Q1 2027 Cholamandalam Financial Holdings Ltd Earnings Call

August 14, 2026

Speaker #1: There will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. With that, I hand over the call to Mr. Rishi Junjunwala from IIFL Capital.

Operator: Opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. With that, I hand over the call to Mr. Rishi Jhunjhunwala from IIFL Capital Services. Thank you, and over to you.

Speaker #1: Thank you, and over to you.

Speaker #2: Thank you, Swapnil. Good afternoon, everyone. Welcome to the Q1 FY27 earnings call of Cholamandalam Financial Holdings Limited. From the management side, we have Mr. Sridharan Rangarajan, Non-Executive Director, Cholamandalam Financial Holdings.

Rishi Jhunjhunwala: Thank you, Swapnil. Good afternoon, everyone. Welcome to Q1 FY27 earnings call of Cholamandalam Financial Holdings Limited. From the management side, we have Mr. Sridharan Rangarajan, Non-Executive Director, Cholamandalam Financial Holdings; Mr. Shyam Shankar, Manager and Chief Financial Officer, Cholamandalam Financial Holdings; Mr. Rajive Kumaraswami, Managing Director, Cholamandalam MS General Insurance; and Mr. Santosh Kumar Pandey, Chief Financial Officer, Cholamandalam MS General Insurance. I will hand over the call to management for their opening remarks, post which we can open the floor for Q&A. Over to you, Mr. Rangarajan. Thank you.

Speaker #2: Mr. Shyamshankar, Manager and Chief Financial Officer, Cholamandalam Financial Holdings; Mr. Rajiv Kumaraswamy, Managing Director, Cholamandalam MS General Insurance; and Mr. Santosh Pande, Chief Financial Officer, Cholamandalam MS General Insurance.

Speaker #2: I'll now hand over the call to management for their opening remarks, after which we can open the floor for Q&A. Over to you, Mr. Rangarajan.

Speaker #2: Thank you.

Speaker #3: Yes, right. Thank you. Good afternoon, and welcome to all of you for the Q1 earnings call. You know that there are two major investments: NBFC and insurance. NBFC is well covered through their Chola Financial call, and you also have the representation uploaded.

Sridharan Rangarajan: Thank you. Good afternoon and welcome you all for the Q1 earnings call. You know that there are two major investment, NBFC and insurance, and NBFC is well covered through the Cholamandalam Financial call, and you also have the presentation uploaded. So we have with us Rajive Kumaraswami, MD, as well as Santosh Kumar Pandey, the CFO for insurance business. This call will predominantly focus on insurance, and I would request Rajiv to make the opening remark, and we will open up for Q&A. Thank you.

Speaker #3: So we have with us Rajiv Kumaraswamy, MD, as well as Santosh Pande, the CFO for the insurance business. This call will predominantly focus on insurance, and I would request Rajiv to make the opening remarks. Then we'll open up for Q&A.

Speaker #3: Thank you.

Speaker #2: Thank you, sir. Good afternoon, everyone, and thank you for joining our earnings conference call for the quarter ended June 30. Assuming charge on 1 June, I take this opportunity to say that I am looking forward to engaging with you as we progress during the year over the next few quarters.

Rajive Kumaraswami: Thank you, sir. Good afternoon, everyone, and thank you for joining our earnings conference call for the quarter ending 30 June 2026. This being my first call after assuming charge on 1 June, I take this opportunity that I am looking forward to engaging with you as we progress during the year over the next few quarters. I also take this opportunity to wish all of you a very warm Independence Day coming celebration. May this occasion inspire us to continue to have pride and unity and a shared commitment to India's continued progress. And we, as part of the insurance sector, provide the requisite protection and risk management to the corporate sector as well as the whole of India. I will begin with an overview with the industry environment, followed by our performance highlights for the quarter.

Speaker #2: Also, I take this opportunity to wish all of you a very warm Independence Day for the coming celebration. May this occasion inspire us to continue to have pride and unity in a shared commitment to India's continued progress, and we, as part of the insurance sector, provide the requisite protection and risk management to the corporate sector as well as the whole of India.

Speaker #2: I will begin with an overview of the industry environment, followed by our performance highlights for the quarter. The general insurance industry recorded a growth of approximately 8.3% in Q1, as compared to 8.9% in the corresponding quarter last year.

Rajive Kumaraswami: The general insurance industry recorded a growth of approximately 8.3% in Q1 as compared to 8.9% in the corresponding quarter last year. The growth continued to be driven by Motor and Health, while commercial lines, especially Fire, remain under pressure due to the intense pricing competition, resulting in a significant industry-wide decline on growth. The operating environment continues to be shaped by evolving regulatory developments and the competitive intensity across product segments arising from claims inflation in both Motor and Health remain to be challenging. Against this backdrop, Chola MS reported a GDPI growth of premium income of INR 1,860 crores, registering a growth of 2.6% over Q1 last year. The GWP, on the other hand, grew by about 6.7% at an absolute number of INR 2,130 crores.

Speaker #2: The growth continued to be driven by motor and health, while commercial lines, especially, saw intense pricing competition, resulting in a significant industry-wide decline in growth.

Speaker #2: The operating environment continues to be shaped by evolving regulatory developments, and the competitive intensity across product segments arising from claims inflation in both motor and health remained challenging.

Speaker #2: Against this backdrop, Chola MS reported a GDPI growth of premium income of ₹1,860 crores, registering a growth of 2.6% over Q1 last year. The GWP, on the other hand, grew by about 6.7% to an absolute number of ₹2,130 crores. While this growth has not been in line with expectations.

Rajive Kumaraswami: While this growth has not been in line with expectations, the performance has been also impacted by lower volumes in commercial business and in Motor and a highly competitive market environment in Fire and the Health portfolio due to pricing issues and the overall combined ratio for the group Health business. The Motor segment, while it saw good tailwinds since September 2025, helps us also maintain Motor being our largest line of business. Our Motor portfolio grew by about 5.7% in the quarter. This growth was led by the Commercial Vehicle segment, and we continue to remain cautious and disciplined towards other segments where profitability remains under pressure. We continue to take corrective portfolio steps, targeted pricing interventions, enhanced NCB sourcing, and tighter underwriting controls. We are also continuing to take corrective actions on the claims management.

Speaker #2: The performance has also been impacted by lower volumes in the commercial business and in motor, and a highly competitive market environment in fire and the health portfolio due to pricing issues and the overall combined ratio for the group health business.

Speaker #2: The motor segment, while it saw good tailwinds in September 2025, helps us also maintain motor being our largest line of business, and our motor portfolio grew by about 5.7% in the quarter.

Speaker #2: This growth was led by the commercial vehicle segment, and we continue to remain cautious and disciplined towards other segments where profitability remains under pressure.

Speaker #2: We continue to take corrective portfolio steps, targeted pricing interventions, enhanced NCV sourcing, and tighter underwriting controls, and we are also continuing to take corrective actions on the claims management.

Speaker #2: These positive impacts and the measures of these impacts are likely to emerge over the coming quarters. In terms of our mix, the private car portfolio is 48% of our business, the two-wheeler book is about 9.5%, and the commercial vehicle segment is at about 42.5% of our portfolio.

Rajive Kumaraswami: The measures of these impacts should likely to emerge over the coming quarters. In terms of our mix, the Private Car portfolio is 48% of our business. The Two-Wheeler book is about 9.5%, and the Commercial Vehicle segment is at about 42.5% of our portfolio. In the Commercial Lines segment, on the back of robust reinsurance capacities that we had sourced at the start of the fiscal. Despite a sharp competitive market and industry-wide pressure, we performed relatively better than the market, with the growth rate being driven by Marine Engineering and Liability. The Commercial segment, while it reported a decline of 8.6% in Q1, primarily due to the pricing pressure in Fire. The April renewal cycle and the aggressive market pricing, which has continued, has resulted in rate reductions.

Speaker #2: In the commercial lines segment, on the back of robust reinsurance capacities that we had sourced at the start of the fiscal, despite a sharp competitive market and industry-wide pressure, we performed relatively better than the market, with the growth rate being driven by marine, engineering, and liability.

Speaker #2: The commercial segment, while it reported a decline of 8.6% in Q1—primarily due to pricing pressure in fire, the April renewal cycle, and aggressive market pricing, which has continued—has resulted in rate reductions.

Speaker #2: Consequently, the fire line of business recorded a degrowth of about 28% in Q1. For the industry, as against this backdrop of 28% degrowth, our degrowth was limited to 15.5%.

Rajive Kumaraswami: Consequently, the Fire line of business recorded a degrowth of about 28% in Q1 for the industry. As against this backdrop of 28% degrowth, our degrowth was limited to 15.5%, outperforming the industry decline in the Fire segment. Although the competitive intensity remained high during the quarter, there are signs of moderation emerging towards the end of the period. With the Nat Cat events that have hit the industry in the month of June, we are hoping that there would be a little more discipline on pricing as far as the property lines of business in the coming quarters are concerned. Health continued to remain the fastest-growing segment within the general insurance industry, contributing to almost 47% of the industry premiums. The growth is driven by increasing awareness on health and protection needs, expanding distribution, and ongoing product innovation across the sector.

Speaker #2: Outperforming the industry decline in the fire segment, although the competitive intensity remained high during the quarter, there are signs of moderation emerging towards the end of the period.

Speaker #2: We hope that, with the NatCat events that have hit the industry in the month of June, there will be a little more discipline on pricing as far as the property lines of business in the coming quarters are concerned.

Speaker #2: Health continued to remain the fastest-growing segment in the general insurance industry, contributing to almost 47% of the industry premiums. The growth is driven by increasing awareness of health and protection needs, expanding distribution, and ongoing product innovation across the sector.

Speaker #2: Within our health portfolio, growth remained moderate as we continue to prioritize the portfolio quality and profitability over volume expansion. To address the current challenges and strengthen business performance, we've initiated several corrective measures, including product redesign, pricing revisions across key accounts, and migration of select group portfolios into retail platforms and also looked at enhancing our presence in the SME segment, where the intensity of pricing is not as elevated as the large groups.

Rajive Kumaraswami: Within our health portfolio, growth remained moderate as we continue to prioritize the portfolio quality and profitability over volume expansion. To address the current challenges and strengthen business performance, we've initiated several corrective measures, including product redesign, pricing revisions across key accounts, migration of select group portfolios into retail platforms, and also looked at enhancing our presence in the SME segment, where the intensity of pricing is not as elevated as the large groups. These initiatives are aimed mainly at improving portfolio quality and long-term profitability, and we would need to do significant work to build a sustainable, profitable, and health portfolio over the medium to long term while maintaining the underwriting discipline. 99% of our claims on the health side are paid within 30 days, with an NPS of 73 demonstrating strong satisfaction levels amongst our customers.

Speaker #2: These initiatives are aimed mainly at improving portfolio quality and long-term profitability, and we would need to do significant work to build a sustainable, profitable, and healthy portfolio over the medium to long term.

Speaker #2: While maintaining underwriting discipline, 99% of our claims on the health side are paid within 30 days, with an NPS of 73, demonstrating strong satisfaction levels among our customers.

Speaker #2: The overall combined ratio for the industry on an overall basis deteriorated to about 117.8 for FY26, as against 112.6 for FY25. Chola MS's combined ratio should be at about 115.2 for financial year 2026, as against 110 for FY25.

Rajive Kumaraswami: The overall combined ratio for the industry on an overall basis deteriorated to about 117.8% for FY26, as against 112.6% for FY25. Chola MS's combined ratio stood at about 115.2% for financial year 2026, as against 110% for FY25. The industry continues to operate in an intensive competitive environment, placing significant pressure on underwriting performance. The underwriting ratio combined ratio for the motor segment has deteriorated to 128%, as compared to 123% in FY25. On the claims front, Motor OD continues to be an area of focus for the management. We continue to strengthen the underwriting and claims control, improve fraud detection capabilities, and enhance settlement efficiencies.

Speaker #2: The industry continues to operate in an intensely competitive environment, placing significant pressure on underwriting performance. The underwriting combined ratio for the motor segment has deteriorated to 128% compared to 123% in FY25.

Speaker #2: On the claims front, Motor OD continues to be an area of focus for the management. We continue to strengthen underwriting and claims control, improve fraud detection capabilities, and enhance settlement efficiencies.

Speaker #2: In Motor TP, we maintain our claims management approach and focus on compromise settlements, improving exonerations, and continuing to undertake reserve strengthening actions across all cohorts of the TP portfolio.

Rajive Kumaraswami: In Motor TP, we maintain our claims management approach and try and focus on compromise settlements, improving exonerations, and continue to undertake reserve strengthening actions across all cohorts of the TP portfolio. Within our commercial line segment, we maintained a discipline and calibrated approach. While we've reduced the degrowth as compared to the industry, what I can give comfort is this is through calibrated risk participation across larger industrial segments. So it is more that we've enhanced the spread rather than writing individual risks, so that when the market turns, we would have the ability to participate in the pricing increase that happens over a period of time. On the commercial lines, we are also focusing our presence in the SME sector, which is leveraging our entire distribution line.

Speaker #2: Within our commercial line segment, we maintained a disciplined and calibrated approach. While we've reduced the degrowth as compared to the industry, what I can give comfort on is that this is through calibrated risk participation across larger industrial segments.

Speaker #2: So, it is more that we've enhanced the spread, rather than writing individual risks, so that when the market turns, we would have the ability to participate in the pricing increase that happens over a period of time.

Speaker #2: On the commercial lines, we are also focusing our presence in the SME sector, which is leveraging our entire distribution network. For the quarter, our net earned premium stood at about ₹1,671 crore, while the claims ratio has been elevated at about 85.6%, as compared to 81.3% in the corresponding quarter last year.

Rajive Kumaraswami: For the quarter, our net earned premiums stood at about INR 1,671 crores, while the claims ratio has been elevated at about 85.6%, as compared to 81.3% in the corresponding quarter last year. The combined ratio is at 120.4%, reflecting the impact of the higher motor reserving, elevated Motor OD experience, as well as a large fire loss that we were part of during the quarter. The operating profit was INR 71 crores, and the profit before tax stood at INR 116 crores for the quarter. The investment portfolios remains at a very robust level of INR 19,000 crores, generating an investment income of approximately INR 380 crores during the quarter.

Speaker #2: The combined ratio is at 120.4, reflecting the impact of the higher motor reserving, elevated motor OD experience, as well as a large fire loss that we were part of during the quarter.

Speaker #2: The operating profit was ₹71 crores, and the profit before tax stood at ₹116 crores for the quarter. The investment portfolio remains at a very robust level of ₹19,000 crores, generating an investment income of approximately ₹380 crores during the quarter.

Speaker #2: We have done some active portfolio management and portfolio rejig in the quarter, and we've improved the portfolio yield to 7.31%, while continuing to maintain a prudent investment strategy with strong liquidity positions.

Rajive Kumaraswami: We have done some active portfolio management and portfolio reject in the quarter. We have improved the portfolio yield to 7.31%, while continuing to maintain a prudent investment strategy with strong liquidity positions. The solvency is at a robust level of 1.93 times, well above the regulatory requirement, reflecting the underlying strength of the balance sheet of the company. From an overall forward-looking perspective, there are several transformation initiatives. We have completed the BaNCS rollout for our motor issuance platform, and we are working on now making some new changes on the workflow on the motor claims, which should help improve efficiency. We have also strengthened customer service initiatives, and we are working towards our readiness towards the Indian Accounting Standards, RBC, and the DPDP implementation.

Speaker #2: The solvency is at a robust level of 1.93 times, well above the regulatory requirement, reflecting the underlying strength of the balance sheet of the company.

Speaker #2: From an overall, forward-looking perspective, there are several transformation initiatives. We've completed the banks' rollout for our motor issuance platform, and we are now working on making some new changes to the workflow on motor claims, which should help improve efficiency.

Speaker #2: We've also strengthened customer service initiatives, and we are working towards our readiness towards the NDS, RBC, and the DPDP implementation. In the near term environment, while the market remains challenging, particularly on the Motor OD health and the commercial pricing, we will remain focused on profitable growth, disciplined underwriting, and efficient claims management, with the technology being the backbone in what we do.

Rajive Kumaraswami: In the near-term environment, while the market remains challenging, particularly on the Motor OD health and the commercial pricing, we will remain focused on profitable growth, disciplined underwriting, and the efficient claims management, with the technology being the backbone in what we do. With that, I conclude my opening remarks and invite questions. Thank you.

Speaker #2: With that, I conclude my opening remarks and invite questions. Thank you.

Speaker #1: Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the 'Raise Hand' icon from the participants tab on your screen.

Operator: Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may click on the Raise Hand icon from the Participants tab on your screen. We request participants to restrict to 2 questions each and then return to the queue for more questions. To rejoin the queue, you may click on the Raise Hand icon again.

Speaker #1: We request participants to restrict themselves to two questions each, and then return to the queue for more questions. To rejoin the queue, you may click on the 'raise hand' icon again.

Speaker #1: We'll wait for a few moments until the question queue assembles. Requesting participants to click on the 'raise hand' icon. If you wish to ask a question, requesting participants to please stay connected.

Operator: We will wait for a few moments until the question queue assembles. Requesting participants to click on the Raise Hand icon if you wish to ask a question. Requesting participants to please be connected. We will take the first question now. We have Sanket Gora of Avendus Spark. Sanket, please go ahead.

Speaker #1: We'll take the first question now. We have Sankit Goda of Avendus Spark. Sankit, please go ahead.

Sanket Gora: Can you hear me?

Sanketh Godha: Can you hear me?

Speaker #3: I can you hear me?

Speaker #1: Yes.

Operator: Yes.

Speaker #3: Yeah, thanks. Thanks for the opportunity. So, Rajiv, the first question is on the Motor TP claims. Just want to understand, given some companies have provided for the Supreme Court judgment with respect to housewives, have we made any additional provision in the claims ratio? The number we have reported—what we see—is more business as usual?

Sanket Gora: Yeah. Thanks for the opportunity. Rajiv, the first question is on the Motor TP claims. Just want to understand, given some companies have provided for that Supreme Court judgment with respect to housewives, have we made any additional provision in the claims ratio, what we have reported as 84.4 or this number what we see is more business as usual? That is my first question. Maybe related to that is on Motor OD. I know that you mentioned in the call that you are taking corrective measures, but still if you see the Motor OD loss ratios, if I look at FY25, you were broadly in the range of 71, 72, 73 kind of a number. It deteriorated to 80 plus in 2026. Now it has further deteriorated in Q1 FY27. I know that you slowed down your two-wheeler business.

Sanketh Godha: Yeah. Thanks for the opportunity. Rajiv, the first question is on the Motor TP claims. Just want to understand, given some companies have provided for that Supreme Court judgment with respect to housewives, have we made any additional provision in the claims ratio, what we have reported as 84.4 or this number what we see is more business as usual? That is my first question. Maybe related to that is on Motor OD. I know that you mentioned in the call that you are taking corrective measures, but still if you see the Motor OD loss ratios, if I look at FY25, you were broadly in the range of 71, 72, 73 kind of a number. It deteriorated to 80 plus in 2026. Now it has further deteriorated in Q1 FY27. I know that you slowed down your two-wheeler business.

Speaker #3: So that's my first question. And maybe related to that is on Motor OD. I know that you mentioned in the call that you are taking corrective measures, but still, if you see the Motor OD loss ratios—if I look at FY25, you were broadly in the range of 71, 72, 72, 73 kind of a number.

Speaker #3: It deteriorated to 80-plus in '26. Now, it has further deteriorated in Q1 FY27. So, I know that you slowed down your two-wheeler business. Maybe you are now calibrated in cars too.

Sanket Gora: Maybe you are now calibrated in cars too. Any visibility you see this number to improve going ahead or is it fair to say that given we will move to four years and six years in cars and two-wheelers, people might further increase the discounting in OD and this number will not see any respite in foreseeable future. That is on the motor side. After you answer, maybe I will ask questions on other segments.

Sanketh Godha: Maybe you are now calibrated in cars too. Any visibility you see this number to improve going ahead or is it fair to say that given we will move to four years and six years in cars and two-wheelers, people might further increase the discounting in OD and this number will not see any respite in foreseeable future. That is on the motor side. After you answer, maybe I will ask questions on other segments.

Speaker #3: So, do you see any visibility for this number to improve going ahead, or is it fair to say that, given we will move to four years and six years in cars and two-wheelers, people might further increase the discounting in OD, and this number will not see any respite in the foreseeable future?

Speaker #3: So that's on the motor side. After you answer, maybe I'll ask questions on other segments.

Rajive Kumaraswami: Yeah. Thanks, Sanket. Short answer, we have not taken any provision in the quarter for the Supreme Court judgment. We are monitoring, given the matter is sub judice, and as you would be aware that there is a review petition which has been filed. We are in the process of doing our analysis, and we would wait for the outcome of the judicial review process, to which the GI Council is also a part of, and then we will take a decision on how to deal with this, depending on what the outcome of the review process goes. On the OD part, I would like to say that, no, I do not think we would accept the current level of the OD LR. There are corrective measures that we are taking both in terms of sourcing.

Speaker #2: Thanks. Thanks, Sankit. So, short answer—we've not taken any provision in the quarter for the Supreme Court judgment. We are monitoring, given the matter is sub judice, and as you would be aware, there is a review petition which has been filed.

Speaker #2: We are in the process of doing our analysis, and we would wait for the outcome of the judicial review process, of which the GI Council is also a part, and then we will take a decision on how to deal with this depending on what the outcome of the review process is.

Speaker #2: On the OD part, I would like to say that no, I don't think we would accept the current level of the ODLR. There are corrective measures that we are taking, both in terms of sourcing.

Speaker #2: Sourcing in terms of, one, the mix of new versus the renewal/rollover. And even in the rollover/renewal, the focus is on the NCB part of the portfolio.

Rajive Kumaraswami: Sourcing in terms of, one, the mix of new versus the renewal/rollover, and even in the rollover/renewal, the focus on the NCB part of the portfolio. That correction would happen from a sourcing standpoint. The other one is that we are also taking some internal interventions to see how we can manage the ACS. While this always remains a challenge because there is the claims inflation that we need to look at managing. But looking at a more closer analysis on the repair versus replacement and how we can build in efficiencies on that is something that we are working on. This is a journey.

Speaker #2: So, that correction would happen from a sourcing standpoint. And the other point is that we are also taking some internal interventions to see how we can manage the ACS.

Speaker #2: While this always remains a challenge because there is the claims inflation that we need to look at managing, but looking at a more closer analysis on the repair versus replacement and how we can build an efficiencies on that is something that we are working on.

Speaker #2: This is a journey. It will take a couple of quarters for us to turn the tide, but we are not accepting that or stating that this level of 80 or 86 is something that we will sustain.

Rajive Kumaraswami: It will take a couple of quarters for us to turn the tide, but we are not accepting that or stating that this level of 80 or 86 is something that we will sustain, irrespective of the fact that the four-year, four plus four comes into play.

Speaker #2: Irrespective of the fact that the four-year, four-plus-four comes into play.

Sanket Gora: Understood, Rajiv. Realistically, this 86, do you see going back to at least 80 kind of a level or meaningfully that the numbers what company used to report in 2025, around 70 plus. Any journey or any time path you have in your mind by when we can achieve that?

Sanketh Godha: Understood, Rajiv. Realistically, this 86, do you see going back to at least 80 kind of a level or meaningfully that the numbers what company used to report in 2025, around 70 plus. Any journey or any time path you have in your mind by when we can achieve that?

Speaker #3: Understood, Rajiv. So, realistically, this 86—do you see it going back to at least the 80 kind of level, or meaningfully to the numbers the company used to report in '25, around 70-plus? Is there any journey or any time path you have in your mind by when we can achieve that?

Speaker #2: So, I mean, the way we look at it is, if the leading private sector companies with a similar portfolio are able to achieve it, there is no reason why we should not be able to.

Rajive Kumaraswami: The way we look at it is, if the leading private sector companies with a portfolio similar are able to achieve it, there is no reason why we should not be able to. Maybe a short answer, we would want to get to a number which starts with seven to begin with, maybe the late 70s, and then we will see how we progress to the mid 70s.

Speaker #2: So maybe a short answer: we would want to get to a number which starts with seven to begin with, maybe the late 70s, and then we will see how we progress to the mid-70s.

Speaker #3: Understood. Understood.

Sanket Gora: Understood.

Sanketh Godha: Understood.

Santosh Kumar Pandey: Sanket, just adding to the Rajiv point. Internally, we are working upon improving the mix of the new motor versus the old motor, which is also helping in terms of the average premium realization. Eventually, that will also help in terms of reducing the overall Motor OD loss ratio. We are quite confident that it will be sub 80 in a given period of time. Yes, overall industry level, the Motor OD LR is on the higher front. If you compare quarter to quarter for most of the players, you are seeing increase in terms of the Motor OD LR. For us also, it is impacting, but yes, we will be achieving a number sub 80%.

Santosh Pandey: Sanket, just adding to the Rajiv point. Internally, we are working upon improving the mix of the new motor versus the old motor, which is also helping in terms of the average premium realization. Eventually, that will also help in terms of reducing the overall Motor OD loss ratio. We are quite confident that it will be sub 80 in a given period of time. Yes, overall industry level, the Motor OD LR is on the higher front. If you compare quarter to quarter for most of the players, you are seeing increase in terms of the Motor OD LR. For us also, it is impacting, but yes, we will be achieving a number sub 80%.

Speaker #2: Sankit, just adding to Rajiv's point, internally we have been working on improving the mix of new motor versus old metal, which is also helping in terms of the average premium realization.

Speaker #2: Eventually, that will also help in terms of reducing the overall motor OD loss ratio. And we are quite confident that we'll be sub-80 in a given period of time.

Speaker #2: So yes, at the overall industry level, the motor ODLR is on the higher side. If you compare quarter to quarter for most of the players, you'll see an increase in terms of the motor ODLR.

Speaker #2: For us also, it is impacting, but yes, we'll be achieving a number below 80%.

Speaker #3: And for a business line, Sankit, which is 70% of our book, we cannot let this continue. So, yeah, exactly. Actually, you are more exposed.

Rajive Kumaraswami: For a business line, Sanket, which is 70% of our book, we cannot let this continue.

Sanket Gora: Yeah. Actually, you are more exposed, so that is the reason I was more keen to get an answer to that point.

Sanketh Godha: Yeah. Actually, you are more exposed, so that is the reason I was more keen to get an answer to that point.

Speaker #3: So that's the reason I was more keen to get an answer to that.

Rajive Kumaraswami: Completely conscious about it, and we are working on it.

Speaker #2: We are completely conscious of it, and we are working on it.

Speaker #3: Understood. Understood. And the second question was on your health business, especially—maybe you can speak about both group health and vehicle health. We understand that in group health, there could be some pricing pressure.

Sanket Gora: Understood. The second question was on your health, especially maybe you can say both group health and retail health. We understand that group health, there could be a pricing pressure, and you might have chosen not to participate. But the entire industry is showing a very strong or robust growth in retail health. But we have chosen a completely opposite path by reporting a decline. So anything we need to understand or you are revisiting the entire strategy, and that is the reason why retail health is reporting a decline compared to why the industry is reporting very robust growth there?

Sanketh Godha: Understood. The second question was on your health, especially maybe you can say both group health and retail health. We understand that group health, there could be a pricing pressure, and you might have chosen not to participate. But the entire industry is showing a very strong or robust growth in retail health. But we have chosen a completely opposite path by reporting a decline. So anything we need to understand or you are revisiting the entire strategy, and that is the reason why retail health is reporting a decline compared to why the industry is reporting very robust growth there?

Speaker #3: And you might have chosen not to participate. But the entire industry is showing very strong and robust growth in retail health. However, we have chosen a completely opposite path by reporting a decline.

Speaker #3: So, is there anything we need to understand, or are you revisiting the entire strategy? Is that the reason why retail health is reporting a decline, compared to the industry, which is reporting very robust growth there?

Speaker #2: So I think you would have seen that there are these slides which have been put up new, so that we are putting it out there in the open, which are the areas which we would need to work on.

Rajive Kumaraswami: I think you would have seen that there are these slides which have been put up new so that we are putting it out there in the open, which are the areas which we would need to work on. Health would be a kind of a grounds-up build. I will probably address the group health part before one gets into the retail health side. On the group health, I can say that there are three large elements of the group health. One is cross-subsidy group health, which typically gets written with the commercial risk, which is the fire engineering.

Speaker #2: Health would be a kind of a ground-up build. I'll probably address the group health part before one gets into the retail health side.

Speaker #2: On the group health, I can say that there are three large elements of the group health. One is cross-subsidy group health, which typically gets written with the commercial risk, which is the fire and engineering.

Sanket Gora: Right.

Sanketh Godha: Right.

Speaker #2: Now, there is no cross-subsidy left. So, there is a degrowth coming because the whole account, if it's not making any sense, there is no point in writing the cross-subsidy health.

Rajive Kumaraswami: Now, there is no cross-subsidy left. So, there is a degrowth coming because the whole account, if it is not making any sense, there is no point writing the cross-subsidy health.

Speaker #2: When it comes to standalone group health, the strategy that we've started adopting is that any standalone group health needs to make sense on its own merit. We are trying to make sure that we drive group personal accident with every group health policy that we underwrite.

Rajive Kumaraswami: When it comes to the standalone group health, the strategy that we have started adopting is that any standalone group health needs to make sense on its own merit, and we are trying to make sure that we drive group personal accident with every group health policy that we underwrite. Hence, there is a shrinkage. There is a slow growth because the focus is on all those single mandate, multinational clients where they seek value rather than price, as well as the SME book. There is enough and more business, and we have seen some traction from channel partners who want to partner with us, and we have got a very strong hospital network of. While the book is small, given the fact that we do a lot of retail health with the public sector banks and hospital network is already in excess of 13,000. So the backbone is in place.

Speaker #2: And hence, there is shrinkage and slow growth because the focus is on all those single-mandate multinational clients, where they seek value rather than price, as well as the SME book.

Speaker #2: And there is enough and more business, and we've seen some traction from channel partners who want to partner with us. And we've got a very strong hospital network. While the book is small, given the fact that we do a lot of retail health with the public sector banks, our hospital network is already in excess of 13,000.

Speaker #2: So the backbone is in place. We need to get the distribution engine to fire. The third part of the group health is the master policy route, where you do a critical illness attachment or a GPA attachment.

Rajive Kumaraswami: We need to get the distribution engine to fire. The third part of the group health is the master policy route where you do a critical illness attachment or a GPA attachment that stays as a robust team and we would want to continue to grow on it. On the retail health side, we will need to, Sanket, honestly invest in creating a Sahi within the company. As you know, it is a bit of a slow build. But we are looking at seeing how we can start doing more retail health with our bank assurance partners, as well as some part of the retail or aggregated broking partners. The degrowth that you see is part of the pricing correction that we've done on the PSU group platform book, which was a little bit of a concern from a profitability standpoint.

Speaker #2: That stays as a robust team, and we would want to continue to grow on it. On the retail health side, we will need to, Sankit, honestly invest in creating a Sahi within the company.

Speaker #2: As you know, it is a bit of a slow build, but we are looking at seeing how we can start doing more retail health with our bancassurance partners, as well as some part of the retail or aggregated broking partners.

Speaker #2: The degrowth that you see is part of the pricing correction that we've done on the PSU group platform book, which was a little bit of a concern from a profitability standpoint. While the bank per se gives us overall profitable business, we are trying to see how we can address parts of the portfolio where there is loss leakage arrest that we need to do.

Rajive Kumaraswami: While the bank per se gives us overall profitable business, but we are trying to see how we can address parts of the portfolio where there is loss leakage risk that we need to do. So the degrowth is essentially reflective of the corrective action that we've taken on the PSU bank portfolio, migrating some part of that book from a group platform to a retail platform.

Speaker #2: So, the degrowth is essentially reflective of the corrective action that we've taken on the PSU bank portfolio, migrating some part of that book from a group platform to a retail platform.

Speaker #3: Understood, understood. And last one—maybe I'll come back in the queue again if time permits. In your initial remarks, you said that you got better reinsurance treaties in place and therefore your moderation in fire is relatively lower than the industry.

Sanket Gora: Understood. And last one, maybe I'll come back in the queue again if time permits. You in your initial remarks said that you got better reinsurance treaties in place, and therefore your moderation in fire is relatively lower than the industry. And naturally, you have done well in other commercial lines like marine engineering. So is it fair to say that given your understanding of this particular segment in the past too, this will remain a key focus area incrementally to drive the growth? And given your background, I just taking a liberty and asking the question that the reinsurance things will materially change compared to the past and that will support these lines to grow a little faster for you relatively?

Sanketh Godha: Understood. And last one, maybe I'll come back in the queue again if time permits. You in your initial remarks said that you got better reinsurance treaties in place, and therefore your moderation in fire is relatively lower than the industry. And naturally, you have done well in other commercial lines like marine engineering. So is it fair to say that given your understanding of this particular segment in the past too, this will remain a key focus area incrementally to drive the growth? And given your background, I just taking a liberty and asking the question that the reinsurance things will materially change compared to the past and that will support these lines to grow a little faster for you relatively?

Speaker #3: And naturally, you have done well in other commercial lines like marine engineering. So, is it fair to say that, given your understanding of this particular segment in the past too, this will remain a key focus area, incrementally, to drive the growth?

Speaker #3: And given your background, I'm just taking the liberty and asking if you think that the reinsurance things will materially change compared to the past, and if that will support these lines to grow a little faster for you, relatively.

Speaker #2: Absolutely. So let me actually hasten to add that the reinsurance capacities were put in place even before I took charge. So I'm just enjoying the benefit of the work that we, Suri, and the team had done.

Rajive Kumaraswami: Absolutely. So let me actually hasten to comment that the reinsurance capacities were put in place even before I took charge. So I'm just enjoying the benefit of the work that Suvi and the team had done. The capacities are, I can say, Sanket, comparable to the leading private sector players both on fire and engineering. The funnel is there, but obviously when you go in as a challenger in a market which is seeing very severe pricing competition, we are gaining traction because obviously both the shareholders have the reputation. There are people who want to do business with us. They did not see us much as a commercial player, but now we are getting traction. But just to give you comfort that we are not going in aggressively.

Speaker #2: The capacities are, I can say, Sankit, comparable to the leading private sector players both on fire and engineering. The funnel is there, but obviously when you go in as a challenger in a market which is seeing very, very severe pricing competition, we are gaining traction because, obviously, both the shareholders have the reputation. There are people who want to do business with us.

Speaker #2: They did not see us much as a commercial player, but now we are getting traction. But just to give you comfort that we are not going in aggressively—see, typically, on the commercial lines, writing large line sizes before you get the diversification can create an issue.

Rajive Kumaraswami: See, typically on the commercial lines business, writing large line sizes till you do not get the diversification can create an issue. What typically happens in this line of business is when you are going in as a challenger and you offer a 30% line, typically the broker or the client will give you 15%. So they are doing the line size management for you. A large part of the growth on the commercial business has come through increasing the funnel, getting better conversions.

Speaker #2: Now, what typically happens in this line of business is when you're going in as a challenger and you offer a 30% line, typically the broker or the client will give you 15%.

Speaker #2: So, they are doing the line size management for you. So, a large part of the growth in the commercial business has come through increasing the funnel and getting better conversions.

Speaker #2: But I'd also like to mention that there is a part of the commercial, especially the fire book, where we do enjoy an advantage, which is one: the home book, the home insurance book, where we have attachment, long-term home, with the banker, home loan portfolio.

Rajive Kumaraswami: But I would also like to mention that there is a part of the commercial, especially the fire book where we do enjoy an advantage, which is one, the home book, the home insurance book where we have attachment long-term home with the banca home loan portfolio, as well as a very large SME book, which goes with the public sector bank fire book, where the pricing competition is not there like the open market. So that is where we are able to balance, and hence one of the other reason why you see that the degrowth is not strong is there are elements which are not subject to this pricing pressure, and there are other parts where we are trying to gain more entry through sensible calibrated line participation. But yes, this will be an area of focus for us.

Speaker #2: As well as a very large SME book, which goes with the public sector bank fire book, where the pricing competition is not there like in the open market.

Speaker #2: So that is where we are able to balance, and hence, one of the other reasons why you see that the degrowth is not strong is that there are elements which are not subject to this pricing pressure.

Speaker #2: And there are other parts where we are trying to gain more entry through sensible, calibrated line participation. But yes, this will be an area of focus for us.

Speaker #2: Whether it's conventional, commercial, liability, credit, or cyber, these are areas which we will definitely want to focus on.

Rajive Kumaraswami: Whether it is conventional commercial, liability, credit, cyber, these are areas which we will definitely want to focus on.

Speaker #3: Understood. And lastly, Rajiv, sorry. You said one big loss in fire impacted the numbers. If you knock off that number, or if you can quantify the loss—if you knock off that number—how would your core have looked?

Sanket Gora: Understood. Lastly, Raju, sorry. You said one big loss in fire impacted the numbers. If you knock off that number or if you can quantify the loss, if you knock off that number, how your core would have looked relatively?

Sanketh Godha: Understood. Lastly, Raju, sorry. You said one big loss in fire impacted the numbers. If you knock off that number or if you can quantify the loss, if you knock off that number, how your core would have looked relatively?

Speaker #2: So that was about ₹40,12.4 crores on the net account.

Rajive Kumaraswami: That was about INR 12.4 crores on the net account.

Speaker #3: Understood. Yeah. Maybe I'll come back in the Q&A. Those were my questions.

Sanket Gora: Understood. Yes. Maybe I will come back in the Q. Those were my questions.

Sanketh Godha: Understood. Yes. Maybe I will come back in the Q. Those were my questions.

Speaker #1: Thank you so much, Sankit. I request participants to please click on the 'raise hand' icon if you wish to ask a question. We'll wait until the question queue assembles.

Operator: Thank you so much, Sanket. Requesting participants to please click on the Raise Hand icon if you wish to ask a question. We will wait until the question queue assembles. We will take one question now from Rishi Jhunjhunwala of IIFL. Rishi, please go ahead.

Speaker #1: We'll take one question now from Rishi Junjunwala of IIFL. Rishi, please go ahead.

Speaker #4: Yes, thank you. Sir, I just wanted to understand the increase in the loss ratios that we have seen in motor, especially on the TP side as well.

Rishi Jhunjhunwala: Yes. Thank you. Sir, just wanted to understand the increase in the loss ratios that we have seen in motor, especially on the TP side as well. Can you give some color in terms of how much would be driven by what we have written now, which is effectively new book versus a potential underprovisioning related reserve provision that might have happened as a result of that?

Speaker #4: Can you give some color in terms of how much would be driven by what we have written now—which is effectively new book—versus a potential under-provisioning-related reserve provision that might have happened as a result of that?

Speaker #2: See, the new book, basically, we typically reserve based on what we expect the ULR of the portfolio to be. And for the elevation that you see, it is typically the claims inflation that we would need to build in.

Rajive Kumaraswami: See, the new book, basically, we typically reserve basis what we expect the ULR of the portfolio to be. For the elevation that you see, it is typically the claims inflation that we would need to build in. It is not per se that we can say you are talking about reserve strengthening. Also, Rishi, since it is a tariff-based pricing is not increasing. Given the type of the court settlements are happening, obviously, basis the experience also, we keep on building this.

Speaker #2: So, it is not per se that we can say you’re talking about reserve strengthening.

Speaker #1: And also, Rishi says that it's a tariff-based pricing, pricing is not increasing. So, given the type of code settlements that are happening, obviously, this is an experience where we keep on building things.

Speaker #4: Understood. So, second question: there is a reduction in our two-wheeler segment and we have mentioned that we have probably done it intentionally. So, just wanted to understand the thought process around it.

Rishi Jhunjhunwala: Understood. Sir, second question is, there is reduction in our two-wheeler, and we have mentioned that we have probably done it intentionally. Just wanted to understand the thought process around it. I would have assumed that especially in TP, probably the two-wheeler TP could be the most profitable segment for the industry. I may be wrong, but would be great if you can give some color around that.

Speaker #4: I would have assumed that, especially in TP, probably the two-wheeler TP could be the most profitable segment for the industry. I may be wrong.

Speaker #4: But would it be great if you could give some color around that?

Speaker #2: So on two-wheeler, the problem is TP, it's not DOD. So typically the TP or the OD on a two-wheeler on new vehicles would operate between a 35 to 45 percent loss ratio. On an overall old plus new, maybe 50 to 60 percent LR.

Rajive Kumaraswami: Well, on two-wheeler, the problem is TP, it is not the OD. Typically, the OD on a two-wheeler on new vehicles would operate between a 35% to a 45% loss ratio on an overall old plus new, maybe 50% to 60% LR. OD is never the problem on two-wheeler. The issue is the TP, and there is a compounded problem that happens, which is the one by N. The segments or geographies which are profitable, the EOM pressure that that book creates, and the segments which are EOM positive give very terrible TP ULRs. Right now, as an organization, Cholamandalam does not have the headroom to enter the two-wheeler space where you have handsome payouts, and hence there is a deliberate strategy to kind of maintain presence and a large part of what you see, the 9.5% is effectively the previous year's waterfall, which is getting earned.

Speaker #2: So OD is never the problem on two-wheeler. The issue is the TP and then there is a compounded problem that happens, which is the one by N.

Speaker #2: So the segments or geographies which are profitable, the EOM pressure that that book creates, and the segments which are EOM positive give very terrible TP ULR.

Speaker #2: So right now, as an organization, Chola MS does not have the headroom to enter the two-wheeler space, where you have handsome payouts, and hence there's a deliberate strategy to kind of maintain presence. A large part of what you see in the 9.5% is effectively the previous year's waterfall, which is getting earned.

Speaker #2: So, incremental new business would be negligible.

Rajive Kumaraswami: Incremental new business would be negligible.

Speaker #4: Understood. One question is on this Supreme Court ruling. You mentioned that since the matter is sub judice, we haven't gone ahead with the provisioning.

Rishi Jhunjhunwala: Understood. One question is on this Supreme Court ruling. You mentioned that since the matter is sub judice, we haven't gone ahead with the provisioning. Just in terms of technicality, if there is a claim today with respect to a homemaker, would that be considered as per Supreme Court ruling or it will remain undecided till the time there is any kind of resolution around that writ petition or other aspects?

Speaker #4: Just in terms of technicality, if there is a claim today with respect to a homemaker, would that be considered as per the Supreme Court ruling, or will it remain undecided till the time there is any kind of resolution around that rate petition or other aspects?

Speaker #3: So, Rishi, what's happening today is, if you see, there are multiple court judgments that have come, which are after the Supreme Court judgment, and wherein it was clearly a part of the order that has been mentioned—every case has to be taken on its own merit.

Rajive Kumaraswami: Rishi, what's happening today, if you see, there are multiple court judgments have come, which is after the Supreme Court judgment, and wherein it was clearly part of the order is being mentioned, like every case has to be taken on its own merit. They have not followed the INR 30,000 criteria, which was defined by the Supreme Court last judgment. At this point of time, every case is being seen on its merit, and accordingly, even at the court level, the claims are getting settled, and the Supreme Court judgment is already. It's basically the view petition filed by the GI Council, and entire industry is awaiting a reward for that. At this point of time, even the courts are not following that Supreme Court order.

Speaker #3: And they have not followed the Rs. 30,000 criteria, which was defined by the Supreme Court's last judgment. So, at this point in time, every case is being seen on its merit and, accordingly, even at the court level, the claims are getting settled. The Supreme Court judgment is already—basically, a review petition has been filed by the GI Council.

Speaker #3: An entire industry is awaiting a reward for that. So, at this point in time, even the courts are not following that Supreme Court order.

Speaker #4: Understood. And theoretically, if we were to provide for this retrospectively, how would that impact our solvency? Right now, it's comfortable at 193, but I just wanted to understand, in case there is an adverse judgment around it, where potentially our solvency could end up being.

Rishi Jhunjhunwala: Understood. Theoretically, if we were to provide for this retrospectively, how does that impact our solvency? Right now it's comfortable at 193, but just wanted to understand in case there is an adverse judgment around it, where potentially our solvency could end up being.

Speaker #3: So, Rishi, we feel our reserves are prudently provided, and in reserves we always keep something for adverse deviation. Such kinds of judgments will be taken care of through, if at all it has to come.

Santosh Kumar Pandey: See, Rishi, we feel our reserves are prudently provided, and in reserve always we keep something for the adverse deviations, and such kind of judgment will be taken care through if at all it has to come through that provision.

Santosh Pandey: See, Rishi, we feel our reserves are prudently provided, and in reserve always we keep something for the adverse deviations, and such kind of judgment will be taken care through if at all it has to come through that provision.

Speaker #3: So that.

Speaker #2: So, we'll have to keep monitoring and watching what happens from the judicial process, because there could be the review petition, which makes it prospective. The prospective could be for accidents that happen after the judgment; the prospective could be for policies which are issued after the judgment.

Rajive Kumaraswami: No, we have to keep monitoring and watching what happens from the judicial process, because there could be the review petition, which makes it prospective. The prospective could be accidents that happen after the judgment. The prospective could be policies which are issued after the judgment. I guess the fact that the whole General Insurance Council has got impeded as part of the review petition, it is an issue which merits serious attention at an industry level.

Speaker #2: So, I guess the fact that the whole council has got impeded as part of the review petition is an issue which merits serious attention at an industry level.

Speaker #4: Understood. And one last question, sir. While we may potentially start doing IFRS from next year, I just wanted to understand if we have been trying to prepare statements around that.

Rishi Jhunjhunwala: Understood. And one last question, sir. While we may potentially start doing IFRS from next year, just wanted to understand, if we have been trying to prepare statements around that, where would our profitability or ROE tentatively look like in terms of. Given that we have a significant proportion of Motor in our portfolio, do you believe IFRS profitability could actually be substantially higher or that would not make a material difference given that acquisition cost in case of large part of Motor anyways gets deferred?

Speaker #4: I mean, where would our profitability or ROE tentatively look like in terms of—given that we have a significant proportion of motor in our portfolio, do you believe IFRS profitability could actually be substantially higher, or would that not make a material difference, given that acquisition cost in the case of a large part of motor anyways gets deferred?

Speaker #3: So Rishi, you know like most of the GI companies have basically got one year for business and IID has approved that for business request.

Santosh Kumar Pandey: Rishi, most of the GI companies have got basically one year forbearance, and IRDAI has approved that forbearance request. We are also implementing from 1 April 2027. So at this point of time we are evaluating, we are doing the assessment. Even we have not submitted the first cut of the financials, as a special purpose financial, which we have to submit to the IRDAI. So we are in the process. So at this point of time, numbers will not be there with us, like what kind of the changes are happening in terms of the ROE and the profitability. By next quarter, we may able to provide something. At this point of time, I will not be able to share any numbers.

Santosh Pandey: Rishi, most of the GI companies have got basically one year forbearance, and IRDAI has approved that forbearance request. We are also implementing from 1 April 2027. So at this point of time we are evaluating, we are doing the assessment. Even we have not submitted the first cut of the financials, as a special purpose financial, which we have to submit to the IRDAI. So we are in the process. So at this point of time, numbers will not be there with us, like what kind of the changes are happening in terms of the ROE and the profitability. By next quarter, we may able to provide something. At this point of time, I will not be able to share any numbers.

Speaker #3: We are also implementing from 1st July 2020, so 1st April 2027. So, at this point of time, we are evaluating. We are doing the assessment.

Speaker #3: Even we have not submitted the first cut of the financials, which you have to either—special purpose financials—which we have to submit to the IID.

Speaker #3: So we are in the process. At this point in time, numbers will not be available with us, like what kind of changes are happening in terms of the ROE and the profitability.

Speaker #3: And by next quarter, we may be able to provide something. At this point in time, I'll not be able to share any numbers.

Speaker #4: Got it. All right. Thank you, sir. All the best. Thank you so much, Rishi. Requesting participants who have joined the call, please click on the 'raise hand' icon if you wish to ask a question.

Rishi Jhunjhunwala: Got it. All right. Thank you, sir. All the best.

Operator: Thank you so much, Rishi. Requesting participants who have joined the call, please click on the Raise Hand icon if you wish to ask a question. We will wait for a few minutes until we have any questions. I think we have a follow-up coming in from Sanket Gouda. Sanket, please go ahead.

Speaker #4: We'll wait for a few minutes until we have any questions. I think we have a follow-up coming in from Sanket Goda. Sanket, please go ahead.

Speaker #3: Is that hear me?

Sanket Gora: Is it him?

Sanketh Godha: Is it him?

Speaker #4: Yes.

Operator: Yes.

Speaker #3: Hi. So again, one question is on this reinsurance accepted growth. As you highlighted, the direct growth was just less than 3%, but almost 7% in the case of GWP.

Sanket Gora: Again, one question on this reinsurance accepted growth. As you highlighted, the direct growth was just less than 3%, but almost 7% in case of GWP. Just wanted to understand the color of this reinsurance accepted number, whether it is happening in commercial lines or health or crop kind of a line of business. Do you think this is sustainable? Maybe just wanted to understand this line of business in general has a better core compared to the overall company, what we are reporting, or it is largely done from a perspective of defraying events.

Sanketh Godha: Again, one question on this reinsurance accepted growth. As you highlighted, the direct growth was just less than 3%, but almost 7% in case of GWP. Just wanted to understand the color of this reinsurance accepted number, whether it is happening in commercial lines or health or crop kind of a line of business. Do you think this is sustainable? Maybe just wanted to understand this line of business in general has a better core compared to the overall company, what we are reporting, or it is largely done from a perspective of defraying events.

Speaker #3: So I just wanted to understand the color of this reinsurance accepted number—whether it's happening in commercial lines, or health, or crop kind of lines of business.

Speaker #3: Sustainable? Maybe I just wanted to understand, this line of business in general has a better core compared to the overall company—what we are reporting—or is it largely done from a perspective of defraying UN?

Speaker #2: So there are largely, Sanket, two elements to the RI inward business. One is part of the commercial strategy, where we are pitching for accounts. We don't get shares on those accounts.

Rajive Kumaraswami: There are largely, Sanket, two elements to the RI inward business. One is part of the commercial strategy where we are pitching for accounts. We do not get shares on those accounts, and we try and get those through reinsurance with other, which is part of risk mitigation, which we would also do sometimes where we picked up a share, we would probably reinsure it to manage the exposures into the treaty, which is what other companies do. This is proactive engagement with other primary companies or with brokers who are placing reinsurance. There is one part of the business which is there, and then there is part which is coming from the group health business.

Speaker #2: And we try and get those through reinsurance with others, which is part of risk mitigation. We would also do this sometimes where we picked up a share—we would probably reinsure it to manage the exposures in the treaty, which is what other companies do as well.

Speaker #2: So this is proactive engagement with other primary companies or with brokers who are placing reinsurance. So there's one part of the business which is there.

Speaker #2: And then there is a part which is coming from the group health business.

Speaker #3: Understood. And lastly, again, you alluded to the point that catastrophe events happening probably should bring discipline in commercial lines. But I'm just wondering, given that reinsurance treaties were signed at the start of the year and that benefit will be there for a large part of the current year, is it fair to say that the pricing discipline that we want will be more reflected in the next year rather than in the current year?

Sanket Gora: Understood. Lastly, you alluded to the point that catastrophe events happening probably should bring discipline in commercial lines. I am just wondering, given reinsurance treaties were signed at the start of the year and that benefit will be there for large part of the current year, is it fair to say that the pricing discipline what we want will be more reflected in the next year rather than in the current year? So it is very simply probably an industry tough year or a tough year to do commercial lines. Secondly, related to that, I just wanted to understand how much GIC Re played a role for the reinsurance market to see a soft market in commercial lines. Maybe it is more of an industry question, what I wanted to check from you.

Sanketh Godha: Understood. Lastly, you alluded to the point that catastrophe events happening probably should bring discipline in commercial lines. I am just wondering, given reinsurance treaties were signed at the start of the year and that benefit will be there for large part of the current year, is it fair to say that the pricing discipline what we want will be more reflected in the next year rather than in the current year? So it is very simply probably an industry tough year or a tough year to do commercial lines. Secondly, related to that, I just wanted to understand how much GIC Re played a role for the reinsurance market to see a soft market in commercial lines. Maybe it is more of an industry question, what I wanted to check from you.

Speaker #3: So, it is very simply probably an industry tough year, or a tough year to do commercial lines. And more importantly—and secondly, related to that—I just wanted to understand how much GIFT City played a role for the reinsurance market to see a soft market in commercial lines?

Speaker #3: Maybe it's more of an industry question that I wanted to check with you.

Speaker #2: Sure. So, I mean, while numbers are still coming out, it's all conjecture. But we are talking about anything between a 3,000 to 4,000 crore loss for the industry on account of the multiple losses that have happened.

Rajive Kumaraswami: Well, numbers are still coming out, it is all conjecture, but we are talking about anything from a INR 3,000 to 4,000 crore loss for the industry on account of the multiple losses that have happened, whether it is Gujarat, whether it is Assam, whether it is Daman and Diu, whether it is the Assam floods.

Speaker #2: Whether it's Gujarat, whether it's Assam, whether it's Dadra Nagar Haveli, whether it's the Assam floods. Now, the reason why, Sanket, one feels hopeful that the pricing discipline will come is that typically the reinsurance contracts have what are called the "ask clauses."

Sanket Gora: Yeah.

Sanketh Godha: Yeah.

Rajive Kumaraswami: Now, the reason why, Sanket, one feels hopefully that the pricing discipline will come is that typically the reinsurance contracts have what are called the Hours Clause. For earthquake, there is normally a 72-hour clause. For floods, there is normally a 168-hour clause. Now, most of these events have been beyond the seven-day interval, which means each incident is a separate incident, and your ability to club all the losses in your net account and then claim as one deductible from your cat excess of loss program has not happened. I am assuming it would be true for most other competitors who have a larger commercial book.

Speaker #2: So for earthquake, there is normally a 72-hour clause. For floods, there's normally a 168-hour clause. Now, most of these events have been beyond the seven-day interval, which means each incident is a separate incident, and your ability to club all the losses in your net account and then claim as one deductible from your CAT excess of program has not happened.

Speaker #2: And I'm assuming it would be true for most other competitors who have a larger commercial book. Which means, if you had a deductible of, say, ₹20 or ₹25 crores, and you breached it, it would be per incident rather than aggregated for Maharashtra, Gujarat, and hence the pain on the P&L would be higher.

Rajive Kumaraswami: Which means if you had a deductible of, say, INR 20 or 25 crores and you breached it will be for per incident rather than aggregated for Maharashtra, Gujarat, and hence the pain on the P&L would be higher. Right?

Speaker #2: Right? If the pain on the P&L is much higher, the hope is that the sanity on pricing discipline will come in faster. But the pressure from the reinsurers—you are absolutely right—contractually, they've agreed to kind of give us the underwriting pen, vis-à-vis the old period where the IIB was imposed on the contracts.

Sanket Gora: Yeah.

Sanketh Godha: Yeah.

Rajive Kumaraswami: If the pain on the P&L is much higher, the hope is that the sanity on pricing discipline will come in faster. But the pressure from the reinsurers, you are absolutely right. Contractually, they have agreed to kind of give us the underwriting pen vis-à-vis the old period where the IIB was imposed on the contracts. That correction, if I may use the word, may happen only next year, either in terms of shrunk capacities, program structures changing, or commissions getting tighter. Yes, the Gift City capacity coming in has had an impact on soft market conditions because there is excess capacity in India, and it is also flowing from the fact that globally also Natural Catastrophe activities is fairly benign. So they also have capacity to deploy, and India is giving the growth opportunity.

Speaker #2: That correction, if I may use the word, may happen only next year, either in terms of shrunk capacities, program structures changing, or commissions getting tightened.

Speaker #2: And yes, the GIFTS capacity coming in has had an impact on soft market conditions because there is excess capacity in India, and it is also flowing from the fact that, globally also, NATCAT activity is fairly benign.

Speaker #2: So they also have the capacity to deploy, and India is giving the growth opportunity.

Speaker #3: Understood, Rajiv. So maybe just one extended question on the GIFT City thing. See, given these guys are relatively new to that area, and they might be okay to burn capital for a couple of years till they themselves get established.

Sanket Gora: Understood, Rajiv. Maybe just one extended question on the city thing. Given these guys are relatively new to that area, and they might be okay to burn capital for a couple of years till they themselves get established, is it fair to say that maybe the reinsurance market softness might continue for a prolonged period, and therefore maybe some recovery in the pricing will happen, but might not be that great enough to pull back the growth or to improve overall maybe profitability for the sector in that particular segment?

Sanketh Godha: Understood, Rajiv. Maybe just one extended question on the city thing. Given these guys are relatively new to that area, and they might be okay to burn capital for a couple of years till they themselves get established, is it fair to say that maybe the reinsurance market softness might continue for a prolonged period, and therefore maybe some recovery in the pricing will happen, but might not be that great enough to pull back the growth or to improve overall maybe profitability for the sector in that particular segment?

Speaker #3: Is it fair to say that maybe the reinsurance market softness might continue for a prolonged period, and therefore, while some recovery in the pricing could happen, it might not be significant enough to pull back the growth or to improve overall profitability for the sector in that particular segment?

Speaker #2: So difficult to say that, Sanket. I mean, one would like to believe that whenever the business plans were presented by the reinsurers who are there in the GIFT City, they would have presented plans when the IIB was present.

Rajive Kumaraswami: So difficult to say that, Sanket. One would like to believe that whenever the business plans were presented by the reinsurers who are there in the Gift City, they would have presented plans when the IIB was present. Right? By the time the approvals came in, the IIB pricing is gone, and we are in free market. I do not think reinsurers would want capital to be burnt. Their capital is fungible, and if they find commercials more attractive in other geographies, the export of capacity will go wherever there is more value.

Speaker #2: By the time the approvals came in, the IIB pricing is gone and we are in free market. I don't think reinsurers would want capital to be burnt; their capital is fungible and if they find commercials more attractive in other geographies, the export of capacity will go wherever there is more value.

Sanket Gora: Okay.

Sanketh Godha: Okay.

Speaker #2: Whether it takes one year or two years, there would be marginal players who don't have the ability to put in larger lead lines. Those are only the foreign reinsurance branches.

Rajive Kumaraswami: Whether it takes one year or two years. There would be marginal players who do not have the ability to put in larger lead lines. Those are only the Foreign Reinsurer Branches. So it is the smaller 5%, 2%, 7% lines that can help you fill up your placement. But to my mind, there is very few players in the Gift City who have the ability to write a 25% or a 30% lead line on your programs.

Speaker #2: So it is those smaller 5%, 2%, 7% lines that can help you fill up your placement. But to my mind, there are very few players in the Gift City who have the ability to write a 25% or a 30% lead line on your programs.

Speaker #3: Understood. This is pretty useful, Rajiv. Thanks for the answers.

Sanket Gora: Understood. This is pretty useful, Rajiv. Thanks for the answers.

Sanketh Godha: Understood. This is pretty useful, Rajiv. Thanks for the answers.

Speaker #1: Thank you so much, Sanket. Are there any more questions from any participants? Please click on the raise hand icon. All right. As there are no further questions from the participants here, management team, I would like to hand it over to you.

Operator: Thank you so much, Sanket. Any more questions from any participants, please click on the Raise Hand icon. All right. As there are no further questions from the participants here, management team, I would like to hand it over to you. Back the conference over for your closing comments, please.

Speaker #1: Back to the conference, over to you for your closing comments, please.

Speaker #2: Thank you. Thank you for your time, and we look forward to remaining in touch with you. Thank you.

Rajive Kumaraswami: Thank you for your time, and we look forward to remaining in touch with you. Thank you.

Speaker #1: Thank you so much. Ladies and gentlemen, on behalf of Cholamandalam Financial Holdings Limited, this concludes today's conference call. Thank you all for joining us, and you can now click on the leave icon to exit the meeting.

Operator: Thank you so much. Ladies and gentlemen, on behalf of Cholamandalam Financial Holdings Limited, this concludes today's conference call. Thank you all for joining us, and you can now click on the Leave icon to exit the meeting. Thank you all for your participation.

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Q1 2027 Cholamandalam Financial Holdings Ltd Earnings Call

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