Go Digit General Insurance Limited — Q1 FY26 earnings call

Call held 28 Jul 2025

Management summary

Go Digit General Insurance reported a strong Q1 FY26 with significant profit growth and robust expansion in net worth and AUM. While the net retention ratio saw a temporary dip due to strategic cession and rapid 2-wheeler growth, the company maintained healthy loss ratios and a strong solvency position. Management highlighted continued focus on profitable growth across diverse segments, particularly in corporate and 2-wheeler motor lines, and aims for expense reduction.

Highlights

  • Profit Before Tax (PBT) increased significantly from INR 101 crores to INR 161 crores, leading to a PAT of INR 138 crores.

  • Net Worth grew by approximately 32.3% to INR 4,100 crores, and Assets Under Management (AUM) increased by INR 3,100 crores to INR 20,861 crores.

  • The company maintained a strong solvency ratio of 227% and achieved 40% growth in its Fire business, significantly outperforming the industry's 17%.

  • ROE on a PAT basis improved slightly to 3.4% compared to 3.3% in the same quarter last year, and IFRS ROE (fully tax basis) reached 4.8% for the quarter.

Concerns

  • The net retention ratio reduced to 65.4% from 76.2% last year, primarily due to increased cession in corporate business and strong growth in 2-wheeler business.

  • The overall expenses to GWP ratio slightly increased to 31.4% from 30.9% last year, with management acknowledging that expenses are 'a bit high'.

  • The combined ratio (IRDAI) appears higher due to lower net written premium, though management clarified it does not impact profitability.

Key financials

2 periods

Headline

  • Profit Before Tax (PBT)
    ₹161 Cr
    YoY +59.4%
  • Profit After Tax (PAT)
    ₹138 Cr
  • ROE (PAT basis)
    3.4%
  • Net Worth
    ₹4,100 Cr
    YoY +32.3%
  • AUM
    ₹20,861 Cr
  • Solvency Ratio
    227%
  • GWP Growth
    12.1%
  • Net Retention Ratio
    65.4%
    YoY -14.2%
  • Expenses to GWP
    31.4%
  • Reinsurance Accepted Growth
    47%

Q1

  • Loss Ratio
    70.3%

What they filed

Q1 FY27: revenue up 8.5%, net profit down 37.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,234 2,436 2,594 2,236 2,488 +11%2,570 +6%2,711 +5%2,427 +9%
EBITDA89 118 -209 159 135 +52%162 +37%-297 −42%114 −28%
Net profit89 119 116 138 117 +31%140 +18%149 +28%86 −38%
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

  • Motor Business Mix
    41% Private Car Share31% 2-Wheeler Share28% Commercial Vehicle Share
  • OD/TP Mix (Digit)
    37% OD Share63% TP Share
  • Fire Business
    40% Growth (Digit)17% Growth (Industry)
  • Other Business (Marine, Liability)
    23% Growth

Guidance & targets

Profitability

  • Current Tax Rate Profitability · Whole year · High confidence 13.9%
    Our assumption is that this year, the current tax rate we are expecting will be about 13.9% for the whole year.

    — Kamesh Goyal

Operational

  • Net Retention Ratio Operational · Going forward · Medium confidence increase towards last year's retention (76.2%)

    From 65.4% today

    our expectation is that our retentions will increase. We would expect us to definitely come back to last year's retention because overall, our retentions have increased by 2%.

    — Kamesh Goyal

Capital Allocation

  • Equity Allocation as % of AUM Capital Allocation · Ongoing · High confidence 10%
    equity to 10% of the asset allocation is definitely desirable.

    — Kamesh Goyal

Market Share

  • Fire Business Market Share Ranking Market Share · This year · Medium confidence Top 10 insurer
    My personal wish is that this year, we should be a top 10 insurer even in fire.

    — Kamesh Goyal

What to watch in Q2 FY26

Net Retention Ratio Improvement

Next quarter/H2 FY26
Current 65.4%
Target Increase towards 76.2% (last year's level)

Why it matters

Improvement is expected to normalize the combined ratio and reflect underlying profitability, which is a key focus for the company.

our expectation is that our retentions will increase. We would expect us to definitely come back to last year's retention because overall, our retentions have increased by 2%.

Risks & concerns

  • Net Retention Ratio Reduction

    medium

    The net retention ratio reduced to 65.4% from 76.2% last year, primarily due to strategic cession in large corporate accounts and strong growth in 2-wheeler business.

    Management acknowledged

  • Expense Ratio Increase

    medium

    The overall expenses to GWP ratio increased to 31.4% from 30.9% last year, largely due to the 2-wheeler business model where commissions are expensed upfront.

    Management acknowledged

  • Group Health Market Pricing Aggression

    medium

    While some aggressive companies from last year are less so, a broad return to pricing discipline in the group health segment is not yet fully observed, as indicated by reducing conversion ratios.

    Management acknowledged

  • EoM Guidelines Effectiveness

    medium

    The overall industry expenses of management have gone up despite IRDAI's objective to reduce them, leading management to believe corrective steps will be taken by the regulator.

    Management acknowledged

  • Combined Ratio Increase (Optical)

    low

    The IRDAI combined ratio appears higher due to lower net written premium from reduced retention, but management clarified it does not impact underlying profitability.

    Management downplayed

  • Market Volatility Impact on Equity Allocation

    low

    Management recognizes the risk of market drops impacting solvency if equity allocation exceeds certain levels, hence the desirable limit of 10%.

    Management acknowledged

Q&A highlights

6 direct
Net Retention Ratio and Commission Expenses Direct
So first of all, there is no cession to reinsurers in motor. As I explained earlier, the commission ratio has increased essentially due to increase in 2-wheeler business. As you know, and you can see our 17th of February, where we have shown how increase in 2-wheeler business impacts your expense ratio because 5-year premium earning or in the first quarter is very little while the expense of 5-year commission gets expensed out.

Analyst questioned the significant drop in retention and higher commission, which management attributed to the nature of 2-wheeler business and strategic corporate cession.

Asked by Avinash Singh

Motor Third-Party (TP) Strategy and Claims Direct
As of now, we have neither relaxed on underwriting guidelines nor made them stricter. We continue to keep looking for opportunities in the TP business. And if we don't see, we actually degrow also in the TP business.

Analyst probed the strategy for motor TP given no price hikes and rising claims; management emphasized adherence to underwriting guidelines and willingness to degrow if unprofitable.

Asked by Avinash Singh

Impact of Allianz Jio JV on Reinsurance Treaties Direct
Our reinsurance arrangement with Allianz as a leader is for 3 years. So next year would be the third year in this arrangement. So ideally, based on the contract, neither them nor we actually can change anything.

Analyst inquired about potential disruption from the Allianz-Jio JV; management confirmed their existing 3-year treaty with Allianz remains unchanged.

Asked by Supratim

Trajectory of Combined Ratio (NEP basis) Partial
But in this case, in NEP, why it has increased is, one, I already said that our 2-wheeler business has increased a lot. This obviously increases the commission outgo. Claims have not really changed.

Analyst sought clarity on reducing the combined ratio; management explained the current increase is due to 2-wheeler business growth and corporate business mix, without providing a specific forward target.

Asked by Supratim

Data Sharing with Reinsurer (Allianz) Direct
So I think we'll continue to send them the same data because data doesn't have any names. So nobody can identify risk as to which risk we are writing, which we are not underwriting. And as I also said, and maybe I should repeat that in our case, we decide what risk to write at what rate, et cetera. Allianz doesn't have any access to any of the data which we do.

Analyst asked about data sharing with Allianz; management clarified that only anonymized data is shared, and Allianz does not have access to individual risk underwriting data.

Asked by Supratim

Trends in Loss Ratios across Motor Segments Direct
So where, as I already said in the initial remarks that when we are writing a comprehensive policy, we look at profitability of OD and TP combined. And we look at loss ratio plus commission ratio at all times from an ROE perspective.

Analyst inquired about structural loss ratio trends in motor segments; management explained their holistic approach to profitability by combining OD and TP for comprehensive policies and considering ROE.

Asked by Prayesh Jain

Pricing Discipline in Group Health Segment Partial
The day our conversion ratio starts going up, we know there is some improvement in the market in terms of pricing. Our number of quotes we are giving, the premium for which we are quoting all of that is on an increasing trend. The only trend which is reducing is conversion ratio.

Analyst asked if pricing discipline has returned in group health; management noted that aggressive companies are less so, but a broad trend reversal (indicated by conversion ratios) is not yet evident.

Asked by Prayesh Jain

Management Expenses and EoM Guidelines Direct
The challenge is essentially in each line of business because even if you look at larger companies last year, almost all of them would have seen a decent increase in their expenses of management... Digit probably would be one of those exceptions where the overall EoM went down.

Analyst questioned the impact of EoM limits and 2-wheeler growth on expenses; management stated that Digit's overall EoM went down, and they believe IRDAI will take corrective steps to reduce industry-wide EoM.

Asked by Nidhesh Jain

3 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Go Digit General Insurance reported a robust Q1 FY26, with Profit Before Tax (PBT) surging by 59.4% to INR 161 crores from INR 101 crores in the prior year. After accounting for an expected tax rate of 13.9% for the full year, Profit After Tax (PAT) stood at INR 138 crores. The company's Net Worth increased by 32.3% to INR 4,100 crores, and Assets Under Management (AUM) grew by INR 3,100 crores to reach INR 20,861 crores. Solvency remained strong at 227%, indicating a healthy capital position.

Net Retention Ratio & Combined Ratio Dynamics

The net retention ratio for the quarter reduced to 65.4% from 76.2% in the same period last year. This reduction was primarily attributed to increased cession in large corporate fire risks and strong growth in the 2-wheeler motor business. While this led to an optically higher IRDAI combined ratio, management clarified that economically, it has not impacted profitability. If retention had been maintained at last year's 15% for Fire, Marine, Engineering, and Liability, the combined ratio without 1/n would have been 105.2%, an improvement over last year's 105.4%.

Motor Business Mix and Growth Drivers

The motor business mix saw 2-wheelers increase to 31%, private cars at 41%, and commercial vehicles at 28%. The company's OD/TP mix was 37% OD and 63% TP, broadly aligning with the industry. Strong growth in the 2-wheeler segment, while contributing to overall GWP growth of 12.1%, also impacted the expense ratio due to upfront commission accounting for 5-year policies. The Fire business demonstrated exceptional growth of 40%, significantly outpacing the industry's 17%.

Investment Philosophy & Equity Allocation

The company's Assets Under Management (AUM) reached INR 20,861 crores, with a yield of 1.8% on fixed income. Equity allocation stood at 6.3% of AUM, a slight decrease from 6.4% at March 31st, 2025. Management expressed a desirable target of increasing equity allocation to 10% of AUM, viewing it as a means to achieve additional yield. They emphasized a cautious approach, considering potential market volatility and its impact on solvency beyond this 10% threshold.

Group Health Business & Pricing Discipline

The health loss ratio improved compared to Q1 last year, with Go Digit maintaining a strong position in retail health within its portfolio. While companies that were aggressive in group health pricing last year are less so this year, a broad return to market pricing discipline is not yet evident. Management monitors conversion ratios as a key indicator of market improvement, noting that while premium quotes are increasing, conversion ratios are still reducing, suggesting continued competitive pressure.

Expense Management and EoM Guidelines

The overall expenses to GWP ratio increased slightly to 31.4% from 30.9% last year, primarily driven by the growth in the 2-wheeler business. Management acknowledged that overall management expenses are 'a bit high' and should be reduced. Regarding IRDAI's Expense of Management (EoM) guidelines, the company noted that industry-wide EoM has generally increased, contrary to the regulator's objective, and anticipates corrective steps from IRDAI in the future.

Reinsurance Strategy and Allianz Partnership

Go Digit's reinsurance strategy focuses on diversification and not maximizing commission, with retentions expected to increase going forward. The company's 3-year reinsurance arrangement with Allianz, where Allianz acts as a leader, remains unchanged despite the recent Allianz-Jio JV announcement. Management confirmed that only anonymized data is shared with reinsurers, ensuring no access to individual risk underwriting details, and expressed confidence in the continued relationship.

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