Ladies and gentlemen, good day and welcome to the General Insurance Corporation of India Q4 FY25 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 star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to 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 FY25 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'll 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 the 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, 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 fourth quarter of FY 2025. In an environment marked by macroeconomic volatility and evolving industry dynamics, our performance stands as a reflection of GIC Re's enduring strength, strategic foresight, and commitment to core reinsurance principles. As a global reinsurer, we recognize that our role is inherently tied to managing uncertainty, balancing risk with resilience, and opportunity with discipline. We remain steadfast in our belief that effective risk management, thoughtful diversification, and disciplined underwriting form the cornerstone of sustainable reinsurance practice. While catastrophic events remain an inherent part of our business landscape, we continue to approach them with prudence, supported by risk assessment frameworks and a long-term vision of value creation.
Our consistent focus on improving portfolio quality, sharpening our strategic direction, and aligning our operations with market realities has 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 2025, 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. We now look at some of the key highlights of our financial performance. Gross premium income for quarter four FY 2025 stood at INR 10,367.08 crore compared to INR 8,723.65 crore in the corresponding period of the previous year.
Investment income for the quarter stood at INR 3,903.02 crore vis-à-vis INR 3,036.52 crore for the corresponding period. Incurred 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 income stood at 85.79% for FY 2025 as compared to 86.24% in the previous year. Profit before tax stood at INR 2,922.66 crore for quarter four as compared to INR 3,171.33 crore in the corresponding period of previous year. Profit after tax was INR 2,182.88 crore as compared to INR 2,642.47 crore in the corresponding period. 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 INR 43,106.52 crore on 31/03/2025 as against INR 37,581.78 crore in the previous year-end.
Net worth including fair value change stood at INR 83,224.33 crore as on year-end compared to INR 81,330.25 crore at the previous year-end. On the premium breakup, domestic premium for the year FY 2025 is INR 30,662.44 crore, and the international is INR 10,491.51 crore. The percentage split is domestic 75% and international 25%. The domestic premium for the year grew by 18.8%, while international business witnessed a 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.
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. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. I would like to remind all the participants, if you wish to ask any questions, you may press star and one. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have a first question from the line of Sanketh 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 fourth quarter, which looks, if I look at the numbers year on year, it has declined. In the fourth quarter, the growth is around 35%. I just wanted to understand if this growth is sustainable and how much it is driven by any pricing environment change in January renewals or because of your rating change. You probably have more contracts that contributed to the growth. If you can split this growth, basically led by price hike, rating change, and maybe volume growth, that would be useful, sir.
Hello, this is S. K. Rath, GM Reinsurance. I would answer to the growth. The fourth quarter growth is mainly factored into resulting from the rating upgrade of GIC, wherein we got the rating upgrade in the month of November 2024. That has been passed on to our insurers and reinsurers. Based upon the information, we are able to write some of the new accounts in the January renewal. That has catered to the growth in international business in the fourth quarter.
There any benefit of pricing environment changing with respect to international business?
I would say pricing international market, what I saw in the first January renewal, is quite soft. As far as direct market is concerned, both in domestic and foreign, it is quite soft, except for the accounts where there are some losses. Those duties, particularly the non-professional duties, could attract some of the loadings ranging from 10-15%. Otherwise, the market has gone a bit softer in comparison to the previous year.
This is only with the limit to international business, you are saying, right, sir?
Yes, yes.
Okay, okay. Sir, then this 35% growth, what you reported in fourth quarter, because of the rating change, can we assume this growth is sustainable for FY 2026 fully?
Yeah, 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. Wherever we lost the accounts, we are trying to regain them. Naturally, this process will continue going forward. Our branches are also likely to get the benefit out of this rating upgrade.
Got it, sir. Sir, we still have a higher combined ratio in international business, 121%, though it is improving every year. With this rating upgrade, any outlook you want to give? This 121% can improve to what extent in 2026 because of you winning better contracts?
If you see, in comparison to last year, our international business, the rate, the combined ratio has actually come down in comparison to March 2023. If you look at March 2024, March 2024, it was something 108%, and now that has come down. Incurred claims ratio has come down to 100% this year. Naturally, the combined is in addition to the normal claims we had, the other expenses and commissions. That is why it is slated at a higher level. Going forward, yes, we will try to improve further, and we would like to follow the underwriting discipline that we have been following. We will also look at the improved market and international markets where we can improve the combined ratio.
Got it, sir. 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 industry, the general insurance industry, is making a representation to lower it for GIC Re, obligatory business to be lowered. 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 students, which makes the news. We have no information, no official news either from the regulator or from the ministry.
Okay, sir. 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 the obligatory part is much more profitable compared to overall company domestic business.
Not really. See, the point is that obligatory would constitute, say, something like 30% of our book. There is always a risk-return trade-off. It is not correct to say that this is more profitable. Given our focus on underwriting discipline, our rest of the book is also improving, not only domestically but also for international. 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. And sir, if I can ask you more, sir, if you can break down your combined ratio of international and domestic business into loss ratio and expense ratio because we have combined ratio numbers in the press release. We don't have loss ratio numbers. So if you can give the loss ratio numbers of international and domestic business separately for full year, it will be useful, sir.
Ladies and gentlemen, please stay connected. The management line is disconnected while we connect them. Ladies and gentlemen, thank you for patiently waiting. We have the management back with us. Over to you, sir, again.
Thank you again. Sir, I was asking the breakup of domestic business and international business combined ratio into loss ratio and expense ratio for the full year. And if you give it, yes, sir.
Sorry, Sanketh, this is Sanjay Mokashi, General Manager, Reinsurance department. The loss ratio for the domestic portfolio annually is at 85.6%, and for foreign business, it is 98.9%.
98.9% and 85.6%, you said, right, sir?
Yes.
Okay, okay. And sir, one.
Sorry, Sanketh, I'll correct myself. It is 96.5% for foreign.
96.5% for foreign for the full year, right, sir?
Yes, yes, full year.
Domestic, you said 85.6, right, sir?
Yes,
85.33.
85.33.
Okay, okay. Okay, got it, sir. In the result, I can again see that you made a catastrophe reserve of almost INR 600 crore, which you also did almost similar number last year. Sorry, INR 600 crore. 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 that sense.
This reserve is being created in line with the CAT reserve policy as approved by the board, and we plan to build up this corpus to something like an amount of INR 5,000 crore. Till that corpus is built, we do not plan to recover or draw down from this reserve. It will be straight to the P&L.
Okay. Are these CAT reserves used in solvency calculation, sir?
No, no.
No, no.
Excluded for the purpose of available assets.
Okay, got it. 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 of, yeah, for the full year, investment income stands at INR 11,204 crore. The income excluding profits, that is your interest, dividend, stands at INR 7,096 crore, which is a 10% increase from the previous year of INR 6,430 crore. Profit on sale is INR 4,108 crore. That is again INR 4,135 crore. Despite the challenging market conditions, we have been able to maintain this profit on sale of security.
Got it, ma'am. Perfect. This is useful. If I have any questions, I'll come back in the queue. Thank you very much.
Yeah, sure.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. Anyone who wishes to ask a question, you may press star and one on your touchstone phone. We have our next question from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah, hi, sir. So 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?
Yeah, Mahesh, this is S. K. Rath, GM Reinsurance. I would like to comment on that. See, this time renewal, we have asked the companies, all the insurance companies operating in India, how they, 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. 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 that have been prescribed as well by IRDA. On the basis of that, they have been following the process, and they are following their business plan. 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 insurance.
What have been the kind of renewal rates that would have happened on the same on a like-to-like basis?
They have been trying to adhere to the IIB rates, particularly from January 1, 2025 onwards. There are aberrations as well, but there are few aberrations which some of the companies might have not adhered to.
Okay, okay. Secondly, sir, in terms of growth, for example, if the obligatory, hypothetically, if the obligatory business 4% goes away, and I understand obligatory business is about 43% of your domestic business, do you see this kind of getting impacted because some of the, for example, health insurers would not want to kind of continue with the obligatory insurance or reinsurance? Would that be a growth restrictor for you?
Prayesh, in the situation, if obligatory goes away, yes, there could be a hit, a temporary setback to the top line. On the flip side, it gives us greater control on our portfolio. The entire risk selection is with our underwriting. It 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. The approach generally would be to market the additional quota share treaty from the companies. 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. 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 relationships. At the same time, we have the data. That data will also help us to strategize. 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. In terms of growth, how would you look at growth in the international business?
Yeah, 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 2020, we are not able to renew some of the accounts. Now we are trying to look into those territories where we can re-enter them and to bring about or to renew those accounts or to gain those accounts which are lost to us. That way, we can get into those markets. Similarly, we are also looking into the accounts where we have better opportunity or better control to increase our line. That way, we want to increase our foreign business going forward.
Any guidance on combined ratio improvement trajectory, which has been consistently improving for you guys over the last four years?
This year, the foreign combined, particularly in this quarter, fourth quarter, is a dampener because of some of the events that is California fire and some of the improvement of the losses like Dubai flood and Nepal flood, all those things are coming up. Taiwan typhoon, those figures are coming up or improved over the quarter. We have been aware of the CAT events, and we are following the CAT modeling also to take leverage of our position. That is how we want to improve our underwriting as well as our business participation in the account so as to improve our foreign combined ratio going forward.
Overall, the combined ratio should be expected to further improve by 150 to 100.
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 over 108.8% in FY25. This can further improve to 106% levels.
Yeah, say around 106.
Okay. Thank you so much, and wish you all the best.
Thank you. A reminder to all participants, you may press star and one on your touch-tone phone to ask any questions. Anyone who wishes to ask a question, you may press star and one. We have our next question from the line of Karthikeyan from an individual investor. Please go ahead.
Hi, good morning to everyone. Thanks for the opportunity. I have two or three questions. The first question, see, we always made underwriting profit in the Q4, the last quarter, and we have not made any underwriting profit for this quarter. Any specific reasons for that?
See, if you look at the underwriting profit, we have made some profit this quarter as well. What is that? This quarter profit. 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. If you look at the December quarter, it was 83.72%, whereas in Q4, it is 70.24. This is for domestic. If you look at for foreign, the loss ratio is, yes, it is for 110.29% in last quarter, whereas it is 70.68.60 for this quarter. The main dampener here is the foreign Q4. 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.
In addition to that, there are some losses that have affected like Israel and Türkiye losses, motor losses have 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 year-on-year basis, it is quite improved. If you look at the entire year, we have made a profit of INR 8,700 crore as against INR 7,000 crore last year. 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. That is why as a reinsurer, we look at.
The life, whatever losses we had in this quarter, right, it's all due to the catastrophic events?
CAT events for which have been reported for which we have made provisions. There are some provisions also, additional provisions are made for the.
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 2.5 times.
Yes, I will ask my actuary, life actuary, Mr. Sindhi, to address the query. He is here with me. He will be addressing that.
One minute, please.
This is Suresh Sindhi, Life Actuary. If you just see that, yes, the losses are quite significant, mainly on account of two things. One is the net claims paid. We paid actually net claims which are much higher compared to last year, INR 1,887 crore paid during this year, number one. Second thing is obviously there are a lot of claims which have been reported, but we have not yet settled those claims. Obviously, we have to set aside reserves. Because of the reserves, setting aside the reserves and those claims which we already paid, because of that, obviously, your incurred 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 a catastrophe event or, I mean, the increase is 2.5 times than last year? Tell me how come the claims have increased so much in one quarter. I mean, even the quarterly, if you look at the numbers, I mean, I'm not able to make any sense out of the numbers.
Yeah. Maybe to be very specific, there are no big losses, obviously, but there are many claims, as I told you. If you really want the explanation, let's say here we are talking about incurred claims of, say, INR 2,904 crore. These incurred claims are made up of three parts. One is how much claims were paid till that. That is INR 1,887 crore. The claims which we are supposed to pay, that is the change in the, we call this additional things, which is around INR 158.1 crore compared to last time. The reserves, we have to set aside reserves also. As you also know, life is a long-term business in nature. We have set aside reserves. That is coming around INR 859 crore. That is a change in reserve also.
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.
Will this trend continue or will there be improvements going forward?
Yeah. So we believe that, as you also know, that Jan, Feb, March is the last quarter of the year for insurance companies. Obviously, we get a lot of claim intimations and all those kind of things. 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. Yes, this time, there is an increase because of this reason.
Okay. Another question. See, we had, I mean, with regards to motor, I mean, foreign motor and marine, which we had discontinued, and we had tail risks coming. That has come to an end, or how is that going to be?
I will not say it has come to an end. Obviously, such an arrangement has a tail. I can only say that the contract that we canceled 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. More importantly, we have created enough reserves in our books of account last year.
Can we say that it will go away maybe by FY 2026 or 2027? How is it that? I mean, it seems to be a very long tail.
It is because the nature of that contract was treaties that were in return in motor and cargo segment. It will always approach the graph asymptotically, the excess asymptotically. The tail will be in future such that it will not hopefully impact our portfolio adversely.
Okay. Got it. Another question. What will be the growth forecast for both domestic and foreign combined for the next two- three years?
On an overall basis, we project a growth in our reinsurance business, which will be measured growth of about 10% year- on- year for the next three years.
Okay. Okay. Final question. See, the last quarter, I mean, it's a very tough quarter in terms of the investment part. 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 INR 3,900 crore gains?
Yeah. Hello. This is Radhika Ravishekar. Just repeat your question.
The question is, what's the, I mean, the breakup, I mean, the gains, INR 3,900 crore? Can you give me the breakup of interest income, dividend, and as well as the tail?
Oh, you're asking for the quarter?
Yeah. Specific, yeah, for the quarter. That's correct.
Yeah. For the quarter, breakup will be, say, around INR 1,500 crore from profit on sale. The balance will be interest income, sorry, interest and dividend income.
Okay. Thank you.
Because we focus more on the fixed income security.
Okay. Got it. Thank you. That's all I have. Thank you. All the best.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and two. Star and one. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have a follow-up question from the line of Sanketh Godha from Avendus Spark . Please go ahead.
Okay. One more question I had on growth. See, health business has seen a significant growth in the full year, around 66- odd-percentage. On this big base, do you think this growth will be sustainable, or you think that the numbers might potentially come down in the full year of next year, I mean to say? On similar lines, just want to understand your outlook on crop incrementally because it has been declining every year. Now we do INR 3,200 odd crore of business in crop. How do we see that playing out going ahead?
Hi, Sanketh. This is S. K. Rath again. As to the health portfolio, yes, we have seen phenomenal growth this year in comparison to last year. I mean, this is mainly the concentration was on retail health business that we have categorically chosen to write. Going forward, yes, that achievement of this sort of growth will not be possible because all the SAHI companies tend to harp on higher commission levels. Whether we can achieve, I mean, able to meet their demands is a question going forward. Particularly, currently, wherever we have participated, the participation on standalone, I mean, retail part is substantial. Then the group health also. Group health, usually, we participate with some participation terms to reduce the outgo in terms of losses.
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 5-10%. The percentage of growth that we have seen this year is not likely to continue going forward.
Got it. If the commission demand is higher, then is it fair to say that this INR 9,500 crore of business, what you did in fourth quarter, might see a decline also because it might not be acceptable terms for you?
Yes, it may be possible. The other way is that there are also new participants coming up who want to have their participation in the health line of portfolio. New insurance companies are also coming up. They are also interested in participating in 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. This and crop are the two portfolios where the companies are more and more interested. There we can extend our capacities with our terms as per our program.
On crop, any outlook you want to give? INR 3,200 crore will be stable, grow?
Yeah. Currently, the crop portfolio has gone substantial changes. It has been the SSM model, which has been in vogue 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. That is where the premium has come down. 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 insurers. We have retained some of the duties this year. Hopefully, going forward, we'll try to improve participation in the SSM model and the excess stop-loss model whereby we can maintain or slightly increase the participation.
Are you seeing incrementally more states adopting that SSM model? Therefore, the.
Yes. They are adopting this SSM model. For example, for a state like Maharashtra, where the premium goes up to INR 10,000-12,000 crore, they have now opted for SSM model wherein the loss is capped at 110%. So naturally, the premium will come down by 50-60%.
Got it. 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? What kind of growth you can expect in fire segment because of the pricing being going up from first January?
See, 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 10-20% in the fire segment. That will naturally add to the growth of our premium. The other aspect that you are telling, that health and crop, we have been away from the crop portfolio because of the same increase in loss and the premium flow. Cash flow is quite minimal. Of late, we have seen this SSM model wherein the companies and the states are prepared to pass on the premium as early as possible. 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 will be the growth will be incremental or minor, it may go down slightly.
Okay, sir. I got it. Understood. That's it from my side. Thank you very much.
Thank you.
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
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. We remain committed to creating value for our stakeholders. Thank you all for joining us for this evening's 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.
Thank you.