Key Financial Performance Metrics (Core Business View)

  • Profit After Tax (PAT): INR 190 crores for Q1 FY27, down 5% from INR 200 crores in Q1 FY26. This figure excludes mark-to-market movement of investments and impact of discounting of reserves.
  • Combined Ratio: 107.2% with DAC (Deferred Acquisition Costs), or 104.3% including discounting effects.
  • Net Earned Premium (NEP): INR 2,007 crores, up 8% YoY.
  • Solvency Ratio: 2.43 times (very strong).
  • Net Worth: INR 4,674 crores on IGAAP basis; INR 8,200 crores on IFRS/Indian Accounting Standards basis.
  • Investment Yield Impact: Higher equity allocation (9.5% of AUM) resulted in INR 14 crores reduction in interest income versus prior year.
  • ROE: 4.1% for the quarter (non-annualized).
  • Tax Rate: 25.2% under Indian Accounting Standards.

Key Business Metrics & Operational Highlights

  • Gross Written Premium (GWP): Down 8% YoY. Excluding reductions in reinsurance inward business (health and crop), growth rate was -2%, in line with industry GDPI.
  • Market Share: Motor market share declined to 5.6% from 6.25% in FY26, a strategic reduction.
  • Business Mix Shifts:
  • Commercial Vehicle (CV): Reduced to 23-24% of motor book from 65% 4-5 years ago.
  • 2-Wheeler: New business grew 26% YoY; collected premium up INR 113 crores to INR 546 crores.
  • Fire Business: De-grew 37% (industry de-grew 27-28%) due to unattractive rates; gross loss ratio was 67%.
  • Long-Term Advance Premium: Stood at INR 3,387 crores (Motor: INR 2,879 crores; Non-Motor: INR 508 crores).
  • DAC (Deferred Acquisition Costs): INR 2,609 crores pre-tax as of 30th June 2026.

Strategic Decisions & Management Commentary

  • Profitability over Growth: Management explicitly chose to protect profitability and book quality over growth optics in a soft market characterized by 5 years of no third-party motor rate increases, rising claims costs (parts, paint, labor, TP claims linked to wages), and downward pricing pressure.
  • Underwriting Actions: Reduced writing in unprofitable segments: private car stand-alone own damage, non-new cars, commercial vehicles, and certain fire, group health, and crop reinsurance business where pricing was unattractive.
  • Reinsurance Philosophy: Maintained long-term reinsurer relationships; increased reinsurance commission across all lines and capacity; focused on protecting treaty profitability for future capacity.
  • Investment Strategy: Increased equity allocation to 9.5% of AUM (from 3.5% at IPO); held INR 268 crores in unrealized equity gains and INR 220 crores in unrealized fixed income gains. Duration of fixed income portfolio increased from 4.5 to 4.9; reinvestment yield at 7.8%.
  • IFRS Adoption: Stated being the first multiline insurer in India to declare all results under Indian Accounting Standards as per IRDAI proforma, promoting transparency and comparability.

Loss Ratio Analysis

  • Overall Loss Ratio: Increased to 73.3% from 70.3% in Q1 FY26. The increase was primarily driven by Own Damage (OD) loss ratio in the private car portfolio.
  • Third-Party (TP) Loss Ratio: 66.6%, described as broadly stable. TP is a long-tail business assessed on a full-year basis.
  • Reserving Practice: TP claims are reserved conservatively, incorporating frequency, legal inflation (e.g., from Sarla Verma, Pranay Sethi, Shishupal judgments), and increases in minimum wages. The company has settled 83% of its ~36,000 TP claims historically via compromise.

Supreme Court Ruling Impact (Shishupal Case)

  • A Supreme Court ruling on 11th June regarding homemaker compensation was discussed.
  • Management stated no separate provision was made in the Q1 P&L, asserting that existing robust reserving practices (which include a cushion for legal inflation) are adequate.
  • Noted subsequent High Court judgments (Allahabad HC on 2nd July, Karnataka HC on 16th July) that offered differing interpretations of the Supreme Court ruling.
  • Actions planned include reviewing underwriting and aggressively settling existing homemaker claims via compromise to mitigate potential impact. The full impact of such judgments typically takes ~3 years to flow through.

Dividend Policy Outlook

  • The company is waiting for Risk-Based Capital (RBC) norms from IRDAI, expected this financial year.
  • Expressed confidence in ability to pay dividends based on strong IGAAP solvency (242%), even with potential increased equity allocation. The matter will be taken up for Board discussion in the last quarter of the year.

Q&A Highlights

  • Growth Strategy: Addressed questions on slowed growth post-listing, attributing it to disciplined underwriting in a tough market rather than structural issues. Highlighted strength in Bancassurance and digital B2C channels.
  • Industry Dynamics: Discussed challenges from Expense of Management (EOM) rules pushing commissions up, leading to irrational pricing in some segments (crop, group health).
  • Motor TP Hike: Acknowledged a strong case for hike in 90-95% of vehicle segments after 5 years of no increase, but stated the company is not waiting for it to happen and is running business based on current realities.
  • OD Loss Ratio: Attributed the increase to a misjudgment in retaining stand-alone own damage policies for too long; corrective actions were taken in Feb, Apr, and May. Stabilization expected in Q2.
  • Group Health Loss Ratio: Elevation in Q1 due to a large bank-driven personal accident policy where claims are often repudiated over time.

Participants

Company Representatives: Kamesh Goyal (Chairman), Jasleen Kohli (Managing Director), Ravi Khetan (CFO), Piyush Bothra (Head of Financial Reporting and Investor Relations), Divya (Manager - Group Financial Reporting), Tejas Saraf (Company Secretary & Compliance Officer).

Moderator: Ansuman Deb (ICICI Securities Limited).

Analysts: Supratim Datta (Jefferies), Avinash Singh (Emkay Global), Ansuman Deb (ICICI Securities), Sanketh Godha (Avendus Spark), Dipanjan Ghosh (Citigroup), Nidhesh (Investec), Ananga Rana (A91 Partners).