Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PB Fintech Ltd (BOM:543390, Financial) achieved a significant milestone with a combined growth of 53% year-on-year in new premiums for health and life insurance.
- The company reported a total insurance premium of INR5,123 crores for the quarter, reaching an annual run rate (ARR) of INR20,000 crores.
- New insurance premiums grew by 47% for the quarter, indicating strong market performance.
- The company achieved a full-year PAT breakeven ahead of target, ending the year with a PAT of INR64 crores, a significant improvement from a loss of INR488 crores last year.
- Revenue for the year grew by 34% to INR3,438 crores, with core businesses Policybazaar and Paisabazaar growing by 39% to INR2,375 crores.
Negative Points
- The credit-linked business, Paisabazaar, showed slower growth, with a 22% increase, slightly above the guided 20% growth.
- New initiatives grew by only 15% year-on-year, which was subdued compared to the previous year's extraordinary growth.
- The company's PAT of INR64 crores was below internal expectations, indicating room for improvement.
- There were concerns about the impact of increased porting in health policies on the persistency of the back book and net present value (NPV) calculations.
- The take rate for savings products decreased, impacting overall revenue growth.
Q & A Highlights
Q: There's been an increase in porting and health policies at the system level. How does this impact the persistency of our back book and our NPV calculation?
A: Our persistency is the highest it has ever been, higher than in the past. The percentage of porting in our fresh business is about 20%, which is roughly half of the overall market level. Persistency on renewals in both number of transactions and premium is the highest ever, 1% to 2% more than it has been in the past.
Q: The regulator seems to favor secured products over unsecured products. Can we look at originating some part of the secured products?
A: Currently, our secured disbursal percentage is about 13% to 15%. We are exploring categories like loan against security, besides home loans and loan against property. The overall priority is to increase the secured loan contribution.
Q: What does the online marketing and consulting services comprise of, and how are these expected to remain in the future?
A: These are marketing expenses, including marketing through influencers. Over time, these should become less of an issue as we go into the future.
Q: The take rate on our renewal commissions in the core business has moved up. Is this sustainable or will it move up from here?
A: As the book builds, this will continue to grow. Renewal revenue on the life side is also starting to add up. Both will keep going, so it should be very sustainable.
Q: Can you give the exact premium number of PB Partners and PB Corporate?
A: PoSP is INR1,200 crores for the quarter, and corporate is about INR200 crores.
Q: How are branding costs moving in the current year, and how do you expect them to play out?
A: Branding costs have been growing below our revenue growth. Next year, we will grow brand spending again below revenue growth but will continue to drive fresh growth.
Q: How is the offline channel within the core business contributing to the total premium?
A: The number is inching upwards every quarter, now around 20% to 22%. We are deploying more people in the field and adding centers, and it is growing quite rapidly.
Q: What is the market share today in the new business of health?
A: It is increasing fast. We pride ourselves on bringing new customers to the system and have worked diligently with insurer partners to produce relevant products.
Q: Can you comment on the quality of business in the offline channel compared to your digital business?
A: The product mix is very similar to what it is online. The quality of the business, as measured by persistency and renewal rates, is in the same ballpark as the online business.
Q: How do you see the growth trajectory in the PoSP business?
A: The growth rate will continue above the market. We are focusing on quality, origin of the business, and going deeper into the country rather than just gathering premium.
Q: Can you give some color on the reinsurance broking side?
A: It is a bit early to give too much color. Protection is one category that we see it impacting, and we will see how that goes as the year progresses.
Q: Did you share Dubai premiums for the quarter?
A: It's about INR210 crores, becoming a decent-sized operation.
Q: How do you see the impact of the expense management cap on your business?
A: We are at a take rate of about 16%, well below any EoM cap. We are a lower take rate channel, and the total expense basis is lower for Policybazaar than others.
Q: What are your thoughts on Bima Sugam and its potential impact on your business?
A: We see it as a fantastic enabler that could expand the market dramatically. We are very positive about it and awaiting its early launch.
Q: What was the ESOP cost for the quarter?
A: INR63 crores.
Q: How are you addressing the issues of affordability and waiting times in health insurance?
A: We are focused on affordability through preferred provider networks, deductibles, and flexible payment modes. For waiting times, we are working on green channel concepts to expedite claims processing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
