General Insurance Corporation Of India

I now hand the conference over Ms. Nikita from E&Y. Thank you and over to you, ma'am.

Thank you, Manav. Good morning to all the participants on the call. And thanks for joining Q4 FY '25 Earnings Call for General Insurance Corporation of India.

Please note that we have mailed out the Press Release to everyone and you can now see the Results on our Website, and it has been uploaded on the Stock Exchange as well. In case you have not received the same, you can write to us and we will be happy to send it over to you.

Before we proceed with the call, let me remind you that the discussion may contain forward- looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with the businesses that could cause future results, performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements.

To take us through the results of this quarter and answer our questions, we have with us the management of GIC represented by Mr. Hitesh Joshi – Executive Director, and other top members of the management. Please note that CMD is not available for call today due to unavoidable travel plans. We will be starting the call with a brief overview of the quarter gone by, which will be then followed by the Q&A session.

With that said, I now hand over the call to you, sir, Mr. Joshi and. Over to you, sir.

Good morning, ladies and gentlemen. Thank you for joining us today for the Earnings Call. I am pleased to present to you GIC Re's financial performance for the 4th Quarter of FY 2025.

Page 3 of 13 vision of value creation. Our consistent focus on improving portfolio quality, sharpening of our strategic direction and aligning our operations with market realities have enabled us to navigate complex market conditions, without compromising on underwriting integrity. We strive to maintain a healthy combined ratio and outcome that stems from deliberate choices and an unwavering focus on operational excellence.

For FY '25, the combined ratio stood at 108.8%. This disciplined posture has not only fortified our financial position but has also deepened our understanding of market cycles and our own risk appetite. It is this clarity that positions us well to engage with both current challenges and future opportunities with confidence and purpose.

Gross premium income for Q4 FY '25 stood at Rs. 10,367.08 crores compared to Rs. 8,723.65 crores in the corresponding period of the previous year. Investment income for the quarter stood at Rs. 3,903.02 crores vis-à-vis Rs. 3,036.52 crores for the corresponding period.

The income claim ratio for the quarter was 82.2% as against 68.9% of the corresponding quarter of the previous year. Combined ratio for the quarter stood at 103.56% compared to 89.26% for the corresponding period in the previous year. Adjusted combined ratio, factoring in policyholders' investment incomes stood at 85.79% for FY '25 as compared to 86.24% in the previous year.

Profit before tax stood at Rs. 2,922.66 crores for Q4 as compared to Rs. 3,171.33 crores in the corresponding period of previous year. Profit after tax was Rs. 2,182.88 crores as compared to Rs. 2,642.47 crores in the corresponding period.

The solvency ratio for the year end improved to 3.70 as compared to 3.25 for the previous year.

Net worth excluding fair value change was Rs. 43,106.52 crores on 31/3/25 as against Rs. 37,581.78 crores in the previous year end. Net worth including fair value change stood at Rs. 83,224.33 crores as on year-end compared to Rs. 81,330.25 at the previous year end.

Domestic premium for the year FY '25 is Rs. 30,662.44 crores and the international age Rs. 10,491.51 crores. The percentage split is domestic 75% and international 25%. The domestic premium for the year grew by 18.8%, while international business witnessed decline of 7.8% over previous year.

While underwriting profitability remains at the core of our strategic focus, our pursuit of excellence combined with targeted initiatives and a prudent approach to risk has reinforced the strength and stability of our overall performance. This positions us well to seize opportunities that are not only aligned with our risk appetite but also support our long-term vision for sustainable growth.

Page 4 of 13 As we look to the future, our priorities remain clear, to uphold underwriting discipline, enhance operational efficiencies, and deliver enduring value to all our stakeholders. I would like to take this opportunity to express my sincere gratitude towards shareholders, clients and employees for their continued confidence and support.

With this, I conclude the remarks and open the floor for Q&A. Thank you.

Thank you very much, sir. We will now begin the question-and-answer session. We have a first question from the line of Sanket Godha from Avendus Spark. Please go ahead.

Yes. Thank you for the opportunity. Sir, I have a few questions. The first question is on the growth, especially on the international business in the 4th Quarter, if you look at the number’s year-on-year it has declined, but in the 4th Quarter the growth is around 35%. So just wanted to understand this growth is sustainable and how much it is driven by any pricing environment change in Jan renewals? Or because of your rating change you probably will have more contracts that contributed to the growth. So if you can split this growth basically led by price hike, rating change, and maybe volume growth, that will be useful sir.

Hello, this is S.K. Rath, GM Reinsurance. I would answer to the growth. The 4th Quarter growth is mainly resulting from the rating upgrade of GIC wherein we got the rating upgrade in the month of November '24. And that has been passed on to our insurance and reinsurance. And based upon the information, we are able to write some of the new accounts in the January renewal, and that has catered to the growth in international business in the 4th Quarter.

And any benefit of pricing environment changing with respect to -- Pricing, I would say pricing international market what I saw in the 1st January renewal is quite soft, so far direct market is concerned. And both in domestic and foreign, it is quite soft. Except for the accounts where there are some losses, and those treaties particularly, the non-proportional treaties would attract some of the loadings ranging from 10% to 15%. Otherwise the market has gone a bit of soft in comparison to the previous year.

This is only with limit to international business you are saying, right, sir? Yes.

Okay. And sir, then this 34% growth what you reported in 4th Quarter, because of the rating change can we assume this growth is sustainable for FY '26 fully?

Yes. Now that we got our rating back and the international market is aware of it, and no doubt they are coming and offering the new accounts to us, or wherever we lost the accounts we are trying to regain them. So naturally this process will continue going forward. And our international branch, our branches are also likely to get the benefit out of this rating upgrade.

Page 5 of 13 Got it, sir. And sir, we still have a higher combined ratio in international business 121%, though it is improving every year. So with this rating upgrade, any outlook you want to give this 121% can improve to what extent in '26 because of you winning better contracts?

If you see, in comparison to last year our international business and the rating, I mean, the combined ratio has actually come down in comparison to the March '23. If you look at March '24, it was something 108% and now that has come down, incurred claims ratio has come down to 100% this year. So naturally the combined is in addition to the normal claims, we add the other expenses and commission. That's why it is slated at a higher level. But going forward, yes, we will try to improve further and we would like to follow the underwriting, this means that we have been following. And we will also look at the improved market and international markets where we can improve the combined ratio.

Got it, sir. And second one more question which I had sir is that, there is a lot of news regarding that obligatory business could be further reduced from 4%, because in the news there are many articles saying that the general insurance industry is making a representation to lower it for GIC Re, obligatory business to be lowered. So if you have heard anything from government or IRDA on those lines, any waterfall what they have given that how gradually it will be reduced or it will be holding up at 4% itself?

We have no information or advice from either the regulator or the ministry. I think these are the usual efforts made by the industry, and particularly certain cedents, so which makes the news.

But we have no information, no official news either from the regulator or from the ministry.

Okay, sir. And sir, if you if you can give your obligatory business, probably combined ratio or loss ratio compared to the company average or domestic business average loss ratio or combined ratio, that will be useful, just to understand whether obligatory is much more profitable compared to overall company's domestic business.

Not really. See, the point is that obligatory would constitute say something like 30% of our book.

And there is always a risk return trade off, so it is not correct to say that this is more profitable.

And given our focus on underwriting discipline, our rest of the book is also improving not only domestically but also for international. So, there should not be any concern on that count that profitable business will go away. We are continuing to improve the quality of the rest of the portfolio.

Got it, sir. Sir, I was asking the breakup of domestic business and international business combined ratio into loss ratio and expense ratio for the full year.

Sanket, this is Sanjay Mokashi, General Manager Reinsurance department. The loss ratio for the domestic portfolio annually is at 85.3%. And for foreign business it is 98.9%. 98.9% and 85.6% you said, right, sir?

Page 6 of 13 Yes. Sorry Sanket, I will correct myself. It is 96.5% for foreign. 96.5% for foreign for the full year, right, sir? Yes, yes, full year. And domestic you said 85.6%, right sir?

Okay, got it, sir. And sir, in the result I can again see that you made a catastrophic reserve of almost Rs. 6,000 crores, which you also did almost similar number last year. Rs. 600 crores.

Sorry, Rs. 600 crores. So just wondering, sir, suppose if a catastrophe event happens you will try to take the hit through reserves in the future? Or you will continue to route it through P&L just to protect the P&L. I still want to understand the logic of creating so much of CAT reserves incrementally in in that sense.

Okay. And these cat reserves are used in solvency calculations, sir?

No, it is excluded for the purpose of available assets.

Okay, got it. And last one sir, if you can break down your investment income for the full year and the current quarter into capital gains and the regular dividend/interest income.

Hello, this is Radhika Ravishekar here, the CIO. The breakup is, for the full year investment income stands at Rs. 11,204 crores. The income excluding profit, that is your interest, dividend stands at Rs. 7,096 crores., which is a 10% increase from the previous year of Rs. 6,430 crores, profit on sale is Rs. 4,108 crores as again Rs. 4,135 crores. Despite the challenging market conditions, we have been able to maintain this profit on sale of securities.

Got it, ma'am. Perfect. This is useful if I have any questions, I will come back in the queue. Thank you very much. Yes, sure.

Page 7 of 13 Thank you. We have our next question from the line of Prayesh Jain from Motilal Oswal. Please go ahead.

Yes, hi sir. Sir, just on this pricing in both domestic and international markets, on the fire piece in particular, we were hearing that the reinsurers have increased the pricing on the fire side. Any comments there from your side?

Yes, Prayesh, this is S.K. Rath, GM Reinsurance, I would like to comment on that. See, this time renewal, we have asked all the insurance companies operating in India, in view of reduction in their premium quarter by quarter we asked them how they are going to improve their claims and how they are going to achieve their business targets. So the companies themselves have come to GIC with their business plan and their growth plan, wherein they assured us that they will be adhering to the IIB rates prescribed by the IRDA. So, on the basis of that, they have been following the process and they are following their business plan. So, reinsurer has no role on that. As and when they come to GIC only for any FAC support, we just wanted to ensure that they follow the rates that they have given as assurance.

But what have been the kind of renewal rate that would have happened on the same on the like- to-like basis?

They have been trying to adhere to the IRDA rates, particularly from 1st of January, '25, onwards. And there are aberrations as well, but there are few aberrations which some of the companies might have not adhered to.

Okay. And secondly sir, in terms of growth, for example, hypothetically if the obligatory business 4% goes away, and I understand the obligatory business is about 43% of your domestic business, do you see this kind of getting impacted because some of the like, for example, health insurers wouldn't want to kind of continue with the obligatory insurance or reinsurance. So would that be a growth restrictor for you?

Prayesh, in this situation, if obligatory goes away, yes, there could be a hit, a temporary setback to the top line. But on the flip side, it gives us greater control on our portfolio. The entire risk selection is with our underwriting, will be based on our underwriting. Having said that, we have put in place a plan to overcome the short-term setbacks that we might have if obligatory goes away. And the approach generally would be to market the additional quota share treaty from the companies. So, there are companies who are willing to increase their reinsurance with us and we will take that opportunity. Currently we have been very conservative, very selective in that segment because we already have obligatory.

Having said that, there is another factor also that we have been in this market for more than 50 years now. There is established relationship with the market which will help us in leveraging the relationship. At the same time, we have the data, that data will also help us to strategize. And

Page 8 of 13 these are the things we will implement if and when obligatory goes up. As Mr. Joshi said, as of now, there is no information either from ministry or IRDA in this regard.

Got that. And in terms of growth, how would you look at growth in the international business?

Yes. Going forward, our impetus is that we look forward to the new markets where we have been moved out, or because of our rating downgrade in the year '20, we are not able to renew our some of the accounts. Now we are trying to look into those territories where we can reenter them and to bring about or to renew those accounts, or to gain those accounts which are lost to us. So that way we can get into those markets. And similarly, we are also looking into the accounts where we have better opportunity or better control to increase our line. So that way we want to increase our foreign business going forward.

And any guidance on combined ratio improvement trajectory which has been consistently improving for you guys over the last four years?

So overall, the combined ratio should be expected to further improve by -- Yes, currently it is at 121% something, and we still want to improve, if it can be around 110% or 115% that will be an achievement by the year end.

Okay. So overall, we can still expect the overall combined ratio at the company level is at 108.8% in FY '25 which can further improve to 106% levels? Yes, around 106%, 107% figure.

Okay. Thank you so much. And wish you all the best.

Thank you. We have our next question from the line of Karthikeyan, an individual investor. Please go ahead.

Hi, good morning to everyone. Thanks for the opportunity. So I have two or three questions. The first question, see, we always made underwriting profits in the Q4, the last quarter, and we haven't made any underwriting profit for this quarter. Any specific reasons for that?

Page 9 of 13 See, if you look at the underwriting profit, we have made some profit this quarter as well. If you look at domestic profit this quarter, the combined ratio has come down, non-life domestic has come down to 70.34% as against 80% of Q4 of last year. And if you look at the December quarter, it was 83.72% whereas in Q4 it is 70.24%. This is for domestic. And if you look at for foreign, the loss ratio is 110.29% in last quarter, whereas it is 68.60% for this quarter. And the main dampener here is the foreign Q4 and that is mainly, as I said before, it is mainly because of the California fire and then Taiwan Typhoon, and there are some flood losses of Dubai and Nepal that has added to the losses.

And in addition to that, there are some losses that has affected like Israel and Turkey losses, motor losses has added to that. That's why the losses, I mean, the Q4 profit has come down in comparison to last year. Otherwise, if you look at the overall performance of the organization, on a year-on-year basis it is quite improved. If you look at the entire year, we have made a profit of Rs. 8,700-odd crores as against Rs. 7,000 crores something last year. So as a reinsurer, we do not go by quarter-on-quarter, rather we look at the overall performance of the company for the annual period. So that is why, as a reinsurer, we look at it.

So the life, whatever losses we had in this quarter, right, it's all due to the catastrophic events?

CAT events which has been reported for which we have made provisions, and there are some provisions also, additional provisions are made for life.

For the life part, I mean, it has actually increased, for the last year if you look at the losses, right, it has increased almost 2.5x.

Yes, and I will ask my life actuary Mr Suresh Sindhi to address the query. He is here with me; he will be addressing that.

Hi, good morning, Karthikeyan. This is Suresh Sindhi, Life Actuary. So if you just see that, yes, the losses are quite significant, mainly on account of two things. One is, the net claims paid, so we paid actually net claims which are much higher compared to last year, 1,887 claims we have paid this year, number one. Second thing is, obviously, there are lot of claims which have been reported but we have not yet settled those claims, so obviously we have to set aside reserves. So, because of setting aside the reserves and those claims which we have already paid, because of that obviously we have incurred, the claims have increased substantially compared to last year.

Because there is not much of an event, right, I mean, in terms of life losses. Is it because of catastrophic event or, I mean, the increase is 2.5x than last year. And suddenly how come the claims have increased so much in the one quarter? I mean, even quarterly if you look at the numbers, I mean, I am not able to make any sense out of the numbers.

Yes. So maybe to be very specific, there are no big losses, obviously, but there are many claims as I told you. So if you really want the explanation, let's say, here we are talking about incurred

Page 10 of 13 claims of say 2,904. So these incurred claims are made-up of three parts. One is how much claims you have paid till date, that is 1,887. The claims which we are supposed to pay that is the change in, we call this additionally things, which is around 158.1 compared to last time. And the reserves, we have to set aside reserves also, as you also know that life is a long-term business in nature. So we have set aside reserves that is coming around 859. That is a change in reserve also.

So if you combine all those things, because of that your incurred claims have increased substantially compared to even last quarter and then the last year.

So this trend will continue or there will be improvements going forward?

Yes, so we believe that, as you also know that Jan, Feb, March is the last quarter of the year for the insurance companies, so obviously we get lot of claim intimations and all those kinds of things. And we believe that if you just talk about coming quarters, obviously, we do not expect this kind of trend will continue. We hope that it will settle down. But yes, this time there is an increase because of this reason.

Okay. Another question we had, I mean, with regards to motor, I mean, foreign motor and marine which we had discontinued and we had like tail risks coming. So that has come to an end or how is it there?

Sanjay Mokashi here, Karthikeyan. I would not say it has come to an end. Obviously, such an arrangement has a tail. I can only say that the contract that we cancelled by the end of 2021, the effect of it is waning. The tail continues. It has not come to an end, but it is certainly waning.

And more importantly, we have created enough reserves in our books of account as well.

So can we say that it will it will go away maybe by FY '26 or '27. How is that? And it seems to be a very long tail.

It is, because the nature of that contract was treaties that were written in motor and cargo segment, so it will always approach the graph as in asymptotically, the axis asymptotically. And so the tail will be in future such that it will not hopefully impact our portfolio adversely.

Okay. Got it. Sir, another question, what would be the growth forecast for like the domestic and the foreign combined for the next two or three years?

On an overall basis, we project growth in our reinsurance business, which will be measured growth of about 10% year-on-year for the next three years.

Okay. And final question, see the last quarter, I mean, it's a very tough quarter in terms of the investment part, but there is a substantial growth, right, I mean, almost 28%. I mean, what drove the growth of the investment income? Can you give us a breakup, I mean, for the Rs. 3,900 crores.

Yes. Hello, this is Radhika Ravishekar, just repeat your question.

Page 11 of 13 The question is what's the investment breakup, I mean, the gains of Rs. 3,900 crores, can you give me the breakup of interest income, dividend and as well as -- Oh, you are asking for the quarter?

Yes. Specific for the quarter, that's correct.

Yes. For the quarter the breakup will be say around Rs. 1,500 crores from profit on sale and the balance will be interest income, so interest and dividend income. Okay. Thank you.

Because we focus more on the fixed income securities.

Okay. Yes, got it. Thank you. That's all I have. Thank you. And all the best. Thank you.

Thank you. We have a follow-up question from the line of Sanket Godha from Avendus Spark. Please go ahead.

Sir, one more question I had on growth, see, health business has seen a significant growth in the full year around 66-odd-percentage. So on this big base, do you think this growth will be sustainable or you think that the numbers might potentially come down in next year? And on similar lines just want to understand your outlook on crop incrementally, because it's been declining every year. So, now we do Rs. 3,200 odd crores of business in crop, so how do we see that playing out going ahead?

Hi Sanket, this is S.K. Rath again. As to the health portfolio, yes, we have seen fundamental growth, phenomenal growth this year in comparison to last year, and this is mainly the concentration was on retail health business that we have categorically chosen to write. And going forward, yes, the achievement of this sort of growth will not be possible because all the SAHI companies tend to harp on higher commission levels, and whether we are able to meet their demands is a question going forward.

And particularly, currently wherever we have participated, the participation on standalone retail part is substantial, and then the group health also. Group health usually we participate with some participation terms to reduce the outgo in terms of losses. So, hopefully if the same trend is continued and if the companies are prepared to accept the same terms, then the growth would be in the range of say 5% to 10%, but the percentage of growth that we have seen this year is not likely to continue going forward.

Page 12 of 13 Got it, sir. But sir, if the commission demand is higher, then is it fair to say that this Rs. 9,500 crores of business what you did in 4th Quarter might see a decline also because it might not be acceptable terms for you?

Yes, it may be. It may be possible, but the other way is that there are also new participants coming up who want to have their participation in health line of portfolio. New insurance companies are also coming up, so they are also interested in participating this retail line of business where the expenses are minimal and whereby, they can gain some mileage out of the expenses to keep their expenses within the limit of IRDA. So this and the crop are the two portfolios where the companies are more and more interested. So there we can extend our capacities with our terms as per our policy.

Sir, on crop any outlook you want to give, Rs. 3,200 crores, will it be stable, grow?

Yes, see, currently the crop portfolio has gone substantial changes. The SSM model which has been now in comparison to the previous model of PMAY scheme where the liability was 250%, whereas in this SSM model the cap is at 110% or 130%, which is usually chosen by various states. So that is where the premium has come down and it has come down by more than 50%, 60% because the exposure is less. The insurance companies try to pass on the benefit on the premium front to the state. So we have written some of the treaties this year and we hopefully going forward will try to improve participation in the SSM model and the excess stop loss model whereby we can maintain or slightly increase the participation.

Sir, are you seeing incrementally more states adopting that SSM model?

Yes, they are adopting this SSM model. For example, for a state like Maharashtra where the premium goes up to Rs. 10,000 crores to Rs. 12,000 crores, they have now opted for SSM model wherein the loss is capped at 110%. So naturally the premium will come down by 50% to 60%.

Okay. Got it, sir. And sir lastly, if these two lines say remain subdued, then the price hike what you have experienced in fire segment will compensate for any growth, sir? Or what kind of growth you can expect in fire segment because of the pricing being going up from January?

The pricing, as I said, we are seeing the growth, particularly the companies are following up the IRDA rates, which itself will help the market to grow by 10% to 20% in the fire segment. So that will naturally add to the growth of our premium. The other aspect that you are telling that health and crop, crop we are away from the crop portfolio because of the same increase in loss and the premium flow, cash flow is quite minimal. But off late we have seen this SSM model wherein the companies and the states are prepared to pass on the premium as early as possible.

And we do see that there are some prospects of participation in some of the specific agri insurance companies, whereby we can see some growth in the crop portfolio. Though health portfolio the growth will be incremental or minor, it may go down slightly.

Page 13 of 13 Okay, sir, got it. Understood. That's it from my side. Thank you very much. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

So the annual results and the quarterly results that we have presented are broadly in line with the earlier guidances we have been giving from time to time and the trajectory that we have chosen.

We will continue to follow the underwriting discipline, the prudent risk management, and will continue to seek favorable risk return trade off. And we remain committed to creating value for our stakeholders. Thank you all for joining us for this earnings call. Good day and bye.

Thank you. On behalf of General Insurance Corporation of India, that concludes this conference.

Thank you for joining us. And you may now disconnect your lines.