GICRENSEQ1 FY24August 14, 2023

General Insurance Corporation of India

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Management on call

Devesh Srivastava

CHAIRMAN AND MANAGING

Hitesh Joshi

GENERAL MANAGER, GENERAL INSURANCE CORPORATION OF INDIA LIMITED

Jayashree Ranade

CHIEF FINANCIAL OFFICER, GENERAL INSURANCE CORPORATION OF INDIA LIMITED

Sateesh Bhat

APPOINTED ACTUARY (NON LIFE), GENERAL INSURANCE CORPORATION OF INDIA LIMITED

Radhika Ravishekar

CHIEF INVESTMENT OFFICER, GENERAL INSURANCE CORPORATION OF INDIA LIMITED

Binay Sarda

ERNST & YOUNG

Key numbers — 40 extracted

rs,

o announce the financial performance for the quarter ended June 30, 2023. Over the past few years, our teams have diligently worked to refine our underwriting practices, and we are constantly focus

INR8,917.71 crore

e of the key highlights of the financial performance. The gross premium income of the company was INR8,917.71 crores for Q1 FY24, as compared to INR11,021.83 crores for Q1 FY23. The investment income increased to

INR11,021.83 crore

nce. The gross premium income of the company was INR8,917.71 crores for Q1 FY24, as compared to INR11,021.83 crores for Q1 FY23. The investment income increased to INR2,454.94 crores in Q1 FY24, as compared to IN

INR2,454.94 crore

s for Q1 FY24, as compared to INR11,021.83 crores for Q1 FY23. The investment income increased to INR2,454.94 crores in Q1 FY24, as compared to INR1,890.43 crores in Q1 FY23. Incurred claim ratio stood at

INR1,890.43 crore

res for Q1 FY23. The investment income increased to INR2,454.94 crores in Q1 FY24, as compared to INR1,890.43 crores in Q1 FY23. Incurred claim ratio stood at 95.1% from Q1 FY24 as co

95.1%

red to INR1,890.43 crores in Q1 FY23. Incurred claim ratio stood at 95.1% from Q1 FY24 as compared to 94.7% during the corresponding quarter of the previous year. Combin

94.7%

23. Incurred claim ratio stood at 95.1% from Q1 FY24 as compared to 94.7% during the corresponding quarter of the previous year. Combined ratio in Q1 FY24 stood at 118.4

118.47%

94.7% during the corresponding quarter of the previous year. Combined ratio in Q1 FY24 stood at 118.47% versus 110.97% during the corresponding quarter of the previous year. The adjusted combined ratio

110.97%

e corresponding quarter of the previous year. Combined ratio in Q1 FY24 stood at 118.47% versus 110.97% during the corresponding quarter of the previous year. The adjusted combined ratio, by taking int

97.24%

ed combined ratio, by taking into consideration the policyholders' investment income works out to 97.24% for Q1 FY24, as compared to 97.01% from Q1 FY23. Profit before tax stood at INR935.18 crores in Q

97.01%

onsideration the policyholders' investment income works out to 97.24% for Q1 FY24, as compared to 97.01% from Q1 FY23. Profit before tax stood at INR935.18 crores in Q1 FY24 as against INR988.71 crores

INR935.18 crore

e works out to 97.24% for Q1 FY24, as compared to 97.01% from Q1 FY23. Profit before tax stood at INR935.18 crores in Q1 FY24 as against INR988.71 crores in Q1 FY23. And profit after tax stood at INR731.79 crore

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Guidance — 20 items

Jayashree Ranade

“So based on that, we calculated crop insurance premium for this particular quarter because SOA, the statement of accounts will be received later.”

Jayashree Ranade

“I'm sure going forward, these figures will increase based on the firming of these figures, which are the base for our accrued premium calculations to match the IRDAI regulation.”

Jayashree Ranade

“And it will be in the range of INR1,500 crores, INR1,600 crores.”

Jayashree Ranade

“So hence, yes, going forward in the next quarter, this crop figures will percolate into GI Council figures.”

Jayashree Ranade

“So going forward this figure will match up which is last year's figures.”

Sanketh Godha

“So if a number you can expect to be continued for the FY '24, sir?”

Sanketh Godha

“Can we expect this number to be maybe decently lower compared to the last year?”

Sateesh Bhat

“See, what happens is to make a provision, you need information that will be flowing from the cedants.”

Sateesh Bhat

“So we will be able to quantify it only in the next quarter.”

Jayashree Ranade

“Yes, but going forward by end of the year if exchanges, there is a small difference 82 point something and 82 point something that is why this loss has come so because it is appreciated in a rupees appreciated a bit.”

Risks & concerns — 14 flagged

We believe that the increase in combined ratio during the quarter is temporary, and we are confident of much lower levels in the coming quarters, led by a relentless pursuit of operational excellence, strategic initiatives and prudent risk management practices.

— Devesh Srivastava

While strategically managing risk and maintaining a balanced portfolio, we continue to position ourselves for long-term success.

— Devesh Srivastava

We firmly believe that the current market conditions, which is going through a hardening cycle, combined with our prudent risk assessment, disciplined underwriting practices and well- executed strategic initiatives will help us in achieving a more favorable risk profile and positioning us for sustained growth.

— Devesh Srivastava

Total impact of this change is INR1,660 crores across all the classes, mainly domestic.

— Jayashree Ranade

That's the reason we see decline in most of the products, except for the motor business in the current quarter.

— Sanketh Godha

So because of delayed booking, those, there is a delayed impact, trailing impact of this particular contract which is impacting the current quarter.

— Hitesh Joshi

The first question is about the risk management.

— MW Kim

So I noticed that overall the underwriting looks not really at a good stage compared to the other global reinsurers, so I just want to understand about your risk management practice.

— MW Kim

So in this years renewal, did you make that bigger the increase of the main excess overload the XOL, excess limit to make that the potential the tail risk the manage better, so that's the my first question.

— MW Kim

See, on the risk management practice, what exactly are you wanting from us?

— Devesh Srivastava

I just want to understand that compared to the old that on the underwriting, do you have the more sophisticated on the writing to manage that tail risk which may happen in every 100 year or every 250 year, or you have the other own internal model to manage the risk then?

— MW Kim

The market discipline for July renewal continues to be there, despite some increase in appetite of the risk carriers, as also more attention by the cedants.

— Hitesh Joshi

But as I understand from your point, there is not a very significant impact of the forex loss or the old contracts in this 130%.

— Anirudh Agarwal

So it is the same thing essentially that entire world market, all risk carriers, whether it is retrocessionaires or whether it is reinsurers or insurers, I think every single player in the risk management market is alive to the challenge of climate change.

— Hitesh Joshi

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Q&A — 5 exchanges

Thank you for the opportunity. Sir, my first question on the growth. There is a significant drop in the crop insurance business. For example, last year, you did around INR2,700 crores of business in crop. And today, you did only INR650 crores in the second quarter. So it's more to give the timing difference of recognition of the premium or most part of the country has adopted a 80-110 rule and therefore crop business has not come to reinsurer. So I just wanted to understand why it led to that shortfall?

Devesh Srivastava

Sure. We are happy to ask our CFO to give this. This is, as we mentioned in the notes as well, largely due to an IRDAI circular in which there is a change in the way we have to estimate our premiums. And that is what led to this drop. So our CFO, Ms. Ranade will take you further on to this, where you can understand where it's coming from. Good morning, Sanketh. This is Jayashree Ranade. Actually, if you see in our notes number 10, we had mentioned that there is an overall -- we have modified our accrual policy, based on the IRDAI circular. This circular mandates that you can estimate only for

Thank you so much for this opportunity. So I have two questions. The first question is about the risk management. So I noticed that overall the underwriting looks not really at a good stage compared to the other global reinsurers, so I just want to understand about your risk management practice. So in this years renewal, did you make that bigger the increase of the main excess overload the XOL, excess limit to make that the potential the tail risk the manage better, so that's the my first question. And then the second question is about the overseas motor underwriting. So based on my understand

Devesh Srivastava

See, on the risk management practice, what exactly are you wanting from us? We were not very clear on that. Yes, sure. So I want to know that whether you increase the XOL, the excess overload of the point, in the case that the overall, in a big mega event you can make that your underwriting will not really have the big harmful. So that's my question. Okay, no, on that count our deductible has remained the same from the previous year. There is no change at the point at which we purchase retro insurance. So that has remained the same. Does that answer your question? Yes. In the case of the weath

Thanks for the opportunity. So I'll start off with the product-wise line. So in life, I can see that on the domestic side, the combined ratio has increased significantly from 82% last year to around 180% now. Just wanted to understand, what is driving this? And could this result in another cycle of hardening, when it comes to the reinsurance rate next year. That is question number one. Question two would be on the combined ratio outlook that you gave, that you expect combined ratio to improve at the company level from the next quarter onwards. Just wanted to understand what gives you the confi

Hitesh Joshi

Let me start with life. There is a definite reserve strengthening that is impacting the higher combined ratio and the higher ICR. But we expect that over the period of time it will get fairly muted. Coming to the second point. So this does not require any pricing action, I understand that, correctly? Yes. Coming to the catastrophe, I think the entire world is watching in terms of what is happening on the climate change side and it is getting more-and-more headlines in different parts of the world. So the broad consensus presently is that climate change is here to stay. It is much nearer than w

Thanks for the opportunity. My first question was on the international book again. So if you could share ex of the forex impact and the US book impact that you saw higher commission, what would the combined ratio have been in the foreign book?

Jayashree Ranade

Mr. Anirudh, if you see, in case of foreign book, our combined ratio is somewhere around 131%. Of which approximately, from the last year if you see, last year there was a profit -- exchange profit of INR350 crores. This year there is a loss of INR59 crores. Okay. So this is a major change. So if you reduce INR59 crores, of course that will be a small impact. Apart from that, the claim ratios have increased a bit by 10%. And as explained by Hitesh sir, commissions for those contracts which have gone up, which has some impact. So these are the reasons for foreign portfolios like increase in the

Thanks everyone again for your time and we are on a very set about path where we had made our decisions and we are just adhering by them moving forward on a well thought of way forward and that is what is getting us the results. And this trend is going to continue because as we had earlier also mentioned that it is the trend that you have to set in motion and then it takes time for it to actually translate into numbers. So whatever we did four quarters, five quarters, six quarters, seven quarters, eight quarters ago is now getting into action and those numbers are showing and we hope to contin

Management

Speaking time

Sanketh Godha

Hitesh Joshi

Devesh Srivastava

Anirudh Agarwal

Jayashree Ranade

Moderator

MW Kim

Radhika Ravishekar

Supratim Datta

Sateesh Bhat

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Opening remarks

Binay Sarda

Thanks, Ryan. Good afternoon to all the participants on the call, and thanks for joining this Q1 FY '24 Earnings Call for General Insurance Corporation of India. Please note that we have mailed out the press release to everyone, and you can also see the results on our website as well as it has been uploaded on the stock exchange. In case we have not received the same, please write to us, and we'll be happy to send it over. 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 due in conjunction with our business that could cause digital performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. To take us through the results of this quarter and answer your questions, we have with us the management of GIC represented by Mr. Devesh Srivastava, Chairman and Managing Director and other top

Devesh Srivastava

Thank you, Mr. Sarda. Good afternoon, everyone. I'm pleased to announce the financial performance for the quarter ended June 30, 2023. Over the past few years, our teams have diligently worked to refine our underwriting practices, and we are constantly focused on improving our combined ratio on the back of our unwavering commitment to enhancing profitability and posting sustained growth. We believe that the increase in combined ratio during the quarter is temporary, and we are confident of much lower levels in the coming quarters, led by a relentless pursuit of operational excellence, strategic initiatives and prudent risk management practices. While strategically managing risk and maintaining a balanced portfolio, we continue to position ourselves for long-term success. Let me now take you through some of the key highlights of the financial performance. The gross premium income of the company was INR8,917.71 crores for Q1 FY24, as compared to INR11,021.83 crores for Q1 FY23. The inves

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