Good afternoon, everyone. Welcome to Q1 FY 2027 earnings call of Cholamandalam Financial Holdings Limited. From the management side, we have Mr. Sridharan Rangarajan, Non-Executive Director, Cholamandalam Financial Holdings. Mr. Shyam Shankar, Manager and Chief Financial Officer, Cholamandalam Financial Holdings. Mr. Rajive Kumaraswami, Managing Director, Cholamandalam MS General Insurance. And Mr. Santosh Kumar Pandey, Chief Financial Officer, Cholamandalam MS General Insurance. I will hand over the call to management for their opening remarks, post which we can open the floor for Q&A. Over to you, Mr. Rangarajan. Thank you.
Right. Thank you. Good afternoon and welcome you all for the Q1 earnings call. You know that there are two major investment, NBFC and insurance, and NBFC is well covered through their Chola Financial call, and you also have the presentation uploaded. So we have with us Rajive Kumaraswami, MD, as well as Santosh Kumar Pandey, the CFO for our insurance business. This call will predominantly focus on the insurance, and I would request Rajive to make the opening remark, and we will open up for Q&A. Thank you.
Thank you, sir. Good afternoon, everyone, and thank you for joining our earnings conference call for the quarter ending June 30, 2026. This being my first call after assuming charge on June 1, I take this opportunity that I am looking forward to engaging with you as we progress during the year over the next few quarters. Also take this opportunity to wish all of you a very warm Independence Day coming celebration. May this occasion inspire us to continue to have pride and unity and a shared commitment to India's continued progress. And we, as part of the insurance sector, provide the requisite protection and risk management to the corporate sector, as well as the whole of India. I will begin with an overview with the industry environment, followed by our performance highlights for the quarter.
The general insurance industry recorded a growth of approximately 8.3% in quarter one as compared to 8.9% in the corresponding quarter last year. The growth continued to be driven by motor and health, while commercial lines, especially fire, remained under pressure due to the intense pricing competition, resulting in a significant industry-wide decline on growth. The operating environment continues to be shaped by evolving regulatory developments and the competitive intensity across product segments arising from claims inflation in both motor and health remain to be challenging. Against this backdrop, Chola MS reported a GDPI growth of premium income of INR 1,860 crores, registering a growth of 2.6% over quarter one last year. The GWP, on the other ha nd, grew by about 6.7% at an absolute number of INR 2,130 crores.
While this growth has not been in line with expectations, the performance has been also impacted by lower volumes in commercial business and in motor and a highly competitive market environment in fire and the health portfolio due to pricing issues and the overall combined ratio for the group health business. The motor segment, while it saw good tailwinds since September 2025, helps us also maintain motor being our largest line of business, and our motor portfolio grew by about 5.7% in the quarter. This growth was led by the commercial vehicle segment, and we continue to remain cautious and disciplined towards other segments where profitability remains under pressure. We continue to take corrective portfolio steps, targeted pricing interventions, enhanced NCB sourcing, and tighter underwriting controls. We are also continuing to take corrective actions on the claims management.
The measures of these impacts should likely to emerge over the coming quarters. In terms of our mix, the private car portfolio is 48% of our business. The two-wheeler book is about 9.5%, and the commercial vehicle segment is at about 42.5% of our portfolio. In the commercial lines segment, on the back of robust reinsurance capacities that we had sourced at the start of the fiscal. Despite a sharp competitive market and industry-wide pressure, we performed relatively better than the market, with the growth rate being driven by marine engineering and liability. The commercial segment, while it reported a decline of 8.6% in quarter one, primarily due to the pricing pressure in fire. The April renewal cycle and the aggressive market pricing, which has continued, has resulted in rate reductions.
Consequently, the fire line of business recorded a degrowth of about 28% in quarter one for the industry. As against this backdrop of 28% degrowth, our degrowth was limited to 15.5%, outperforming the industry decline in the fire segment. Although the competitive intensity remained high during the quarter, there are signs of moderation emerging towards the end of the period. We hope with the Nat cat events that have hit the industry in the month of June, we are hoping that there would be a little more discipline on pricing as far as the property lines of business in the coming quarters are concerned. Health continued to remain the fastest-growing segment within the general insurance industry, contributing to almost 47% of the industry premiums.
The growth is driven by increasing awareness on health and protection needs, expanding distribution, and ongoing product innovation across the sector. Within our health portfolio, growth remained moderate as we continue to prioritize the portfolio quality and profitability over volume expansion. To address the current challenges and strengthen business performance, we have initiated several corrective measures, including product redesign, pricing revisions across key accounts, and migration of select group portfolios into retail platforms. We also looked at enhancing our presence in the SME segment, where the intensity of pricing is not as elevated as the large groups. These initiatives are aimed mainly at improving portfolio quality and long-term profitability, and we would need to do significant work to build a sustainable, profitable, and health portfolio over the medium to long term while maintaining the underwriting discipline.
99% of our claims on the health side are paid within 30 days, with an NPS of 73, demonstrating strong satisfaction levels amongst our customers. The overall combined ratio for the industry on an overall basis deteriorated to about 117.8 for FY 2026, as against 112.6 for FY 2025. Chola MS's combined ratio stood at about 115.2 for financial year 2026, as against 110 for FY 2025. The industry continues to operate in an intensive competitive environment, placing significant pressure on underwriting performance. The underwriting combined ratio for the motor segment has deteriorated to 128%, as compared to 123% in FY 2025. On the claims front, motor OD continues to be an area of focus for the management. We continue to strengthen the underwriting and claims control, improve fraud detection capabilities, and enhance settlement efficiencies.
In motor TP, we maintain our claims management approach and try and focus on compromise settlements, improving exonerations, and continue to undertake reserve strengthening actions across all cohorts of the TP portfolio. Within our commercial line segment, we maintained a disciplined and calibrated approach. While we've reduced the degrowth as compared to the industry, what I can give comfort is this is through calibrated risk participation across larger industrial segments. So it is more that we've enhanced the spread rather than writing individual risks, so that when the market turns, we would have the ability to participate in the pricing increase that happens over a period of time. On the commercial lines, we are also focusing our presence in the SME sector, which is leveraging our entire distribution line.
For the quarter, our net earned premiums stood at about INR 1,671 crores, while the claims ratio has been elevated at about 85.6% as compared to 81.3% in the corresponding quarter last year. The combined ratio is at 120.4, reflecting the impact of the higher motor reserving, elevated motor OD experience, as well as a large fire loss that we were part of during the quarter. The operating profit was INR 71 crores, and the profit before tax stood at INR 116 crores for the quarter. The investment portfolios remains at a very robust level of INR 19,000 crores, generating an investment income of approximately INR 380 crores during the quarter. We have done some active portfolio management and portfolio rejig in the quarter.
We've improved the portfolio yield to 7.31, while continuing to maintain a prudent investment strategy with strong liquidity positions. The solvency is at a robust level of 1.93 times, well above the regulatory requirement, reflecting the underlying strength of the balance sheet of the company. From an overall forward-looking perspective, there are several transformation initiatives. We've completed the BaNCS rollout for our motor issuance platform, and we are working on now making some new changes on the workflow on the motor claims, which should help improve efficiency. We've also strengthened customer service initiatives, and we are working towards our readiness towards the Ind AS, RBC, and the DPDP implementation.
In the near-term environment, while the market remains challenging, particularly on the motor OD health and the commercial pricing, we will remain focused on profitable growth, disciplined underwriting, and the efficient claims management, with the technology being the backbone in what we do. With that, I conclude my opening remarks and invite questions. Thank you.
Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the raise hand icon from the participants tab on your screen. We request participants to restrict to two questions each and then return to the queue for more questions. To rejoin the queue, you may click on the raise hand icon again. We will wait for a few moments until the question queue assembles. Requesting participants to click on the raise hand icon if you wish to ask a question. Requesting participants to please be connected. We will take a first question now. We have Sanketh Godha of Avendus Spark. Sanketh , please go ahead.
Okay. Can you hear me?
Yes.
Yeah. Thanks for the opportunity. Rajive, the first question is on the motor TP claims. Just want to understand, given some companies have provided for that Supreme Court judgment with respect to housewives. Have we made any additional provision in the claims ratio, what we have reported at 84.4%, or this number, what we see is more business as usual? That is my first question. Maybe related to that, is on motor OD. I know that you mentioned in the call that you are taking corrective measures, but still, if you see the motor OD loss ratios, if I look at FY 2025, you were broadly in the range of 71%, 72%, 73% kind of a number. It deteriorated to 80% plus in FY 2026. Now it has further deteriorated in Q1 FY 2027.
I know that you slowed down your two-wheeler business. Maybe you are now calibrated in cars, too. Any visibility you see this number to improve going ahead? Or is it fair to say that given we will move to four years and six years in cars and two-wheelers, people might further increase the discounting in OD and this number will not see any respite in foreseeable future? That is on the motor side. After you answer, maybe I will ask questions on other segments, sir.
Sure. Thanks, Sanketh . The short answer, we have not taken any provision in the quarter for the Supreme Court judgment. We are monitoring, given the matter is sub judice, and as you would be aware that there is a review petition which has been filed. We are in the process of doing our analysis, and we would wait for the outcome of the judicial review process, to which the GI Council is also a part of, and then we will take a decision on how to deal with this, depending on what the outcome of the review process goes. On the OD part, I would like to say that, no, I do not think we would accept the current level of the OD LR. There are corrective measures that we are taking, both in terms of sourcing.
Sourcing in terms of, one, the mix of new versus the renewal/rollover, and even in the rollover/renewal, the focus on the NCB part of the portfolio. That correction would happen from a sourcing standpoint. The other one is that we are also taking some internal interventions to see how we can manage the ACS. While this always remains a challenge because there is the claims inflation that we need to look at managing. Looking at a more closer analysis on the repair versus replacement and how we can build in efficiencies on that is something that we are working on. This is a journey.
It will take a couple of quarters for us to turn the tide, but we are not accepting that or stating that this level of 80 or 86 is something that we will sustain, irrespective of the fact that the four-year, four plus four comes into play.
Understood, Rajive. Realistically, this 86, do you see going back to at least 80 kind of a level or meaningfully that the numbers what company used to report in FY 2025, around 70 plus. Any journey or any time path you have in your mind by when we can achieve that?
I mean, the way we look at it is, if the leading private sector companies with a portfolio similar are able to achieve it, there is no reason why we should not be able to. Maybe a short answer, we would want to get to a number which starts with 7 to begin with, maybe the late 70s, and then we will see how we progress to the mid-70s.
Understood.
Sanketh , just adding to the Rajive point. Internally, we are working upon improving the mix of the new motor versus the old motor, which is also helping in terms of the average premium realization. Eventually, that will also help in terms of reducing the overall motor OD loss ratio. We are quite confident that we will be sub 80 in a given period of time. Yes, overall industry level, the motor OD LR is on higher front. If you compare quarter to quarter for most of the player, you will find that you are seeing increase in terms of the motor OD LR. For us also, it is impacting, but yes, we will be achieving a number sub 80 plus.
For a business line, Sanketh , which is 70% of our book, we cannot let this continue.
Exactly. Actually, you are more exposed, so that is the reason I was more keen to get an answer to.
Completely conscious about it, and we are working on it.
Understood. The second question was on your health, especially, maybe you can say both group health and retail health. We understand that group health, there could be a pricing pressure, and you might have chosen not to participate. But the entire industry is showing a very strong or robust growth in retail health. But we have chosen a completely opposite path by reporting a decline. Anything we need to understand or you are revisiting the entire strategy and that is the reason why retail health is reporting a decline compared to why the industry is reporting very robust growth there?
I think you would have seen that there are these slides which have been put up new, so that we are putting it out there in the open, which are the areas which we would need to work on. Health would be a kind of a grounds-up build. I will probably address the group health part before one gets into the retail health side. On the group health, I can say that there are three large elements of the group health. One is cross-subsidy group health, which typically gets written with the commercial risk, which is the fire engineering. There is no cross-subsidy left. There is a degrowth coming because the whole account, if it is not making any sense, there is no point writing the cross-subsidy health.
When it comes to the standalone group health, the strategy that we have started adopting is that any standalone group health needs to make sense on its own merit, and we are trying to make sure that we drive group personal accident with every group health policy that we underwrite. Hence, there is a shrinkage. There is a slow growth because the focus is on all those single mandate, multinational clients where they speak value rather than price, as well as the SME book. There is enough and more business, and we have seen some traction from channel partners who want to partner with us, and we have got a very strong hospital network.
While the book is small, given the fact that we do a lot of retail health with the public sector banks, our hospital network is already in excess of 13,000. So the backbone is in place. We need to get the distribution engine to fire. The third part of the group health is the master policy route where you do a critical illness attachment or a GPA attachment. That stays as a robust team, and we would want to continue to grow on it. On the retail health side, we will need to, Sanketh , honestly, invest in creating a Sahi within the company. As you know, it is a bit of a slow build.
We are looking at seeing how we can start doing more retail health with our bancassurance partners, as well as some part of the retail or aggregated broking partners. The degrowth that you see is part of the pricing correction that we have done on the PSU group platform book, which was a little bit of a concern from a profitability standpoint. While the bank per se gives us overall profitable business, we are trying to see how we can address parts of the portfolio where there is loss leakage risk that we need to do. So the degrowth is essentially reflective of the corrective action that we have taken on the PSU bank portfolio, migrating some part of that book from a group platform to a retail platform.
Understood. Last one, maybe I will come back in the queue again if time permits. In your initial remarks said that you got better reinsurance treaties in place, and therefore, your moderation in fire is relatively lower than the industry. Naturally, you have done well in other commercial lines like marine engineering. So, is it fair to say that, given your understanding of this particular segment in the past too, this will remain a key focus area incrementally to drive the growth? Given your background, I just taking a liberty and asking that question that the reinsurance things will materially change, compared to the past, and that will support these lines to grow a little faster for you rel atively.
Absolutely. Let me actually hasten to comment that the reinsurance capacities were put in place even before I took charge. I am just enjoying the benefit of the work that Suvi and the team had done. The capacities are, I can say, Sanketh , comparable to the leading private sector players, both on fire and engineering. The funnel is there, but obviously, when you go in as a challenger in a market which is seeing very severe pricing competition, we are gaining traction because obviously both the shareholders have the reputation. There are people who want to do business with us. They did not see us much as a commercial player, but now we are getting traction. Just to give you comfort that we are not going in aggressively.
Typically on the commercial lines business, writing large line sizes till you do not get the diversification can create an issue. What typically happens in this line of business is when you are going in as a challenger and you offer a 30% line, typically the broker or the client will give you 15%. So they are doing the line size management for you. A large part of the growth on the commercial business has come through increasing the funnel, getting better convergence. But I would also like to mention that there is a part of the commercial, especially the fire book, where we do enjoy an advantage, which is, one, the home book. The home insurance book where we have attachment long-term home with the banker home loan portfolio.
As well as a very large SME book, which goes with the public sector bank fire book, where the pricing competition is not there like the open market. So that is where we are able to balance, and hence one of the other reason why you see that the de-growth is not strong is there are elements which are not subject to this pricing pressure, and there are other parts where we are trying to gain more entry through sensible calibrated line participation. But yes, this will be an area of focus for us. Whether it is conventional commercial, liability, credit, cyber, these are areas which we will definitely want to focus on.
Understood. Lastly, Rajive, sorry. You said one big loss in fire impacted the numbers. If you knock off that number or if you can quantify the loss, if you knock off that number, how your core would have looked relative to.
That was about INR 12.4 crores on the net account.
Understood. Maybe I will come back in the queue. Those were my questions.
Thank you so much, Sanketh . Requesting participants to please click on the Raise Hand icon if you wish to ask a question. We will wait until the question queue assembles. We will take one question now from Rishi Jhunjhunwala of IIFL. Rishi, please go ahead.
Yes. Thank you. Sir, just wanted to understand the increase in the loss ratio that we have seen in motor, especially on the TP side as well. Can you give some color in terms of how much would be driven by what we have written now, which is effectively new book versus a potential under-provisioning related reserve provision that might have happened as a result of that?
See, the new book, basically, we typically reserve basis what we expect the ULR of the portfolio to be. For the elevation that you see, it is typically the claims inflation that we would need to build in. It is not per se that we can say you are talking about reserve strengthening.
Also, Rishi, since it is a tariff-based pricing is not increasing. Given the type of the court settlements are happening, obviously basis the experience also, we keep on building things.
Understood. Sir, second question is, there is a reduction in our two-wheeler, and we have mentioned that we have probably done it intentionally. Just wanted to understand the thought pr ocess around it. I would have assumed that especially in TP, probably the two-wheeler TP could be the most profitable segment for the industry. I may be wrong, but would be great if you can give some color around that.
On two-wheeler, the problem is TP, it is not the OD. Typically, the OD on a two-wheeler on new vehicles would operate between a 35% to a 45% loss ratio on an overall old plus new, maybe 50% to 60% LR. So OD is never the problem on two-wheeler. The issue is the TP, and there is a compounded problem that happens, which is the 1/N. The segments or geographies which are profitable, the EoM pressure that that book creates, and the segments which are EoM positive give very terrible TP ULRs. Right now, as an organization, Chola MS does not have the headroom to enter the two-wheeler space where you have handsome payouts.
Hence there is a deliberate strategy to kind of maintain presence and a large part of what you see, the 9.5% is effectively the previous year's waterfall, which is getting earned. So incremental new business would be negligible.
Understood. One question is on this Supreme Court ruling. You mentioned that since the matter is sub judice, we have not gone ahead with the provisioning. Just in terms of technicality, if there is a claim today with respect to a homemaker, would that be considered as per Supreme Court ruling, or it will remain undecided till the time there is any kind of resolution around that writ petition or other aspects?
Rishi, what is happening today, if you see, there are multiple court judgments have come, which is after the Supreme Court judgment, and wherein it was a clearly part of the order is being mentioned, like every case has to be taken on its own merit. And they have not followed the INR 30,000 criteria, which was defined by the Supreme Court last judgment. So at this point of time, every case is being seen on its merit, and accordingly, even at the court level, the claims are getting settled, and the Supreme Court judgment is already it is basically review petition filed by the GI Council. And entire industry is awaiting a word for that. So at this point of time, even the courts are not following that Supreme Court order.
Understood. And theoretically, if we were to provide for this retrospectively, how does that impact our solvency? Right now it's comfortable at 193, but just wanted to understand in case there is an adverse judgment around it, where potentially our solvency could end up being?
See, Rishi, we feel our reserves are prudently provided, and in reserve always we keep something for the adverse deviation, and such kind of judgment will be taken care through, if at all it has to come through that portion.
We'll have to keep monitoring and watching what happens from the judicial process, because there could be the review petition, which makes it prospective. The prospective could be accidents that happen after the judgment. The prospective could be policies which are issued after the judgment. So I guess the fact that the whole council has got impeded as part of the review petition, it is an issue which merits serious attention at an industry level.
Understood. And one last question, sir. While we may potentially start doing IFRS from next year, just wanted to understand, if we have been trying to prepare statements around that, where would our profitability or ROE tentatively look like in terms of given that we have a significant proportion of motor in our portfolio. Do you believe IFRS profitability could actually be substantially higher or that would not make a material difference given that acquisition cost in case of large part of motor anyways gets deferred?
Rishi, you know most of the GIC companies have got basically one year forbearance, and IRDAI has approved that forbearance request. We are also implementing from 1st April 2027. At this point of time, we are evaluating, we are doing the assessment. Even we have not submitted the first cut of the financials, as a special purpose financial, which we have to submit to the IRDAI. We are in the process. At this point of time, numbers will not be there with us, like what kind of the changes are happening in terms of the ROE and the profitability. By next quarter, we may able to provide something. At this point of time, I will not be able to share any numbers.
Got it. All right. Thank you, sir. All the best.
Thank you so much, Rishi. Requesting participants who have joined the call, please click on the Raise Hand icon if you wish to ask a question. We will wait for a few minutes until we have any questions. I think we have a follow-up coming in from Sanketh Godha. Sanketh , please go ahead.
You can hear me?
Yes.
All right. So again, one question is on this reinsurance accepted growth. As you highlighted, the direct growth was just less than 3% but almost 7% in case of GWP. Just wanted to understand the color of this reinsurance accepted number, whether it is happening in commercial lines or health or crop kind of a line of business, and do you think this is sustainable? Maybe just wanted to understand this line of business in general has a better core com pared to the overall company, what we are reporting, or it is largely done from a perspective of deferring event.
There are largely, Sanketh , two elements to the RI inward business. One is part of the commercial strategy where we are pitching for accounts. We do not get shares on those accounts, and we try and get those through reinsurance with other, which is part of risk mitigation, which we would also do sometimes where we picked up a share, we would probably reinsure it to manage the exposures into the treaty, which is what other companies do. This is proactive engagement with other primary companies or with brokers who are placing reinsurance. There is one part of the business which is there, and then there is part which is coming from the group health business.
Understood. Lastly, again, you alluded to the point that catastrophe events happening probably should bring discipline in commercial lines. I am just wondering, given reinsurance treaties, they are signed at the start of the year, and that benefit will be there for large part of the current year. Is it fair to say that the pricing discipline, what we want will be more reflected in the next year rather than in the current year? It is very simply probably an industry tough year or a tough year to do commercial lines. Secondly, related to that, I just wanted to understand how much Gift City played a role for the reinsurance market to see a soft market in commercial lines. Maybe it is more of an industry question, what I wanted to check from you.
Sure. While numbers are still coming out, it is all conjecture, but we are talking about anything but from a INR 3,000 crore to INR 4,000 crore loss for the industry on account of the multiple losses that have happened, whether it is Gujarat, whether it is Assam, whether it is Dadra and Nagar Haveli, whether it is the Assam floods. The reason why, Sanketh , one feels hopefully that the pricing discipline will come is that typically the reinsurance contracts have what are called the hours clause. For earthquake, there is normally a 72-hour clause. For floods, there is normally a 168-hour clause.
Most of these events have been beyond the seven-day interval, which means each incident is a separate incident, and your ability to club all the losses in your net account and then claim as one deductible from your cat excess of loss program has not happened. I am assuming it would be true for most other competitors who have a larger commercial book. Which means if you had a deductible of, say, INR 20 or INR 25 crores and you breached it will be for per incident rather than aggregated for Maharashtra, Gujarat, and hence the pain on the P&L would be higher. Right? If the pain on the P&L is much higher, the hope is that the sanity on pricing discipline will come in faster. But the pressure from the reinsurers, you are absolutely right.
Contractually, they have agreed to kind of give us the underwriting pen vis-à-vis the old period where the IIB was imposed on the contracts. That correction, if I may use the word, may happen only next year, either in terms of shrunk capacities, program structures changing, or commissions getting tightened. Yes, the Gift City capacity coming in has had an impact on soft market conditions because there is excess capacity, in India, and it is also flowing from the fact that globally also Nat cat activities is fairly benign, so they also have capacity to deploy, and India is giving the growth opportunity.
Understood, Rajive. Maybe just one extended question on Gift City thing. Given these guys are relatively new to that area, and they might be okay to burn capital for a couple of years till they themselves get established, is it fair to say that maybe the reinsurance market softness might continue for a prolonged period, and therefore maybe some recovery in the pricing will happen, but might not be that great enough to pull back the growth or to improve overall maybe profitability for the sector in that particular segment?
So difficult to say that, Sanketh . One would like to believe that whenever the business plans were presented by the reinsurers who are there in the Gift City, they would have presented plans when the IIB was present. Right? By the time the approvals came in, the IIB pricing is gone, and we are in free market. I do not think reinsurers would want capital to be burned. Their capital is fungible, and if they find commercials more attractive in other geographies, the export of capacity will go wherever there is mo re value. Whether it takes one year or two years. There would be marginal players who do not have the ability to put in larger lead lines. Those are only the foreign reinsurance branches.
It is the smaller 5%, 2%, 7% lines that can help you fill up your placement. To my mind, there are very few players in the Gift City who have the ability to write a 25% or a 30% lead line on your programs.
Understood. This is pretty useful, Rajive. Thanks for the answers.
Thank you so much, Sanketh . Any more questions from any participants? Please click on the Raise Hand icon. All right. As there are no further questions from the participants here, management team, I would like to hand it over to you. Back the conference over for your closing comments, please.
Thank you for your time, and we look forward to remaining in touch with you. Thank you.
Thank you so much. Ladies and gentlemen, on behalf of Cholamandalam Financial Holdings Limited, this concludes today's conference call. Thank you all for joining us, and you can now click on the Leave icon to exit the meeting. Thank you all for your participation.