Ladies and gentlemen, good day and welcome to the Niva Bupa Health Insurance Company Limited Q2 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anshuman Deb from ICICI Securities Limited. Thank you, and over to you, sir. Good evening, ladies and gentlemen. It's a privilege to host the management team of Niva Bupa Health Insurance Company Limited for their Q2 FY '26 results conference call. From the management, we have Mr. Krishnan Ramachandran, MD and CEO, Mr. Vishwanath Mahendra, ED and CFO, Mr. Ankur Kharbanda, ED and Chief Business Officer, Mr. Bhabatosh Mishra, Chief Operating Officer, Mr. Dhiresh Rustogi, Chief Technology Officer, and Mr. Vikas Jain, Chief Investment Officer. Without further ado, I will now hand over the call to Mr. Krishnan Ramachandran, MD and CEO. Over to you, sir. Thank you, Anshuman, and thank you to every one of you listening in on this call for your time late evening today. H1 for us was a productive and eventful quarter. Given the accounting changes that happened in the second half of last financial year, to make sure that we are able to assess or review our results on a like-to-like basis, for the most part, I will focus on our IFRS financials or without one-by-one numbers specifically when it comes to things like growth rate. In summary, for H1, we achieved an overall growth rate of 23% and a retail growth rate of 28% without 1/N. Our IFRS PAT for H1 improved to INR 132 crore, up from INR 60 crore similar period last year. Our combined insurance service ratio for H1 improved by more than 100 basis points to 103.1%, down from 104.2% last year. Our retail market share, which is based on reported numbers and to that extent had noise because of the 1/N accounting change, held steady at 9.9%. We continue to trend very well on a range of customer metrics. Our settlement ratio for Q2 on claims was 95.2%. Our weighted average NPS, to remind all of you, we measured this across 35 critical customer touchpoints, improved to 57 for H1. We continue to sell the right sum insured and products to our customers, as evidenced by our industry-leading ATS at more than INR 31,000. Also, close to 83% of our policies have a sum insured of INR 1 million or above. In Q2, we also launched what we believe is the next-generation retail health insurance product, ReAssure 3.0. It has found very good reception and is doing very well in the marketplace as we speak. We also made good progress on our health ecosystem, or as Bupa calls it, a wider strategy. In H1, more than 13 million downloads. We have 5.8 million monthly active users on the customer app and more than 51,000 health checkups every month, and about 6,700 doctor consults every month using our customer app. Our product and distribution mix has been largely stable. We added one more city in our preferred provider network, which is our strategy to manage great customer experience and claims cost at the same time. About 17% of our claims in the cities where our PPN is present go through these PPN hospitals. We have also seen incidence rates and average claim size range bound and within what we call a stable trend. Consequently, our retail health claims ratio, H1 to H1 this year to last year, is more or less flat. Broadly, that has been a summary of our performance. Before I hand over to Vishwanath, I want to touch upon a topic that I understand has fired up our collective imagination, if you will, which is this whole topic of GST. I really want all of us to step back and look at this change for what it really is, in my opinion. The first part is GST has come down from 18% to 0%. I'll quote what the Chairman IRDA has stated, which is that food is at 0% GST. At the highest level of policymaking, health insurance has been recognized as being equivalent to food in terms of how essential it is in the arsenal of financial services products that a customer should have. I think this is an incredible win for the industry, having personally been involved year after year in lobbying for GST coming down. I think 0% GST is an incredible step from the highest level of policymakers in our country. Second, we should look at it beyond maybe this quarter or next quarter for what it really is, which is adding to the drop in price. Survey after survey on health insurance has suggested that affordability is a barrier to purchase of health insurance. Which is to say that this is a category where price elasticity demand does see a price elasticity curve as in many other categories. To that extent, this should be a significant fillip to demand for the category. Indeed, as many of my friends in the industry have already commented, we, like many others, are seeing demand go up. As a case in point, October, in spite of being a Diwali month, which is historically a low season for health insurance, we have seen very, very good uptick in demand. I'm sure my colleague Ankur can talk more about that. Now, on the topic of ITC, what I can say is that today, when we process commissions, we have passed-on commissions. I think using the term passed-on commissions is not reflective of our philosophy of what this change means for every stakeholder. We truly feel or we truly believe it's a win for customers through lower price. We believe it's a win or we believe and we will make this a win for our distribution. We're confident that whatever income loss there is will be more than made up through increased volumes. Also, one of the other problem statements for the category is there is significant underinsurance. The 18% fall in price, we should think about it in terms of what can we do to give customers more adequate insurance both at the time of acquiring new customers as well as renewal. All of these measures, we truly believe, will make it a win for our distribution as well, in spite of ITC being passed on. In closing, before I hand over to Vishwanath, I mentioned this last time as well. There's been a lot of change in the last 12, 18 months. Change necessarily has meant that all of our minds have been focused on the change. I think now is the time for us to also step back and look at health insurance for what it truly is, which, in our opinion, is one of the few secular multi-decadal growth opportunities in our country. As I stated last time, we are very, very excited about this opportunity, and we are putting our investments where our mouth is, so to speak, right? In distribution, for example, this year, we have increased our headcount by more than 1,000 feet on the street. We have set up an AI lab to explore many of the exciting capabilities that GenAI has to offer. Indeed, one of our customer projects got rated in the top 10 in the global ecosystem of Bupa. This is something that we are very keenly invested in, focused on in terms of what it can do for our business, both from a sales customer experience as well as a cost standpoint. We have also gone live along with the launch of ReAssure 3.0 with a modern microservices-based core system, which we believe will be transformational to us as we move along in terms of our ability to launch products and serve customers. Significant investments we continue in making as a company to pursue the opportunity of health insurance. Growth with profit has been our mantra, and that is the journey that we have been progressing on. This year is no different. Over to you, Vishwanath. Thank you, sir. Good evening, everyone. Following some of the financial highlights for H1 FY '26. GWP for H1 is INR 3,983 crore, registering a growth rate of 23% over last financial year on a like-to-like basis, which is without one-by-one impact. The profit after tax and the IFRS more than doubled from INR 60 crore in last financial year to INR 132 crore this financial year, H1. Combined ratio for H1 FY'26 and the IFRS has improved by 105 basis points to 103.1%. While there is an increase in overall loss ratio by 1.2%, this has been more than offset by reduction in expense ratio by 2.3%, resulting in improvement of combined ratio. The retail loss ratio, which was slightly elevated in last quarter, has also moderated to last financial year level of H1. IFRS basis retail loss ratio for the first half in current financial year is 68.1%, which is in line with last financial year H1 loss ratio of 68%. There is year-on-year improvement in expense of management ratio to the tune of 3.7%, with H1 EOM being 36.3% as against last year of 40% same period. This is mainly on account of following factors. One is decrease in gross commission as a percentage of GWP due to change in mix, etc. Most importantly, because of operating leverage, where the expenses have gone up by low single digit, GWP has gone up by 23%. For the first half, the allowable EOM ratio comes to 35.8%. Actually, it is above allowed by 50 basis points. We are confident of bringing down EOM ratio within regulatory limit in the current financial year as per guide path submitted to the IRDA. Annualized investment yield for H1 FY '26 is 7.3% with AUM of INR 8,482 crore. Solvency ratio is at a healthy level of 2.85x as on 30 September 2025. This was an overview of H1 FY '26. Happy to take questions. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on the touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register for a question, please press star and then one. Our first question comes from the line of Supratim Datta from Jefferies. Please go ahead. Thanks for the opportunity. I have three questions. The first is on the October demand, and like you likely pointed out, the demand has been fairly strong. Wanted to understand. If you could break it down, what is driving this growth? Is it new products, new demand coming through, or is it existing customers taking higher sum assured, or is it greater rider attachment that is really driving growth here? If you could break it down into what has been the key factor behind the stronger growth we are seeing in October, that would be very helpful. Secondly, on your comments around GST and the growth offsetting any loss of commissions for distributors, while I do understand that. Would you be taking a one-size-fits-all strategy here, or would it be more nuanced and depending on the type of distributor would this strategy play out? That's one part of the question. The other is, how much of this impact would you be able to offset through a price hike? And given the GST has just taken place, would you be able to take a price hike in the next six to eight months? That's the other question we would like to understand. Lastly, on your retail health loss ratio, it has been stable. That's great. Insurers who have reported till now have shown an improvement actually versus last year to this year. Even if I look at it on an IFRS basis, second quarter versus second quarter last year, it's broadly flat. Wanted to understand why is there a difference. Or should we look at you versus peers differently? Those are my three questions. Thank you. Thank you very much. I'm Ankur Kharbanda. Supratim. First, let me take the first two questions, which is on October performance and GST. I will ask my colleagues to talk about the rest on the pricing and the retail law. First, on the October performance, very happy that one thing which we were pushing for on the GST side, lowering on the GST side from last few years, is now a reality. One is it has become a reality, and it has for the month of October, which was a Diwali month, given us substantial results. The numbers which are coming on the retail side are more than 50% growth for the month of October, which clearly talks about that this is really playing out well. What it has done is, if I just give you numbers on one of the platforms which we look at, is how are we doing on the queries coming on the Google side. That has gone up drastically. The conversion has also gone up drastically. Both in terms of queries and the conversions, both have gone up for us. I'm assuming that's the case for the industry as well. The second thing which it has done is the per person buying in terms of the sum insured and the adequacy of the sum insured has also gone up. The proof for that is the ticket size. For us, the ticket size for the month of October versus H1 is on the retail new business is plus 15%. That's the big difference which it has made. That's on the new business. Even on the renewal side, our ticket size has gone up. One of the things which people are realizing is 18% lower GST means that there's a cushion of 18% for us to sell. We have gone up with our analytics model straight away from 1 October in terms of understanding which customer payability, etc., etc. We have seen that there is a massive growth there as well on the renewal upsell, both in terms of sum insured and in terms of adding a rider. Both of them have really, really worked well for us. Let me now get on to your second question on GST. As we know, GST exempt helps the citizen of India, everyone to get closer to our universal health coverage as well. To ensure that we give full benefit to the customer, we have passed on the GST impact to the distributors. Our distributors have also understood this, that overall income will go up. October has shown them as well that the overall income has gone up because the number of people buying insurance is going up and the number of people also are taking a better cover there. My point and the answer to it is we have done it for all, and distributors have also understood this. Just to relate a mutual fund industry in 2016, 2017 when this came in, in seven years, mutual fund industry is three times of what they were earlier. Same thing happened, a cut, etc. happened. The real thing was the customers were getting a better value. This is also happening in our industry. When the customers are getting a better value, distributors understand that overall sales will go up, which would mean that overall their income will go up as well. I would ask on the point on price revision, Supratim, given what we have seen and what Ankur said around volumes. We do not intend to take in a revision at least this quarter. We'll monitor how things are and as needed to manage overall portfolio economics. We'll review it at the end of the quarter only, Anshuman. On your question on loss ratio, defer to Vishwanath to address that. Yeah, Supratim. On loss ratio for H1, we have seen same as last year. Last year was also kind of stable loss ratio. It was not too elevated. It is at same level. Q1, it was higher, 2.5%-3% this year. Q2, it is lower, similar range. Trend perspective, yes, we are also seeing loss ratio on better in recent months. For whole H1, it is at same level. Got it. Thank you. Thank you. Our next question comes from the line of Varun Palacharla from Kotak Securities. Please go ahead. My first question is again on the claims ratio part. Last quarter, if I remember correctly, we had provided a higher amount for claims which are outstanding. As they run down, there should be some benefit coming in this quarter, right? If we include that benefit, how much is the claims ratio increased by in Q2? That is one thing I wanted to ask. Second is with regard to the auto adjudication system. Last time, we had some disruption with regard to an IT supplier. Are we doing any changes on that front, or are we still continuing with the same IT service provider? In terms of IT service provider, we have taken assurance for infosec risk, etc., from third party. After that only, we have started with that. We are very comfortable. That was the reason it was outstanding was on a higher side. If you see whole H1, it is at same level. As I was mentioning, 2.5%. It was higher last quarter. The same is lower this quarter. Quantifying exactly how much is coming from last quarter versus this quarter, that's not something which I have handy. Broadly, for the H1, we are very comfortable. The trend perspective also is comfortable, downward trend. The trend would be upward, right? If we include that impact, likely 120 basis points, whatever up we are seeing in the first half basis, largely a similar impact would be in Q2. It is actually an uptick in claims, is it not? Okay. I'll just explain. In terms of, there is a trajectory loss ratio here. Q1 is lower, Q2 is higher, then Q3 again lower, and Q4 lower. That's the kind of curve. It is following the same curve. It's not that Q2 is lower than Q1. It is more like, the trend is lower than last year as we speak in recent months. Okay. With regard to the long-term ROE guidance, now that you've had more of a handle, are you able to change your guidance, or would you want to just reiterate the long-term guidance? We stick to long-term guidance, which is, let's say, FY '29 mid to high teens ROE. We stick to that. Okay. Thank you. Our next question comes from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah. Hi. The first question is on the GST front. When you mentioned that the commissions you have kind of passed on to the distributors, you are saying that the ITC impact would not be there at all for Niva Bupa. Is that the fair statement, or you passed on partially, and there is some still impact which will come on the books for us? If so, what would be the quantum of that? Yeah. Thanks, Prayesh, for asking this. Yes, we have passed down entirely to the distributor. As I explained, the distributor has also understood this, that this is ultimately benefiting him because his income is going up. His income is not going down because the volume is going up. Ticket size is also going up. Right. Right. Second is, again, so again on the loss ratio front. If you adjust for that first quarter kind of one-off, this seems to be much elevated than what we would have expected, right? Is that the benefit? Is there some pockets where the loss ratio have come in higher, in some cohorts, or is the group business working against? I'm talking about the overall loss ratio for the company level. That's what I'm asking. Do you think that the group business or any other place where you've seen some higher loss ratios? Sure, Prayesh. In terms of retail, as we explained, it is at the same level as last year. Group, of course, is higher because of mix change. We talked about the large group we have written, which has very, very low expenses, expense ratio. In terms of overall, there is a 1.2% increase, and largely it is coming from group, and group is because of mix change, where group has gone up by 5 percentage points. In that sense, you're right, this 1.2% is driven by group. That is again more than offset by reduction in expense ratio. That's why combined ratio is lower by more than 100 basis points. Prayesh, while analyzing loss ratio, it's best to split it between retail and group. Because they have very different combined ratio profiles because of the cost equation. So retail, as Vishwanath said, is flat compared to H1 last year. And group has gone up because of certain large corporates. Obviously, there's been a relief on the expense side because of which the combined ratio has come down overall. Is it fair to assume that the second half, there will be a significant improvement in loss ratio as a group business? Because under IFRS, there should not be any change. On your reported accounts, would that change? Yeah. Under reported. In Q4, the loss ratio will be on the lower side because that business was written in Q4 last financial year. That is, yeah, only reported. IFRS, they will not be changed. IFRS will be carried here. If you go to the, we actually have a bridge this time in the Investor Presentation because that was also something that many of you had. This time, they put out a bridge, explained the difference in loss ratio. Clearly, as Vishwanath mentioned, by Q4, you should see it swing, swing on the positive, in a positive way. Got it. Got it. Thank you. Thank you. Our next question comes from the line of Shobhit Sharma from HDFC Securities Limited. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, my first question is on your group health business. What is the strategy on that business now? Because we have seen we had good growth in last year. First quarter was also good. In the second quarter, we have seen some slowdown. Secondly, coming to the loss ratio, in the first quarterly call, you mentioned that we have provided for some 1.5% extra provisioning. Have we taken some reserve releases out of it, or still we are holding on that? Now, coming on to the expenses, there is some multifold increase in the business support-related expenses, advertisement and publicity-related expenses. How to read about it? Have we increased our spending on that? You mentioned about the growth in the October month. Would you like to give some emphasis on which channels are driving this growth and what kind of conversion rates and the renewal increase we are going to see because of the GST-related impact? One important thing which I can note from your slide is the share of the direct business has come down by 2%-2.5% on a Y-o-Y basis. Are we pushing more onto the more scalable, faster scalable channels, or what's our strategy on that? Yeah. Thank you. Let me take the first one, which was on the group side. As you know, we have been selective. We have been looking at this channel as wherever we find opportunity, whereby the combined, we just do not on the group business, we do not look at the LR. We look at the combined ratio. Wherever we feel that the combined is within our side, we do that. That is where you have seen last quarter. Last year, last quarter, we have taken that basis opportunity there. This quarter, we have not done that much. We have been very selective there. On your question on why is the direct business a little lower this month, this is largely an impact of 1/N. If you look at Apple to Apple, there is no difference between us because our strategy remains the same. On this side of business, we want to grow our direct, our digital business in a better way. We are really emphasizing on how do we grow that. Just to give you a good sense, our growth of business from our direct digital for the first half has been very good, almost one and a half time of our average growth of the organization. That is how we have been emphasizing on that. One more question you had on October? On October, channel by channel split, I would not get into the channel by channel split, but what I will tell you is this impact is in all channels, largely in agency and our digital business and digital partnerships. These are the three channels which have seen the maximum, maximum impact of this. Lesser impact in banks because banks, we do a large portion of our business is considered as booked under the group RUG rather than a retail platform there. These are some of the pointers which I wanted to talk about. Shobhit, on other two points, loss ratio reserve, we have largely released because now its auto adjudication is back. That is on outstanding. The other question on advertisement, it really depends. It is never smooth across sequential quarter. Last quarter, we had a new product launch, so we spend more on advertisement and publicity. Okay. Just two follow-ups. One to Ankur, if you can give us some color around the renewal rates. Have you seen renewal rates increasing? Because one of your peers have highlighted that they have observed some positive traction on that side. And Vishwa, one thing on the loss ratio. You mentioned that we have seen improving trend. The recent months. Is it particularly because of the lower incidence rate which you have been observing, or is it because of the lower average claim sizes? Yeah, that's it. Let me first take on the renewal rates. Renewal rates have gone up for us. Specifically, last year to this year, it has gone up by 100 basis points, more than that. Just for the month of October, this I am talking about H1. When I look at just for the month of October, it has definitely gone up much higher than that. The second point is it is not just about the renewal rate. It is also the ticket size, which is the GWP, which is coming from a renewal side. That has further gone up. Both impact put together, we definitely have a big upside coming from on the renewals, largely because of the cut in GST. Yeah. On loss ratio, actually, it is coming from a mix of both. Average claim size, medical inflation is also benign. And incidence rate also, we have seen. On lower side. Okay. Okay. Thanks. Thanks and all the best. Thank you. Our next question comes from the line of Sanketh Godha from Avendus Spark. Please go ahead. Yeah. Thank you for the opportunity. Sorry, my question is again on group health. Group health, if you see without one-by-n, for the half, it is 13%, and for the quarter, it is 6% year on year. Naturally, it is a little lower than typically what you used to report in the past. The slowdown is predominantly visible in corporate plans, that is, indemnity plans, or it is more because of the benefit-based products. If you can clarify. Related to that, out of the total group, which you did around INR 1,173 crore in 1H FY '26, how much will be affinity-based products and whether the contribution has gone up or declined compared to last year? Yeah. I'll talk about the first part. This is largely on the corporate group, whereby, as we said, that our strategy has always been to be selective. Wherever you are able to get a good client basis the COR calculation, not the LR, but the overall calculation, then only we are taking that. That's the point there. Let me ask Mr. Krishnan to talk about the second question. Sanketh, in terms of overall group, roughly in the past, also, we have mentioned of the 30-odd percent, that's overall group. Roughly it's one-third, two-third in terms of the split. And that broadly. Maybe has shifted. Broadly has been the same. Although the growth has slowed down, but given some of the large corporate business that we wrote, that's broadly stayed the same from an earnings standpoint. Yes. Krishnan, the reason I was asking is that if the mix remained broadly the same, then even your highly profitable benefit-based plans have grown in low teens. That is the reason I was asking that question. Yeah. I mean, so I mean, we grew our business in those two segments quite rapidly last year as well as last. The growth is off of fairly close to 40-50% growth last year and prior year. Sanketh, you would have seen those numbers. Yes. It's a double-digit growth on top of a 40-50% growth rate last year. Just to put that in context. Understood. Maybe sorry to harp on that point, but just wondering whether the—we know that multi-lining companies are paying on a year basis on commission, but we moved to 1/N strategy. That is not. That has not impacted us. That's not had any impact. No, I can reconfirm that. Okay. Perfect. Perfect. Can you quantify your group health loss ratio on an IFRS basis for the current half and the previous half? Actually, that's not something we publish, but. I think you gave it last time, Vishwanath, that 61% was on IQ FY '26 group health loss ratio, and 68 was retail. And blended, it was 66.8. So on similar lines, if you can give the number, it will be useful. Yeah. You are saying overall group, not B2B and B2C? No, no, overall group. Yeah, yeah. Naturally, overall group, I'm asking. Sorry. Okay. Okay. Okay. So. This H1. We have overall 65.9%, where 68.1% is retail and 60.9%. So roughly 68% retail, 61% group. Last year, same 68%. What's the number? 56%. 56%. I'm just rounding off. Yeah. Oh, okay. So 56% gone to 61%, 68%, 68% is flat. That's the way I need to understand it. Yeah. That's it. Got it. Okay. Sanketh, just to remind you, all our ratios include claim settlement cost. Yeah. I understand that point. Yeah. Just a fundamental question. See, IRDA probably allowed, or in one of the circulars said that, or master circular said that your pricing based on claim experience or discount given to the customer based on the claim experience can be implemented. One of your peers has implemented that to 30% of the portfolio. Just wanted to understand where we stand and whether the incremental pricing, what we do for the portfolio, whenever we will do it, will we follow this approach consistently? As we have mentioned in the past as well, the regulations permit favorable claims experience discount. In our case, favorable claims experience and experience basis, for example, if somebody does on an average 10,000 steps daily and records it in our customer app, they become eligible for as high as 30% discount at the time of renewal. We continue to implement both of these when we reprice our products or when products come up for renewals, as the case may be. Okay. We don't have cohort-based pricing. Is it fair to understand? Basically, if it's the same age bracket, one has a little higher loss ratio and some other guy has a little lower loss ratio. The price hike, despite, suppose, more of it, it has been same. Will he experience a differential pricing, or we don't have a cohort-based pricing? It's based on what you said, the software points, like steps covered and all those things. Also favorable claims experience discount, right? I mentioned both. Okay. We have favorable claims experience discount as well as other health parameters. It is not just the hospitalization parameter, but other health parameters to broad base the kind of discounts we give our customers. Essentially, for people who have been healthy, the idea is to encourage them to premium discounts. Will you be okay to quantify how much% of the portfolio follows this approach of pricing? We can probably take that offline, Sanketh. Okay. Perfect. Perfect. The last one. The retail health growth has been very solid for us compared to the industry being a little muted, even on end basis. Just wanted to understand, any color you want to give on potent policies and what percentage it contributes to total premium or total GWP in first cost? Broadly, the potent percentage has been stable. Sankeeth, if anything, it's probably come down. I think in the past, we have guided between 20-25%. That is where our potent has been. It's actually been rangebound in that level only. The growth has actually—let me sort of address another aspect, right? We said broadly, our retail health has grown 28% for H1 in GWP terms. I would say 6%, 7% of that has come from value growth, and the balance has actually come from volume growth. Close to 20% of the growth has been lives growth, and the balance has come from ticket size improvement. Okay. Okay. Understood. That's it from my side. Thank you very much for the answers. Thank you. Our next question comes from the line of Uday Pai with Investec. Please go ahead. Yeah. Thanks for the opportunity. Just one clarification question. The pass-on to distributors, is it implemented for the full quarter, or Q3 will still have some impact of GST? Just one question from myself. Done as effective October 1. Okay. So Q3 should not have any impact of this, right? It should be a clean quarter from GST? That's correct. Yes. Thank you. Thank you. Our next question comes from the line of Rachna K from Simpl. Please go ahead. Hello. Am I audible? Yes, you are. Yes, you are audible. Thank you for the opportunity. I had one question. Within our group health insurance portfolio, could you share how the premium mix or share between employee, employer versus SME customers have evolved? Further, if you could provide some perspective on the underlying business economics at a ballpark level of writing employee group health versus SME? What factors make the SME business segment attractive? As we had discussed previously, that SME business is an attractive segment within the health business, and how it is different from writing employee-employer business. In addition to this, what has been our approach to become better in SME business in terms of growth and profitability? As this segment tends to be a bit price sensitive. This is my question. Actually, employer-employee. SME is also employer-employee technically. Just want to be clear that both are employer-employee. Just depending on the size and the number of lives covered, we categorize something as large corporate versus SME. As we have stated in the past, our strategy is to focus on the SME segment or disproportionately focus on the SME segment. Ankur mentioned earlier, we do believe we have a strong value proposition for large corporate, but we are opportunistic, right? It has to come at the right economics around combined ratio for us to write that. The case in point being that in early 2025, we wrote a couple of large multinational companies because they believe very much in a health value proposition, and we were able to write that large business using a health value proposition. Strategically, I just wanted to clarify that. In terms of the split of the business, I'd say more than two-thirds of our business by volume or count of policies comes from SME, probably closer to 70-75% or even higher. In terms of SME in the company, we actually run almost like a retail business. We source SME business through direct-to-consumer channels. We source it. Many of our bank partners have large SME lending franchises. We ride off our sizable agency network, and we also ride off the broker network. It's a multi-channel approach to the SME business, similar to what we do on the retail business. Indeed, we run it like retail, where the conversation-to-conversion ratio is something that we closely monitor on the SME side. This is a business that we've been strategically investing in and growing. This business has been growing. If I sort of deconstruct the overall growth, while our overall group business growth has been relatively slower than the retail growth, the SME growth has been maybe close to 50%. You want to add? That gives you a sense of our overall employer-employee strategy, the role of SME, and what engines we're using for growth. Okay. More on the economics perspective, if you could give a ballpark figure. In terms of combined ratio? Look, we've spoken about group combined ratios in the past. I mean, that's what we've been talking about publicly. Okay. Thank you. That's it. Thank you. Our next question comes from the line of Vinod Rajamani from Nirmal Bang. Please go ahead. Hello. Thank you for the opportunity. I don't know whether you may have already addressed this because I joined slightly late. I just wanted to know the split between, in the group segment, the split between employer-employee and benefits, what's the premium split and also the loss ratio split? That's all. Thank you. Premium split is roughly one-third employer-employee and balance affinity business. Loss ratios, we have not been disclosing publicly. Okay. Sure. Thank you. Thank you. Our next question comes from the line of Raghvesh from JM Financial. Please go ahead. Hi. Thanks for the opportunity. I have a couple of questions. First, on the claims ratio reserve, which we have been discussing, in one key, you had mentioned you'll take a couple of quarters for this to stabilize. The commentary suggests it's now stabilized, and we can kind of consider this INR 50 crore number, adjusting for a first growth to be stable thereon. Is that a correct understanding? Yeah. Secondly, how have you—okay. Okay. Great. Secondly, on the gross commission ratio, you have been able to reduce. So any specifics you would like to give in terms of what channels have contributed to this, or were there change in mix in some way that we are missing? No major movement in channel. It has more to do with the mix change. Okay. So the employer-employee fee is becoming larger. Is that the reason? Employee, new lineal, all those kind of mix changes. Okay. Okay. Finally, from October, the entire aspect about 1/N and N goes, or is there something? The figure which will still be coming, and we'll have to look at another like-to-like growth number? What is published monthly is the like-to-like? Not exactly because last year, October, we started 1/N. So whatever is the theme deferred in those months, it will keep coming. There will be a cycle. Now we keep deferring, and it will keep coming from previous months. Whatever will be reported will be like-to-like, right? Last financial year in those months, the previous financial year's deferred will not be there. This financial year, these months will have deferred coming from previous financial year. It will— It will be slightly higher than what will be there. Yes. Okay. Okay. Got it. Thanks. Thanks Thanks for the answers. Thank you. Our next follow-up question comes from the line of Sankeet Goda from Aventus Park. Please go ahead. Sorry. Sorry for taking my questions again. Vishwanath or Krishnan, if you can answer. See. The drawback in the reduction in the commissions is probably maybe 65-70% or 70-75% of your cost. The rest of two-third cost, excluding the non-employee cost, still will have some GST implications with no input credit availability. Do you think this will have an implication on overall core or profitability in the second half onwards? Do you think it will be more than compensated by, say, better invoice or ticket size increase or higher sum assurance, which invariably will have lower loss issues? Just on that point, if you can call it till you address, it will be useful? Sure. Sure, Sankeet. So you're right. There will be some cost items, overhead items, where there will be GST and input tax credit will not be available. One is we are looking at each and every item in detail and identifying if we can renegotiate, reduce, etc., on those cost items. Still, there will be some residual, but that will be more than compensated by a few items, a few you mentioned. There's another additional item where in terms of claims, the GST on pharmacy or medicines has been reduced. That's also something which will help us. Overall, we feel that there will not be any negative impact. Understood. Understood. Perfect. One more thing. If I look at your ticket size numbers, average ticket size for policy for 1H to 1H and for both agency and overall, there is a kind of 12%-13% decline, even if I do that math on 1/N, without 1/N basis. Any reason you think it has happened, or is it because incrementally distributors are selling less long-term policies, and that is getting reflected in the ticket size? Sankeet, there's no reduction. Without 1/N metric, we have given you slide number 8. If you see GWP per policy sold by agent, it says INR 25,108, INR 25,215. It is marginally high. Probably you are looking at another slide where there is a reduction, and that is coming because of 1/N impact. That will also get addressed from next quarter onwards. Okay. Understood. Sorry. Maybe I looked at a wrong slide. You're right there. Finally, can you quantify your advance premium sitting in the balance sheet? Not handy currently, but. We disclose that in our IRDA financials feature. Yeah, yeah. It will come with the lag, so I was asking. I mean, since it will be available in public domain, we can find out and give you separately. Okay. Okay. Not a problem. Thanks. That's it from my side. Thank you. Sure. Thank you. Thank you. Our next follow-up question comes from the line of Sobhit Sharma from ICICI Securities Limited. Please go ahead. Yeah. Hi. Thanks for the follow-up. Firstly, can you help us understand how much of our expenses related to outsourcing expenses contribute to total expenses? What's our plan on that? I believe whatever ITC impact would be there on that portion of the expenses, if we are able to bring that in-house, we'll be able to offset some of that. Secondly, on the investment AUM side, if I look at as compared to March 2025 to September 2025, the AUM has been more or less flat. It has grown by 45% only. What's the reason behind that? What's our strategy onto the portfolio? Will it always be skewed towards the debt side? What's our duration of the portfolio? That's it. Thank you. Sure. Sure. First, on your question on outsourcing, we have very small outsourcing vendors where we take help. On manpower side for IT, etc. We are looking at each and every contract and seeing is there value in sourcing that. In some cases, we may do. In some cases, we may still continue with outsourcing. It is not a very major cost item any which way. On AUM, this has to do with reinsurance treaty. Last financial year, we had reinsurance treaty, which was there on where settlement was on annual basis. In May this year, we settled that all voluntary quota share. This year onwards, it is on quarterly settlement. That is why optically it is looking that the AUM has not grown. The capital contribution was another point because last year we had INR 800 crore capital. That is why there was a sudden jump, and we raised also from private market before that. Those are the only reasons. In terms of bonds, yes, we would like to continue majorly with bond strategy, but we also have close to 6% which is there in Nifty ETF, AIF, InvIT, REIT, etc. We will continue with that, but it is not that we want to ramp up that largely. Second, we are not investing in direct equity. It is only through Nifty ETF. What's the duration of the portfolio and the debt portfolio? Duration would be around. 61 months. Sixty-one months. Yeah. Duration would be 61. Duration. Yeah. Four and a half years or so. Okay. Thank you. We can give you that. Thank you. Our next question comes from the line of Kushagra Goel from CLSA. Please go ahead. Hi. Thank you for taking my question. Just one question. There was earlier, we had a news article, right, that the General Insurance Council was. My voice is not very clear. Hi, sir. Is this better? This is slightly better, but if you're using a speakerphone, may we request to use the handset, please? Sure. Is this better now? Yes, please go ahead. Yeah. Just one question. If there is any update regarding the negotiation which was happening between the insurance industry body as a whole with the hospitals in terms of keeping your expenses or the sort of harmonizing the expenses which are being charged, if you can give some update on that because there was some recent news also on this front. Yeah. No, I think maybe I'll give a broader update on three big industry initiatives. One is an awareness campaign. Where, as I updated last time, as an industry, we have committed to a sizable spend every year for the next three years. I think we had the second burst of that campaign. Happened during Q2. Second is on the common empowerment initiative. It continues the pace. I think we have close to 3,500 or 4,000 hospitals that have applied. Under common empowerment. The third, maybe I can request Dr. Bhabatosh to talk about the work that we're doing specifically around standardization, which is also a powerful lever. To control claims cost. Yeah. So a lot of focus on standardization of protocols as well. For seven kinds of conditions and more than 10-12 diagnosis codes, a standard protocol indication for hospitalization has already been adopted, largely by all players, and increasingly by the entire industry for health insurance. This is an initiative where more conditions are being added as we speak, and there is significant not just push, but endeavor to standardize these protocols of indication for hospitalization and treatments as well, including position statement that is already underway, led by a General Insurance Council. On behalf of the industry. Got it. Thank you. To your question on duration, it is four and a half years. Thank you. Our next follow-up question comes from the line of Supratim Datta from Jefferies. Please go ahead. Thanks again for taking my question. One, just wanted to understand what is the GST impact this quarter? Because I understood that your renegotiated rate started from October 1. We just wanted to understand what was the impact this quarter. Secondly, wanted to understand what proportion of your GWP currently comes from narrow network products, and how are you seeing that grow over the next two to three years? Thank you. GST. Not major. It's INR 5 crore, INR 8 crore. Okay. Narrow network is still early days. It's probably in the single digit on new sales. Keeping aside that, the preferred provider network that we are executing on quite aggressively, which is now there in 44 cities, I think about 16-17% of our claims in those cities go through the PPN network. The objective is the same, except that one is achieved through the product and the other achieved through communication. Providing superior benefits, working with our distribution, and nudging customers, better experience, nudging customers to go into the PPN. How is the claim experience different in a PPN versus non-PPN? As in the loss ratio. Loss ratio. Did I get it right? The difference in loss ratio between. Loss ratio. PPN and non-PPN? Yeah. Yeah. That is not what we publish in public domain. Look, broadly, the price difference on a like-to-like basis, and broadly, there's a difference of about 10-15% PPN versus a quaternary tertiary care facility. Yeah. In terms of the average claim cost for like-to-like treatment. Definitely, the PPN is, as mentioned, 10-15%, perhaps a little lower in that range. However, you cannot also compute loss ratio at a provider level or a cohort of provider levels, right? Given the calculation of loss ratio is claims upon earned, you can't compute earned for a set of providers, right? So that's not something that is even computable. Got it. This is good. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, everyone, for your patient hearing and your questions. Let me just close by saying that we continue to be super excited about health insurance. Specifically, retail is a big focus area for us, and we are continuing our journey of investing and growing the business in a profitable, valuable way. Thank you. Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.