General Insurance Corporation of India — Q4 FY25 earnings call

Call held 28 May 2025

Management summary

GIC Re reported a mixed Q4 FY25, marked by strong growth in gross premium and investment income, alongside an improved solvency ratio. However, profitability was impacted by an increased income claim ratio and combined ratio, largely due to catastrophic events and soft international market pricing. The company remains committed to underwriting discipline and strategic diversification, projecting a 10% annual growth for the next three years.

Highlights

  • Gross premium income for Q4 FY25 stood at ₹10,367.08 crores, up 18.83% YoY from ₹8,723.65 crores.

  • Investment income for Q4 FY25 increased 28.56% YoY to ₹3,903.02 crores from ₹3,036.52 crores.

  • Solvency ratio improved to 3.70 at FY25 end from 3.25 in the previous year.

  • Net worth excluding fair value change increased 14.70% YoY to ₹43,106.52 crores from ₹37,581.78 crores.

  • Overall profit for FY25 was approximately ₹8,700 crores, up from ₹7,000 crores in the previous year.

Concerns

  • Income claim ratio for Q4 FY25 increased to 82.2% from 68.9% YoY.

  • Combined ratio for Q4 FY25 increased to 103.56% from 89.26% YoY.

  • Profit after tax for Q4 FY25 declined 17.39% YoY to ₹2,182.88 crores.

  • International business witnessed a decline of 7.8% over the previous year (FY25).

  • Life claims increased by 2.5x in FY25 compared to the previous year.

Key financials

2 periods

Headline

  • Solvency Ratio (FY End)
    3.7
  • Net Worth Excl. FV Change (FY End)
    ₹43,106.52 Cr
    YoY +14.7%
  • Domestic Premium (FY)
    ₹30,662.44 Cr
    YoY +18.8%
  • International Premium (FY)
    ₹10,491.51 Cr
    YoY -7.8%
  • Total Investment Income (FY)
    ₹11,204 Cr

Q4

  • Gross Premium Income
    ₹10,367.08 Cr
    YoY +18.8%
  • Investment Income
    ₹3,903.02 Cr
    YoY +28.6%
  • Income Claim Ratio
    82.2%
  • Combined Ratio
    103.6%
  • Profit After Tax
    ₹2,182.88 Cr
    YoY -17.4%

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.

Segment breakdown

Share of Premium (FY)
₹41,153.95 Cr Total
  • Domestic ₹30,662.44 Cr 74.5%
  • International ₹10,491.51 Cr 25.5%

Capital allocation

high confidence
  • Liquidity Liquidity disclosed A CAT reserve of ₹600 crores is being built up, with a plan to reach ₹5,000 crores, which will not be drawn down until the corpus is built.
    So 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 Rs. 5,000 crores. Till that corpus is built, we do not plan to recover or withdraw draw down from this reserve. It will be straight to the P&L.

Guidance & targets

Growth

  • Overall Reinsurance Business Growth Growth · next three years · High confidence about 10% year-on-year
    On an overall basis, we project growth in our reinsurance business, which will be measured growth of about 10% year-on-year for the next three years.

    — Sanjay Mokashi

  • Health Portfolio Growth Growth · going forward (next year implied) · Medium confidence in the range of say 5% to 10%
    So, 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 say 5% to 10%, but the percentage of growth that we have seen this year is not likely to continue going forward.

    — S.K. Rath

  • Crop Portfolio Growth Growth · going forward · Low confidence maintain or slightly increase the participation / see some growth
    So we have written some of the treaties this year and we hopefully going forward will try to improve participation in the SSM model and the excess stop loss model whereby we can maintain or slightly increase the participation.

    — S.K. Rath

  • Fire Segment Growth Growth · going up from January (implied next year) · Medium confidence 10% to 20%
    The 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% to 20% in the fire segment.

    — S.K. Rath

Profitability

  • International Combined Ratio Profitability · by the year end (FY26) · Medium confidence around 110% or 115%
    Yes, 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.

    — S.K. Rath

  • Overall Combined Ratio Profitability · FY26 · Medium confidence around 106%, 107% figure
    Yes, around 106%, 107% figure.

    — S.K. Rath

What to watch in Q1 FY26

International Combined Ratio Improvement

By FY26 end
Current ~121%
Target Around 110-115%

Why it matters

Key to improving overall profitability and underwriting performance, especially after the impact of catastrophic events.

Yes, 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.

Risks & concerns

  • Impact of catastrophic events on underwriting profitability

    high

    Q4 foreign combined ratio was dampened by events like California fire, Taiwan Typhoon, and floods in Dubai and Nepal.

    Management acknowledged

  • Soft pricing in the international reinsurance market

    medium

    Pricing in the international market was quite soft in the 1st January renewal, impacting direct market conditions.

    Management acknowledged

  • Potential reduction in obligatory business

    medium

    Industry rumors suggest obligatory business could be reduced from 4%, but management has no official information from regulators.

    Analyst not addressed

  • Higher commission demands in the health insurance segment

    medium

    SAHI companies' demands for higher commissions could impact the sustainability of high health business growth.

    Management acknowledged

  • Increased life claims and reserve setting

    medium

    Net life claims paid were significantly higher, and more reserves had to be set aside, leading to a 2.5x increase in life losses for FY25.

    Management acknowledged

Q&A highlights

8 direct
Sustainability of 34% Q4 international business growth due to rating upgrade. Direct
Yes. 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, or wherever we lost the accounts we are trying to regain them. So naturally this process will continue going forward.

Clarifies the driver of international growth and its potential sustainability following a rating upgrade.

Asked by Sanket Godha

Outlook on improving international business combined ratio (currently 121%). Direct
If you see, in comparison to last year our international business and the rating, I mean, the combined ratio has actually come down in comparison to the March '23. If you look at March '24, it was something 108% and now that has come down, incurred claims ratio has come down to 100% this year. So naturally the combined is in addition to the normal claims, we add the other expenses and commission. That's why it is slated at a higher level. But going forward, yes, we will try to improve further and we would like to follow the underwriting, this means that we have been following.

Addresses the high international combined ratio and management's strategy for improvement through underwriting discipline.

Asked by Sanket Godha

Potential reduction of obligatory business from 4% and its impact on GIC Re. Direct
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 cedents, so which makes the news. But we have no information, no official news either from the regulator or from the ministry.

Addresses a significant regulatory/industry rumor that could impact GIC Re's business model, with management stating no official communication.

Asked by Sanket Godha

Profitability of obligatory business compared to overall domestic business. Direct
Not really. See, the point is that obligatory would constitute say something like 30% of our book. And there is always a risk return trade off, so it is not correct to say that this is more profitable. And given our focus on underwriting discipline, our rest of the book is also improving not only domestically but also for international. So, 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.

Clarifies the contribution and profitability of obligatory business, emphasizing overall portfolio quality.

Asked by Sanket Godha

Reasons for not making underwriting profit in Q4 FY25, unlike previous Q4s. Direct
And the main dampener here is the foreign Q4 and 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.

Explains the impact of catastrophic events on Q4 underwriting performance, particularly in the foreign segment, leading to higher loss ratios.

Asked by Karthikeyan

Significant increase in life claims (2.5x) in FY25. Direct
So if you just see that, yes, the losses are quite significant, mainly on account of two things. One is, the net claims paid, so we paid actually net claims which are much higher compared to last year, 1,887 claims we have paid this year, number one. Second thing is, obviously, there are lot of claims which have been reported but we have not yet settled those claims, so obviously we have to set aside reserves.

Provides a detailed explanation for the sharp increase in life claims, attributing it to higher net claims paid and increased reserve setting.

Asked by Karthikeyan

Outlook on the 'long tail' risks from discontinued foreign motor and marine business. Direct
I would not say it has come to an end. Obviously, such an arrangement has a tail. I can only say that the contract that we cancelled 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. And more importantly, we have created enough reserves in our books of account as well.

Addresses the lingering impact of past discontinued business and reassures about reserve adequacy for these 'long tail' risks.

Asked by Karthikeyan

Sustainability of high health business growth (66%) and outlook for crop business. Direct
So, 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 say 5% to 10%, but the percentage of growth that we have seen this year is not likely to continue going forward.

Provides realistic expectations for health business growth going forward, indicating moderation due to commission demands, and discusses the outlook for crop business.

Asked by Sanket Godha

2 min read 7 chapters

Detailed narrative

Q4 FY25 Financial Performance Overview

GIC Re reported a gross premium income of ₹10,367.08 crores in Q4 FY25, marking an 18.83% increase year-on-year from ₹8,723.65 crores. Investment income also saw a significant rise of 28.56% to ₹3,903.02 crores. However, profit after tax for the quarter declined by 17.39% to ₹2,182.88 crores, primarily due to an increased income claim ratio of 82.2% and a combined ratio of 103.56%.

FY25 Annual Performance and Solvency

For the full fiscal year 2025, GIC Re achieved an overall profit of approximately ₹8,700 crores, up from ₹7,000 crores in the previous year. The company's solvency ratio improved significantly to 3.70 at year-end, compared to 3.25 in FY24, indicating a stronger financial position. Net worth excluding fair value change also grew by 14.70% to ₹43,106.52 crores from ₹37,581.78 crores.

Premium Mix and Growth Dynamics

Domestic premium for FY25 grew by 18.8% to ₹30,662.44 crores, constituting 75% of the total premium. Conversely, international business experienced a 7.8% decline, settling at ₹10,491.51 crores. Management attributed the Q4 international growth to a recent rating upgrade, which is expected to drive future growth as the company regains lost accounts and expands into new territories.

Underwriting Performance and Catastrophic Events

The combined ratio for FY25 stood at 108.8%, reflecting the impact of various catastrophic events such as the California fire, Taiwan Typhoon, and floods in Dubai and Nepal. The foreign loss ratio for FY25 was 96.5%, while the domestic loss ratio was 85.3%. Management emphasized its commitment to underwriting discipline and risk assessment frameworks to manage these events and improve underwriting results.

Investment Income Breakdown

Total investment income for FY25 was ₹11,204 crores. This included ₹7,096 crores from interest and dividends, a 10% increase year-on-year, and ₹4,108 crores from profit on sale of securities. For Q4 FY25, profit on sale contributed ₹1,500 crores to the total investment income of ₹3,903.02 crores, with the balance coming from interest and dividend income.

Outlook on Key Business Segments

GIC Re projects an overall reinsurance business growth of about 10% year-on-year for the next three years. While the health portfolio saw phenomenal growth in FY25, future growth is expected to moderate to 5-10% due to higher commission demands. The crop portfolio, influenced by the new SSM model, is expected to maintain or slightly increase participation, with the fire segment anticipated to grow by 10-20% due to adherence to IRDA rates.

Obligatory Business and Regulatory Environment

Management clarified that there is no official information from the regulator or ministry regarding a potential reduction in obligatory business from 4%. While acknowledging industry discussions, GIC Re stated it is prepared to manage any short-term setbacks by marketing additional quota share treaties and leveraging established market relationships, ensuring continued portfolio quality.

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