PB Fintech Ltd

Fintech is a very broad term being used today to describe everything from payments, risk management, distribution solutions, tech platforms among various things. At a basic level, a Fintech organisation is defined by the solution it offers, which can either be a product or a service offering. Both our platforms, Policybazaar and Paisabazaar, offer financial products to consumers who trust us with the best possible choice of products, a convenient way to transact and a world-class service.

Our business has tremendous long-term tailwinds

1. India continues to grow at a fast rate with per capita GDP predicted to triple in the next few decades, thereby increasing the total addressable market for us.

2. With widespread and fast paced adoption of mobile phones and internet, online businesses have become mainstream in every domain.

3. The impetus provided to the digital economy by the government is conducive for businesses to deliver best-in-the-world offerings in the country.

4. The middle and upper-middle income class which we define as families earning Rs5 Lacs to 50 Lacs annually (US $6k to $60k) is likely to grow even faster. This demographic segment is highly aspirational and wants their children to do better than themselves, which implies investing for them and protecting their dreams and aspirations.

5. India used to be a joint family / non-urban set-up a generation ago where adverse events were handled by family and relatives pooling in as they were our societal forms of insurance. Nuclear families are relatively a new phenomenon and with low insurance/ social security, there is an increasing realisation that death, disease and damage are omnipresent. COVID-19 further highlighted this necessity.

Insurance spans a wide range of products, both personal and asset-based.

In the personal insurance category, protection products i.e. Health & Term Life Insurance have a unique proposition for the consumers, wherein they are essential purchases, however the best case scenario is for them to be never used. The nature of the products is such that it forces consumers to consider potential negative future events and demands a time commitment to understand the finer details of product at the time of purchase. These are not impulse / glamour purchases i.e. no one wakes up in the morning and thinks that they have to buy insurance, but the financial risk of death, disease or damage is to be protected against.

In this backdrop, our endeavour has been to educate the consumer about this critical need, which is worth a serious consideration, but not a happy purchase. It's bought out of serious consideration of risks, and takes time to sink in, as parting with money today for a future promise is hard. It has been 15 years of very serious communication and work that has led to the fact that today, when someone thinks of health or term life insurance, the journey invariably begins with policybazaar.com. However, that's just the start and it takes the consumer over 2-6 weeks to finally buy, and we attempt to stay with them during this journey and hope they finally buy through us.

In Insurance, "Absolute Trust" is critical, as the promise is complex and comes with its set of caveats. Miscommunication on product features and hidden costs, as well as lack of proper disclosure and in many cases, intentional fraud, are serious matters that do not allow the industry to operate comfortably. Technology and data are increasingly solving both these issues, but it's not a simple problem to solve. Both fraudsters and mis-sellers get smarter all the time. We have worked hard with our partners to ensure this is minimised, if not removed altogether. We believe that anyone who interacts with the consumer is the first line of defence against fraud and mis-selling, and we take pride in being amongst the best, with significant investments and focus in tech, data & voice analytics, facial & voice recognition and matching etc. We are crystal clear about the fact that we expect all our insurance partners to have profitability on all our book of business, and we expect them to do so using analytics and technology. We are happy to collaborate with each partner as much as they permit. Eventually it's this focus which helps us differentiate from other formats of distribution.

Lastly, the moment of truth is during claims. Today, we offer tech-enabled, on-ground claims support in all city tiers, to the extent that support is available within 30 mins at the hospital during an emergency. This, in our opinion, is a game changer, and as long as the consumer has been honest in their disclosure, we fight every corner to ensure the consumer gets their due claim. The initiative is a combination of technology and operations, but this is gaining serious consumer goodwill.

Naveen joined us in 2014 to create a platform for credit products, Paisabazaar.com.

Paisabazaar allows any individual to quickly understand the best offerings for his unsecured credit need along with the loan provider details, time to disburse, and credit terms. Paisabazaar works with 65+ partners ranging from big banks to NBFCs to new-age lending Fintechs. It turned profitable (at adjusted EBITDA level) since December 2022, and is now poised to grow these profits.

Our new initiatives will continue to be managed responsibly. We prefer "build" over "buy". This may not always be preferable in public markets as focus is higher on P&L costs vs Balance Sheet spends. However, we do not think that way and treat the company's cash reserves as our own money and would rather build, which provides organisational learning than buy something, which we eventually struggle to control as interests diverge. We are an objective-driven young team, which is transforming the industry as a force for good. It takes courage and time, and we are grateful for all your support.

We operate in a regulated industry and engage with the regulators on all matters. Since we promote insurance awareness, transparency, consumer research, superior disclosure and analytics, we expect the regulations to incrementally support us, as has been our experience over the last decade and a half. The direction is positive and is gaining momentum.

Our long-term vision is encapsulated in our tagline, which we first heard from the current IRDAI Chairman Sir, "Har Family Hogi Insured" (Every Family Will Be Insured), and we will not give up on that objective until it is met.

On our core businesses, every quarter we deliver approximately f50Cr more adjusted EBITDA than the same quarter previous year. This has been consistently happening with very little deviation and these numbers are becoming bigger. This implies incremental adjusted EBITDA of Rs200Cr a year and we see no reason of this slowing down. This will eventually make us a significantly profitable business.

Within our core businesses, contribution margin on new business is positive and as we scale, this will continue to enlarge. The other significant source of profitability is the renewal business, which has predictable persistency and growth, based on our cumulative volumes. Together, these will add significantly to the profits. As time progresses, the investment in new initiatives will reduce and so will the ESOP charges (a large chunk of which we have already accounted for). All this put together gives us reasonable comfort about our future profitability. The focus is and must stay on business growth, and efficiency.

Most importantly, we are blessed to lead the team we have. We will lay out the core traits of our culture. Firstly, we have a culture to put the company ahead of oneself. This was always part mission, part business (though to sustain a mission you must have profits). This is an important trait and we discuss transparently whenever we feel a breach in this characteristic. We are transparent to a fault, and that truly sums it up. The other characteristics we cherish are patience, trust in team, yet urgency in execution. We have over 100 people who are over 10 years old in the company, but we have an equal ability to infuse new talent, visibly displayed in the number of new people leading serious change projects (we classify under 5 years as new). Carrying the vintage with fresh blood is always a challenge and we are increasingly getting very good at it.

Our entire business focuses on helping customers at the time of dire difficulty like death, disease, and damage, or when they need credit. This has great social impact as we are the primary driving force in bridging India's insurance protection gap. As we say "ESG is not paid lip service here, it is our entire business."

We believe in thinking long term, while delivering short term. We are grateful for your support that allows us to keep building towards our eventual mission of "Har Family Hogi Insured".