Go Digit Q3 profit rises 2.8X amid strong premium growth
The company's gross written premium for the third quarter of FY25 was Rs 2,677 crore, up from Rs 2428 crore in the corresponding period of FY24.
Fairfax-backed general insurance firm Go Digit has reported 2.8X increase in net profit, at Rs 118.52 crore, for the third quarter ending December 2024, driven by strong premium growth and operational efficiency.
The company had recorded a profit of Rs 42.87 crore in the same period in the previous year.
"This is coming from the core insurance business, not from any exotic capital gains or reserve releases. Our profitability is driven by disciplined underwriting, prudent risk selection, and strong operational efficiencies, ensuring sustainable growth." said Kamesh Goyal, Chairman of Go Digit, during the company’s earnings call.
Go Digit's gross written premium for the quarter stood at Rs 2,676.78 crore, up from Rs 2,427.97 crore in the corresponding period last year, according to its regulatory filing.
Adjusting for new long-term premium recognition norms implemented this quarter, gross written premium for Q3 FY25 was Rs 2,738 crore, at a growth of 12.8%.
"On a like-to-like basis, our growth remains strong, and we continue to grow faster than the industry," CFO Ravi Ketan noted.
The company’s combined ratio—a measure of profitability in underwriting—improved to 108.1% from 110.3% in the same quarter last year.
The loss ratio, which measures the percentage of premiums used to pay claims, improved to 72.9% from 74.5% in Q3 FY24. This indicates better control over claim payouts.
"Our team has done an excellent job refining our pricing model and claims management," Goyal said. "We are leveraging data and technology to reduce fraud and improve underwriting margins."
Expense ratio, which reflects operating and acquisition costs as a percentage of premiums, dropped slightly to 35.2% from 35.8%.
Segment-wise contributions
The motor insurance segment remained the company’s largest contributor, with earned premiums amounting to Rs 1,385.42 crore in the quarter. However, underwriting losses in this segment expanded to Rs 259.70 crore, underscoring the persistent challenge of managing claims costs in a highly competitive market.
In the motor insurance segment, Go Digit made changes in its portfolio mix to mitigate margin pressures.
"We have significantly changed our TP (third party) portfolio mix, reducing exposure to high-risk segments and improving underwriting discipline," Ketan stated.
"While TP pricing remains a challenge, we believe around 50% of the industry's book requires a price hike," he said.
'TP portfolio mix' refers to the composition and allocation of policies within Go Digit's third-party motor insurance business.
Health insurance, spanning retail, corporate, and government segments, demonstrated mixed results.
Retail health premium stood at Rs 16.77 crore, supported by steady growth and underwriting profits of Rs 69 lakh. The group and corporate health business generated Rs 317.11 crore in premium and recorded a an underwriting profit of Rs 25.50 crore, driven by higher claim payouts.
Government business saw a notable increase in premium to Rs 104.60 crore but reported an underwriting loss of Rs 7.01 crore.
Investment performance and capital management
Go Digit's assets under management grew to Rs 18,939 crore, up 20.1% from March 31, 2024, driven by investment income and operational cash flows.
"Our investment yield in Q3 stood at 1.83%, up from 1.76% a year ago," said a company executive, during the earnings call. "We continue to maintain a conservative allocation, with some incremental increase in equities and AT1 bonds."
Despite raising capital in its IPO, Go Digit maintains a strong solvency position at 2.22.
"Even without the IPO capital, we would have increased AUM by over Rs 2,000 crore," Goyal noted. "Our leverage remains at 4.8X, demonstrating our ability to sustain growth without additional capital infusion."
Edited by Swetha Kannan