Go Digit General Insurance Limited (GODIGIT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Go Digit General Insurance Limited Q4 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ansuman Deb from ICICI Securities. Thank you, and over to you, sir.

Thanks, Dolvin. Good evening, ladies and gentlemen. On behalf of ICICI Securities, we welcome you all to the Q4 FY '24 Results Conference Call of Go Digit General Insurance. We have the senior management of the company on the call. I now hand over the call to Chairman, Mr. Kamesh Goyal for his opening remarks, post which we will open the floor for Q&A. Over to you, sir.

Thanks, Ansuman and good evening, everyone. First of all, welcome, everyone, for joining our post-listing first call -- quarterly call. I think going forward, we obviously would be doing calls within a month of the quarter ending. This time due to IPO call got delayed. With me also we have on the call our CEO, Jasleen; our CFO, Ravi Khetan; and also our company secretary Tejas. As I start the call, maybe speak for a few minutes on the presentation. I'll refer to the pages briefly, and then we'll be happy to answer any questions that you may have. So if you look at the first slide, we have completed -- crossed INR 9,000 crores of premium income. In the last 4 years, overall market share on GWP basis is about 3.1%. In terms of products, we have now a wide range of products available, a very large number of customers and the number of policies issued. We have now settled close to about 20 lakh claims since we started now averaging roughly in a month, about 80,000, 90,000 claims in a month. The assets under management have grown as of 31st March to about INR 15,700 crores. Our manual policy issuance continues to be quite low. And NPS, which is internal score continues to be good for both claims as well as non-claims. Our customer rating on social media is also 4.7 out of 5 on Google Review and 4.9 out of 5 on Facebook. Moving to the next slide. I think if you look at, we have given 3 years number, INR 5,200 crores, INR 7,200 crores and about INR 9,000 crores. The growth in net earned premium has been double. So from FY '22 to FY '24, we have doubled our net earned premium. And if you look at the next line, which is the premium retention ratio, the premium retention ratio has also been increasing each year. And in FY '24, this number was about 85.8% which I believe would be amongst the highest in the industry. And as in some of our interactions, we have discussed that retaining more premium is strategy which we follow in the company. Our combined ratio in FY '24 was 108.7%, which is about 1% higher than the previous year. Most of it is related to some large losses in property which we had and some nat-cat losses, and I will cover to that a bit later. Our profit for the year is about INR 182 crores. And for the quarter, it's INR 53 crores, which is double to what we had in quarter 4 of '23. The net worth of the company as of March '24 is about INR 2,500 crores. The solvency ratio was 1.61 as of 31st March '24 compared to 1.78 which we had. The capital which we raised through the IPO came in May. So obviously, the solvency number, which would be materially different as of 30th of June '24. Moving on to the next slide. I think if you look at the premium numbers, I have spoken already. If you look at, I think, in terms of GWP mix, you can actually see our own damage mix has increased from 16% to 22% in FY '24. TP has actually reduced from 46% to 39% health travel & PA has increased from 13% to 19%. Fire is more or less flat and the others have reduced in the year FY '24. When we look at the industry growth and compare that to Digits growth. Industry has grown in motor on damage by work 17% against ours 42%. TP is about 10% which is similar to ours. Fire industry grew by 7%, we grew by 19% and health, et cetera, also we grew more than the industry. When we look at the right side and especially look at Q4 you would notice that in motor TP, I think because that seems to be an outlier. We have actually degrown by 11% in this quarter. Now I think 2 things I wanted to say. One is that we as a company always try and continuously look at businesses where we feel -- it doesn't make sense economically for us to do business. And we would actually then get out of those segments if we don't find the margins to be attractive. And in case of TP, we need to keep in mind that in the last 4 years, we have only seen increase in TP only for 1 year. And we feel that due to third-party inflation, increase in minimum wages, et cetera, the TP business needed some corrective action to be taken. When I say corrective action, what it basically means is depending upon what the commission we can afford to pay, we can pay that commission. And we also continuously try and look at the new opportunities of the new segments which we can tap. Now even in this quarter, and this is the time you might recall is the time when the road shows have really started in March. Even in this quarter, we decided to take the corrective action. And also try to take some -- find some segments where we can now try and gain some growth in the TP segment. Fire again was compared to the industry, we had a decent growth. So in all other, other than TP segment, we had better growth than the industry. And here, again, I would just want to emphasize this point again, that we, as a company, don't feel that there is an ideal LOB mix. We, on a very continuous basis, look for opportunities where the business is profitable or it is not profitable. And then we take corrective action based on our understanding of the business. Going to the next one. I think this is more a movement of the combined ratio over 3 years as well as quarter-on-quarter. If you look at -- the combined ratio, as I said, was about a percentage higher than the previous year. If we look at quarter 4, expenses have gone down expense ratio or loss ratio was higher at about 72.2%. Quarter 4 of FY '23 was -- I would say slightly outlier in terms of the loss ratio, and I will cover that as we come to the triangles, especially of the TP business. This is profit after tax, and I think I've already covered it, there's really nothing to be repeated. I think one thing, as I said, we believe in higher retention ratio, which basically means our growth in AUM is faster. And if you look at from FY '23 to FY '24, we have roughly increased organically the AUM by about INR 2,700 crores, INR 2,800 crores. And this year, we have raised INR 350 crore of sub debt to support the solvency. If we remove that, then we raised about organically increased the AUM by about INR 2,700 crores, INR 2,800 crores. The investment income is decent. We crossed INR 1,000 crores in investment income. So if you actually see FY '22 to FY '24, our investment income has actually more than doubled. And you can also see that the investment yield is also now about 7.3%, which is almost 100 basis points, better than the previous year. Moving to the next slide. I think this is more our asset location. Our equity allocation has continue to be lower. It's only 1.6%. And when we look at our solvency of 161% since solvency ratio was a bit lower any unrealized losses in equity passed through the solvency or pass through the P&L. That is why we have not really taken asset allocation more towards equity now with higher solvency ratio. That's an opportunity, which we have. Our overall investment has been more and more in the fixed income and especially in the government bonds also. And in banking and finance, you can see that this year, we have increased our allocation. Some of it is also coming in for the Tier 1 capital or Tier 2 capital which the banks raised. So some of those bonds have also come under this. I think when we look at loss ratios. If you look at our own damage loss ratios has been coming down year by year, 74%, 69%, 66%. TP loss ratio has been coming down. But in TP loss ratio, we always look at loss ratio over a period of 3 years or 4 years rather than just looking at 1 single year and that is also I would say, transparent from the triangles. And especially when we think about Digit and since we have only completed 5 years as of FY '23. So you'll actually notice that our review of third-party results in the first 4 years was not there and that is the reason why Q4 FY '23, we actually had a significantly lower loss ratio. In health, our loss ratio has increased. Two reasons. One is that if we look at FY '22, this was a year of COVID. And at that time, Digit had written, we had written a lot of COVID health insurance. So we actually had a significantly lower loss ratio. Some of that also came in FY '23. The loss ratio still was at about 72% lower than, I would say, the industry health loss ratio. And this has increased last year due to the growth in the employer/employee health insurance business. The amount of data which had employer/employee health insurance, both for quotation purpose as well for claims, et cetera, were significantly lower since our portfolio was more diverted towards COVID in the earlier years. I think now we have reached a stage where we feel we have a decent idea in terms of pricing and quotation, what's the quality of data we get from different partners, et cetera. Fire, I think, was a tough year last year, in the next slide we'll show you what exactly happened. Marine, I think, is more or less okay. Engineering also was a year where we saw some nat-cat losses. Overall, the loss ratio was about 70% for the year. Again, I think the way we drive business we look at loss ratio more on for the year basis for things like own damage, health, et cetera. Fire, TP, we would see it more from a 3-year perspective. because you can have a nat cat event or a large loss, which can impact your loss ratio. So I'm just trying to give perspective as to how we look at loss ratios. And obviously, quarter-by-quarter is something in the loss ratio. We wouldn't worry too much about it because we also have seasonality in almost all lines of business. Moving to the next slide. This is a slide you can actually see on a Digit net basis. We actually had an impact of about INR 70 crores, which basically meant that in case of property and engineering this had a very, very significant impact. But what is interesting is that because we have a very high net earned premium of almost INR 7,000 crores, the impact on the overall loss ratio for the year is only 1%. And I think this is, from our perspective, is important because on 1 side, obviously, higher business you retain larger the chances of losses. And we know that last year was a very unique year where we had 3 major nat cat events and -- or 4, and we also had 1 large loss. And all these events were relatively small from a perspective that the nat cat or excess-of-loss treaty wouldn't get triggered. So the net hit to the bottom line for this was higher, especially in property and engineering, as you can see. One would expect, I would say, half of these losses -- or 1/3 of these losses to come every year but the losses will never ever be uniformly distributed. And I think as we continue to grow our net earned premium, I think, can continue to be cautious or whatever we can do in terms of underwriting. I think the overall impact on a year is unlikely to be substantial. And I think this is the message I wanted to give. I'm not giving any sort of guidance on nat cat events, et cetera, because this is something which is completely, completely unpredictable. I think this is the last slide before I move to the triangles. I think our focus on KPI integrations, et cetera, is very strong, and you can also see in 2 years we have almost doubled the number of APIs we have and now 51% of our policies are issued through the APIs. So this again is, I would say, part of our core strategy. in terms of how we underwrite, how we onboard, how we service policies. And this is something which will continue to be the focus for us. Now I'm moving to the slides after the thank you slide for additional information. The first is the reserving triangle for whole account. We started really for -- were there for about 4 months in the year '17, '18. And after that, all the data is for every single year. So the number is INR 6.9 crores which was the original estimate. We have got 1 very large TP claim, so the reserve were increased, then you can actually see over a period of time even this small year also had a positive release for us favorable development. After that, again, if you actually see from INR 392 crores (sic) [ INR 392.4 crores ] 3 years later, this was about INR 379 crores -- INR 380 crores not material change. And after that, there has been a change. So every year, you can actually see that overall, our reserving has been, I would say, adequate on the whole account basis and this is something which obviously will keep publishing every year. The next one is more for motor TP. And here, as I said, we've got a large TP claim. The reserve was only INR 5.1 crores and this has a very small negative development as of now of about INR 60 lakhs. In all others, if you see for March '19 for 4 years, we actually did not review our reserves at all for '18/'19, which got reviewed 4 years later. And similarly, I think if you look at up to '20 that there has been slight increase here and there by INR 2 crores, INR 3 crores, INR 4 crores. I think now the methodology, our experience on TP, all of that, I think, is quite decent now. And you can actually see that overall, we have been providing based on this information. And it's basically, if you look at up to years March '20, March '21 was a COVID year. I think we'll wait and see as to how this develops. We'll actually -- you can see that there has been adequate reserving even in motor TP. The next is whole account, excluding motor TP. This is every single line of business, excluding TP here. Here again, you can actually see that reserving has been adequate. I think for us in Digit philosophy, for reserving is that we need to be always be adequately reserved, I think having surprises on reserving -- negative surprises, is something which is -- which shouldn't really happen. I think -- so that's why I think maybe I'm spending slightly longer time on giving the reserving. The last thing I wanted to say before I hand over to the questions is on IFRS earnings. I think as we know that listed companies will start reporting from next year the IFRS earnings. And I think there were some questions obviously, will people generally wanted to know about IFRS and things like that. So these are our IFRS results. Our reconciliation has also been audited by our joint statutory auditors. So this reconciliation is audited by them. You can see what the IGAAP profit is, what the networth is in IGAAP, then you can see what the deferred acquisition cost is IFRS 17, then unrealized gain, loss of investments, IFRS 9, discounting impact of IFRS 17 and provision for deferred tax under IFRS because we are profitable in IFRS, I think, from year 3 and all the losses have now been, I would say, passed through, so a taxes payable on that. And you can also see what the networth is as per IFRS and what the return on networth also as per IFRS. So I think this is, as I said, that's for IFRS 17 audited reconciliation. I think, as you know, that as of now, regulator is not asking us of any company to publish IFRS results. And in what shape and manner would IFRS get implemented in India by the regulator is something which we'll have to wait and see. But we just wanted to show the IFRS earnings. And this is something we will continue to do every quarter and obviously, once a year, these numbers would be -- end of the year would also be the audited reconciliation by statutory auditors which are the same ones who do the IGAAP audit. So this was really the last slide I wanted to speak. I think all of us are now able to answer any questions that you may have. Thanks for patient listening.

[Operator Instructions] The first question is from the line of Bhavesh Jain an Individual Investor.

I just have 2, 3 questions. The first one is, can you provide the breakdown between the -- in the health segment? How much is retail and how much is group?

Ravi, do we -- would we be publishing these numbers of retail and group with our annual disclosures?

No, sir, these are not published numbers.

So Bhavesh as of now, as I said, since we are not publishing, I would not want to comment on that, but I can definitely say that most of our portfolio would be group and retail health insurance would be a smaller number, if I remember off hand, this would be close to about INR 60 crores or so for last year.

Okay. So sir, basically, the premise is that the group health insurance is basically considered a loss-making business for the insurance companies. So how are you planning for the profitability in the health segment?

So Bhavesh, as I said, I think in group business, we feel that this business is fast growing. Now last year, it was already bigger than the retail business. I think retail business has its own challenges in terms of what happens after the waiting period of 4 years is over to the loss ratios and a lot of new business, which is now coming, 50% of that almost in the industry is portability. So overall, I think health business is definitely under stress. Group health, as you rightly said, is loss-making. But this is 2 bigger segment from -- for us to stay away. And since I was saying in the call that we didn't really have any data also in terms of how one can quote on this business. So I think we have developed this business also from a perspective of gathering data because this data otherwise is not available in the market. Going forward, I think on a quarter-by-quarter basis, you will be able to see how the loss ratio of this segment of health care, et cetera, are developing.

Okay. And sir, 1 more question is regarding the solvency ratio. So as mentioned that our solvency ratio is different after the capital infusion after the IPO. So can you tell me what is the current state of solvency ratio like what is the number presently after the capital infusion?

So Bhavesh, I think we will publish it as of 30th of June, but our sense is this will be more than 200%. What exactly that number would be, that we will know only on 30th of June. But we expect the solvency ratio to go by -- go beyond 200% definitely.

Okay. Okay, sir. And 1 more question is regarding the expenses. There has been some change in the classification of the expenses. And which you mentioned in the result PDF. So can you tell me like what are the classifications we have done? What are the changes we have done?

Sure. Bhavesh, Ravi you want to answer that?

So Bhavesh, you can look at the industry-wide financials. There was a movement of the expenses from Schedule 4 to Schedule 3. And we are also aligned with the industry and the changes are in line with overall industry approach.

[Operator Instructions] We have the next question from the line of Shubham from Investec.

I wanted to ask what would be your combined ratio trajectory from here on? And my second question would be, we have seen that there has been significant reserve releases in the last 2 years. So how does it -- how will that work in the future.

So 2 things here. One is that we actually don't have any guidance on this. We, as a company, as I tried to explain earlier, we basically don't think there is an ideal LOB mix, which one wants to look at, market is fairly dynamic. So one will have to keep -- wait and see as to how the business develops. Second, I would say is that from a combined ratio perspective, when we think about higher retention of premium, which leads to higher leverage or higher growth in AUM, the same combined ratio will give very different ROE from that perspective. And you can also see that at our combined ratio, and I'm sure you can compare it to others in the company -- others in the industry that are sort of a combined, what sort of ROE we are able to give. But we -- the way we drive business, we don't really -- we are not really in a position to give any guidance and nor we want to give guidance because we don't drive our business from that perspective.

Okay. And regarding the reserve releases.

So reserve releases, as I said, I think we do it on the basis that what we think or our actuaries think is the best estimate when we are providing them. Our attempt always is to ensure that we always provide for adequate reserving. We also know, especially in case of TP, et cetera, that court judgments, et cetera, can also have an impact in the future as to how the claims actually develop. Even in fire in some large cases we have actually seen that in case of business interruption, especially if companies have -- customers have taken business interruption policy, in a large claim, which are not very frequent. One can actually see the claim amount increase even after 1 year, 1.5 years. So the approach is to provide adequately for the results. And each year, we try and reflect as to what we think based on the information we have, what the reserve should be. Now how would they develop in the future? I think we'll be publishing these numbers every year, and that's what I can answer at this stage.

The next question is from the line of Prayesh Jain from Motilal Oswal.

Just 1 question on the distribution. So our business distribution has been dominated by brokers. How and how do you see this mix changing in, say, the next couple of years and what line of business, which channel is something that you will be focusing on? And what are the plans here? That would be my first question.

Thanks for your question. So broker actually is a very omnibus sort of a channel. So when we think about motor dealers, they come through OEM brokers. Corporate business obviously comes through corporate brokers. Then you have a lot of retail brokers who do business, I would say, on a state or on a city basis. And then you have aggregators who work on POSP model who also come as brokers. So if you just look at these 4 examples, all of them come through brokers but all 4 are very different distribution channels. Answering your question as to how we look at distribution, et cetera. I think we, as a company, are channel agnostic which basically means that we try and steer business through all possible distribution channels, looking at their own each channels, own loss ratio, as well as acquisition cost. And this is something we -- our teams continuously to look at to see where we can increase the presence or where -- which geographies we want to tap. And like product mix, there is no real channel mix, which we steer towards to say in 2 years, this is a channel mix, which we want because I think, again, based on our understanding of business, market changes very fast. So one should not, in our view, steer business from a particular channel mix or a product mix perspective in 2 to 3 years because 99.9%, the chances are that one would be wrong. For -- just to give 1 example, last year was very strong on new vehicle sales. Now because of that OEM brokers have done a good amount of business. Now their proportion would have increased. And as you can see in our proportion of own damage premium increased substantially last year. But if you go back to the year 2021 where because of COVID and semiconductor issues, there was very less or there was negative growth in the new vehicle segment. The OEM channel would have actually not done that well. So without us doing anything, in 1 year, we would have seen the channel not growing as fast, while in 1 year, the channel would have grown much faster while our focus wouldn't have really changed much during those 2 years. So basically, this -- I think driving this in isolation without -- now, we realized that the market dynamics and economic macroeconomics will have a very substantial impact on this. So we try and increase our presence across all distribution channels based on our philosophy, but we don't really drive ourselves to a certain channel mix.

Second question is on your motor business, what's the mix today between commercial vehicles, 2-wheelers, and passenger cars and any thoughts as to how this mix woud pan-out. I know you've said that you look for profitable pockets. But inherently, all these 3 segments have their own structure wherein probably something like a CV is a high on loss ratio but low on expense ratio. So vice versa in passenger car. So how do you kind of think about the next couple of years standpoint?

So we don't think on that basis. I think if you see about 4 years -- 3, 4 years back in our first 3 years out of 6, 7 years journey, first 4 years, we were substantially bullish on motor third-party business while the industry was not as bullish. Last 3 years, industry, a lot of players have become very bullish on third-party business. While we are not as bullish and you saw that we actually degrew our third-party book in quarter 4. So here again, I would say, we don't really drive ourselves to see this is the CV mix we should have, or this is the private car. We, again look at where the opportunity is and -- which is a function of both the vehicle sales segment as well as the competition dynamics. And just to talk about quarter 4 specifically, if we degrew in motor third-party you can be sure that the degrowth would have happened more because of commercial vehicles because commercial vehicles have almost 90% of the premium coming in from third party. So in that quarter, the commercial vehicle segment would have degrown. But again, in the next quarter, in the next 2, 3 quarters, if there is an opportunity for us to grow in that segment, we can actually immediately grow in that segment because the distribution plays already there. And maybe I'll just take 1 more minute to explain this, that our industry is actually quite interesting because if you are growing fast, if you are growing 15%, 20%. Also 15%, one needs capital to provide for this growth because solvency is linked to the premium which you write. And if one is writing this business at a loss, then again, you have to provide for the capital for the loss. So we feel that this mechanism will ensure that any company which is becoming aggressive in the loss-making segment, sooner or later will have to put in more capital and that capital will come with even lower ROE than what was available previously. So those market correction volatility can happen from a quarter-to-quarter but nobody can, on a continuously basis, write loss-making business. So we'll see those corrections happening. And that's the reason I feel that at this stage -- no, we are not in a position to tell you when exactly will that business grow. We'll have to just wait and see when that correction happens.

Got that. Sir, my last question is on de-tariffing, if the motor TP business is de-tariffed, how do you think would play out in the industry. And like we've seen all the segments where -- it's the only segment which is tariffed today, and it's been quite hypercompetitive at least the OD segment is quite hypercompetitive. So in that sense, do you think TP could -- if de-tariffing happens, do you think that it can be under pressure of price -- more competition and in that sense, more possibility of lower combined. Yes, that will be my last question.

So in TP, I believe the industry's focus is and has been that there has hardly been any increase in third-party premium rates in the last 4 years. So we believe that the General Insurance Council Has been engaging with the regulator that this third-party increase should happen and the discussions have been going on. As far as I think the de-tariffing goes, our view is that sooner or later, one should have de-tariffing simply because this is the only segment where there is no fee pricing. Secondly, when the pricing is fixed, then people play on the commission on the acquisition cost. So if pricing becomes free, like it is in, say, own damage and you give example of that, then people will play on the pricing with a certain commission in mind. In private car today, a lot of companies in a comprehensive insurance take into account the third-party claims experience and then give a quote overall on comprehensive business. So as of now, our understanding or assessment would be that with the free pricing, it's not essential. Some rates will go down. Some rates and the commission will get adjusted a bit. In some places, the rates will also increase, because overall, for the industry, if you look at last 4 years, the business has not been profitable on the TP side. So if the loss -- if the rates just go 1 way down, then the losses for the industry will significantly increase which means industry will need even more capital. And then again, that correction will happen. So overall, I think we would support anything which is towards 3-year pricing. But the first priority, I think, for the industry has been and rightly so to engage with the regulator for increase in the third-party premium rates which haven't really increased in the last 4 years.

Sir just maybe one more question...

My sense is if you could take for somebody else. And if we still have time, we could come back to you if that's okay with you.

The next question is from the line of Dipanjan Ghosh from Citi.

Just a quick question. First on your strategy on the B2B business which is more of a fire, engineering, maybe group health. Just wanted to get some sense of how you have seen these businesses scaling up? And what sort of reinsurance support would you require? Or how are the discussions going? And also, do you want to retain more or kind of how should one think of the [ tiering ] ratio in this business. It's the overall strategy on these businesses. And also in this context on the B2B businesses, I just wanted to get some sense of -- what is the right to win in any of these businesses for someone who is, let's say, relatively smaller in scale. Do you focus on product bundling, or it's more of the relationship that you really build out there? Or is it just based on pricing? My second question would be on the investment leverage and how should one think of the trajectory of the investment leverage from here on? And my last question would be on the retail health business in terms of your plans for scaling that segment up. Those are my 3 questions.

Right. So let me start with your leverage question. So leverage obviously will go down this year because we have raised capital of about INR 1,125 crores or so. So our net worth will certainly increase by 1/3. So the leverage will go down. I think under normal circumstances, and I'm not giving any guidance here, after this year is over, then again, I think the growth on the leverage increase should actually start happening again from next year. We, as a company, believe in higher retention. And in each area, we try and define for whether for 1 event which could be 1 single claim or 1 single event which is a flood or earthquake. What the capital at risk we want to deploy. And that is a function of what the net worth which we have. Now I explained in this slide that last year was -- we saw 4 major events plus 1 large loss, and we lost INR 70 crores which is very substantial. I think if you think about INR 180 crores is a profit for the year and even assuming that 30% -- 1/3 or 40% of these losses are normalized, even then it has been very substantial from our bottom line. But on the other hand, from a 1-year perspective, this is only 1% of our earned premium. Now as for reinsurance, et cetera, is concerned, I think all I can say is -- and this is more a market knowledge that we have fairly large capacities on reinsurance. And we also have decent freedom as to how we can -- what sort of a business we can write. And for each line of business, the premium retentions are actually disclosed. So as of 31st December for fire, motor or each line of business, those numbers are there. And in the next 7 to 10 days, the number for the fourth quarter would also be up. So you can actually have a look at what the retention is in each line of business. I don't want to give too much details on the reinsurance because it's more like a confidential arrangement which companies have with their reinsurers. And as I said, you can look at those losses and see what sort of losses which we had on our net on this basis. Lastly, on retail health, I think, as I said earlier, one has to keep in mind this 2 things. One, obviously, is this waiting period of 4 years, the portability business which has now becoming more and more, and the absolute fresh business is less. First year commissions are also very high. So while this is a business which we have been growing. But this is not something which we see as like -- as a do or die sort of opportunity. Getting a ROE of 15% of this business on retail health, even for some of the best players is very, very difficult as -- if we go by the numbers which we see. So that's all I can say on the retail health side.

Sir, if you can just add some color on my first question on the B2B businesses. In terms of your strategies on those businesses and whether it's relationship dependent or pricing independent or something else that what do you think would be your right to win or scale up strategy from, let's say, 3- to 5-year perspective in the B2B businesses particularly?

So I would say it's a mix of all. So first, obviously, is the relationship. Second is your ability to understand our business as to whether you would want to underwrite that business or not. And just to give you 1 example out of this -- or 2, maybe 1 business from the past, which we wrote, which was a satellite launch business where we had written some portion of that business based because we saw that as a new opportunity, time spent on that was quite a lot to see what typically the failure ratio is, of different countries, what the premium rates are and things like that. And on the other hand, we have -- we said no to a business which pertained to this weather exposure for cricket matches whereas not even 1 goal is pulled, you have to pay for the financial loss, and we do not participate at all for that business. So having an understanding of what the exposure is, what sort of a loss you can have is very critical in this. Third is your reinsurance capacity, how much you can actually write a business? And can you write it as a leader? Can you take a meaningful share in it? And can you settle large claims? So it actually becomes a mix of all of this. As far as I think right to win, et cetera, goes, as you rightly said, we are a small player in this, but despite that with the INR 800 crores of property premium last year. And I think if you look at overall market share of property and our overall market share, this will be very similar. And if you go back maybe 3 years, our market share in fire business would have been half of what it was last year. So one has to keep trying based on these 3, 4 things. And you have to earn that right every single day. We can take 2 more questions.

The first is from the line of Swarnabha Mukherjee from B&K Securities.

Three questions. So first, on the motor business, I just wanted to take your views on the growth versus the cost of acquisition piece of the puzzle. So I mean, our growth rates have been very strong historically. Of late we have been hearing about from other reinsurers that the competitive intensity, the pricing levels, et cetera. seems to be showing some kind of normalizing. So I just wanted to take your views that how are you seeing the market at this point of time? Where can we -- can we see your cost of acquisition growing given the growth rate that we were dreaming of, [indiscernible] whether you were seeing a different picture should we see some normalization in number -- your number also in the motor business? I heard your comment on TP but I thought I'd kind of take some more details from you regarding this. The second question is on the -- now that your investment group has also increased post IPO. I just wanted to understand, how should we think about the asset allocation, should we be heading towards a slightly riskier assets leading to the better investment to better support the ROE. And in addition to that, so if I understand correctly, the IFRS numbers, the profitability as well as the ROE would see some impact on the mark-to-market components of the underlying assets. So there could be some volatility there, so if I were to understand that for your business, what could be a core ROE number with normalized investment assumptions. Yes, these are my questions.

So let me start on the investment side, I think every quarter, we'll give you update both on our asset allocation as well as on investment yield. I think you guys are more on the investment area. You can actually decide for yourself what the trajectory on investment can be. Obviously, data is available for all other companies. That's a good part of our industry. Of other -- you can look at 4, 5 companies what sort of a return, they have -- investment yield they have, and what sort of asset allocation they have. On the IFRS number, if you look at our slide, we have actually given all the data points, whether it is change in unrealized gains, whether it is discounting impact, whether it is deferred acquisition. And I would leave it to each of you. I think you guys are the analysts, you know this more than us, as to what you should take into core ROE, what you don't want to, and everyone can have a different view. I think our job was to publish these numbers and how to interpret that, I would leave that to you. On the motor business, on the competitive intensity, et cetera, my sense is that business is competitive. I think that's the nature of business in India, typically. But secondly, as I said earlier, we have to just keep this in mind that if any company decides to grow in motor TP, motor OD, health, fire, every business aggressively, what will happen to the loss ratios? And what sort of capital requirement would happen or would come because of growth as well as because of your writing business at a much lower profitability. So over a period of time, all these things automatically find the normal level because there is no free capital available which is ready to come at seemingly even lower ROE, et cetera. What we see, our job is that we in the business from a long-term perspective, we would not write any business at a loss. If we know this business will be loss making, we will not write it. We don't want to drive ourselves that we have to grow so much, irrespective of what the market conditions are. If market conditions are good, we can grow like [ hell ] in that segment. which is obvious from our TP, the way we grew TPs initially. And if we feel market conditions are not good, we will degrow that segment also. So we don't put those sort of constraints on us to say we have to have so much in this line of business or this product or this channel. And we have to grow so much in a particular quarter. We don't drive ourselves to that because business by nature, any business by nature is uncertain. And we don't want to unnecessarily pretend that we will drive it in a certain way. Every quarter, we will be showing you loss ratios and the growth rate of each segment. And as I said earlier, we look at own damage, health, loss ratios on a yearly basis, or last 4 quarter basis rather than just one. And TP and fire more from a 3-year perspective than just 1 because in TP, you have to see how the results are developing, how the extent -- your loss ratio is developing. And then fire, obviously, in 3 years, it gets normalized for large losses and some nat cat events. So that's how we look at business, and that is how exactly we have tried in this presentation to show you data points which we look at closely in terms of what we think is important. We have time now for 1 just last question. We actually have an external visitor coming in at sharp at 6.

We will take the last question, which will be from the line of Raghvesh from JM Financial.

Just I wanted to understand on the motor business in the OD and the TP, what is the share from the dealerships and the online. I mean the assumption is the online would be largely third-party and OD would be from the dealership. Can you give a better sense of this. And in terms of the CE or the combined ratio, is our digital business, both our own website and through third parties already at par better off-line business. And if not at what scale would it be at par?

So thanks for that. So one is that we don't share these numbers [indiscernible] substantially. And we see that existing, we don't want to really discuss quarterly [indiscernible] because these things can change and do change very fast. As for the channel steering, as I mentioned earlier, we are channel agnostic. We look at loss ratio and acquisition costs together, when we look at profitability. In motor business [indiscernible]

Sorry to interrupt. The for you is not very clear sir, at the moment.

Okay. Sorry, I was saying in case of motor business, normally, we look at it on a yearly basis as far as combined ratio goes in very exceptional cases, you might see it from an 18-month or a 2-year perspective, but we normally see motor business on a yearly perspective on acquisition cost.

And how better is it -- better or worse is the digital, OE website and third parties as compared to the off-line?

So I don't, again, want to get into this, but our experience is that online channel attracts the best of customers and the worst of customers. So we are not in the position to generalize that online customers are bad. Our online customers are always good. Thanks a lot, and I just wanted to thank everyone for joining for our first call and I also want to take this opportunity that a lot of you have supported us in the IPO. We are really, really thankful for your support, and we'll do our best at all times to repay the trust that you have put on us. Thank you so much.

Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.