Go Digit General Insurance Q1 FY27 earnings call

Management emphasized a conscious decision to prioritize profitability over growth in the current soft market, stating, 'We do not chase growth. That does not pay for itself.' This strategy has led to a gross written premium decline of 8% YoY, or an adjusted -2% after removing reinsurance inward business in health and crop. The company is willing to 'sit it out' where the market is going and focus on protecting the quality of their book, rather than chasing volume.

The company reported a profit after tax (with DAC, without discounting and mark-to-market) of ₹190 crores, a 5% drop YoY from ₹200 crores. Net earned premium, however, increased by 8% YoY to ₹2,007 crores. The combined ratio (with DAC) stood at 107.2%, and the Q1 loss ratio was 73.3%. Solvency remained strong at 2.43 times, and IGAAP net worth increased to ₹4,674 crores from ₹4,600 crores in March.

Motor business was largely flat, growing by 0.4%, but private car and commercial vehicle segments de-grew by 27%. The motor own damage (OD) loss ratio increased to 73.3% in Q1 FY27. Management admitted a misjudgment in past underwriting for new car standalone OD policies, stating, 'I own this failure that I did not get up earlier.' Corrective actions, including reducing business in non-new cars and private car OD, were initiated in February/March 2026, with expected stabilization in Q2 FY27.

The fire business de-grew by 37% in Q1 FY27, significantly more than the industry's 27-28% de-growth, primarily due to a 40-45% reduction in rates. Despite a large one-off^📎 claim in Q1, the gross fire loss ratio was 67%. Management reiterated their commitment to underwriting discipline, stating they 'should not write business which doesn't make sense' and aim to protect reinsurer relationships for long-term profitability.

The TP loss ratio was 66.6%. Management detailed their conservative reserving approach for third-party (TP) claims, which accounts for legal inflation and minimum wage increases. They highlighted that 83% of their 36,000 settled claims since inception were through compromise. Recent High Court judgments (Allahabad and Karnataka) have offered different interpretations of the Supreme Court's Shishupal case, suggesting the ₹30,000 rule may not apply universally, which management views as supportive of their current reserving.

The company's equity asset allocation reached 9.5% of AUM, with ₹268 crores in unrealized gains. Fixed income also holds ₹220 crores in unrealized gains. Management actively manages duration, increasing it from 4.5 to 4.9 in Q1 FY27, with reinvestment yield at 7.8%, to benefit from rising interest rates. They emphasize a disciplined capital allocation approach, aiming to benefit regardless of market direction.

Management commented on the broader industry, noting that EOM rules have driven up commissions and that many players rely heavily on capital gains, which is now threatened by IFRS. They expressed hope that IFRS will standardize KPIs across the industry. They also anticipate risk-based capital (RBC) norms and a draft on TP rate increases by IRDAI later this financial year, which could further shape the competitive landscape.