Ladies and gentlemen, good day and welcome to Star Health and Allied Insurance Company Limited Q2 & H1 FY 2025 Earnings Conference Call. 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 a star, then zero on your touch-tone phone. I now hand the conference over to Mr. Pratik Patel from Adfactors PR, Investor Relations Team. Thank you, and over to you, sir. Thank you, Steve. Good morning, everyone. From the senior management, we have with us Mr. Anand Roy, Managing Director and Chief Executive Officer, Mr. Nilesh Kambli, Chief Financial Officer, Mr. Aneesh Srivastava, Chief Investment Officer, Mr. Amitabh Jain, Chief Operating Officer, and Mr. Aditya Biyani, Chief Strategy and Investor Relations Officer. Before we begin this conference call, I would like to mention that some of the statements made during the course of today's call may be forward-looking in nature, including those related to the future financial and operating performances, benefits and synergies of the company's strategies, future opportunities, and growth of the market of the company's services. Further, I would like to mention that some of the statements made in today's conference call may involve risk and uncertainties. Thank you, and over to you, Mr. Anand Roy. Thank you, Pratik, and a very, very good morning to all of you, and thank you for joining Star Health's conference call today. I would like to wish all of you a very happy and prosperous Diwali to you and your family members. I will now hand over this conference to Aditya, my colleague, to take you through the company's presentations, and then we will open up for questions. Aditya, thanks. Thank you, Anand. Firstly, we would like to set the context for the health industry in India. In a growing economy like ours, we believe individuals and families will experience an increase in disposable income, which enables them to consider lifestyle enhancements, savings, and investments in security measures like insurance, especially health insurance. Post-COVID, there has been a tremendous increase in awareness about health coverage, positioning the health insurance sector as the highest contributor to the general insurance industry. This growth has been driven by several factors like the adoption of technology, product innovation, and an expanded reach, alongside the rising risk of lifestyle diseases. In line with this, the regulator has envisioned insurance for all by 2047. Star Health Insurance aims to ensure that every Indian citizen has access to quality healthcare through comprehensive coverage. The regulator's consumer-friendly approach, while balancing all stakeholders' interests, has made the environment conducive to profitable growth. Coming to industry overview, the health segment remains largest in overall GI, contributing to almost 39% of the total GWP of the industry. For H1FY25, health insurance, including the personal accident industry, has grown by 9.6% to reach INR 65,600 crores, majorly driven by growth of 11.5% in group health and 18.3% growth in retail health. For Q2FY25, health insurance, including the personal accident industry, has grown by 3.3%. Star Health is committed to creating innovative, affordable products for all socioeconomic segments, leveraging technology and partnerships with healthcare providers to enhance service delivery. Some of the key highlights of our business are as follows: the retail growth is gaining strength, while the overall GWP has grown by 17%, outperforming the overall average industry growth. Fresh growth for the same period is 31% over last year's H1. The number of policy growth in fresh has been 14%, with the overall number of policy growth of 9%. Agency fresh business in Q2 FY25 versus Q2 FY24 grew by 23%. Our renewal ratio in H1 FY25 is 25:75. The average sum insured of new policies has increased by 6% to INR 10.3 lakhs per policy. INR 5 lakhs and above sum insured policies now constitute 82% of the retail health portfolio versus 77% in Q2 FY24. Our renewal growth is also picking up. In H1FY25, overall renewals have increased by 7% by volume, which is the number of policies, and by 13% by GWP compared to H1 FY24. Price increases have been absorbed well, and renewal persistency has also increased because of our wellness initiatives such as telemedicine, PHC, condition management program, and continuous engagement with customers on various fronts. We will continue to take calibrated price increases in products for the appropriate risks. All the channels are firing and continue to grow. Coming to our ABCD engines of growth, our agency vertical contributed around 80.4% of our overall business in H1 FY25. Our agency strength has increased to 742,000 agents, with recruitment of almost 25,000 agents in the September quarter. We have also seen a strong 17% increase in fresh GWP in H 1FY25 over last year through this channel. Agency activation for H1 has grown by 12% over H1 FY24. Our Banca channel includes banks, NBFCs, and alternate channels, and it contributes to around 8% to our GWP in FY25, with a fresh GWP growth of 25%. Coming to our corporate business, it has contributed to 4% of our overall business in H1 FY25. As we have recalibrated our corporate business, we have seen significant growth of 231% in corporate business, though over a low base. Our digital business comprises of our direct-to-consumer and online brokers' web aggregators. This business contributed to 7.4% in H1 FY25 to our overall business. Our own direct-to-consumer channel contributed 72% to GWP, and the balance 28% comes from online brokers and web aggregators. We have also seen a robust growth of fresh business from this channel of over 41% in H1 FY25. Coming to the claims initiatives and outcomes, we continue to see elevated frequency and severity, especially in medical claims. We are working on several initiatives to have the most efficient claims processing engine in the industry, like hospital rate negotiations, fraud detection measures, and improved cashless turnaround metrics. The PHC contribution to total claims outgo stands at 0.6%. We track this as an investment in wellness initiatives, which will support us in coming years with improved renewal retention, enhanced customer engagement, reduction in hospital readmission of customers. Our preventive health checks have increased by 38% in Q2FY25. Our anti-fraud digital initiatives, which are proprietary to Star Health, have yielded savings of 3% of the claims outgo as a direct result of these measures. The proportion of cashless claims with agreed network hospitals has gone up to 74% in Q2FY25 versus 66% in Q2FY24. In terms of claims amount, 79% of the paid claims are cashless in Q2FY25. We continue to have one of the largest hospital networks in India, with over 14,000-plus hospitals onboarded. Our app downloads have reached 7.4 million as of Q2FY25, from 4.4 million as of Q2FY24. Our monthly active users have increased by 115% compared to Q2FY24, and organic traffic to our website has grown by 27% in Q2FY25 versus Q2FY24. Our NPS score stands at 59 as of September 2024. Coming to our new product launches, we have launched a modular product, Super Star Plan, a personalized long-term health insurance solution aimed at providing greater value and flexibility for individuals and families. This product features a five-year policy term with modular coverage that adapts to customers' needs throughout different life stages, allowing for customization and scalability. Coming to our financial performance of H1, our combined ratio for H1 FY25 stood at 101.1% versus 98.4% in H1 FY24. Our claims ratio for H1 FY25 stood at 70.2% versus 67.1% in H1 FY24. Our expense ratio for H1 FY25 stood at 30.8% versus 31.4% in H1 FY24. For H1 FY25, our profit before tax stood at INR 575 crores, and our PAT for H1 FY25 stood at INR 430 crores. Our annualized ROE for H1 FY25 stood at 6.5%. Investment income in H1 FY25 has grown to INR 650 crores versus INR 505 crores in H1 FY24. Solvency of the company as of 30 September was 2.24 times compared to the regulatory requirement of 1.5 times. Coming to the financial performance of Q2, our combined ratio for Q2FY25 stood at 103% versus 99.2% in Q2FY24. Our claim ratio stood for 72.8% in Q2FY25 versus 68.7% in Q2FY24. The expense ratio for Q2FY25 stood at 30.2% versus 30.6% in Q2FY24. Investment income in Q2FY25 has grown to INR 354 crores versus INR 255 crores in Q2FY24. The yield for Q2FY25 stood at 8.8% versus 7.5% in Q2FY24. Our investment assets have grown by 17.2% and have reached INR 16,431 crores in Q2FY25. For Q2FY25, our profit before tax stood at INR 149 crores versus INR 167 crores in Q2FY24. Our PAT for Q2FY25 stood at INR 111 crores compared to INR 125 crores in Q2FY24. Based on the combination of ABCD growth engine and our three competitive modes, which are cost leadership, unparalleled distribution network, and superior in-house claim servicing, we are confident of achieving our aspiration of INR 30,000 crores and tripling our PAT to INR 2,500 crores by financial year 2028. Before we open for questions, we want to address the recent cyber incident that we experienced. As you are aware, we were the victim of a cyber attack, and although the situation has attracted much attention, we wanted to assure you that we have responded swiftly and decisively. We are working very closely with cybersecurity experts, regulatory, and law enforcement authorities to thoroughly investigate the breach, and we have succeeded in having the exposed data taken down. We are also fortifying our system with advanced security measures and controls to prevent any future incidents. Importantly, our claims processing and customer services have remained fully operational throughout this period. The trust and security of our customers are our top priorities, and we remain committed to upholding the highest standards of data protection. In fact, the trust that our customers placed in us is borne out by the robust fresh growth, renewal growth, and the agent activation, agent recruitment for the month of September and October 2024. And with all these updates, we can now open the floor for Q&A. Thank you so much. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead. Good morning, sir. Thank you for taking my questions. So my first question is on the claims experience and the loss ratio. So this sequential, not only sequential but year-on-year basis, also this loss, our loss has gone up sizably around 400 basis points or so. I just wanted to understand that what are the factors driving this? Is it only the seasonal illness claims that are driving, or anything has spilled over from previous quarters? Or on the claims management side, are there any challenges? If you could highlight that, and what corrective measures are you taking? What would be our loss ratio expectation as we move ahead in the year, and any glide path that you may take in the upcoming quarters? I also wanted to understand how the situation is in October related to the claims. So that is the first part. And second, sir, related to the impact of the price hike, we don't, at least in the financials, it is not visible that the price hike is percolating in terms of increasing growth in the earned premium level. So if you could highlight why the earned premium growth is still in and around that 15%, 16%, then can we expect it to go up sometime in the future? If you could highlight these two. Yeah. Hi, Swarnabha. Amitabh here. Thanks for the question. See, there are two or three reasons for the increase in LR. One is for the seasonal impact that happens in Q2, and you are aware of that. We have seen roughly a 10% increase in our severity in Q2 and about a 6% increase in frequency, largely led by increase in medical claims. Apart from that, there are two other factors that have played out in terms of the increase in LR. One is our increasing share in the group business, and group operates at a higher loss ratio, and in group, we see a slightly higher impact in this quarter. And also, there is some amount of, in the net loss ratio, there's some impact of the higher reinsurance arrangements for our long-term business that we had taken last year after quarter two. So that also has an impact. Yeah, I mean, there are obviously concerns on medical inflation, and that's an issue for the industry, as you know, and we've been seeing across media also. You would have noticed that there are several challenges on that. We continue to invest on our network capabilities and better negotiations with hospitals. But some of these are industry-wide issues and are being taken at that level, and we continue to do, we believe, better than most other players as far as the overall network management is concerned. Q3, Q4, typically, if you've seen the loss experience is better, and we hope that the same trend will also happen this year. The extended monsoon obviously has not helped us this year because it started pretty early, and it has continued well into October. So that also has had an impact, and some of the incidence patterns have changed this year compared to the previous years because of maybe the post-COVID era, the way it is evolving, heightened outreach by hospitals as far as marketing themselves and trying to also convert outpatient to inpatients and so on, and of course, a lot of awareness in the customers because of the cashless availability and availability of overall healthcare services, so all of those factors are playing out. I think this is a year of change that we are going through, and we'll have to maybe readjust to the new normal. So just to follow up, so would it hence be fair to assume that in Q3 and Q4, I understand that it might not be, I mean, the loss experience as the seasonal illnesses wave might not be as much as what we have seen in Q2, but compared to, say, Q3 and Q4 last year, we should still ideally, because of the other factors you mentioned, we should see an increase in loss ratio anyways over the next two quarters as well. And then, as a structural element, we should now think about the industry operating at a higher loss ratio and Star Health by extension? See, obviously, it will have to have a correction in two, three different ways. One is obviously more price corrections will be required, and that is something that we've already started beyond what we had earlier planned. So that is something that we are doing. Also, the overall investment in wellness and telemedicine and home care services, all of these, we believe, will start paying us some amount of returns over an extended period, some amount of impact we are already seeing in the way we are able to manage some of the medical cases. So I believe, obviously, there will be some amount of changes in the way the industry operates. And finally, we have to, as an industry, work towards profitability. So I think loss ratios have to be controlled and managed in all these ways. Okay, sir. And your aspiration of taking group in the mix higher, that will also, I mean, as you mentioned, that has shown some impact this quarter. Would you be able to split the loss ratio between retail and group this quarter? So generally, we do not publish this. We see the point in group is that finally, what matters is the combined ratio, and typically in group, as you know, the expenses are lower. So what we look is the overall picture and not simply the loss ratio there, and therefore, there will be some readjustment in the loss ratio versus expense ratio combination going forward as the group part grows. Sir, just to maybe rephrase it in another way, sir, at this current juncture, Can you please fall back in the question queue for the question? Sure, sir. Yeah, I have another question unanswered, so if that management could address that, it would be very helpful. In terms of the price hike and anything else. Yeah. Hi. So see, the price hike as Amitabh alluded to, we have decided to take price hikes on products which were earlier not as per plan. But having seen the elevated loss ratios in some of the pockets, we have decided to go ahead with that. So two products we have already taken a price revision. One is the senior citizen and one is the Young Star. But of course, we are also contemplating price increases in a couple of other products this month and the next. So we will keep you informed as and when we go ahead with that. But having said that, I think the growth of business is very, very encouraging. We are seeing growth across all the channels, and we believe that what we are doing as far as business strategies are concerned is paying off on all the channels that we are operating in. And we believe that with the higher growth coming in in terms of fresh business, the loss ratios also will fall under control over a period of time. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant as there are several participants waiting for their turn. The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services. Please go ahead. Yeah. Hi. Good morning, everyone. Just continuing the point on loss ratio and combined ratio, we had at the beginning of the year, we had mentioned of our aspirations to improve the loss ratio by 50 basis points YOY and combined by 100 basis points. It seems to be a stretch now. So, any color on as to what kind of combined ratio or loss ratio we should expect for the full year of FY25. And Anand, you mentioned about price hikes. Would you also consider another price hike in Family Health Optima? Because I think, and this is one more question on the group business. While you mentioned that the group business is high for us, but I would assume that a large portion of that group business is banca-based because the contribution from banca is almost like 8%. And so in that sense, that particular piece of business ideally has a lower loss ratio versus the employer-employee. So, in that sense, it would be great if you could give us a split between the employer-employee and banca-led products and relatively how the loss ratio kind of impact happens from the banca channel because that is something which has seen a significant increase rather than the employer-employee. Hi, Prayesh. Yeah, thanks. Thanks for the questions. Yes, there are four parameters that we track very, very closely as far as our business outcomes are concerned. Number one is the fresh business growth, of course, the renewal business growth. We also track the ICR and the OpEx ratio. Out of these four parameters, we are well in control on three parameters. The claims ratio has elevated definitely beyond what we had anticipated because of the seasonal effects which Amitabh mentioned. I think the targets that we had set for ourselves in terms of improving Combined Ratio by 100 basis points for this financial year, we are able to deliver on the OPEX side of it, but on the claims side, as you rightly mentioned, looks a little bit of a challenge. We'll have to see with our driving strategy how we are able to bring it under control. Coming to the pricing of other products, including Family Health Optima, we are considering all of this. Right now, we are not able to give exact dates on which when we will go through this, but we are looking at all the products in terms of price correction. You might have seen that the medical inflation in the industry is very, very high, and unfortunately, we are seeing that happening consistently across the board without any let up. So we will have to take price corrections when necessary. As far as group business is concerned, our bancassurance business continues to operate at a healthy level, but we are definitely seeing significant competition in employer-employee groups, the corporate groups, because of some reset in tariffs as far as property and casualty insurance is concerned. It has gone down, and we have also seen the group business prices also becoming more competitive. So we have always tried to focus on the smaller corporates, but there seems to be a lot of pricing competition there as well. So we are evaluating the corporate business strategy as we speak, how we are going to play out in the future, given the pricing market, the way it is operating. But having said that, I think we are very confident on achieving the annual targets that we had set out to achieve on INR 18,000 crores, and we are also looking forward that the next four years will be good for the company. Anand, my question was very specific on the banca share. The banca is already at 8%, and that is the kind of mix on the group business. So why should the loss ratio be impacted by increase in banca? Because that's generally a lower loss ratio business. That was my understanding. Correct me if I'm wrong. No, no. See, banca. We are not. The loss ratios are not what we are talking about. When we spoke about the group loss ratio, it is more on the corporate loss ratio, not on the banca. Got it. I'll take this offline. Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead. Yeah. Thank you for the opportunity. So I also wanted to understand if you guys can share the loss ratio or the combined ratio trend for the retail industry. I believe that data is available for you guys because we tend to get this data on the monthly from some of your peers. So at least that will help us understand how the whole industry and the retail book is moving. That data would be very useful. Retail for the industry? Yeah, yeah. The loss ratio or the combined ratio for the retail health industry. If that data is available on 1Q versus 1Q, 1H versus 1H, if that data could be shared, it would be an interesting data point. Thanks. Yeah, we can give it to you offline. We have market intelligence, but we don't have. We have to go what is published by various companies, and what we have is market intelligence. We can share it with you. Got it. Got it. And sir, just something that we were talking about on our equation with hospitals, and that is something which is happening across. I mean, any updates on any kind of changes in the industry practices or the private health insurers coming together to have better negotiation with hospitals? Any updates on that? Because we continue to hear hospitals versus insurers very frequently. Yeah. So the way we are taking this up is the industry-wide effort is happening through the GI Council, and there has been some progress on that. The council has taken up the matter with specific hospitals. First of all, we're looking at how we can, as an industry, have a common set of understanding on various billing patterns, the billing heads, the understanding of room rent. Can that get standardized? And also that across the industry, it helps everyone and starts making a lot of improvement in the hygiene as far as hospital pricing goes. Then we can get to the next level of actual negotiation of prices across the industry or across a set of players. So that is the kind of progress that is happening. These things take time, but there's been some improvement on this area. So when can we hear something final shaping up from the GI Council in a couple of months, quarters, any timeline? And will it be publicly known then? I would suggest that we can have a direct connect with the GI Council team there. Mr. Segar is driving this on behalf of the council, and we can have that discussion. But already a couple of meetings have happened, and we look forward to that gaining traction. Got it. Okay. Thank you so much. Thank you. The next question is from the line of Avinash Singh from Emkay Global Financial Services. Please go ahead. Hi. Good morning. Thanks for the opportunity. The first question again around your experience so far and ambition in the medium term, the doubling of premium and tripling of profit. So yeah, doubling of premium is something, I mean, you are on track probably what is happening so far. On claim side, the question here is that, I mean, you have done whatever you could. I mean, you took price hike across portfolio last year. You are kind of increasing your aggregate hospital network. Your fraud detection systems are helping you control cost. So all the measures you are already taking, but the outcome is going in the other direction probably because, I mean, in the post-COVID world, there is perhaps a big behavioral shift of one from the hospitals in terms of the persistent price hikes that one expected that, okay, post-COVID should normalize, so that is continuing. And second, from the insured population, insured pool, that probably the behavioral change in terms of seeking hospitalization, even for something that can be taken care at home or OPD. But I mean, there again, you cannot control because that creates controversy, and you invite regulator's eye if you say that, okay, this particular dengue or malaria case was not to be hospitalized. Now, so these two things, I mean, you do not have a control on your hospital's inflation. You do not have a control on this big behavioral shift that it has leading to rising claims frequency. Now, in this, I mean, you have one choice that, I mean, price hike. But price hike is so far, it seems to me that, okay, not being able to overcome that. Now, how do you see, I mean, what are the sort of what will make you feel that, okay, you can still be on the right track? Because, I mean, the other levers, you have very limited levers available. So I mean, that tripling of profit over the medium term, if there's so much of uncertainty in the near term, how it's going to play out? That's one. And second, if you can just help what's going to be the impact of some accounting changes regarding long-term policy, what kind of policy gets affected, and what could be the impact on you? Thanks. So Avinash, I think you articulated it beautifully. This is the challenge the industry is facing in terms of the shift in consumer behavior as well as the medical inflation. In all the forums that we are participating, we are taking this up with the regulators, with the government bodies. And we are hoping that something will be done. And as we have mentioned, there's been some effort being taken at the GI Council level also to bring some control over this. But the solution as far as for us immediately is concerned is on pricing the products as per the risk that they are exposed to. We are looking at options of cohort-based pricing where consumers who will be priced differently based on their experience. I think this is something which is in the works, and we plan to introduce this very quickly. Other than that, the shift in consumer behavior will be managed to some extent through our investments in wellness and prevention, which we are doing consistently. As you have mentioned, almost more than 60-70 basis points of our loss ratios are currently accounted for in our investments on these wellness and prevention platforms. We believe that over a period of time, this will start showing results. We are already seeing results in the immediate high-end persistency of these consumers who are engaging better with us. There are definitely green shoots here. But the answer to your question is, right now, we have to go for more proactive product pricing, which probably we are going to do that in the next immediate future. And as far as the long-term accounting is concerned, I'm requesting Nilesh to answer that. So in terms of long-term accounting, it will be effective 1st of October. So what will happen? The long-term policy-related premium will be reported on a yearly basis. So if it's a three-year policy, only one year GWP will be reported, one year NWP will be reported. So for us, the impact is anything since we are on 1 by 365 basis, there is no change in the on-premium. What will happen is because the net return premium is reduced, it will have an impact on the expense ratio, I mean, the reported expense ratio, while no impact on the underwriting profits to be reported going forward. But we believe in the industry, it will have some impact in the way things are done in terms of long-term policies. And what's your share of this long-term premium currently? It's around 4%-5%. And just quickly, if you can tell, what's the proportion of benefit product in your entire mix? I mean, because typically that would help your claims ratio. So currently, what's the benefit product in your mix? So benefit will be around 2.5%-3%. So there are two long-term products. One is the benefit product which comes from bank insurance channel, and second is the long-term retailers. That is what's also picking up. So it's a combination of both these products. Okay. Thanks. Thanks. Thank you. The next question is from the line of Sanket Goda from Avendus Spark. Please go ahead. Yeah. Thank you for the opportunity. Anand, thanks. Congratulations on new business growth coming back at 31% in H1 FY25. So I want to understand the 31% will also include long-term business. If I do a clean analysis, trying to understand indemnity growth and one-year policy growth, then this 31% will translate into what kind of a number in that sense? And second, just wanted to understand this 31% includes how much contribution from both, if it is there any. So that's my first question. And the second question, Anand, to you is that to the extent what portion of business we have taken already to price hike? Assuming you are planning for a couple of more products to take price hike, then if you add up those two couple of more products, then eventually for the entire year, what portion of business can potentially see a price hike in that sense? That's my second. And then lastly, if you can give your investment income in the current quarter driven by capital gains? Okay. Sanket, a couple of data points. Our policy-related growth is also double digits as far as new business is concerned. The growth is coming both in value as well as in volumes. That's what we keep tracking. We have always maintained that our business operations are more towards expanding the scope of health insurance. We are not so much dependent on portability and so on. Our portability share has remained the same as much as last year, which is around 12% of in our overall contribution to fresh business. It was the same last year. It continues to be the same this year. So we are selective. We are aggressive in markets where we want to be, but we are selective in markets where we don't believe it will make sense. As far as the pricing is concerned, we have already taken product pricing, repricing in almost 10%-12% of our product contribution as we speak. And we plan to take in a few other products. As we exit this year, I think almost 50%-60% of our product GWP will be repriced. That's what we are looking for. You said 50%-60%, right? 50%-60% percentage. Yes, that's correct. That's corr ect. Yeah. Okay. Okay. Add to that. Yeah. So Sanket, in the first half of this financial year, we have booked INR 110 crores of profits. And these profits are booked looking at the market conditions. And in second quarter, will be that INR 110 crores in H1 would be second quarter how much? So you're asking me to tell you how we're looking? These are the markets you understand? No, no, no. No, no. I'm asking for the second quarter, current quarter. You said for H1, it is INR 110 crores. So what would be the amount for INR 80 crores? Second quarter is INR 80 crores. 80. Okay. Okay. And just to follow up on that 31% growth, just wondering, your 14% growth is in number of policies. So that 31% growth, maybe because your long-term contribution would have gone up. So if I assume fairly that one-year to one-year product growth still will be more than 14% as a whole? Yeah, yeah. Sanket, see, that 31% growth, what we are talking about, is coming both. We are definitely pushing for long-term also because we believe that long-term is good for both from the consumer point of view as well as the insurance company's point of view in terms of persistency. So both of long-term policies are very, very kosher in our scheme of things. We are pushing for it. But yes, if you go by only annualized policy, we will be around upwards of 25% kind of growth rate. Okay. And mix between you and retail. Mr. Sanket, please fall back in the question queue for further questions. Thank you. The next question is from the line of Mohit Surana from HDFC Asset Management Company. Please go ahead. Yeah. Hi, sir. Sir, figures that you mentioned around increasing severity and frequency 10% and 6%. So tell me if I'm reading this correctly, if the net incurred claims for the first half have increased 21% YOY. So of that, 10% and 6% is explained by increasing severity and frequency, and then around 6% to 7% will be normal volume increase. Is that the correct way to read it? Yeah. Got it. And, sir, if you can, on both these parameters, severity and frequency, can give some color on how should we see them going forward? So as I said earlier, this is basically seasonality that has played out maybe to a higher extent than was expected. Q3, Q4, we generally see lower impact. And we hope that the same will play out this year as well. And, sir, once what you mentioned on seasonality will be more true in case of increase in frequency. So do we believe that the increase in severity part of it is more structural than seasonal, or you think there is some seasonality in severity part of the increase? Yeah. Severity also, I think it's more of some correction that has happened in a set of our network pricing. And therefore, some of it will be one time. And we believe that the impact will be lower going forward. Got it. Got it. Okay. Thank you. Thank you. The next question is from the line of Prakash Kapadia from Spark PMS. Please go ahead. Yeah. Thanks for the opportunity. Two questions from my end. Earlier, we were targeting combined ratio being lower. And we were also looking at retail growth being higher than peer players and industry. So what is that we are missing as a leader? Is it just the seasonality impact or underwriting? And from year on, if I were to look at slightly medium term, obviously, you have your target of longer-term profitability and GWP doubling, so profitability tripling. So in the medium term, how do we evaluate you? Is it going to be a slowdown in business and the trade-off of profitability? So what is the game plan? Because it's slightly confusing. Despite the leadership we have, we've not been able to get better combined ratios or profitability. So are we okay slowing down growth in the near term and focusing on profitability, or we think the balance of profitability and growth will be there? So how do we look at, say, the next few quarters from year on? Those are my two questions. Yeah. So see, there is absolutely no thoughts or no plans to slow down the growth. Our growth continues to be the main focus area. And as I've mentioned earlier, we are looking at an overall growth of 18% this year to achieve a target of INR18,000 crores, which we are very much on track on. We are looking at the company's growth rate to be in line with the industry's growth rate. We are slightly behind as we speak on the retail side. But on the new business side on retail, we are definitely up there. But on the renewals, because of the price impact we had last year, the base effect, it's a large base. We are seeing a little slower growth in GWP. However, our persistency has definitely improved significantly over last year in terms of number of policies, even on renewals. So the growth engine and the growth aspirations continue. We don't have any thoughts of compromising on that. As far as the outcome in terms of financial, in terms of overall combined ratio and claims ratio is concerned, on the OpEx side, the company continues to be the best in the industry as far as our expense of management rates are concerned. And I think it will only improve going forward with our investments that we are making in tech and other areas. As far as the claims ratio is concerned, this is a challenge the entire industry is facing. And obviously, being a market leader, we also face this challenge. But quarter two is typically quite most impactful. But quarter three and quarter four, we expect that the loss ratios will improve. In addition to that, we are taking proactive measures in terms of product pricing, in terms of investments in our various wellness and prevention facilities, which we believe will help us in keeping the claims ratio under control as what we are planning to. Do you look at group business? Because all of us know group business always has its trade-off between lower expense ratio but higher claims ratio. So would you still continue to grow group at a low base, obviously, for us, but the growth rate would continue? Yes. Group business, we will continue to grow. But as I mentioned earlier, there has been definitely a very significant pricing correction in the group portfolio at the industry level. So we are recalibrating our strategy on group. We probably will not like to do business which are definitely going to be loss-making. We would not like to participate in those areas. But we will continue to focus on groups, especially the small and medium corporates, which comes through our regular distribution channels like digital and agency. Okay. So hopefully, second half, we should see some better progress. Please fall back in the question queue for other questions. Thank you. The next question is from the line of Supratim Datta from Ambit Capital. Please go ahead. Thanks for the opportunity. My first question is, on the group business, could you give us a split of what is your employer employee and what is your attachment product split of GWP and how both of them have grown? If you could give us some color on that, that would be helpful. Now, moving to the next bit, on the digital side, it seems like the digital channel as a percentage contribution has reduced in the second quarter. Just trying to understand what has happened there that there has been this fall. And on the loss ratio side, one point you mentioned was long-term policy reinsurance also adversely impacting the loss ratio. Just wanted to understand that because my understanding was that this long-term reinsurance would actually help you offset some of the losses. So what has happened? If you could give us some color on that, that would be very helpful. Thank you. So our digital business has definitely shown much higher growth in the second quarter than the first quarter. And in fact, it is now the fastest growing channel for us. And we are investing heavily into our digital business. We have probably one of the best digital business books in the entire industry, very, very significant contribution to our top line as well as to our bottom line, so we continue to invest very heavily on the digital side of things. As far as the group business is concerned, as I mentioned earlier, we have a very small portion of group business, GMC, that is employer-employee, which contributes only around 3% of our overall book right now. But even in that, we have experienced very, very deterioration of rates when it comes to mid-corporates and large corporates, which is even a smaller portion of the 3%. So we are evaluating whether we should continue in those areas, but as far as small corporates and the MSME is concerned, definitely that is our focus area and we'll continue to keep investing there. As far as the long-term numbers are concerned, Nilesh, if you can do that. Yeah. So long-term, RI, if you remember, last year we had tie in December. So this is for long-term retail policies. What we are saying is H1 compared to H1. Last year, there was no long-term. Whereas this year, it is. And we have saved 50%. So there is a reduction when it comes to net earned premium for long-term policies. The benefit comes to RI commission. So that's the comparison we're talking about, H1 versus H1, where optically the loss ratio because it's ceded. On an earned premium basis, the loss ratio gets impacted, which was last year. But in terms of profitability of that business, it continues to be a very good business line. It's just a loss ratio comparison. Got it. Thank you. Thank you. The next question is from the line of Madhukar Ladha from Nuvama Wealth Management. Please go ahead. Hi, sir. Good morning. Most of my questions have been answered. But just coming back on our growth path and our target of tripling profits, 3x, right? So given how things are playing out, it seems that the industry is facing this problem of high claims ratio. Are we seeing any signs that this can change? How can we drive this change? Or should we settle for the fact that this helped retail health and helped Star Health in particular, right? That's sort of a 12%-14% ROE business, even if that is sort of if there is some improvement. And second, you mentioned that you're looking to take price hikes on almost 60% of the portfolio. To what extent will the price hikes be? Can you quantify? You've already taken price hikes on about 12% of the portfolio, if I'm not wrong. What is the price hike over there? What is the quantum average over there? Yeah. Yeah. Yeah. Thanks a lot. I mean, see, you're right. We have taken price hike in 12%, and the average price increase was around 10% in these two products. As far as the future products are concerned, it might be on the similar lines or slightly higher. But as I mentioned, we are also looking at a differentiated pricing model based on cohorts of customers' experience, and we are evaluating that as we speak. As the medical inflation keeps increasing in India unabatedly, unfortunately, insurance companies have to reprice their products to pass on the cost to the end consumer. That will happen. But I think going forward, the way in managing the situation is by driving more traffic towards our preferred network of hospitals, by investing more in our wellness and customer engagement activities. And finally, of course, by making sure that there is a very strong industry-wide engagement with the healthcare ecosystem, which we are driving definitely, which we believe that it will play off for the benefit for the entire industry. And sir, do you change your guidance after seeing this? So given that the loss ratios are so high this year, and we are seeing this problem in the industry, over the next couple of years, would you like to sort of revise your guidance? So see, it's like this. I think this year, we were expecting a 100 basis points improvement in the combined. We had kind of planned for 50 basis point improvement in OpEx and 50 basis point improvement in claims. On the OpEx side, as we are confident that we will be able to do what we have planned. On the claims side, as we are all seeing that there's a heightened medical outgo for the entire company and the industry. So we obviously will have to look at that as we speak. But quarter three and quarter four is typically better for all of us in the industry level, and we hope that that will help us. But whether we'll get to that, I would not like to comment on that. As far as our medium term is concerned, we stick to our plans. We believe that definitely we are on track to achieve our 2x GWP by FY28 and 3x profitability by FY28. Those two numbers, we definitely believe that we are in a position to deliver given all the corrections that we are taking. Sir, I'll take this offline. Thanks. Thank you. The next question is from the line of Himanshu Taluja from Aditya Birla Sun Life. Please go ahead. Hello. Good morning, sir. Thanks for the opportunity. Just a few questions. Maybe it looks repetitive, but I clearly wanted to understand. You hosted an analyst day in June and towards you've given some guidance on the combined ratio as well. But typically, knowing generally from because you have an adverse effect in the month of June itself, also you typically know second quarter remains high from both severity and the frequency of the claims. You're entering the group businesses, which at the start of the year, you decided to get in some of the group businesses, which will eventually lead to higher loss ratios. What has typically changed so that typically you see more your loss ratios guidance looks? And secondly, because at the start of the year, you always think that probably the normal is around 95%-96% combined ratio. Typically, we end up at a higher. Is that structural change and probably one should change the assumption and take the combined ratio towards the higher end of the assumption? Second part to the question is in the concessions for the new business premium because this is one area that you really wanted to achieve that. But probably you have taken various price hikes in the past as well. Despite that, we are seeing the growth is coming down from 20s towards 16. Your loss ratios too, even in the past price hikes, your loss ratios have gone up only. You have again taken the price hike for potentially the new business premium. But again, it can eventually lead to a problem to an affordability-like situation where higher affordability and the renewal premium growth can again be subdued. So how you will address both and what is the new normal for us to understand? Thanks. So as far as our new business growth is concerned, the strategy hasn't changed. We continue to focus on new to Star Health and new to industry growth as our main driver. Portability has never been the main strategy of this company. So we don't intend to change that. And thereby, there is no adverse selection if you are asking about that. So that is the main agenda. The second one, as far as our price revisions are concerned, yes, we did take a price revision in our FHO last year, but we did not get the full impact of it as we had anticipated. But since we are considering looking at all products as we speak for the current financial year, as I mentioned, almost 50%-60% of our products we are looking at repricing in the next couple of months. As far as the long-term outlook of this business is concerned, we strongly believe that the business growth, the opportunity of increasing insurance penetration continues to be very, very high. Health insurance is the focus area for all industry players, including us. So as an industry leader, we think that we are in a good position to capture the opportunity which is available. And with multiple things which is there, the tailwinds which is coming up for this industry in terms of hopefully a GST reduction in the health insurance products and all of that. And if some kind of regulations or some kind of arrangements can be done between healthcare providers and payers, I think that will also be good for the industry. So we do not see any specific long-term challenges. But in the short-term pain we are going through because of the heightened medical inflation we have seen, and we are taking corrective measures to control that. Sir, sorry, it just seemed like I'm just trying to understand more from a combined ratio. Has that probably changed because severity of the claims rising, severity of the claims are rising, medical inflation is there? Probably because what happened typically, we think that the loss ratios likelihood to sustain between 65%-66%, where probably you will end up at 4%-5% core operating profitability and eventually. I'm just trying to understand, has it changed? Do you believe that potentially one should think, given the medical inflation is right now, one should tend towards the higher end of the curve? The factor of multiple things, it's all about, see, loss ratio cannot be looked upon in isolation, right? We have to look at, as you rightly said, at the combined ratio level. If you're able to operate in the combined ratio bands that we are comfortable in, because loss ratios are different for different lines of business. So yes, I think structurally there has been an increase in loss ratios for the entire industry, and we are nowhere away from that. So we are also experiencing the same. But at a combined ratio level, our sweet spot, ideally, we want to achieve a certain level. But definitely, the first half of this year is heightened. If you ask me, are we confident of getting to that level which we want to be in, maybe a 96%-95% combined ratio, which is what our end objective is? As I told you, probably in the short term, it may be difficult, but in the long term, it is going to be our in the midterm, rather, it is doable for us. Fair, fair, fair. Sir, just last question, not pertaining only to Star, just from my understanding, what we are seeing post-COVID, the actual number of the lives is not growing, remains stagnant. The volume growth has not been there. Do you believe is there a change where people are moving more towards the corporate end of the policy, the younger generation towards the corporate end of the policies rather than an individual? And given your market share is too high also, unless the volume growth picks up, difficult to have things normalized. Can you just shed some light on why the number of the lives in the industry is not growing? Has it changed people thinking of having a more corporate version? Is the younger generation shifting towards more of the corporate end of the policies rather than going in individual policy? In fact, I would put it the other way. We are experiencing a very, very high growth in the younger generation. We are seeing our digital business growing rapidly, so I don't think that that's the concern right now. I can't speak for the industry. Yes, the industry is facing challenges on volume growth, but as far as we are concerned, we track volume growth closely, and we have seen good outcomes there. Our volume growth is there in double digits and much higher in the digital side of things, so I don't think that's a challenge for us right now, but having said that, health insurance as a business, most of the companies are looking at this from top-line perspective, and so there is a lot of competition, is quite intense. So as a leader in the industry, we believe that it is our duty to not only grow our business, but also expand the market, which we are doing. And we are investing more in tier two, tier three cities, smaller towns, expanding our distribution in terms of branches, in terms of all of that, agents. This year also, we are on track to add 100,000 new agents who will contribute to our business in the future. So I think these are some of the basics that we continue to invest in, and we are quite confident that this business will continue to grow. Sure. Thank you, sir. Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Mr. Nilesh Kambli for the closing comments. Thank you, everyone, for joining the call. As mentioned, we are confident of our long-term objective in terms of doubling our revenue and tripling our cash growth. These are some of the short-term challenges, and we are working on answering these challenges. Thanks a lot. On behalf of Star Health and Allied Insurance Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.