognizance, and it’s getting better, but we don’t see that in the numbers yet, so, any further thoughts there that would be helpful.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

Prayesh, on the first one, honestly what you said is what it is. When it comes to unexpired risk reserve, its purely a function of what kind of business mix that you write. And the earnings is purely a function of the contract term for which, let’s say, the policies are issued. And hence to that extent, like for example if a large part of our policies are predominantly of one-year duration. And to that extent, the earnings will typically kind of get earned over the contract period.

So, hence to that extent given the fact that, let’s say, for example, this particular year, we have seen let’s say, the growth being relatively better than what we had seen, let’s say, in the past two periods, which is why you get to see in whichever period of writing the higher quantum of business, to that extent for the period at which you ending up reporting numbers, you end up carrying a higher amount of unexpired risk reserve, which will obviously get released in the future periods.

A better outcome will be to look at more because correspondingly, that you would also have [Indecipherable] loss experience getting paid out as well, so rather it is better to look at more either the loss ratio numbers for the company as a whole, or more importantly I think combined ratios will be far more EBITDA reflection, rather than just looking at at NEP on a standalone basis, because it has got multiple factors, as you rightly mentioned, in terms of the mix of business, at what point of time are you kind of writing those risks, and so on and so forth, so hence the better way to kind of look at is more, let’s say, the loss ratios and the combined ratios. So that’s in response to the first one.

To your second point on when do we see, let’s say, our changing stance, I think obviously, we have — this is not the first time that we have been kind of taking a calibrated call with respect to going a little slow in writing certain segments of business. Now, that’s the reason why just to kind of repeat what we had put out as a part of the introductory opening remarks is what you get to see us an outcome for the overall market with respect to the motor combined issues. Really, you’ll see this is public information, so which is why I mean, the industry as a whole is operating at a combined of 124%. Obviously, it does not make viable sense for us to kind of significantly go after that segment, which is going to exhibit a very adverse underwriting outcome. That’s the reason why you have been taking calibrated calls in the segments where we think the competitive intensity is far more elevated. But our sense is, given that now we are seeing maybe continued quarters of combined ratio staying elevated for the market, we don’t think this is something that can continue to sustain for maybe further longer period of time. Already we are seeing, which is what Bhargav also mentioned, we are clearly seeing signs of some of the players in the market starting to become far more rational when it comes to underwriting this particular segment, so our sense is we will obviously watch out for the development over the next couple of quarters. And then, but at least in so-far as our investments is concerned, I think we are pretty much staying on force, in the sense that we are kind of expanding investments in expanding distribution even on the motor side, whether it comes to working with OEMs in terms of the number of dealers whom we have an access to, or for the matter of fact, even with the number of agents that we are working with, which is what you would have seen for the company as a whole, again the aggregate number of agency count has kind of gone up. So, we’re continuing to make those investments in driving those businesses, as and when we see the opportunity to turn up, we are kind of better placed to write this particular segment.

Operator

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

Sanketh Godha — Spark Capital — Analyst

Thank you for the opportunity. Can you give me the loss ratio breakdown for retail health benefit based health and group health and PA if possible, just to understand, how it is panning out given the last part of the business will be new in nature, just wanted to understand whether it is substantially below 60 or 65, especially in case of our retail indemnity.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

Yeah, Sanketh, I think, I am just giving you right now quarter three numbers. Quarter three loss ratios for the corporate health book, which is a GHA portfolio that number is 98.9%. And in so far as the retail indemnity book is concerned, that number is at about 68%.

Sanketh Godha — Spark Capital — Analyst

Okay. but at 68, I am still asking because you’ve got 68, which means it might be a 12% or 13% ROE products, and if you are chasing a product which will break down the entire ROE of the company, so just wanted to understand, this 68 is like a sustainable number what you look to the kind of growth you’re delivering or it could come down in your view?

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

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

Sanketh Godha — Spark Capital — Analyst

Got it, and in [Indecipherable], it has been a phenomenal year for us here at least for nine months. So, of the entire health if I look this year benefit-based health and group health are driven by some kind of a factor which are not repeatable in nature, like credit goods being very strong and group health by being better. So, I just wanted to check whether the Group Health pricing, you have already seen a correction, and if on a higher base the credit growth slows down, then the highly profitable products like benefit based might contribute lower in the next year. So, just wanted to know retail indemnity as you have highlighted might do well because of the investments you have made, that the kind of growth what you have reported health NPA, 40% plus in overall [Indecipherable], what likely number you expect it to moderate in ’24?

Bhargav Dasgupta — Managing Director & CEO

If you go back to before let’s say the NBFC crisis, we used to have roughly 75% of our business in the health coming from the Bancassurance, the retail benefit structure. So, this year it looks like suddenly it has increased because of the low-base of the last two years. Going ahead, do we expect go to particularly for, let’s say retail for retail credit growth to come down significantly. That’s a poor liberated typically for some others, macroeconomic medium, of course, it will come down. In terms of what we believe that we are one gaining market share in most of the Bancassurance partners that we’re working with, we are looking at opening up other streams of businesses from each one of these partners, which we believe there is an opportunity. So, we are reasonably confident of going the Bancassurance business, may not be the same weight, given that we have a very high growth this year. On that basis, maybe it is not going to have the same rate of growth, but we remain confident of growing that channel.

The second question that you had in terms of Group Health pricing, look, at the end of the day, of course, it’s driven by pricing, someone could come in and get very aggressive, that is a possibility, but if you go back to the reason why the Group Health pricing was the level where it was, because largely a few large, you know companies who were doing it in an aggressive level, most of them today have some solvency challenges, and we really don’t anticipate them coming back and doing the same thing right now, there is still a capital constraint there. So we believe that the market for Group Health structurally is getting better, and we believe that this growth should sustain for some more time. And in terms of price increase, we took a price increase as we discussed last year, we had talked about post COVID where we have taken 15% to 20% price increase, on that basis we are able to get further price increases, not at the same pace, but we assume that we will get small price increases and the hold on to the business.

The other thing is happening in health is that in Q2, we had talked about the fact that the claims, the frequency had got elevated. We are seeing that rationalize and kind of come down to normal levels. So from all of those perspective, we remain reasonably confident with the health business as of now.

Operator

Thank you, Mr. Godha. May we request that you return to the question queue for follow-up questions. [Operator Instructions] The next question is from the line of Nidhesh Jain from Investec. Please go ahead.

Nidhesh Jain — Investec — Analyst

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

Bhargav Dasgupta — Managing Director & CEO

Look, any — when there are changes, there will be some consequential impact on the ground, right, and what we’re seeing is a plethora of changes happening at the same time. So, it’s just that you know, lets look at couple of things that could create some amount of disruption. One is fresh licenses. It may not come in by next year, but if that comes in, there is lot more capital coming into the sector, that could create some competitive question. That’s a possibility. I’m not saying it will happen, but these are things that you need to be conscious of and aware of.

Secondly, for example, commercial lines, there is a talk of complete [Indecipherable]. If that happens, there could be a roundup competition. We don’t believe that it will have dramatic changes, because if you look at the overall combined ratio in the sector and some of the players who were very aggressive last time when this happened, we may not have the capability or the capital to continue with that upward this time, but still there is always a probably of some amount of disruption. That’s a point that I wanted to make. But, I think the larger point is that these are all, in our opinion, very positive changes from a longer-term perspective. And we believe it should help discipline underwriters, names like us who have capital brand and presence across multiple lines of business at scale, I think it should benefit us. But, we just wanted to kind of tell you that there is also probably be some amount of destabilization given the amount of changes that are happening, that’s always a possibility.

Nidhesh Jain — Investec — Analyst

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

Bhargav Dasgupta — Managing Director & CEO

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

Operator

Thank you. We’ll take the next question from the line of Madhukar Ladha from new Wealth Management. Please go ahead.

Madhukar Ladha — new Wealth Management — Analyst

Hi, good evening. Most of my questions have been answered, just couple of them. One on the motor TP segment, we’re seeing a lot of improvement in the loss ratio. So, I’m not sure whether you’ve clarified this earlier or not. But has there been some improvement taken from the six months restriction on the period of reporting any accident. So what have been the developments on that? And if you could give us some guidance in terms of how the courts are ruling and whether they can be any benefit flowing through more better we have accounted for any sort of reserve releases because of that.

And second, on the group others business which is excluding the employer-employee business, what is the source of that, I believe they are not doing that business more as a type [Indecipherable] bank. So, what are the other partners, Broadly, if you can help us with the banks, NBFC, some sort of classification, and against what products for these attachments?

Bhargav Dasgupta — Managing Director & CEO

On the first one, Madhukar. First answer is no, we have not taken benefits of the shortening of the tail as yet. What is seen happen is in a recent Madras High Court judgment, which is reaffirming this point that you have to file claims within six months. So we have a case supporting the change in the regulation or law of the land, which is a positive. What we are beginning to see is some signs, for first six or seven months, you didn’t see a big change in terms of frequency or acceleration of claims. But as we speak, early signs of some acceleration happening in some states. We will have to study this for some more time to tell you that this is happening at a national level, but early signs are positive. And we will have to — if that happens, then it could be a positive for the sector. But as of now, we’ve not taken any benefit of that in our numbers, because it’s too early to take a benefit.

In terms of your second question, this was always our strength, working with multiple Bancassurance companies, NBFC, HFCs we work with digital lending companies, we work with a whole host of entities, which provides retail credit with whom we sell some of these group other category of health products, which is what has come by, this is a point that we’re making that last couple of years, there was no — and we had a relatively higher share of the business. So, to that extent, it was negative for us, but that has now come back this year, and that’s where this is going from. ICICI Bank business on that account, what they revealed, last year they stopped selling, they haven’t restarted that. However, what they’ve done is they have started selling indemnity products, retail indemnity products, both through the branches as also as attachment for their mortgage customers. So that’s why the number from the bank side is also positive.

If you look at percentages, we gave them in the opening remarks. ICICI Bank distribution grew by about 30.9%, non ICICI Bank distribution, which includes multiple other banks. So, most of the large private sector banks we’re their partners, most of the large NBFC and HFCs, we are their partners, and that segment that is non ICICI Bank distribution grew at 44.2%.

Operator

Thank you. We’ll take the next question from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.

Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst

Yeah, thanks for the opportunity. Can you hear me clearly?

Bhargav Dasgupta — Managing Director & CEO

Yes, Rishi.

Rishi Jhunjhunwala — IIFL Institutional Equities — Analyst

Yeah, so sir. I just wanted some color on how do we look at the expense ratio trajectory, right? So, there are two parts to it. Over the past 15 months since the acquisition of Bharati AXA, there was one trajectory which suggested that the gap between the expense ratios between parties and that should converge took 2.5 year period, and that is something that will drive the overall combined [Indecipherable]. On the other hand, we had extended to basically invested in digital retail health and digital in order gain some of the shares, market share there. Now if I look at both these aspects, it would be great to just understand one on the Bharati AXA rationalization, has the progression been slower than expected? And two, we have seen like even on a nine-month basis, significant growth in sales growth and expenses and even overall opex excluding commissions. But it doesn’t seem to reflect that it is going into retail health, looking at the combined ratio of retail where it seems to be going into quarter. So just wanted to understand on the second part, you know how the expenses are getting allocated to, and as a result, what should be the trajectory going forward.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

So, Rishi, I think your second part of the question with respect to the progress of the Bharati AXA integration in-line with what we have been communicating, I think that is pretty much, we have kind of realized whatever synergies that we spoke about. I think the only last synergy, which we had said is something that we will realize in this financial year is the technology synergy consequent to once we get the applications integrated or merged, we should start realizing the benefit of the synergy play out from quarter four of the current year onwards. I’m happy to note that even that particular aspect in respect of integration between the two companies have kind of been done, and hence to that extent you may start to see the synergy on the technology cost play-out from Q4 onwards.

To your first part on with respect to what could be the trajectory that expense issues could take, yes, you are right, I think there are multiple aspects that goes in so far as determination of the expense ratio trajectory is concerned. One is a function of what kind of revenue growth opportunity that one sees, which is what I had explained. Certain lines of businesses while there are costs that we kind of continue to be incurred, however, the revenue is something that we have not been able to completely realize to its fullest potential. As a segment in reference is motor, for example. Clearly, we have not been able to kind of realize the complete potential of what we would like to see that segment offers at. Now, as and when, let’s say, the growth comes back, that itself will be a function of let’s say, some form of efficiencies or maybe some form of improvement that you will get to see in so far as the expense ratio trajectory is concerned.

The second is obviously, as I mentioned, the investment in retail health, to your other point, was not just a one off investment, it’s a continuing one. We continue to hire, lets say, the number of retail health agency managers whom as we have explained will obviously go and add more number of agency distribution. But, those costs again comes in and its today in our P&L, because these are actual number of employees who are getting onboarded in so far as retail health distribution is concerned. Which is why you will — until that time, let’s say the benefits in the form of incremental revenue play-out, which is in the past also, which we have explained it roughly, it takes about 12 to 18 months for the cycle to completely get efficient, is when you will start seeing let’s say incremental revenues being contributed.

But in so-far as early signs are concerned, I think the investment seems to be kind of playing out in-line with our expectations, and hence to that extent I think we are quite happy with the way how things are playing out.

But finally, in terms of what number the expense ratio trajectory could take? I think, rather we would look at it more from a combined ratio perspective, which is a combination of both expense and loss ratios, because different segment etc., has outcomes in terms of the way this will get sourced. There clearly what we had indicated was over a two-year period, we would want to see a declining slope on the combined ratio print. And we are pretty much staying on course with respect to that particular thought process of ours. I mean, already in-line with what we have spoken about for FY ’23, we had said that combined will stay range-bound in the 104% level. And in FY ’24, you will start seeing a declining slope. We are pretty much on course in order to kind of getting that reflected. And hence, that’s the trajectory that one would see in so-far as the combined ratios is concerned.

Operator

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

Bhargav Dasgupta — Managing Director & CEO

I think, there was that one question which Hitesh had asked, in the context of how many agents did we had consequently, that 1,000 in the health agency management, that number is at about 10,000 agents is what we have been able to add. By these agency managers that we have added.

So again, thank you everyone for joining the call. It’s pretty late for all of you. I look forward to our interaction during the quarter. Thank you.

Gopal Balachandran — Chief Financial Officer, Chief Risk Officer

Thank you so much.

Operator

[Operator Closing Remarks]