Summary
The New India Assurance Company Ltd. - Q3 FY26 Earnings Call Summary Monday, February 02, 2026 14:00 PM
Event Participants
Executives 2 Girija Subramanian (CMD), Kasturi Sengupta (Executive Director)
Analysts 4 Harsh Jain (Individual Investor), Pawan Sachdev (Individual Investor), Rachna K (Simple), Shobhit Sharma (HDFC Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Gross Written Premium (Global) | ₹11,680 crores | +8.37% YoY; Driven by strong growth in Health and Fire segments. |
| Net Profit after Tax (PAT) | ₹372 crores | +5.38% YoY; Impacted by ₹2,026 crore wage revision provision, offset by high capital gains. |
| Net Incurred Claim Ratio (ICR) | 90.77% | -372 bps YoY; Significant improvement in Health segment (91% vs 103% YoY). |
| Combined Ratio | 117.98% | +170 bps YoY; Elevated due to one-time wage revision provisions (110.13% excluding wage impact). |
| Solvency Ratio | 1.81x | -9 bps YoY; Slightly improved from 1.79x in Q2 FY26; stays above 1.50x regulatory norm. |
| Return on Equity (ROE) | 6.63% | +12 bps YoY; Quarterly ROE improved; 9-month ROE stands at 4.95%. |
| Investment Income | ₹2,280 crores | Included ₹1,080 crore capital gains in Q3 (₹4,236 crore for 9M) to fund wage arrears. |
| Assets Under Management | ₹1,00,890 crores | +3.28% YoY; Growth moderated slightly by monetization of equity for wage payouts. |
| Market Share (GDPI) | 13.40% | +60 bps YoY; Outpaced industry growth of 8.69% with domestic growth of 13.71%. |
Geographic & Segment Commentary
- Health & PA: This segment accounts for 48.16% of the portfolio. ICR improved drastically to 91% in Q3 from 103% YoY due to strict risk selection, exit of loss-making Group Mediclaim (GMC) accounts, and intensified anti-fraud inspections (increased from 30% to 50%).
- Motor: Reported a negative growth of 0.89% in Q3 as the company consciously exited high-loss segments. The portfolio mix shifted toward private cars (46%) and away from heavy commercial vehicles (>40,000 GVW), with a target ICR of 103-104%.
- Fire & Marine: Fire growth stood at 4.06% for the quarter (15.31% for 9M). Marine saw a 19.46% premium spike but experienced an ICR of 119% in Q3 due to large specific losses, including two sunken vessels and a significant fire claim on a ship.
- SME & Others: The company declared FY26 as the “Year of SME,” with the MSME book growing 36% through November 2025. Crop premium plummeted from ₹180 crore to ₹5.7 crore YoY due to regulatory shifts preventing reinsurance seeding from AIC.
Company-Specific & Strategic Commentary
- Wage Revision Impact: Management provided ₹2,026 crore in Q3 for wage arrears and retired employee benefits. An additional ₹700–800 crore provision for Family Pension Scheme (FPS) is expected in Q4 FY26 following the government notification.
- Investment Strategy: The company realized ₹4,236 crore in capital gains over 9 months, with ₹2,000 crore specifically targeted to offset wage revision costs. Normal quarterly capital gains run-rate is expected at ₹700–800 crore.
- Digital & Fraud Mitigation: NIACL is implementing AI/ML chatbots, WhatsApp services in 8 languages, and is in the final stages of selecting a vendor for an automated fraud monitoring software to be deployed within 4 months.
- New Product Lines: Launched Parametric Insurance and Surety bonds. While Parametric uptake is currently slow (12 contracts), management views it as a key driver for future penetration due to automated, instant claim settlements.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Return on Equity (ROE) | Double Digits (Medium-term) | Primary lever is reducing ICR; every 1% improvement in ICR significantly impacts PAT. |
| Loss Ratio (Health) | 98% - 100% | Targeted through better pricing of GMC accounts and internalizing medical TPA functions. |
| Loss Ratio (Motor) | 103% - 104% | Focus on private car segment and better dealer partnerships to recover growth in 2 quarters. |
| Tax Rate | ~17.42% (MAT) | Expected for FY27; current FY26 rate is negligible due to bad debt write-offs and advance tax credits. |
Risks & Constraints
| Risk | Context |
|---|---|
| Wage Bill Overhang | A final one-time hit of ₹700–800 crore for family pension revisions is pending for Q4 FY26, which will weigh on underwriting results. |
| Claims Inflation/CAT | Marine and Aviation segments saw volatile ICR spikes (119% and 149% respectively) due to large individual hull and cargo claims. |
| Competitive Pressure | Intense pricing competition in Motor and Health continues to necessitate exits from large corporate accounts, potentially hitting top-line growth. |
Q&A Highlights
Reserve Releases
- Question: Has there been a reserve release in IBNR leading to lower claims? (Rachna K)
- Answer: No specific core release. The IBNR reduction was primarily due to actual claim payouts in the Crop segment (Girija Subramanian).
Wage Revision Clarification
- Question: What is the total impact of wage arrears and what is pending? (Shobhit Sharma)
- Answer: Total calculation is ~₹2,500 crore. ₹1,677 crore for in-service and ₹642 crore for retired employees provided. Only FPS (~₹800 crore) is pending for Q4 (Girija Subramanian).
Investment Gains
- Question: How much of the investment gain was one-time? (Shobhit Sharma)
- Answer: Out of ₹4,236 crore gains in 9M, ₹2,000 crore was specifically sold to cover wage provisions; the rest is regular trading (Management).
Market Strategy
- Question: Why did the “Others” segment de-grow by 26%? (Harsh Jain)
- Answer: This was entirely due to Crop insurance regulatory changes. Excluding Crop, the miscellaneous/SME segment actually grew by 26% (Management).
Key Takeaway
The New India Assurance Company delivered a resilient Q3 FY26, characterized by a domestic premium growth of 13.71%, which comfortably outpaced the industry. While the headline Net Profit of ₹372 crore was constrained by a massive ₹2,026 crore provision for wage revisions, the underlying operating performance showed significant strength, particularly in the Health segment where the ICR improved to 91%. Strategically, the company is pivotting away from loss-making Motor and large corporate GMC accounts toward a more profitable Retail and MSME mix, with the MSME book growing at 36%. Capital gains of ₹4,236 crore for the nine-month period were utilized to buffer the balance sheet against one-time employee costs. Looking ahead, management enters Q4 with a final pending pension liability of ₹800 crore but remains focused on achieving a double-digit ROE through disciplined underwriting and a targeted 98-100% loss ratio in Health. This transition toward a risk-weighted growth model suggests a more stable, albeit slower-growing, earnings profile in the coming fiscal.
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