The New India Assurance Company Ltd

Welcome to the conference call of The New Assurance Company Limited arranged by Concept investor relation to discuss its Q1 FY25 results. We have with us today, Mrs. Girija Subramanian - CMD, Mr.

Titus Francis - Executive Director, Mrs. Smita Srivastava - Executive Director, General Managers (Technical), Mr. Sharad Ramnarayanan - Appointed Actuary, and Mr. Vimal Jain - CFO.

At this moment, all participant lines are in listen only mode. Later we will conduct a question-and-answer session. At that time, if you have a question, please press * and '1' on your telephone keypad.

Please note that this conference is being recorded. I would now like to hand over the floor to Mrs. Girija Subramanian. Thank you and over to you, ma'am.

Thank you and good evening to everyone. I'm Girija Subramanian - Chairman and Managing Director of New India Assurance. Joining me on this call are Mr. Titus, Francis - ED, Mrs. Smita Srivastava — ED, General Manager (Technical) - Sushma Anupam, Mrs. Lavanya Mundayur, Mrs. Mukta Sharma and Mrs. Chandra lyer. We have our CRO - Mr. Ayyappan, with us. Our Appointed Actuary - Mr. Sharad Ramnarayan and also our DGM - Mr. Ruchir Pant.

First of all, I would like to thank all the participants who have taken out time for attending this concall. I would also like to express my gratitude to our valued shareholders, analysts and investors for your continued support and interest in our organization. There has been remarkable growth in the Indian insurance sector over the past few years. However, India still remains under penetrated with general insurance penetration around 1.10%. IRDAI, the regulator and Government of India, along with various insurers are taking many steps to help increase the insurance cover, bring down the cost of premium and educate people about the importance of insurance.

Furthermore, we are witnessing increasing disposable income, increasing cost of medical expenses alongside awareness and willingness of the new generation to opt for a health cover. All this has helped increase penetration level to some extent. We firmly believe that this will only increase substantially with time.

As many of you know, New India Assurance was founded by Sir Dorab Tata in 1919. Our operations now span 25 countries and we have maintained our position as a market leader since nationalization in 1973. We are proud to be rated AAA by Crisil and hold an exceptional AAA.in rating by AM best on the India national scale. Additionally, we are recognized as a domestic systematically important insurer by the IRDAI and our ISO 27,000:2013 certified for IT security placing us amongst the few general insurers in India with such high standards of data security. Also, we are the state insurer for the state of Gujarat and Union Territory of Lakshadweep. This

widespread footprint reinforces our dominant position in the domestic market and enhances our ability to serve a broad customer base.

The Indian general insurance industry has shown impressive growth.

During the quarter ended June 30, 2024, the industry grew 13.33% with the GDP of Rs. 72,758 crores as against Rs. 64,198 crores for the corresponding quarter of the previous year's. Current trend suggested figure could surpass rupees Rs. 3,00,000 crores by the end of this financial year.

For new India, staying true to our moto growth with profitability, we have strategically avoided loss-making businesses that could not meet our pricing or terms resulting in a slightly lower direct premium growth. The company's GWP for the quarter ended 30th June 24 was Rs. 11,788 crores. Our net earned premium for the quarter ended 30th June 2024 was rupees Rs. 8503 crores, registering a growth of 7.37% year on year.

Our market share stands at 14.67% as on 30th June 2024 and we continue to be market leader despite the highly competitive environment. The first quarter of the year was marked by significant catastrophic events including Cyclone Remal, which is severely affected the West Bengal area and severe flooding in Assam and Northeast area due to heavy monsoon rains exacerbated by the cyclone Remal.

As on 30th June 2024, the company has a net worth of rupees Rs. 21,343 crores and investment assets standing at rupees Rs. 98,770 crores. The company's net worth including the fair value change account increased from rupees Rs. 44,704 crores in March 24 to rupees Rs.47,703 crores in June 24. The Profit After Tax stood at rupees Rs.217 crores as against rupees Rs. 260 crores in the previous financial year, primarily due to motor third party portfolio where there has been no price division in the last three years.

The incurred claim ratio has improved to 95.98% for the period ended 30th June 24 as against 96.19% for the corresponding quarter last year and 97.36% for the year ended 31st March 24. The combined ratio stands at 116.05% as against 115.16% for the corresponding quarter last year and 120.87 for the year ended 31st March 2024.

The solvency ratio remains comfortably above the threshold of 1.50 times and we are currently at 1.83 times. The company has a well- diversified portfolio of products, including the recent launches of surety bonds. In fact, New India is one of the few insurers issuing both bid bonds as well as performance bonds, which will support

infrastructure growth in the country. We are continuously striving to provide the best customer initiatives and services.

Moving forward, our focus remains on digital initiatives, streamlining processes for increased efficiency and expanding our sales force particularly through our agency channel. In this direction, we have tied up with Super App players like Phonepay and having pays, WhatsApp enabled sales facilities.

Looking at the 01 performance, we have revised our premium targets to better align with our strategic goal of growth with profitability. We aim to achieve an increase in retail insurance premiums and profitable segments, while improving our presence in under penetrated areas and lines of businesses. We plan to undertake targeted marketing campaigns, customer and intermediary engagement initiatives and the marketing of our products as per individual requirements. As per our benchmarks by under penetrated areas, we consider potential in the rural sector, livestock insurance tier two and three cities, microinsurance products for low-income groups, MSME sector, women centric products, targeting millennials and the Gen Z.

With our superior digital capability, we plan to utilize our digital platform mobile technology and apps to reach remote areas. Our concerted efforts for the bancassurance channel is being made with the intention to collaborate with commercial banks, cooperative banks, regional rural banks, non-banking financial institutions.

Additionally, we are looking to tap cooperative societies, local organizations, NGO's and self-help groups to enhance, reach and trust with our customers.

Apart from the agency and bank assurance lines, our key focus areas shall be speedy claim settlement, improving our turnaround time and ICR, designing new products to meet the requirements of different segments and digitizing the claims settlement process including the Al based claims settlement in select lines of business.

We have tied up with super app players like Phonepay, WhatsApp enabled sales facility and which is made available across many products.

Work is in progress for adding more plugins facilities to improve customer journey. I want to assure our stakeholders that your company recognized as a domestic systematically important insurer is fundamentally strong and strategically well positioned to cater to the insurance needs of the country offering best solutions to our customers while ensuring proper pricing for our product.

With that, I now hand over to our CFO - Mr. Vimal Kumar Jain, who will present the performance up to the first quarter of 2024.

Thank you, ma'am, and good evening to everyone. I will give you a brief overview of the financial performance of the recently concluded first quarter of Financial Year 24-25. The results have been uploaded on our Stock Exchange and on our website as well.

You can also access it as I am presenting a brief overview of the financials of the company for the quarter one of Financial Year 24- 25.

We have the highest market share of 14.67% out of the total gross direct premium of rupees Rs. 72758 crores written by all the companies. We are leaders in fire, marine, engineering, motor, health, including PA and aviation. We are 105 years old company.

We have a presence in 25 countries with 1755 offices in India and having dominant domestic market positions.

Our solvency is strong at 1.83 times, which has grown from the earlier quarters. We are also rated by AM Best and Crisil ratings and are also having an ISO 27001:2013 certification and we are having a diverse product mix with technical competence and a multi-channel distribution. We strive to excel in customer service and technology with a consistent market leadership and growth.

Along with the various initiatives, we are also aware of the ESG initiatives, which are required to be done, and we are trying to reduce our carbon footprint by sustainable practice, green energy solutions and digital processes. We are also implementing the various governance practices and aim to be transparent and accountable in all operations. We are involved in various social initiatives like education and health and have using the CSR budget.

Our future strategy continues to be increasing the return on equity by increasing in market share, improving our profit margin by leveraging economies of scale driven by growth, rationalization of operating offices, increasing the digital penetration and maintaining a healthy solvency margin and we are always aiming to leverage technology to drive customer satisfaction, profitability and growth.

Our distribution mix, we have brokers30%, direct business 36%, agency 25%, dealers 8% and bancassurance 1%. Our financial performance ensured we have completed a gross premium income of Rs.10,536 crore in first quarter of 24-25 as against Rs.10,212 crore in last year of first quarter. There is growth of 3.17%.

Our growth return premium is of rupees Rs.11788 crore as against in rupees Rs.11362 crores which is giving a growth of 3.74%. The profit

after tax is Rs.217 crores against Rs.260 crores. Net worth in Indian Rupees 21,343 crore as against INR 22,025 crore in quarter one financial year 23-24. There is growth of 5.39% in net worth.

Net worth including fair value is Rs. 47,703 crore against Rs.38,487 crore last year. Our ICR is 95.98% against 96.19% last year. Our combined ratio is at 116.05% against 115.16% last year. Solvency is 1.83 times. And our return on equity is 4.09%.

Our product mix for Fire is at 16%, Marine is 2%, Motor 22%, Health & PA 50% and others at 10%. The movement in technical reserves are adequately provided and as on 30th June 24, it is Rs.51,638 crores in technical reserves.

The key ratios we have incurred claim ratio of 95.98% Commission 8.49% and expenses ratio of 11.58%. We are well within the EOM limits as per the IRDAI EOM regulation. Our solvency is 1.83 times and the return on equity is already mentioned is 4.09%.

Net worth is Rs.21,343 crore. Net worth including fair valuation change 47,703 crore, investment and market value is 98,770 crore and solvency is 1.83 times.

We come to the segmental performance. We have negative growth in fire by 7.15% and motor OD at -2.29% whereas positive growth is in motor TP at 9.39%, Health including PA at 5.58% and other business miscellaneous at 16.69%. As already mentioned, the ICR is 95.98% and if you look at the Lop wise ICR, Fire is at 7.85%, Marine at 56.19%, Motor OD at 114.82%, Motor TP at 111.69%, Health at 105.95% and other miscellaneous at 54.95%. These are the brief highlights of the financial performance of your Company for the first quarter.

Thank you very much. The first question is from the line of Uday Agarwal, SBI Capital Securities. Please go ahead.

Yeah. Good afternoon, Sir. Thank you for your opportunity, Sir. I had a couple of questions. So first one is that earlier, you know, we had mentioned in our con-calls that we are trying to improve our banking partnerships to increase our sales. So, Sir has there been any progress on that front?

as well as the commercial banks and they're forging new ties with couple of PSU banks. It will soon come into play in this current year.

With this we are expecting that this year the banking, the bancassurance premium will go up considerably and all our products which are catering to the Banca channel are also being, you know promoted and training is being given to require people at the bank to enable them sell this product. So, with all these efforts, we hope to see a lot of traction, the bancassurance channel.

OK. Thank you for the detailed answer. Ma'am, my next question is that could you just give us an indication you know about our profitability and the margins going forward, like how it will pan outgoing ahead? Will we see any improvement on that front?

Yeah. So, which as regards profitability, we are profitable at the moment and we will continue to be profitable going forward also because our strategies are we have had a very close granular look into our operations across offices we have realigned our targets.

This year we have got increased thrust on our retail segment where we feel there is a more subject to pricing that is possible for us to have and also where we're able to hold on to customers in a big way. So, we will be going very aggressively on the retail channel and therefore the profitability seems to be more on a positive note more achievable. Going forward, we plan to bring down the combined ratio significantly in the medium term so that they're able to be competitive in this current environment as well as have a very win- win situation for the company.

And if I could just, you know, squeeze in one more question. So, it was like I wanted to know like what is the internal international insurance market panning out as we have presence in 25 countries.

And the last question is, could you just give us the breakup of the domestic and international gross return premium?

Yeah. So, our overall premium consists of 10% foreign and 90% domestic.

OK. And how is the international insurance market panning out as we are present in 25 countries?

Yeah. The insurance market internationally is also very competitive Most of our branches and other offices are located in much developed nations which have and they have seen a lot of experience across many years and they are very steadily their operations and they are able to stand alone on their own without any capital support from us at the moment. And if we want to grow aggressively in those markets, we'll have to infuse a lot more capital.

Therefore, the strategy has generally been to mean remain

profitable and relevant and you know, not with a very aggressive growth margin. In any case, those markets are developed markets where it is very strictly regulated, so being compliant with the regulations and having a very relevant existence there itself is a challenge which New India has very successfully managed for many years across 25 countries.

OK. Thank you. That's it from my side. Best wishes.

The next question is from the line of Aditi Joshi from JP Morgan. Please go ahead ma'am.

Yeah. Thank you for taking my questions. I have a couple of questions. The first is just I want to follow up on the ma'am's comment that they are trying to that you are trying to avoid this loss making business lines. So, can you please get some more details as in which specific business lines or product segment that is? Second is can you please share your ROE target if you have for this year and the next year? And the third question is on the health insurance underwriting. In the presentation comments you have mentioned that some higher loss ratios were seen in the government health scheme, so I'm just trying to understand is it just one off or how do we see the loss ratios panning out in the government scheme segment and how should we overall think about the health insurance loss ratios because you've said that the retail and the group side is sort of improving in the underwriting. So yeah, those are from me.

Yeah, to answer your question, #1 which was on which lines of business we are avoiding which are loss making. So, the comment that we made was we're not avoiding any line of business. We are present across all lines of business, will continue to be present. The only thing is our strategies have changed within the line of business so that we focus within the segment on better business on wherever we've had bleeding accounts like in group medi-claim business where we had a lot of heavy ICR because of group certain groups not performing well, we have hiked up the price and we have lost businesses because of that. So, there is I mean wherever we have lost business on account of increase in price so that it becomes viable for us, we have lost the business and therefore de-growth in those lines. Otherwise, we are very aggressive on the retail side across all lines of business where we intend to grow with much more aggression in the coming quarters. Now the second question was are we target, which our Executive Director, Mr. Titus will answer.

Good evening once again and thank you for joining us. So is regarding the question regarding ROE. So, I would like to just inform

you that we are committed to have double digit ROE in the short term. So, anything about 10 is what we are targeting to be above 10 in the short term or the medium-term range. So, this is our target because we have a good amount of net worth, so we require a good amount of profit to have that ROE. So, this is what we target in the short term so probably in a year of one to three years. So, we have targeted that we will be going about.

So on the third question regarding health loss issues, we have our GM — Mrs. Sushma Anupam who will answer that question.

Good evening and thank you for the question. Actually, related to the government loss issue, I will first answer that usually in any policy, the claims would be panning out in different times of the year and they are more or less cyclical and seasonal so what happens is that the entire picture, the loss ratios will stabilize by end of the year. So, if we look at it at any one point of time, it could vary from time to time. But over a period of time, it stabilizes so we see stability that will come by end of the year in the government's loss ratios. And as regards the other balance, health portfolio, as CMD Ma'am has already mentioned that we are forging ahead into the retail segments which are profitable and we are strategizing to have more and more business in that, at the same time we are concentrating on the group businesses which have been profitable and some of them which have not been profitable, we have tried attempting the price correction wherever the customers have supported us in this initiative. We have gone ahead with them wherever it has not been mutually acceptable, there we have let go of some accounts and definitely the effort as we have also recruited a large number of doctors. So, we are making all efforts to make the portfolio sustainable, at the same time, we are actually having some constraints in the form of the medical inflation that is coming year on year. So as much as the efforts are being made, we are even having to face the medical inflation and the newer additions and the treatments and the modern treatment cost, which is going up, that actually is on the other hand making all the calculations and estimations a bit stormy, so nevertheless it is a journey which we have begun and I think that with the strategy we are very hopeful of bringing down our loss ratios in the health segment as well in the group segment, I meant to say, thank you.

The next question is from the line of Aditi Joshi, JP Morgan. Please go ahead.

Yeah. Sorry. Thank you for taking the question again, I could not catch your comments on the last question. Actually there was some issue with the line. So, just briefly on the health insurance segment, again, if you can.

OK, sure. So actually, as I was mentioning that as far as the government loss ratio, I would address that query first. Actually, the policy which is there is for a year and in usually in all such policies as the awareness increases and as we encounter different seasons, the claims do change in the numbers and the exposure that is there changes in the time of the year that we talk about; so, usually all such policies they stabilize by end of the year. So, even in this policy currently though, we see a spike in the loss ratio, we are very hopeful that by end of the policy year we will be able to have a repeat performance of the previous years and the loss ratio would stabilize there also because the seasonal impact will be neutralized by then. And coming to the other part I mentioned that in the retail segment as our CMD Ma'am has already mentioned that we are really going strong and we are making all efforts to increase our portfolio there and we are coming out with the new products and simplifying the processes and making it more customer friendly and easier for the customers to onboard various products that are being offered and we see a good traction and we are hopeful that there the portfolio is going strong and as far as the corporate group policies are concerned, we have attempted lot of price correction and we have a very huge book. It is well known by all of very large portfolio client. So, there we have all along attempted at a price correction and wherever we had challenges and there it was not mutually acceptable, we have let go such accounts and we have also recruited a large number of doctors. So, we are working very closely on monitoring of the claims and other processes that are there, but at the same time, another challenge or a problem that we encounter all along is the high medical inflation. So, initially it was felt that after COVID the medical inflation would come down, but it has sadly not come down and then to add to it, we also have lot of modern treatments coming up, which are actually quite costly and the estimations what are done usually on account of these sometimes do go a bit stormy because of various things in the short duration. But we are hopeful that even in the corporate health segment as the year progresses; we will make better improvement in the loss ratio. Thank you. Sure, got it. Thank you so much.

The next question is from the line of Aditi Joshi, JP Morgan again, please go ahead ma'am.

Yeah. Thank you so much for taking questions again. Just a couple of follow-ups actually. So, when we say that in the retail segment you have mentioned that you're going aggressive and you're trying to grow aggressively, aggressively aggressive on pricing means that

cutting the prices or aggressive on gaining the market share and combining with hike in the pricing?

Thank you. Aditi. Actually, it's a very good question. I really like to getting this opportunity to clarify that actually when we talk of aggressiveness, it is not the price alone. Price definitely has to be one of the important features because we are working in a competitive market where we can't price the product in isolation.

But when we talk of aggression here, we were trying to make out a significant strategy where we are identifying the different sections of the population and coming out with different products that would attract different sections of the population. We are coming out with the features that would be more appreciated by the customers where the customers can easily onboard. And by the policies, so all these features, the ease of buying insurance and increasing the market penetration, that is what we were trying to mean when we say the aggressive. Thank you.

OK. And I think in the past couple of quarters, we have seen some pricing hike in both retail and the corporate segment. So, is this trend continuing in both the segments, is it what's going on?

Yeah. So actually, you know if you see in our flagship products, particularly, we had come out with the price revision after six years.

So, because we could not come out with the price revision due to the pandemic being in force and after the pandemic, we came up with the price revision thereafter, we also made some changes in the pricing strategy because there was a lot of feedback around it that when the pricing is as per the age banks, then people who are having you know double impact as much as the price has gone up even the age has gone up. So, both the case, they have to pay a higher premium, so to take care of that as we had the in the previous meeting, we had informed and which we have implemented also that we came out with age wise pricing and also to take care of the normal differences, certain sections, certain areas of the country with higher medical inflation and the traction is more towards the usage in terms of the footfalls in the hospitals and all. So, taking care of that, the pricing was modified. So that was the price rise which we had in those products. And then now after the master circular, which has come in, there are some 5-6 changes which are introduced and mandated by the regulator for which we have to be compliant by 30th of September'24 to take care of that in some of our products which we had not touched the pricing for maybe over five years or so and which products are actually not very, I would put it this way that they form part of almost some 15% of our premium coverage kind of. In those policies we have come out with the increase recently, which has been received well, I think

OK, sure. So when we talk about flagship products, it's, is it on the retail side?

Yeah. So actually, you know in retail, we have to come out with a price revision because it is on a book basis. It has to be applicable to all simultaneously. And there are certain norms to be followed that we have to give the notice to the customers before we make any price revisions. Whereas on the other hand, you know, for group policies, it is always on each renewal we keep doing the price correction and for whatever features are getting added, they are factored and then accordingly the pricing is done so there we don't come out with a pricing strategy or like a particular percentage or some price because each policy has its own experience and it is an experience based pricing.

OK, sure. Got it. And just one last question. Can you share the reason for a weaker investment income on a year-on-year basis in this quarter, in last quarter?

Actually, in the first quarter or that profit on sale, we have not sold much equity. Due to that dividend, we received in the first quarter.

In the after first quarter also. So we sold less equity after the first quarter and our due to that we realized less profit on sales of equity, OK, got it. Thank you so much. Thank you.

Thank you very much. The next question is from the line of Jayesh from Harshad Gandhi. Please go ahead Sir.

Actually have joined little later. Whether I don't know whether you have answered this question or not, what are we doing to bring down our combined ratio? It is for my first question and the second question in in the last three years on an overall basis how much your increase in prices have we have we done across all our products whether it be health or whether it be fire. What are we anticipate in the price increase?

So as far as the combined ratio goes, it's a multi-pronged approach that we are you know trying out unless that we are changing our strategy towards our business, we are going more retail now because across the industry even I mean if you examine the performance of products across various insurers, retail business has done better across all lines of business most of the time so therefore, we are also going retail and we are, you know, putting our distribution strategy in place to match with our aspirations on

And in the medium term, we expect to bring down the combined ratio significantly.

That's great to hear. And, Madam, what about the price rises that we have taken in, say, last three years on an overall, I mean all the businesses?

Yeah. On this, I would like our Appointed Actuary, Mr. Sharad to explain.

So, price rises, we cannot give a figure to across the board how much price increase was taken because it depends on a lot of factors including what segment of the market we are talking about. So, coming to specifics in retail health, there has been a price increase of close to 25 odd percent, which we rolled out last year and this year also because of some zoning related changes, there has been price increase in some zones which has been rolled out. Again, for the regulatory purpose, there is a 10% hike which is rolled out across various different retail health products. On group health, pricing is done on a case-to-case basis depending on how the

behavior of the group works and as Mrs. Sushma mentioned earlier, the pricing has been made much more prudent and wherever the price we want is not available, we are happy to walk away. Coming to motor because there has been no price increase on the motor third party front, we have rolled out some price increases on the motor own damage front in order to cushion the impact so that has been done and that has been done across segments, particularly on the commercial vehicle side. The price increase has been on the higher side on the own damage. Coming to property because of data repeat, there has been some pricing pressure, but here the focus is more on risk selection. So, that for the price which is available in the market, we are choosing the right. So, like that for every product line, the strategy has been different depending on the market conditions. So, across the board, whether price has increased decrease that is I don't think we can really be able to pinpoint the figure to you.

I get it, Sir. Thank you and good luck for future. Moderator Thank you very much. Ladies and gentlemen, that was the last question. I now hand the conference over to Mrs. Girija Subramanian — CMD, New India Assurance Company Limited for closing comments.

Yeah, I would like to, you know, take this opportunity to thank all our investors, our business partners, our employees and everybody connected to New India one way or the other, mainly our customers who are constantly deposing trust, trust in this institution, which proves the existence for 106 years and we will be there strong leading from the front across many more years to come and we would put every effort that is there. The entire management team and the workforce to ensure that we deliver on the promises that we have given to our customers at all times. Thank you so much for this opportunity.

Thank you very much. On behalf of Concept Investor Relations, that concludes this conference. Thank you for joining us and you may now disconnect your lines.