General Insurance Corporation of India — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

GIC Re delivered a robust Q1 FY26 performance with significant increases in PBT and PAT, driven by improved underwriting and strong investment income. The combined ratio improved despite major extraordinary losses, and the solvency ratio remained healthy. While gross premium income saw a slight dip due to accounting changes, the company maintains a positive outlook for the year, focusing on profitable growth and strategic portfolio optimization.

Highlights

  • Profit Before Tax (PBT) increased by 61.04% to INR2,243.54 crores, reflecting strong profitability.

  • Profit After Tax (PAT) grew by 69.08% to INR1,752.22 crores, demonstrating robust bottom-line performance.

  • Underwriting loss significantly reduced by 29.54% to INR907.76 crores, despite two large extraordinary losses.

  • Gross investment income rose by 18.37% to INR3,228.51 crores, contributing positively to overall results.

  • Combined ratio improved by 2.66 percentage points to 106.94%, indicating better operational efficiency and risk management.

  • Solvency ratio remained robust at 3.85%, up from 3.36% in the previous year, highlighting strong capital adequacy.

Concerns

  • Gross premium income slightly decreased by 0.14% YoY to INR12,388.01 crores, primarily due to IRDAI's accounting changes for long-term policies.

  • Health segment experienced de-growth due to non-renewal of some treaties and rising medical inflation.

  • Two large extraordinary losses (Jindal Poly Films and Air India aviation) impacted incurred claims, though adequately provided for.

Key financials

  1. Gross Premium Income ₹12,388.01 Cr -0.14%YoY
  2. Underwriting Loss ₹907.76 Cr -29.5%YoY
  3. Gross Investment Income ₹3,228.51 Cr +18.4%YoY
  4. Profit Before Tax (PBT) ₹2,243.54 Cr +61%YoY
  5. Profit After Tax (PAT) ₹1,752.22 Cr +69.1%YoY
  6. Combined Ratio 106.9%
  7. Solvency Ratio 3.9%

What they filed

Q1 FY27: revenue down 1.5%, net profit down 31.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue12,378 11,144 13,209 14,623 12,755 +3%12,589 +13%13,018 −1%14,401 −2%
EBITDA2,380 1,929 2,998 2,605 2,762 +16%2,366 +23%2,463 −18%2,021 −22%
Net profit1,856 1,677 2,499 2,531 2,874 +55%1,726 +3%2,533 +1%1,744 −31%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Overall Growth

  • Overall growth Overall Growth · this year · High confidence 9-10%
    So going forward, we would look at this year, maybe for the entire year, we expect the growth to be between 9% and 10% compared to last year.

    — Ramaswamy Narayanan

International Growth

  • International growth International Growth · year-on-year for this year · High confidence 17-20%
    So typically, international would grow about 17% to 20% year-on-year for this year

    — Ramaswamy Narayanan

Domestic Growth

  • Domestic growth Domestic Growth · this year · Medium confidence 6.5-8%
    and domestic would be about 6.5% or 7%.

    — Ramaswamy Narayanan

Commission Ratio

  • Commission ratio Commission Ratio · for the year · High confidence 18-19%
    So I would say this is a one-off. Going forward, we will see that it kind of settles down around 18%, 19% for the year.

    — Ramaswamy Narayanan

Combined Ratio

  • Overall Combined Ratio Combined Ratio · for this year · High confidence 106.8-107%
    So I think if you see overall, we are looking at a combined of around 107%, 106.8%, 107% for this year

    — Ramaswamy Narayanan

  • Domestic Combined Ratio Combined Ratio · for this year · High confidence 104-105%
    in which overall, the domestic curve will continue to be at around 104%, 105%

    — Ramaswamy Narayanan

  • Foreign Combined Ratio Combined Ratio · for this year · High confidence 110%

    Previously 126% → 110%

    and Foreign will come much better than what it was last year. I think it will come closer to 110% is my feeling.

    — Ramaswamy Narayanan

Capital Gains

  • Capital gains realized Capital Gains · for the entire year · Medium confidence around the same level or even slightly higher

    From INR4,108 crores today

    So I mean, going by what we have booked, we can expect it to be around the same level or even slightly higher for the entire year.

    — Ramaswamy Narayanan

What to watch in Q2 FY26

IFRS implementation and disclosure of IGAAP/IndAS figures

Q3 FY26
Current Working on it, may share from Q3 FY26
Target Disclosure of both IGAAP and IndAS figures

Why it matters

The shift to IFRS will significantly alter financial reporting, especially investment valuation and ROE, requiring investors to understand the new basis.

Hopefully, we will not even wait for the dates that IRDAI has given for implementation. We'll actually start doing that much earlier. And we will be in a position to hopefully give you both the figures, the IGAAP as well as the IndAS figures, maybe from the third quarter of this year.

Risks & concerns

  • Catastrophic events (Jindal Poly Films fire, Air India aviation loss)

    high

    Two large extraordinary losses impacted Q1, but management states they are adequately provided for with comprehensive risk frameworks.

    Management acknowledged

  • Catastrophic losses in Q3/Q4 (seasonal)

    high

    Q3 and Q4 are typically periods for catastrophic losses, and their impact on the combined ratio will need to be monitored.

    Management acknowledged

  • Persistent global uncertainty (inflation, geopolitics, climate risks)

    medium

    These factors contribute to heightened volatility across financial and insurance markets, but GIC Re navigates through underwriting discipline.

    Management acknowledged

  • Medical inflation and rising losses in health segment

    medium

    Medical inflation and creeping losses led to non-renewal of some health treaties, resulting in de-growth in the segment.

    Management acknowledged

  • Competition in domestic reinsurance market

    medium

    Increased competition from FRBs and other players, but GIC Re focuses on profitable business and market development.

    Management acknowledged

  • Long-tailed policies (Life business) requiring continuous provisioning

    medium

    Life business, being long-tailed, requires continuous monitoring and provisioning to ensure no future shocks from claims.

    Analyst acknowledged

  • IFRS implementation impact on investment valuation (market value basis)

    medium

    IFRS will require investments to be valued at market price, potentially reflecting market dips negatively, necessitating a different investment management approach.

    Analyst acknowledged

  • Softening rates in international market

    low

    International market saw rate softening, but GIC Re leveraged its credit rating improvement to secure good new business.

    Management acknowledged

Q&A highlights

6 direct
Top line growth drivers (international vs domestic) and impact of accounting changes Direct
The top line growth on the international has grown because of our credit rating improvement, which happened in October last year, which gave us a chance to look at really good businesses on the 1st Jan renewals, and we managed to write a substantial amount of increase there. Secondly, on the domestic side, yes, again, you're spot on in saying that the property premium today looks a little subdued simply because quarter-on-quarter when you compare, you're comparing 2 different quarters. In the last quarter, the premium of long-term policies were fully accounted for. Today, we have apportioned them across the different years for which the policy is taken.

Clarifies that international growth is driven by credit rating upgrade and new business, not rate hardening, and explains the subdued domestic growth due to IRDAI's accounting change for long-term policies.

Asked by Aditi Joshi

Expense ratio outlook and reasons for Q1 improvement Direct
So 2 things. One on the salaries on the employee compensation, what happens is we do provide for the pensions and gratuity for employees based on actuarial calculations. There has been a dip in that for the current quarter compared to last year's quarter. Plus, I think on the IT side, the spending that we have done last quarter compared to this quarter, it was more last quarter. So to that extent, we've got a deficit.

Explains the temporary nature of the expense ratio improvement due to lower pension/gratuity provisions and IT spending, and clarifies its minimal impact on the combined ratio.

Asked by Aditi Joshi

Commission reduction and expected normalization Direct
Well, yes. So this is more a one-off, I would say, for this quarter. Basically, the initial commissions that we charge. And then depending on the profitability of the portfolio, the commissions would go up or down. That's how typically it works. So I would say this is a one-off. Going forward, we will see that it kind of settles down around 18%, 19% for the year.

Indicates that the lower commission in Q1 is a one-off event and expects it to normalize to 18-19% for the full year, which impacts profitability.

Asked by Shubham

Investment income strategy and booking profits from equity sales Direct
We don't really try to sell investment just to prop up our bottom line. That is not what we do. When we do sell, it is just because we feel that a particular sector is kind of run up well and reach the end of where it should be. And then we decide to sell if a stock or a sector has become suddenly overheated, we would then kind of sell it and maybe wait and purchase it at a later time.

Clarifies that investment sales are strategic based on market conditions and sector performance, not merely for short-term profit booking, emphasizing a long-term, safe investment approach.

Asked by Shubham

Impact of IFRS on financial reporting, particularly investment valuation and ROE Partial
So you as an investor or as an analyst may actually get to see how the books would look once IFRS comes into play. We are still working on it. So I may not be able to give you a 100% answer now as to whether the ROE will change because, honestly, it's not dependent only on the investment fair value. It depends also on how the overall underwriting looks. So there will be multiple factors there.

Highlights the upcoming shift to market value accounting for investments under IFRS, which will significantly change how financials, especially ROE, are presented, and the company is still working on the full implications.

Asked by Shubham

Foreign portfolio losses in Motor and Marine and their runoff timeline Direct
A particular contract from the U.S., which was for Marine and Motor, which we had stopped in '21. The runoff of that continues to come in. ... I guess, Marine is kind of done now. And if you see it reflects in the loss ratios as well. Motor is where we would expect -- I mean, typically, Motor third party is a long-tailed class. We would possibly expect this to go on for another 2 to 3 years.

Explains that ongoing losses in these segments are from a legacy US contract that stopped in 2021, with Marine runoff largely complete but Motor expected to continue for another 2-3 years due to its long-tailed nature.

Asked by Karthikeyan K

Quantum and components of the Air India aviation loss Partial
There are multiple classes that are involved in this loss. I'm talking of the Air India -- unfortunate Air India crash that happened in Ahmedabad, now there are multiple classes, which get involved because this was an international flight, so people would have taken travel policies, that will trigger. There'll be losses paid there. ... The market is still coming to terms. There are different views about it. There are people who are saying it could be $200 million to $250 million. We believe it could be closer to $400 million to $450 million because, again, like I said, there are multiple classes getting involved.

Reveals the significant and complex nature of the aviation loss, involving multiple insurance classes (hull, liability, travel, PA, life, marine) and a potential quantum of $400-450 million, which is still being assessed by the market.

Asked by Karthikeyan K

Competition in the reinsurance market and GIC Re's strategy Direct
I think we have seen all the competition that we wanted to see. FRBs, even before they set up here, they did have a presence in this market. ... So we don't mind competition as long as people understand what they are writing and they are able to put in that kind of capacities, we are more than happy to have them. Having said that, new companies will take some time to settle down because reinsurance is a game of deep pockets, you need to have a lot of capacities, you need to have a lot of staying power.

Management acknowledges and welcomes competition, viewing it as beneficial for market development, while emphasizing GIC Re's focus on profitable business and its strong capacity and staying power in the long-term reinsurance game.

Asked by Karthikeyan K

3 min read 8 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

General Insurance Corporation of India Limited (GIC Re) reported a robust Q1 FY26 performance despite persistent global uncertainties. Profit Before Tax (PBT) surged by 61.04% to INR2,243.54 crores, while Profit After Tax (PAT) increased by 69.08% to INR1,752.22 crores. This strong growth was attributed to underwriting discipline, portfolio optimization, and strategic alignment, enabling the company to navigate market headwinds effectively.

Gross Premium Income & Accounting Changes

Gross premium income for Q1 FY26 was INR12,388.01 crores, a marginal decrease of 0.14% compared to INR12,405.68 crores in Q1 FY25. This slight dip was primarily due to a change in IRDAI's accounting policy for long-term policies, effective October 2024, which now requires premiums to be apportioned over the policy's duration rather than being fully recognized in the first quarter. Management noted that despite this, overall growth is expected for the year.

Underwriting Performance & Major Losses

The company significantly reduced its underwriting loss by 29.54% to INR907.76 crores in Q1 FY26, down from INR1,288.53 crores in Q1 FY25. This improvement occurred despite two large extraordinary losses: a fire loss at Jindal Poly Films (GIC's share INR925 crores) and the Air India aviation loss in Ahmedabad. The combined ratio improved by 2.66 percentage points, reaching 106.94% compared to 109.6% in the prior year.

Investment Income & Strategy

Gross investment income saw a healthy increase of 18.37% to INR3,228.51 crores in Q1 FY26, up from INR2,727.43 crores in the corresponding quarter last year. The investment book is largely composed of debt (74-75%), ensuring stable interest income. Profit on sale of investments contributed INR1,074 crores for the quarter. Management emphasized that investment sales are driven by strategic market conditions rather than solely to boost the bottom line, maintaining a focus on a safe investment portfolio.

Solvency, Assets & Net Worth

GIC Re maintained a robust solvency ratio of 3.85% in Q1 FY26, an increase from 3.36% as of Q1 FY25. Total assets grew by 5.89% to INR197,539.62 crores compared to INR186,552.46 crores in the previous quarter. Net worth also increased by 17.19% to INR45,275.48 crores, and including the fair value change account, net worth stood at INR89,512.55 crores, reflecting a strong and growing balance sheet.

Outlook & Growth Drivers

Management provided an optimistic outlook, guiding for an overall growth of 9-10% for the entire year. International business is projected to grow by 17-20% year-on-year, primarily driven by the company's improved credit rating and new business acquisitions. Domestic growth is expected to be around 7-8%, with fire premiums anticipated to be higher than last year. The overall combined ratio is targeted to be around 106.8-107% for the year.

Impact of IFRS on Financial Reporting

GIC Re is actively working towards the implementation of IFRS, which will necessitate a shift to market value accounting for investments. This change is expected to be beneficial in the long run, though it will require adjustments in investment management to handle potential market volatility. The company aims to provide both IGAAP and IndAS figures, possibly starting from Q3 FY26, to offer transparency to investors.

Competition and Market Dynamics

The company acknowledges the presence of competition from Foreign Reinsurance Branches (FRBs) and other players in the market. However, GIC Re views this competition positively, believing it fosters market development and growth. The strategy remains focused on writing profitable business, leveraging strong relationships with insurance companies, and maintaining significant capacity and staying power, especially in anticipation of Risk-Based Capital (RBC) implementation.

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