Good evening, ladies and gentlemen. It gives us immense pleasure to host the senior management of Niva Bupa Health Insurance Limited for their Q3 FY26 results conference call.

I now hand over the call to Mr. Krishnan Ramachandran, Managing Director and CEO.

Over to you, sir.

Thank you. Thank you very much, Anshuman, and thank you to each and every one of you who has joined this call.

Let me start off our presentation. There's been a number of very, very important developments in Q3, specifically from a policy standpoint.

Also, a number of industry initiatives are picking up momentum. I thought I'd spend a minute or two to walk you through all of what's happening from an overall industry landscape standpoint.

I think the first one is the awareness campaign, which all of you are aware of. Just to reiterate, the industry is committed to spending a sizable amount to the tune of ₹120-₹140 crore every year on spreading insurance awareness, general lines as well as health, health being a significant part of this spend.

One more burst of this campaign is currently live as we speak. This is an important initiative which is being sustained by the industry.

The second important initiative is how we build a more transparent, a more sustainable, and a better ecosystem of insurance and hospitals for the benefit of the policyholder, promoting both access to high-quality care as well as affordable care. As you're all aware, there is a significant common empanelment initiative underway.

There's a lot of focus on bringing about commonality around evidence-based practice of medicine through standard treatment protocols and use of technology. While the overall initiative is underway and we're making great progress, I do want to update all of you that we are very excited that Dr.

Prakash, who's an outstanding clinician as well as somebody who has deep experience in the insurance industry, being the Joint Managing Director at Star Health, has now joined the General Insurance Council as the CEO for health. I think his leadership will be very, very instrumental in driving and giving fresh impetus to a number of initiatives around health insurance and healthcare that the industry has embarked on.

I think the third big one, which was a big topic of discussion last time, is specifically how is GST going to play out as far as economics as well as consumer demand is concerned. The signs are clearly quite positive as far as Q3 is concerned, and my colleague Ankur will give you an update on business, and Vishwanath will give you an update on what it's meant from a financial performance standpoint.

The last update along this theme is the Insurance Amendment Bill, which got passed. I guess a few key highlights.

Of course, a big one from our standpoint is the 100% FDI, which really clears the way for more foreign participation, not just in Niva Bupa, but also into the industry. A few things which have been topics of discussion amongst us several times, I just thought I'd highlight what is not there that was expected to be there, is the composite license has not come about.

The ability to generate fee income through value-added services is not there, as well as open architecture on agency is not there. That now there is certainty in terms of what the bill or the Insurance Amendment Act contains.

I'd say that's the other big policy update as far as Q3 is concerned. Coming on to the business performance of the company itself, on a like-to-like basis, I won't repeat, because of the accounting change, we'll still continue to focus on giving you an update both on an N as well as 1/N basis.

On a like-to-like basis for nine months, we overall had a growth rate of 26% as a company and a retail growth rate of 33%. Our nine-month PAT was ₹208 crore, and our retail market share improved for the nine months to 10%.

I'm also particularly proud that we've been recertified for the sixth time in a row as a Great Place to Work. We have sustained a very high trust index score.

We will figure in the top 100 companies, Great Places to Work in India, and also in the top 25 in banking and financial services. I cannot overemphasize how important a KPI this is for us, because as you all know, this business is a daily execution-intensive business.

Talent, we believe, is a significant differentiator. This KPI gives you, the audience, the investor, the analyst, a sense on how well we are doing and what I believe is the most essential raw material for our sustained success.

A couple of key customer metrics: on NPS, we've improved by five percentage points, five points rather, blended NPS stands at 58. Our cashless NPS holds steady at a very strong 67, and we continue to maintain best-in-class claims settlement ratios at close to 95%.

Last time when we spoke, I gave you a brief update on how we are transforming our value chain using AI. We will give you a more robust update when we do our next call, but just to give you a flavor, while we are already fairly mature when it comes to using, let me just call it traditional AI techniques such as machine learning, we're also making significant progress using GenAI.

I updated you on the implementation path of Sprinklr, Sprinklr has gone live, and we are continuously infusing AI capabilities which the product has to offer. We also have a functioning AI lab as we speak.

Every element of the value chain, and we've put this out in the investor presentation, we are working through how we transform it using both traditional AI as well as the exciting generative AI capabilities through the large language models. At this point, I'm going to hand over to Vishwanath for an update on our financial performance.

Thank you, sir. Good evening, everyone.

To start with profit: profit after tax under IFRS increased by 74% from ₹120 crore in nine months last financial year to ₹208 crore current financial year YTD. The profit for quarter three is ₹77 crore in current financial year against ₹60 crore last financial year.

This is after taking into account one-off impact of around ₹20 crore on account of impact of new wage codes related to past service costs for gratuity and leave encashment. Combined ratio for nine months under IFRS has improved by 50 basis points to 102.9%.

If we remove the one-off impact of gratuity and leave encashment, the COR comes to around 102.6% for same period. While there is increase in overall loss ratio by 1.1%, mainly because of mix change, this has been more than offset by reduction in expense ratio by 1.6%, resulting in improvement in combined ratio.

Retail loss ratio on IFRS basis for nine months is in current financial is 66.9%, which is a shade better than last financial year nine months retail loss ratio of 67%. The expense of management, EOM ratio for nine months, improved to 35% from 39% in last financial year on without 1/N basis.

When calculated on 1/N basis, the ratio stood at 36.3%. This improvement is driven by mainly decrease in gross commission ratio as percentage of GWP from around 23% in H1 this financial year to around 21% in Q3, mainly due to including GST as part of commission.

Most importantly, because of operating leverage, where the expenses have gone up by 13%, GWP has gone up by 22%. The allowable EOM, including additional allowance, comes to 35.9%.

Hence, on without 1/N basis, we are compliant, and with 1/N basis, it is higher by around 40 basis points. We are very confident that we will meet the regulatory requirement on both 1/N accounting and without 1/N accounting for current financial year.

Annualized investment yield for nine months is 7.3% with AUM of around ₹9,000 crore. Solvency ratio is at a healthy level of 2.49.

That was financial highlights for nine months. Let me now hand over to Ankur for more detail update on business.

Thank you, Vishwanath. Good evening, everyone.

Overall, our growth in Q3 was 31%, and for the nine months, it is 26% overall. When I give you new business numbers, the growth in Q3 was 46%, and the total of YTD, which is nine months, is 30%, which helped us to gain market share from a 9.6% in H1 to a 10.2% in Q3, and taking our overall market share to 10% in the first nine months.

Let me now go to channel-wise and give you a view on some of the large channels. Agency saw a growth of 43% in quarter three, and for the nine months, the growth is 32%.

When I give you numbers for bank and non-bank financials as NBFCs, the quarter three growth was 27.5% and 19% on a YTD basis. Most importantly, our direct digital channel, the business overall grew by 70% in quarter three, and overall they are maintaining a healthy growth of 49%.

Last time, I updated all that GST will have a very positive impact, and all our Q3 numbers are signaled to one of the reasons is also we got tailwinds from GST. Important to share that Q3 volume growth was also 29%, yes, 29%, and the value growth additional was 15% there, which means the ticket size went up by 15% in Q3.

Vis-a-vis H1, H1 volume growth was 22% for us, and the value growth, which is the ticket size growth, was only 5%. These are the highlights of this quarter and the overall nine months performance on the business side and the channel side.

I would now request Dr. Bhabatosh to talk about the products and the claim side.

Thank you, Ankur. Our most recently launched product, ReAssure 3.0, has found really great favor with the market.

It has, in a short period of time, become the fastest-growing product. This product, if you may recall or if you may know, has very unique features.

This is India's first inflation-proof product for lifetime. With unlimited sum insured, it beats the high level of medical inflation that our country continues to witness.

With features like comprehensive OPD, wellness, and prevention, it offers coverage not traditionally as for hospitalization, but also for complete suite of OP expenses like diagnostics, various consultations, and pharmacy as well. With Niva Bupa 1 membership available in certain variants of the product, customer can access superior services, a really wide, comprehensive suite of health checkups in top-tier institutions, faster delivery of services and assistance programs throughout their journey, whether it is with regards to application, policy, or claims or endorsements.

Complete customization is possible through a range of optional benefits like global coverage, varied pre-existing waiting periods, small to medium-size copayments, very small to high deductible options, interestingly, a tiered network which accrues discount to customer, and many more. On our digital health services through our health ecosystem, we continue to witness wide adoption.

On an average, more than 50,000 annual preventive checkups and diagnostic tests are booked through our mobile app as a digital asset. Nearly 3,000 HRAs are completed on the platform.

We also went live with phase one of completely upgraded and revamped provider page to help our customers make right healthcare setup decisions. This also allows them not just to review the ratings, clinical and other parameters of the hospital, but simultaneously compare multiple hospitals to make the right decision.

Our app continues to enjoy 4-plus rating, 4.2 on iOS and 4.4 in Android. Our MAU, monthly active users, continue to grow at nearly 600,000 active users on a month-on-month basis.

Happy to announce that our PPN, or preferred provider network, grows from strength to strength, now having presence in 47 cities in India with nearly 1,100 hospitals. Thus, the contribution of PPN to overall has gone up to 20% of total claims coming through PPN.

Superior consumer experience at PPN exhibited through NPS of 80-plus now. Over to you, Krishnan

sir. No, I think just to summarize before we throw this open to Q&A, we did have a strong Q1, at least the early signal with respect to specifically the change around GST, the signs are definitely positive in terms of both volume and value increase.

In spite of there is a hit on account of GST on non-commission services, and there's also the one-off which Vishwanath mentioned on account of labor code changes, we've had a strong Q3. That's it from our side, over to every one of you for your questions, comments, suggestions.

Thanks for the opportunity. My first question is on the retail claim loss ratio.

The retail claim loss ratio has been broadly stable at around 67% despite the very strong growth in new business. Just wanted to understand why is that, because typically new business would have a lower loss ratio.

Just wanted to understand is there any other offsetting factor that is going into this which we should be aware about? That's one.

Secondly, on the growth side, there has been GST tailwinds, your ReAssure 3.0 product has seen very significant traction as well. Are you seeing these GST tailwinds continue into January as well?

Is that traction continuing, and should we think of it as more of a structural tailwind as compared to a one-off impact that would have played out for three months? Just wanted to understand how the trends there are playing out.

Then, lastly, on Vishwanath on your commentary around the regulation bit. Just wanted to understand there are multiple initiatives, you're right, being taken by the General Insurance Council.

When it comes to medical inflation or commissions, we are not seeing any improvement at an overall industry level. When should we start seeing these initiatives which either the General Insurance Council or companies are taking really flow down to and resulting in the industry profitability improve?

How far are we from that point, and what really needs to change for that to happen, if you could throw some light there? Thank you.

Sure, Supratim. I'll just start with loss ratio.

Loss ratio is stable around 67%. See, this is based on earned premium.

All the business growth, of course we have been consistently growing, but the one which Ankur mentioned, the supernormal growth in last quarter, the earned premium of this will take time. The mix change we have to see not only in terms of GWP, but more like earned premium.

It will reflect over a period of time. In that sense, if you look at our planning, our modeling, etc., this loss ratio being stable itself is looking pretty good to us.

On your next question in terms of GST tailwinds to sustain, from October to November and to December, the December growth was even better. January also looks very healthy to us, which to me looks like it's not a one-time benefit which we have got.

Looks like a sustained one to us.

Supratim, in terms of your question on broadly the two sets of initiatives, right, or three sets of initiatives, let me take the one on acquisition cost first. Vishwanath, I'd say as an industry, and we updated last time as well, that the GST impact on commissions would be passed through.

That is evident in our data, right? If I look at gross commission ratio for H1, it was 23%.

For Q3, it is 21%. There's a two percentage point fall, and largely this is on account of GST.

That's one example. Also, as you may be aware, on senior trail, the commission rates have been dropped to, for many, many participants, 10% including GST.

That's another, and senior the senior book has been 15% and 20% of, several companies', this is several large platforms. That's another significant development which is actually operating at the industry level.

Clearly there is action happening, and that action is also evident in the data, at least in terms of what I just told you. With respect to, look, the other point is the awareness campaign.

GST has certainly been an important tailwind, but more broadly, I think the overall spend on awareness should play out. I'm sure there is some impact of that in terms of the business growth numbers that Ankur alluded to, but these are things that, take time to play out, with any such campaign.

These are multi-year, this is a multi-year impact item, not something that you can expect to see results for in a quarter or two. That's generally how sustained brand building and awareness works.

Now to the point on, what's happening on the hospital side. Look, there are close to 1,000 hospitals that are empanelled with common rates with the industry today.

Again, and these are at, these are at rates that the industry with its collective bargaining power has empanelled these hospitals. For sure, the impact of this and this number will go to 5,000 in the next six to nine months.

The impact of this will also play out. Let me also add, it's not just tariffs.

I'd say tariffs is only one part of what the industry initiative on, with respect to hospitals about. It's also about standardization.

Last time I mentioned that, we have standardized protocols for seven medical conditions, we've also standardized protocols for seven treatments. This is also having an impact.

We're not yet in a position to quantify it for you, but for sure, this will have an impact on claims cost and therefore ongoing affordability of health insurance.

Got it. Just one follow-up question there, Krishnan.

On the senior citizen plan, you're right, it has come down from 15% to 10%. Just wanted to understand can this be extended to the other products as well, because not a lot of effort is really required in renewal commissions to drive renewal business.

The renewal commissions actually grows as the person ages as well, because the premium goes up. Wanted to understand if this could be extended for the entire renewal piece as

well. Supratim, it's always about keeping a balance, and it's about taking a measured approach, because as I mentioned last time, we want to make sure that as we do this, of course there's a win for the customer, distribution, and us.

It is about finding the balance over time. Could it be done?

The answer is yes, but it's about having a balanced approach and measured approach to do some of these things. The point really is, in the last 12 months, there has been some fairly serious action.

Got it. Understood.

Just one data-keeping question. What is the IFRS loss ratio in 3Q FY26?

If you could also mention the insurance revenue from IFRS, those two would be helpful.

Supratim, on IFRS results, this time we are publishing all the results including with limited review by statutory auditor. They should be there in stock exchanges website maybe in an hour or so.

You will get everything. You wanted to know quarter three IFRS loss ratio overall.

This is 64.4%.

Okay. That's helpful.

You will get all insurance revenue, etc., everything.

Okay. That would be very helpful.

Thank you, Vishwanath.

Yeah. Thank you for the opportunity.

Vishwanath, can you spell out your group claims ratio for nine months current year and last year? Just to understand because overall life ratio is lower than the retail, naturally the group is better.

Just if you can give us a color how the number is and how it has changed from last year.

Sanketh. Group loss ratio last year was around 57%, this year is 62%.

That's the increase. That has to do mainly with mix change.

You can see the drop in expenses, this is one of the factor.

Understood. Related to that point, maybe I don't know the corporate plans if they have helped to reduce your EOM or accelerate the compliance of your EOM.

Just wanted to understand whether the behavior in that business has been in line with your expectations, when it comes for fourth quarter renewal, you will continue to do it or any thoughts on those lines? Or how the contracts are behaving, suppose you want to withdraw any compliance burden with respect to

EOM? No, Sanketh, as we have always maintained, we write this business wherever we believe it makes economic sense for us.

In terms of writing corporate business, it is not about EOM, it is about doing it for entirely business reasons. In fact, this portfolio has actually grown slower for us.

It's grown at 12% this year, just to give you a sense. It's not that we write this business when the pricing is supportive for us and also when our value proposition is resonating.

Compared to last year, this business is only growing at 12%, materially slower than the company's overall growth rate.

Understood, Krishnan. Actually that was my next question, that if your group growth is 12%, and if the corporate part also has grown by 12%, then your banca business has meaningfully slowed down.

Maybe I'm asking this question very similar to the previous quarter, whether this is market share loss, or in general, disbursements being weak is leading to that slow

down? Look, on the banca side, as I've mentioned, Sanketh, our growth is 27.5% in quarter three, bank and NBFC.

YTD, we are almost at 20% growth on the banca side, it's not slowing down overall. The 12% which Mr.

Krishnan mentioned was on the pure B2B side, employer-employee side.

Understood. Maybe I was looking at a wrong number, sorry, my bad there.

Understood that point. Eventually means that your mix in the favor of benefit-based products improved, which should be boding well for overall loss ratios in group business to improve going ahead compared to 62% what you reported now?

Yes, in future, you're right. When we look at this next year, because this is basis earning, the weights of earning, and that's why we are here, yeah.

Understood. Lastly two questions.

One is can you spell out contribution of your long-term policies in the fresh business you are doing? You said that the growth is on fresh 47% if I got the number right.

How much was the contribution of long-term in the current third quarter or nine months, and how was it in third quarter last year and nine months of the last year? The second question is on solvency.

See, our solvency was 300-plus, now has dipped to 249. Maybe because of 1/N accounting thing.

Assume profit pools remain slow, and the growth remains as strong as it is in the I-GAAP numbers, because solvency is based on I-GAAP numbers. Do you think this numbers will see a challenge, or you will go for a sub-debt?

I know it's too early to ask, but just wanted to understand when the convergence in the profits will happen and before this it might not trigger solvency to fall below 200?

Let me take the first one, Sanketh. Our overall multi-year and the policies has been stable since last year.

There has been not very significant change over last year to this year. This is hovering around 20%-21% even in last year and this year as well.

Neither the quarter-wise there is any change which I should highlight here.

Sorry, this 20%-21% is on total premium including renewals. If I consider only new, then also the number is same?

Around some change, but not very significant here. I don't have immediate handy number, but not very significant is what I'll tell you.

Understood. Thanks, yeah.

On solvency,

Sanketh. As there's a seasonality in I-GAAP profit, and quarter four is always heavy in terms of results.

We don't see that to be a challenge. 2.5 should only go up.

It is as per our plan when we raise this capital. We are good with that.

Understood. Perfect.

Those were my questions.

Just to see, the growth on banca that Ankur mentioned is the channel growth. Channel has both retail as well as group.

Just keep that in mind as you think through how it will play out over time, yeah?

I understood, Krishnan. Thanks for the clarification.

Yeah. Hi, thanks for the opportunity.

Firstly, Krishnan, you mentioned about seven surgeries or something which is kind of agreed rates. Is it with the entire hospital network, or how is it, and what would be the contribution of these to, say, in your nine months claims or yeah?

Thank you, Prayesh. It's not on rate.

What Mr. Krishnan referred to is as an industry, most players have come to an agreement to apply evidence-based medicine driven standard protocols for hospitalization in seven most common infectious diseases.

Now, the same is also available, ratified by and thus is available on General Insurance Council's website as well. Now, all the insurers, one of the challenges that we used to as insurers face is ambiguity about admission criteria in infections mostly.

Now, these guidelines, as I said, very evidence-driven guidelines were created. These were circulated and discussed with more than 10,000, 15,000 providers, and with their input, these have been agreed and have been put on General Insurance Council's website.

That removes any ambiguity when it is whether the hospitalization was necessary or not. This is about standard treatment protocols and guidelines, and not about the cost.

So

Maybe you should also speak for the ICMR standard treatment workflows. Yeah.

As you would have heard, as many of you would know, ICMR also has come up with standard treatment workflows, or call it care pathways or guidelines, for a range of more than 100 health conditions and diagnosis and procedures. Industry is at a actively and advanced stage of adopting this premier institution's very scientific body of work on creating these guidelines under the aegis of General Insurance Council, that is, as I said, at a fairly advanced level.

This removes ambiguity and awards a lot of clarity even to consumers based on very clearly when is the admission required and whether the treatment is appropriate or not.

Point, Prayesh, is, we tend to talk a lot about tariffs, but actually the larger impact of how medicine plays out is on admissions, is about overcare, it's about unnecessary care, right? The whole drive from an industry standpoint, in addition to, of course, common empanelment, is on standardization, right?

The idea is, look, when we have standards on when is an admission necessary, what is the appropriate standard of care for a particular presenting diagnosis, right, and these are all, medicine is science, the idea is to, as an industry, of course in collaboration, in consultation with hospitals, do this so that we have a handshake that is great from a consumer standpoint, both from an experience as well as from a cost angle. If I may add, Prayesh, there, the common empanelment which Mr.

Krishnan referred to earlier, again driven through General Insurance Council, where already 1,000 hospitals we have achieved closure, and sooner than later likely to go to 5,000, is a combination of both: standard tariffs with them, and the simultaneous activity, standard treatment protocols, guidelines, what is already live and through the ICMR work, all in combination addresses both the components, which is appropriate care, right admission at right cost. Do visit the council website to get a flavor of what these protocols are about.

They are displayed on the General Insurance Council website.

Sure, we'll do that. Just more color on it.

Obviously you would have a better understanding on this with respect to what has been the average claim sizes on these diseases, and current tariffs, or whatever savings, do you think that those are significantly or materially lower than what we are looking at average claim size on these diseases right now?

See, as I mentioned, the standard protocols primarily are about admitting the patient when the admission is required, based on clinical condition and parameters.

That would have a bearing Basically, number of hospitalizations can go down.

That's correct. In our, for example, post-monsoon, we have historically witnessed a significantly high level of admissions, for example, for dengue fever.

Now there is a protocol on when an admission is warranted, and by the application of this protocol consistently as an industry, we are in a position to say, "Hey, all of the signs and symptoms and presenting diagnosis does not warrant an admission." An unwarranted admission is actually harmful to the customer, so that it will lower admissions, completely eliminating the claim, as opposed to dealing with average claim size, yeah.

Very important to note these two points, if I may add. One is, because we had circulated to all providers, all hospitals, and have taken their input, and then only finalized, that means customer is not inconvenienced.

Hospitals also know the protocol that is applied, unnecessary admissions are avoided, and consumers are not inconvenienced in that. Otherwise, once somebody unnecessarily admitted, at a claim stage only if you apply, maybe you are doing the right thing, still possibly customer may face some hardship.

That is also eliminated by providing clarity and removing ambiguity.

Got that. Thanks for that detailed explanation.

Last question: just on the commission bit again, there's been a very strong fresh growth in this quarter, and so the commission ratios have come down. With respect to passing on of GST, is that a concluded agreement with all your partners, or there are still negotiations going on, and possibly some impact of it could come in the later quarters?

Is there anything of that sort?

We have closed all discussions, and we have passed it on to our distributors. As I mentioned earlier, they have also seen the results of this GST.

Their overall income is not getting impacted. They are all very happy that overall, the business is going up.

If you look at all the distributor businesses, our businesses, the overall business is going up. That's a very good news.

Yes, there is an impact, but overall income impact is not there, percentage impact may be there.

This fresh growth, and in spite of that, lower commissions, could you explain that?

The growth numbers are much higher, which means the overall business has gone up for them. The ticket size has gone up for them.

No, my question is on your I-GAAP commission ratio, in spite of the fact that we had such a strong fresh growth, the ratio has come down. What explains that?

There is two percentage point around 1.6%, 1.7% percentage point drop in commission ratio, Prayesh. That accounts for both new renewal mix, which would take it upward, and passing on this 18% GST.

Whatever commission we are paying on retail book, it is divided by 1.18. If you just let's say take a 70% retail book, if there is no change in this, it should go down by 12.6%, just to give you mathematics.

So 21 divided by 1.126. It should have been lower, but it's not lower because of this change in mix, where we have higher

Offline. I'll take this offline.

Thanks.

Yeah. Hi, sir.

Thanks for the opportunity. Sir, my first question is on the recent letter which we have received from the IRDA on the EOM.

Though the letter mentioned about the revised methodology for calculating the EOM, but why I'm asking this question is because there is a lot of noise, and there is a lot of statements made by the government and the regulator around the higher distribution cost. Do you expect that the overall EOM for the industry would be brought down by the IRDAI?

How prepared are we on that? Secondly, interestingly, you can throw some light on the claims ratio on the I-GAAP side, how it has moved.

I just wanted to understand last year you mentioned that there was a favorable impact of 1/N accounting. Can you help us understand that?

On H1, you mentioned that the 1/N impact was around 5.2%, somewhere close to that. This at the end of nine months, this has gone up.

I just want to understand why this has happened, because during the quarter, you would have received the second installment of the long-term premiums underwritten last year. That's it.

Lastly, on the loss ratio, though usually Q3 on a seasonal basis should have a lower loss ratio, but it seems it has gone up as compared to the last quarter. Have we inched up our reserving?

These are my questions, sir.

Sure. On EOM and commission, there has been a lot of discussion in the media, but in terms of what the position is, whether something is happening, if something is happening, how will it happen, to be honest, nobody has an answer to that.

I would be just guessing if I told you anything on that. That's really where things are as far as both these topics are concerned.

As of now, I guess the topic as far as we are concerned is what happens with respect to our own EOM, with respect to our glide path and compliance, and there Vishwanath has already confirmed that with respect to what is the regulation of the day, we are well on track to comply. On the I-GAAP and loss ratio, I'll ask Vishwanath.

Loss ratio has not gone up. It has gone down if you compare H1 to Q3 on retail side.

Group of course is a function of many things including mix. Retail loss ratio has gone down.

Now your question on I-GAAP. I-GAAP, we mentioned that there's one-time impact of one large group which will get normalized in next quarter, because the renewal is due on 1st January, and that has been renewed.

Just to address that. Impact of 1/N accounting, it's maybe we can take offline.

It is not very straightforward that there's impact of business which was deferred last year, that plus what we are deferring now. Net of if you do, so that's the impact we have shown of 1/N, 5.9%.

Okay. Vishwanath, just one more thing.

Because of the GST rationalization on the consumable side, on the claim side, have you experienced any kind of a reduction in the claim size or claims cost? That's one.

On the expenses side, anything else other than the commissions rationalization we have done?

I can take both the questions, and both are quite related also. We have done analysis in depth looking at claims, what was the let's say medicine cost, individual medicine cost, pre-GST and post-GST.

We have seen there is certainly reduction in those. If I can just share with you for this, the impact is around 50 basis point on combined operating ratio.

Of course on loss claims it's higher. Second part on GST, non-availability of input tax credit on other expenses.

We have done two, three things. One, of course we rationalized our expenses, we negotiated with some of the vendors.

All those things have helped, but still there's impact on account of that, which is reflected in Q3 results, which incidentally is closer to that 50 basis point on as far as COR is concerned. They almost nullify each other.

Yeah.

Okay. Sir Vishwanath, you mentioned the 50 bps impact.

This is on the nine-month number or for the quarter number?

No, it is for the quarter. Nine months would be, because H1 there was nothing.

It is you can see on underwriting basis, so.

Got it. Thank you, Vishwanath.

All the best.

Hi. On this, all the positive things you mentioned about industry-wide efforts to control the claims, how much they would have benefited in terms of nine months, because the reported number shows sort of a flatish trend when I look at IFRS numbers.

If you look at a cohort-wise, because you have a mix of new which helps you here, but if internally look at the cohort-wise to make a quantitative assessment, how much of impact, positive impact these industry-wide efforts would have taken?

Look, I just want to emphasize that the industry-wide efforts are, again, like the awareness campaign, on the claims side, these are multi-year efforts, right? It's not that there is one action that you will start to see results in one quarter.

These are multi-year efforts. Also, the fact of the matter is with these efforts as well, there will be an inflation that will operate.

The fact that claims ratio is flat last year to this year in spite of an aging book, and Vishwanath also mentioned, with respect to earnings, I'd say that means that effectively inflation has been at some level negated, right? That also gives you a sense of overall what's happening in our portfolio.

As far as the retail cohorts are concerned, I'd say it's in line with our expectation as well as planning,

yeah. Okay.

You also give this claims cost index, which is showing a not too much increase so far in this nine months, right? Is that a representation of all these efforts you are making?

Is it fair to sort of draw a quantitative inference?

It's a reasonable proxy for you to look at.

Got it. Your cohort seasoning impact of the increase in claims ratios is being nullified by the new fresh mix increasing, that is also a fair assessment?

Or you think if let's say you didn't have this tailwind going on in terms of seasoning and the new offsetting it, then you would have seen slightly improved ratio on the claims, is that fair to think?

You're right.

Okay. Another question I had on this was if you look at the claims ratio you report in IFRS versus the claims ratio you report on 1/N basis, there is about 8% gap.

Can you help me understand accounting-wise what causes this much gap?

Sure. IFRS claims ratio is on 1/365 method, which is in a way true reflection of underlying claims and earning.

This is consistent. On I-GAAP, there are two impacts which are, playing.

One, because under I-GAAP, we don't have DAC, we know that that issue is there. In terms of claims, the claims ratio is calculated on 50% earning.

We set off 50% of NWP as UPR. In that sense, there is a seasonality impact.

Also, seasonality is accentuated because there were one or two large groups which were written on 1st January, which will get renewed on 1st January this year, which are already renewed. Next year, next quarter when you see for whole year, that will be more normalized.

Also on top of this, there's a 1/N impact also, because some of the business of multi-year is now deferred, which was not the case historically. There is lot of noise.

I would just add, and we've said this consistently and I think all of you agree, that the right way to look at our financials is on an IFRS basis. The Indian GAAP accounting has a lot of noise, as Vishwanath mentioned, also because of the change in accounting that was introduced last year.

Also, the regulator has also indicated that IFRS will become the local standard of accounting April 1, 2027 onwards. We'll have to bear with this noise for this quarter as well as four quarters next year, but after that, it should hopefully be all IFRS.

Just to mention, our IFRS limited review accounts for nine months along with auditors' attestation is available now on stock exchange website, you can also download condensed stock exchange.

Got it. A last piece on this, that the pricing increase which is being taken by the industry-wide during yourself, is that if you look at nine months '26, is it sufficient or more than sufficient to cover the medical cost inflation and all of those factors, sort of problems in the industry, or this is still what you probably will need to come to a profitable level for the industry?

I'm not sure I understood the question.

I meant to say that the price increase you take on your products, right, I think you talked about few things in the call, but are these price increases enough given that you have made some controlling effort towards the cost increase side on the medical cost as industry? Now are we matching that criteria where price is and cost are converging to each other, or still the cost increase is ahead of price increase?

I think we have consistently maintained that our approach to pricing is to do it annually and to do it high single digit. That approach or strategy does not change.

What that high single digit is is a function of what's the underlying inflation that we're seeing, and as you pointed out, nine months this year has been relatively all right, benign.

Great. Thank you.

Good evening to the team. I have two questions.

Forward-looking, my first question to Mr. Krishnan is, with rising healthcare inflation and increasing penetration of retail health insurance, how is Niva Bupa refining its product design, underwriting framework, and distribution mix to drive sustainable growth?

In this context, how do you balance expansion into newer customer categories with maintaining long-term claims discipline, customer experience, and existing portfolio quality? It's my first question.

I'll ask my second question after. Thank you.

Sure. Look, I will reiterate what we have consistently maintained as our approach to building a sustainable portfolio, is our underwriting approach, which is basis lifetime value.

This is a fairly sophisticated and mature algorithm that we have been working on for the last close to six years now, which is about matching the product, the sum insured with the economics that we part with to distribution, geography, channel, age, etc., etc. We are in a position to therefore then predict when we underwrite a particular risk, is it going to be sustainable over the long term, specifically with respect to how the cohorts behave.

I think this approach has stood us in good stead, and this is fundamentally the approach that we use to select risk. Now, in terms of building a sustainable portfolio, this is the most powerful lever, but there are other levers that we have mentioned in the past and I'll reiterate some of them.

One is a discipline around inflation-driven price increase every year. We believe that it's better to do single-digit price increase annually as opposed to bunching it up over two, three years where it ends up being a sticker shock and results in selective lapse.

This is the other pricing discipline that we have maintained. There's a lot of work that we're doing on the claims side, both from a cost management and coincidentally also improving customer experience.

Dr. Bhabatosh referred to the preferred provider network.

There's a bunch of industry initiatives that I spoke about including medical protocols, etc., etc. I think that is the other lever that we use to build a sustainable portfolio.

Also, on the renewal book, there's continuous opportunities to upgrade customers to more appropriate products, more appropriate sums insured. There's a steady cross-sell, upsell rhythm.

Nearly one in five eligible customers do get cross-sold or upsold at the time of renewal. Taken together, this is what we call our approach to portfolio management that delivers what we believe will be sustainable over time.

Thank you. I have just one question to Mr.

Vishwanath. Can I ask my question?

Please.

Thank you. Again, it's a forward-looking one.

Just want to understand your vision on this. Given the constant volatility in claims ratio and the ever-evolving regulatory compliance, how are you thinking about margin sustainability and profit normalization over the short to medium term?

Additionally, can you elaborate on how capital allocation, investment tactics, and operating efficiency initiatives are being aligned to support growth while strengthening return metrics and keeping the balance sheet strong? Thank you.

Sure. See, our medium-term target is to get to ROE of high teens, let's say, in next two financial years.

We are on IFRS basis, and we are very much there in that trajectory. For that, of course, like Mr.

Krishnan mentioned, underwriting, claims, growth in business, all those are levers which we are using. If you see our trajectory of profits and ROE in last three years, and all those numbers are available in public domain on IFRS audited accounts, you will realize all those things including maintaining loss ratios and operating leverage and economies of scale are helping us to achieve the target of high teens ROE in next two years' time.

Thank you, and best of luck for the next quarter.

Thank you. Thank you very much, everyone.

Appreciate the questions and your patient hearing.

I already said my thank you. Thank you to everyone for being with us on the call, your questions, and very patient hearing.

Thank you.

Thank you.