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Informist, Friday, Oct. 25, 2024

 

--Bajaj Finserv: May infuse INR 5-6 bln in AMC, healthcare ops in 7-8 mos 
--Bajaj Finserv: Portfolio balancing helped cut motor insurance loss ratio 
 

By Richard Fargose and Christina Titus

 

MUMBAI – Bajaj Finserv Ltd may infuse INR 5 billion – INR 6 billion in its asset management and healthcare subsidiaries over the next 7–8 months, Chief Financial Officer S. Sreenivasan said at a post-earnings analyst call on Friday. "We have (capital infusion) demand primary from the mutual fund business and from our healthcare business as well," Sreenivasan said.

 

Bajaj Finserv Asset Management Ltd, which launched its operations in June 2023, has assets under management worth over INR 160 billion through seven schemes. Bajaj Finserv Health Ltd. is a health tech venture, which seeks to provide platforms for customers to manage their healthcare needs. Vidal Health Insurance TPA Pvt. Ltd. is a wholly-owned step-down subsidiary of Bajaj Finserv Health.

 

Bajaj Finserv is the non-operating holding company of Bajaj Finance Ltd., Bajaj Allianz General Insurance Co. Ltd., Bajaj Allianz Life Insurance Co. Ltd., Bajaj Finserv Asset Management Ltd. and Bajaj Finserv Health Ltd.

 

Sreenivasan said the general insurance and life insurance businesses were incorporated decades ago and those segments are now generating steady cash flows, which is allowing the holding company to invest in new ventures.

 

Tapan Singhel, chief executive officer of Bajaj Allianz General Insurance Co., said better balancing of portfolios has helped the general insurer reduce its loss ratio in the motor segment in Jul-Sept. The general insurer's claim ratio increased to 79.7% from 78.0% in the corresponding quarter last year. But the loss ratio for motor insurance improved sharply to 68.8% in Jul-Sept from 76.6% a year ago.

 

"I did mention that commercial vehicle, we have been kind of conservative on that line of business," Singhel said, adding, "So, if the mix changes, then loss ratio will change. When we see a higher loss ratio, we are moving the mix of business to a lower loss ratio, then overall your loss ratio will improve."  

 

Speaking about recent regulatory changes in the life insurance segment, Tarun Chugh, chief executive officer of Bajaj Allianz Life Insurance Co., said new surrender value norms will lead to structural changes in the commission mechanism in the life insurance industry.

 

The Insurance Regulatory and Development Authority of India in December issued a master circular asking insurance companies to increase the surrender value of life insurance policies, specifically for non-participating products. Surrender value is the total payout given by the insurance companies when the policyholder exits the policy before maturity.

 

"The cost of commissions has to come down because of surrender value norms," Chugh said. "They can plateau out in such a way by reducing the first year's commissions. Since the discussions are going on for more than six months, most distributors have either taken a commission cut or deferral in the entire sector. As we go ahead, we will see more plateauing out of commissions."

 

On Wednesday, Bajaj Finserv Ltd's reported an 8% on-year rise in its consolidated net profit for the quarter ended Sept. 30 to INR 20.87 billion, with its life and general insurance subsidiaries exhibiting subdued performance.  

 

At 1405 IST, shares of Bajaj Finserv were down 2.1% at 1,705.65 rupees on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vidhi Verma

 

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