PC: Pune.News
Go Digit General Insurance Ltd on Monday announced the Q2 FY25 results, in which operating revenues grew marginally but registered challenges of slowing premium income and mounting costs. The company said it posted a net premium growth of 3.7%, ₹1,891 crore as against ₹1,824 crore in Q1 FY24, after witnessing a decrease in gross premium of 11%.
Premium Income and Investment Performance
Talking about the detailed report issued on the National Stock Exchange, Go Digit reveals a net premium income that is reported to be 5% lower. Its Q2 FY25 figure stands at ₹1,927 crore compared to ₹1,821 crore in Q2 FY24. This is a disturbing aspect because it clarifies various problems with customer acquisition and maintenance in the presence of stiff competition.
On the positive side, the company’s income from investments grew leaps and bounds year on year, increasing to ₹284 crore in Q2 FY25, compared with ₹211 crore in Q2 FY24. Increased investment productivity is one reason why income from investments grew, and that should contribute to a much-needed improvement in overall income.
Total income for the Q2 FY25 on Go Digit’s books was ₹2,175 crore, up from ₹1,868 crore in the same quarter last year. Challenges persist in the premium space, but the company has shown an ability to grow investment income.
Increasing Expenses and Claims Pay-Out
Thus, even though total income is up overall, Go Digit has registered increasing operational costs that are affecting its profitability. Its commissions and brokerage costs increased to ₹572 crore for Q2 FY24 from ₹533 crore during Q2 FY24. Employee benefits expenses also increased and amounted to ₹90.5 crore for Q2 FY25. In addition, other operating expenses in the form of business development, sales promotion and other operations rose enormously, amounting to ₹132 crore during Q2 FY25.
The company also reported increase in payment of claims, which stood at ₹851 cr in Q2 FY25 versus the corresponding figure of ₹763 cr reported for the same quarter last year. Outstanding claims too had risen to ₹483 cr in Q2 FY25 versus ₹315 cr in Q2 FY24, thus representing a rising liability for the company.
Underwriting Loss and Profit Hopping
Go Digit incurred an underwriting loss of ₹244.83 crore in Q2 FY25, 11.5% higher than ₹219.33 crore incurred last year even as it faces increased income and costs. The point is that although the company is earning revenue, these underwriting costs are having such a tremendous impact on its bottom line.
There is a silver lining, though. Profit for Go Digit rose 3.2 times during the quarter ending September 2024 compared to the same quarter in FY24. That is once again spectacular profitability, given that premium income appears to be falling and the underwriting account is still in loss.
In essence, Go Digit General Insurance Limited’s results for Q2 FY25 represent a mixed bag of performance. The company has slightly increased revenue, while profits have surged significantly; however, issues related to premium income and an increasing cost base have reared their ugly heads. Amplified payouts on claims and underwriting losses indicate the necessity for the company to maintain strategic focus on customer acquisition and retention in this competitive insurance scenario. Further growth for Go Digit would depend on the ability to continue to maintain these factors in balance for long-term progress toward profitability.
