Earnings Call Transcript - XNSE:GICRE 2026-11-06

Operator

Ladies and gentlemen, good day and welcome to the General Insurance Corporation of India Q2FY27 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 this 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 Atri from ENY. Thank you, and over to you, ma'am.

Nikita Atri, Head of Investor Relations

Thank you, Adarik. Good morning to all the participants on the call, and thank you for joining Q2 and H1 FY27 earnings calls for General Insurance Corporation of India. Please note that we have mailed out the press release and presentation 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 our 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 for the quarter and answer questions, we have with us Mr. Hitesh Drushi, Chairman and Managing Director, and other top members of the Management and GIC. We will be starting the call with a brief overview of the quarter gone by, which will then be followed by the Q&A session. With that said, I will now hand over the call to Mr. Joshi. Over to you, sir.

Hitesh Joshi, Chairman

Good morning, ladies and gentlemen, and thank you for joining us for GIC Rearnings Call for Q2 FY2027. Before turning to our financial performance, let me briefly touch upon the broader operating environment. The global operating environment remains shaped by geopolitical uncertainty, changing trade dynamics, and broader economic developments. Natural catastrophe activity, rising asset values and elevated loss costs continue to influence risk assessment, pricing and demand for insurance and reinsurance protection. Catastrophe exposure remains a key industry consideration. The frequency and severity of events, concentrations of economic value in exposed regions and higher repair, reconstruction and replacement costs reinforce the importance of adequate capacity, pricing adequacy and disciplined risk assessment. Global insurance capacity remains healthy. Increasing competition across certain business lines and geographies. Against this backdrop, GIC remains selective in its underwriting, prioritizing pricing adequacy, and sustainable risk-adjusted returns over premium growth alone. Underlying demand for protection remains strong, supported by growing asset values, greater awareness of evolving risks, Growing accumulation and increasing focus on financial resilience. In India, economic growth, infrastructure development, an expanding basis of insurable assets, and increasing insurance penetration support a compelling long-term opportunity. As risks grow in scale and complexity, reinsurance capacity and expertise will remain really important. GICD is well positioned to support this development while pursuing sustainable, profitable growth. Let me now take you through some of the key financial highlights. The gross premium income of the company was Indian rupee 11,228.21 crore for Q2 F527 as compared to Indian rupee 9,601.70 crore for Q2 F526. Thanks. Gross premium income for half year FY27 was Indian rupee 24,703.57 crore compared to The investment income stood at Indian rupee 4238.26 crore in Q2 as compared to rupees 3791.67 crore. Investment income for half year 27 was Indian rupee 7503.78 crore compared to Indian rupee 7105.41 crore in the corresponding period of the previous year. In-car claims ratio stood at 87.39% in Q2 FY27 as compared to 81.50% during the corresponding quarter of the previous year. Combined ratio in Q2 FY27 stood at 110.23% versus 109.15% during the corresponding quarter of the previous year. The Income Claims Ratio for H-127 was 86.19% compared to 86.45% in H-1F-5-26. The Combined Ratio was 107.39% compared to 107.41% in the corresponding period of the previous year. The adjusted combined ratio taking into consideration the policyholders' investment income works out to 85.92% for the half-year ended 30th September 26 as compared to 87.34% in half-year FY26. Underwriting loss for H-127 was Indian rupee 1,709.06 crore compared to Indian rupee 1,234.59 crore in H-1 FY26. Profit before tax to date Indian rupee 3,101.54 crore in Q2 F527 as against Indian rupee 3,472.76 crore. Profit after tax to date Indian rupee 2,455.62 crore in Q2 F527 compared to Indian rupee 2,866.79 crore. Profit before tax for H-127 was Indian rupee 5,591.79 crore compared to Indian rupee 5,716.30 crore. Profit after tax was Indian rupee 4,377.66 crore compared to Indian rupee 4,6019.02 crore. Our solvency position remained strong. The solvency rest was too dead. 4.18 as on 30th September 26, compared to 3.85 as on 30th September 25. Net worth excluding fair value change to date Indian rupee 53,402.32 crore as on 30th September 26, compared to Indian rupee 46,669.38 crore as on 30th September 25. Net worth of the company including fair value change to date Indian rupee 93,138.68 crore as on 30th September 26th as against Indian rupee 88,709.19 crore as on 30th September 25th. On the premium breakup side, domestic premium for H1 FY27 was Indian rupee 19,794.41 crore and international premium was Indian rupee, 4,909.16 crore. The percentage split was domestic 80% and international 20%. Domestic premium recorded a year-on-year growth of 15.9%, while international premium remained broadly unchanged year-on-year in this half-year. The first half recorded healthy premium growth and a broadly stable claims ratio. Underrating losses, however, increased year-on-year. Strengthening underwriting profitability remains a key priority and our efforts are directed towards better risk selection, appropriate pricing, and active portfolio management. The international portfolio recorded an improvement in its combined ratio to 108.24% in H127 from 119.87% in H1F526. This is encouraging progress, although the portfolio has yet to achieve underwriting profitability. We expect competitive conditions to persist in the second half of the current financial year. Our approach will remain measured with growth pursued where pricing, terms, and risk-adjusted returns meet our expectations. Our strong capital base, relationships, and solvency position enable us to support clients and pursue opportunities across domestic and international markets. Our focus is on translating this into financial strength. Thank you.

Operator

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

The first question comes from the line of

Operator

Avinash Singh with MK Global Financial Service. Please go ahead.

Avinash Singh, Analyst — MKM Global Financial Services

Thank you for the opportunity. Good morning, sir. A few questions. The first one, I mean, I'm not sure if I missed it. If you can please quantify, I mean, your net capital flood related losses in quarter two. And also, you know, what would be your normal model run rate for these kind of losses? Because I mean, a Q2 flood will be a normal phenomenon. So, of course, you will have certain model loss numbers. So, I mean, By what amount these quarter losses were in excess due to the floods or that catch? One. Second, now where we are in H1 and looking ahead, what kind of a combined ratio for the full year do you, you know, see to be achievable? I mean, is 105% for F27 full year achievable or not? That's the second. And thirdly, I mean, now you would have also started, you know, submitting that index-based financials to the regulator. Under index, where will your kind of combined ratios or, I mean, your P&Ls will appear particularly, I mean, the combined ratio?

Operator

Thanks. Sir, please go ahead. You're not audible, sir.

Operator

Ladies and gentlemen, the line for the management has dropped. Please stay connected when I reconnect them. Thank you. Ladies and gentlemen, please stay connected while I reconnect the management. Thank you. Ladies and gentlemen, the management line has been reconnected. Please go ahead, sir.

Hitesh Joshi, Chairman

Yeah, so, Avinashji, coming to your first question regarding guidance on the netcat activity for the, say, quarter 1, quarter 2. Presently, we are not disclosing this. We are working on it, and we propose to come up with this guidance explicitly from the next year. That will be financial year FY28. Presently, we would like to park it because we are working on it. Coming to your second question, whether a combined ratio of 105 is achievable, we would like to believe that it is achievable, but then we have still two full quarters to run, and also the Q3, which remains exposed to catastrophe activity globally. Coming to IndiS, I think we need to now move away from the concept of combined ratio, because IndiS works on a totally different way. And there will be certain sensitivity and volatility coming from the transition itself, particularly how the investment income is recognized. And in the very first year, where there can be a very significant investment capital gains getting reflected in the index, and it will be subject to assumptions. So presently, we would refrain from making a comment as to where the combined ratio will go. If we just would like to make a very broad comparison between the legacy, the existing accounting system and the end IS, we would like to believe that it will get deflated to the extent of mark to market. Rest of the things, say investment income per se and the financial performance will remain same. Only thing the major factor that will move the needle for us will be the discounting of reserves. So I think probably you can make some back-of-the-envelope calculation and arrive at return on equity and the combined ratio on the basis of whatever I have said.

Operator

A reminder to all participants, you may press star and want to ask a question. The next question comes from the line of Sanket Goda with Aventus Park. Please go ahead.

Sanket Goda, Analyst — Aventus Park

Thank you for the opportunity, sir. Sir, when I look at your domestic loss ratio, for the first half, which is at 88%, better than first quarter, FI 27 at 89%. I just wanted to understand what led to this improvement despite entire industry, all General Nations players reporting losses with respect to Gujarat floods. So, what led to this improvement or is it the case that we did not provide for catastrophe in the current quarter, it eventually will come in subsequent quarter as the numbers get crystallized? So, that is my first question, sir.

Hitesh Joshi, Chairman

Would you like to finish all the questions or would you like to take one by one?

Sanket Goda, Analyst — Aventus Park

Better if you do one by one, sir. If you are okay with it.

Hitesh Joshi, Chairman

So, there is a natural lag in our reporting to the extent that some of the quarterly statements of accounts on the proportional treaties and the obligatory statements flow to GICV with some lag. So, there is a lag and some of this impact of the losses that are getting reported might show in the next quarter, but at the same time, as far as our financials are concerned, we have provided something like 450 to 500 crore for the Gujarat flood. So, it is not that the market losses are totally ignored. At the same time, market losses are not fully affected in. Probably our results fall somewhere in between.

Sanket Goda, Analyst — Aventus Park

Understood, sir. So basically what you're trying to say, you already provided in this 88% claims ratio, 450-500 crores, and if there are anything more than that, you'll provide in subsequent quarters. That's the way I'm interested.

Hitesh Joshi, Chairman

Correct, correct.

Sanket Goda, Analyst — Aventus Park

Understand, sir, then if I ignore 450 crores and try to look at the losses excluding catastrophe events, then there is a meaningful improvement in the domestic loss ratios. So, any line segment or product mix segment which played a role for that improvement, sir?

Hitesh Joshi, Chairman

Sankyaji, as you have been saying that ours is a trained business, while we do analyze internally and we do have our conclusions, Probably it will not be appropriate for us to share those because we have been maintaining consistently the two quarters results are not really reflective because there are certain reserve moments, there are certain adverse and positive reserve moments for the previous periods. So there are quite a few moving parts. So we do consider and arrive at a conclusion, but we consider it premature to share these conclusions with the investing community for now.

Sanket Goda, Analyst — Aventus Park

Understood, sir. Fair enough. And sir, on similar lines on the domestic, sorry, overseas business, we had an extraordinary quarter in 1Q with a 66% loss ratio. Now in 1H, we are at 80% overseas, which is still very good compared to historically what you have reported. Okay, but just wanted to understand what led to 66 going to 80 from 1Q to 1H kind of an overseas loss ratio, and from a fuller point of view, this 80 kind of a number is a sustainable number or not wanted to check.

Sanjay Mukashi, Other

Sanket, this is Sanjay Mokashi, Chief Underwriting Officer.

Sanket Goda, Analyst — Aventus Park

Yeah, sir.

Sanjay Mukashi, Other

Yeah, on the international side, our property book, the weight of the property book is more, and that has performed well because of both our underwriting approach and a fairly benign kind of cat activity. However, having said that, we have provided in the motor and cargo segment more for the American runoff treaty, which we came out in December 2021, Thank you.

Sanket Goda, Analyst — Aventus Park

Sir, we were under the impression that this, the old book, runoff treaties, what you mentioned, were almost fully provided. This is more like a conservative accounting, or do you think this will come really and hit at some point in time to us?

Sanjay Mukashi, Other

It is conservative accounting. As the IBNR proportion is small, it's better to maintain it at certain threshold level. That is what we are doing.

Sanket Goda, Analyst — Aventus Park

Understood, sir. And, sir, another question is on growth. If I look at your growth in the domestic business, for the quarter, it is 21 percentage, and for the year, it is 16 percentage, or first off, it is 16 percentage. And in the overseas business, also growth has picked up in second quarter with 6% growth, which was flat for the year on year. So I just wanted to understand that in domestic business, it seems that we are growing better than the industry, which means that have we gained any market share from FBRs or GiveCity branches, which led to our market share gain? And within that, if I see the numbers in domestic, sir, it seems that you are focusing too much on health. If you can give a color what line of health is growing and what kind of loss issues you are experiencing here.

Sanjay Mukashi, Other

Your observations are bang on Sanket, but I wouldn't say that we are focusing more on health. It so happens that in any segment where we come across a contract that makes sense that we find viable, that will add to our quality of our portfolio, we write that contract. And health contracts that we have been writing, they are big ticket contracts, the quota shares of various insurance companies as well as Sahi. We got better signings from standalone health insurance companies this year. All this has contributed to the health book showing a pronounced growth. And that, though the property, on the property side, our, our, what do you say, book has shrunk, the health is compensating, and overall that is the reason. Additionally, we have, as you know, 4% obligatory sessions, which reflect the market growth in our, our books. Coming to foreign, if you see on half yearly basis, and that is the best way to look at the foreign book, considering the seasonality involved, it has remained stable at around 4,900 crores. So, we will have to look at the Q4, how we perform in 1st January renewal to get a sense of where and how our foreign book is moving on an annual basis.

Sanket Goda, Analyst — Aventus Park

Understood. Last point, last question. On domestic, I think from September 10 onwards, there is some kind of indirect discipline in fire prices implemented by the industry. I just wanted to understand, are you seeing that behavior happening that the pricing in foreign fire business has improved? And even if you can give a color on pricing environment for the overseas business, how it is behaving currently, given still overseas business did not witness as many cat events. Typically, it was there two, three years back.

Sanjay Mukashi, Other

I appreciate your observations about the domestic Sanket. Yes, we understand that insurance companies have realized that there has been slide in domestic property premiums, which are not sustainable, and they are holding the slide. So, we are not, we are in touch with our prominent customers, insurance companies, and we see that they have been able to control that slide, and the rates are holding up from September onward till date. That is our... Our information from the market, which is hardening. And in terms of... Overseas, we are just back from couple of international conferences, and the information that we gather from various market players, various our interaction with the stakeholders, that there is abundant capital in the foreign market, both in the traditional segment and on the alternative capital slide. So the competitive pressures are expected to remain for another year. But one silver lining there is that the outlook appears to be stable and the underwriting discipline is also expected to hold up. So we are pinning our hopes on these observations and going to face our first-gen renewals. Which are now very much around the corner.

Sanket Goda, Analyst — Aventus Park

Understood, sir. And lastly, on PBT, how much NSE contributed to our profit, sir, in the quarter?

Jayashree Balakrishna, Other

1,082 crores, sir.

Sanket Goda, Analyst — Aventus Park

How much, ma'am?

Jayashree Balakrishna, Other

1,082 crores.

Sanket Goda, Analyst — Aventus Park

1,082 crores. Okay, perfect. Perfect, ma'am. Thank you very much. That's it for my sake.

Operator

Participants, please press star and want to ask a question. The next question comes from the line of Swati Agarwal, an individual investor. Please go ahead.

Swati Agarwal, Analyst — Individual Investor

Yes, sir. So, my question was regarding the MSE share valuation. Can you please explain how the valuations have changed in the books of the company during the quarter on account of its listing? So, since it was unlisted, what is valued at cost and already at M2M and how the gains on the sale and the market value change on balance quantity has been recognized?

Jayashree Balakrishna, Other

When it was unlisted, ma'am, it was being done at cost only. The valuation was at cost when it was unlisted. Hello?

Swati Agarwal, Analyst — Individual Investor

Yes, ma'am. So, right now, have you changed the valuation?

Jayashree Balakrishna, Other

Yes, yes. It has gone as per market value now, in our book.

Swati Agarwal, Analyst — Individual Investor

So, some of the investment income that I see quarter-wise, it's not changed too much, if you see historically. So, how have you recognized this income?

Jayashree Balakrishna, Other

One zero eight two crores from NSC OFS.

Hitesh Joshi, Chairman

Madam, unrealized appreciation of NSC will go to the fair value change account. It will not get reflected in the investment income.

Swati Agarwal, Analyst — Individual Investor

Have we already transferred it to that account?

Jayashree Balakrishna, Other

Yes, yes.

Swati Agarwal, Analyst — Individual Investor

We have already recognized it.

Jayashree Balakrishna, Other

Yes, yes.

Swati Agarwal, Analyst — Individual Investor

Okay, fine. Thank you so much, ma'am. Thank you.

Operator

A reminder to all participants, you may press star and 1 to ask a question. The next question comes from the line of Karthikeyan, K, an individual investor. Please go ahead.

Karthikeyan K, Analyst — Individual Investor

Hi, thanks for the opportunity. Good morning. So I have a couple of questions regarding... Growth, I mean, in terms of the foreign portfolio, we are like flat for the first half. How are we seeing, you know, growth in the second half and the, you know, subsequent year, the FI-28? And, and, see, we are, we are going very well in the health and actual life portfolio. But at the same time, you know, we are, like, the, We're also observing, you know, underwriting losses there in the health portfolio. And life seems to have done well in the Q2. So will that continue going forward?

Sanjay Mukashi, Other

Yes. Hello. Yes, Kartikeyan, this is Sanjay Mokashi.

Operator

Hi.

Sanjay Mukashi, Other

Your first question was about the growth in foreign portfolio, especially at this stage when we are saying that the foreign portfolio is flat. The observation is correct, and going forward, we... We are pinning our hopes on the 1st January renewals. As you know, there is some kind of seasonality as far as foreign business is concerned, where many, much of the renewals happen on 1st January. And we have our rating back. We have been engaging with the brokers. There has been an initiative from our side for broker outreach. We have reached out to international brokers so that we get to see more opportunities. And we hopefully will increase our foreign book during the 1st Jan renewal. That is how we are playing for the foreign book. And on the domestic side, yes, we are growing in health and life. While answering the earlier question, I did mention that it is a contract that should make sense, and we will write a contract if it is found viable by us. And it so happened that the health contracts that were offered to us on 1st of April, we wrote a couple of big-ticket contracts. We got increased signings from standalone health insurance companies. Likewise, in Liferi also we are looking for opportunities. There have been additional contracts which we wrote during the current year, which has resulted in prolonged growth in both health and life. Thank you. are based on this understanding of the portfolios that we are, we are writing. But at the same time, we need to keep strengthening our reserves and as a result, you are seeing that, the reflection of that you are seeing in our health portfolio results at the half-year stage. In Liferay also, we had mentioned in the previous quarter, Earnings call that some old contracts, long-term contracts needed reserve strengthening, which we have done over past few quarters, and that strengthening we have sufficiently done, and that is the reason why if you see this quarter, the life-free results have improved over the previous quarter, and we expect to see this improvement in rest of the year.

Karthikeyan K, Analyst — Individual Investor

Got it, sir. You were saying that this trend of the life and, you know, health component growing will continue in the H2 and subsequent years?

Sanjay Mukashi, Other

Yes, sir. These are the contracts which we have already written. So, the same, they will get booked in Q3, Q4, and you will see the same kind of growth.

Karthikeyan K, Analyst — Individual Investor

Okay. What I see is that from H1 to last year to this year, the resource strengthening, I mean, the IBNR has gone up by almost 25%. Right? So, like last year, it was only like 4,000 crores. Now, it's like almost close to 5,100 crores. So, do you think that this strengthening will happen? I mean, this will continue in the H2S field?

Sadeesh Bhatt, Analyst — Appointed Actuary for Non-Life Business

This is Sadeesh Bhatt, appointed actuary for non-life business. Ideally, IBNR strengthening happens based on the business that we have written. I think it was mentioned earlier also that about 440 crores we have made a provision for the Gujarat floods. Likewise, we look at the class of business-wise and still segregated by foreign business and also by subsections like the type of contracts. So, it is not basically a conscious decision to actually or to a policy like to increase the IBNR or the reserves. It basically reflects the business that the corporation has written during that period. So, we just can't compare a previous number with this number because of the growth in business and also the type of business, the emerging loss experience that we are seeing.

Hitesh Joshi, Chairman

This IBNR also includes a significant strengthening for the current crop year because of the drought conditions that are getting reported. So, I mean, as Mr. Satish Bhatt pointed out, there are too many moving parts because there are also reserve releases against over-reserving in the previous years on some classes, some contracts. At the same time, there are reserve strengthening on certain other contracts and other classes. So, what you are seeing is actually the net result, which is the... Which can be a fairly complex scenario overall.

Karthikeyan K, Analyst — Individual Investor

Got it, sir. Thank you. And one last couple of questions regarding the, you know, look at the balance sheet, both in the standalone and constructed level. The advances, you know, it has grown almost like from the end of March to six months, right? It has grown up by almost 10% in the standalone and 20% in the consolidation level. Any reasons for that?

Radhika Ravishikar, CFO

I mean, Sir, this is normal, we'll come back to you on this actually, which part has increased, but it's the normal things going on, so it's not that consciously something has increased. Go to the next quarter.

Hitesh Joshi, Chairman

So as long as SFS is normal and CFS is abnormal, I think the answer has to be found in the associates. And the bigger ones are, you can readily see who are they. It is AICL mostly the biggest one.

Radhika Ravishikar, CFO

No, so CFS will have JIT in South Africa is the biggest one.

Hitesh Joshi, Chairman

And AICL?

Radhika Ravishikar, CFO

AICL, yes, profit comes.

Operator

Participants who wish to ask a question may press star and 1.

Operator

Participants, you may press star and want to ask a question. The next question comes from the line of Mehek with MK Global Financial Service. Please go ahead.

Mehek, Analyst — MKM Global Financial Services

Yeah, hi. Thank you for the opportunity. I just had one question on the impact of, you know, the cyclones which have, you know, resulted in high losses in the eastern part of India. I know it's early days, but if you could give a sense of, you know, what kind of impact you are seeing on your book with respect to those NADCAD events.

Hitesh Joshi, Chairman

We don't have any real concrete figure to go by. We will need to wait some more time. Maybe, I think, data is collected at the insurance company level and it will flow to us with a little lag. But still, in case you would like any guidance, we tend to have a loss of the industry at around 25 to 30%. So, whatever might be the industry figure getting reported, we could be having... Loss of 25-30% of that.

Mehek, Analyst — MKM Global Financial Services

Got it, sir. And secondly, one question on, you know, the competitive dynamics, especially with respect to, you know, two to three new reinsurers, you know, starting their businesses, and one of the, you know, large groups who is expecting to start their reinsurance business. So how do you see the competitive intensity, especially in the domestic market going forward?

Hitesh Joshi, Chairman

I think we'll need to watch their behavior as to how aggressive they become. That is something which we can't really speculate about. We need to wait for that thing to pan out.

Mehek, Analyst — MKM Global Financial Services

Sure, sir. Thank you so much for answering the questions.

Operator

Thank you.

Operator

Participants, please press star and want to ask a question.

Operator

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for the closing remarks.

Hitesh Joshi, Chairman

Thank you all for joining in. As we have discussed, there is overall more reserve strengthening than reserve releases for the previous periods. Despite that, the result is fairly stable. Volatility is at the core of our industry. Despite that, it is our effort. We will continue to work on it. As we have also discussed, there is ample capacity, not only globally, also the new capacity, the new reinsurers who have come up. At the same time, the low strength during the last two to three years have been below the long-term average. So all these factors will be... Thank you.

Operator

Thank you, sir. Ladies and gentlemen, on behalf of General Insurance Corporation of India, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.