Go Digit General Insurance Ltd (NSE: GODIGIT) Q3 2025 Earnings Call dated Jan. 22, 2025
Corporate Participants:
Kamesh Goyal — Non-Executive Chairman and Director
Analysts:
Ansuman Deb — Analyst
Avinash Singh — Analyst
Supratim Datta — Analyst
Analyst
Sanketh Godha — Analyst
Dipanjan Ghosh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Q3 FY ’25 Earnings Call of Go Digit General Insurance Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Ansuman Deb from ICICI Securities. Thank you, and over to you, Ansuman.
Ansuman Deb — Analyst
Thanks, Manav. Good evening, ladies and gentlemen. On behalf of ICICI Securities, it gives us immense pleasure to host our Q3 FY ’25 Results Conference Call of Go Digit General Insurance. I now hand over the call to MD and CEO, Mr. Kamesh Goyal, which we will open the floor for Q&A. Over to you, sir.
Kamesh Goyal — Non-Executive Chairman and Director
Thanks, Ansuman. I think just a small correction. Our MD and CEO is Jasleen, who is sitting next to me. We also have Ravi Khetan, our CFO; Rishi, our Finance Controller, Head of Investor Relations. So I think getting on to the presentation. And as always, we’ll try and cover the presentation in about 20 minutes or so and then have about 40 minutes to answer any questions that you may have.
Let me just start by thanking you for joining us at a bit late evening. So when we look at Slide number 4 from the senior numbers, as you know, this is the slide which we have where we give certain KPIs, I think premium gross between premium 7,700 crores total number of customers now 6.2 crores. Assets under management is about INR19,000 crores. And as you know, in our business model, the leverage plays a very important role. And in case of Digit with higher retention. Our leverage is very high. I think amongst the larger players would be highest in the industry, and I think that continues customer satisfaction scores, all of them stay amongst the best in the industry.
Moving to the next slide, maybe spend a bit of time here. I think we are giving numbers both for 9 months as well as for Q3. So in Q3, if you look at, we have given the — we’re showing a premium of. And as you know, from 1st of October, one by end has been implemented. So when we compare to last year’s quarter, Q3 ’24 on a like-to-like basis, then our premium would be INR2,738 crores instead of INR2,677 crores because of, roughly about INR60 crores of the premium has been moved in the next stage.
Loss ratios compared to last quarter to 74.5 to 72. And when we look at combined ratio, combined ratio has improved to 108.1 compared to 110.3. Now when you look at the press release and when we — and I’ll come to that later because I think that’s an important point to make here. Our profit after tax has increased from INR43 crores to INR119 crores. And ROE nonannualized for the quarter is about 3.1 for 9 months non-annualized ROE is about 9.6%. Our net worth in IGAAP has now crossed INR3,900 crores. Solvency ratio is strong at 2.22%.
Now moving to the next slide. I think this is more the GWP. And the share, I think if you look at 9 months growth rate overall has been in 9 months for industry is 8% against that Digit is at 15%. And if we — again, if you see, without the growth hit in quarter three where the growth rate would be about 13%. And for 9 months, it will be about 16% on. So we are continuing to grow substantially higher than the industry growth rate on a 9-month basis, and even in Q3, growth has been better than the industry.
Moving to the next slide. And I think here, you might recall that even in the last call, I was saying that Indian combined ratio doesn’t indicate the true reflection of profitability. And I think if you look at this in third quarter purely because of, the premium, which would have come under GWP. From GWP, it would have come under net written premium. And when you look at combined ratio, where you look at claims ratio plus expense ratio as a function of net written premium because of, the denominator has actually reduced. So the expense ratio has moved up.
If we had to compare this on a similar basis with Q3 ’24, then our combined ratio would be 107.2, which is an improvement of 3%. Now what is interesting is that when we are moving this, something which would have been recognized in premium, gross written premium, net written premium, it would have actually gone to unexpired premium reserve under accounting entry. So — and when we are moving this from gross premium to advanced premium, there again, there is no accounting impact.
So here, actually, you will see our combined ratio is looking 1% worse, but it has no impact on profitability. So I think the question — and if you recall what I said in the last call that our combined ratio was slightly worse, but profit had almost double. Now here, you can see combined ratio because of is actually becoming worse by 1%, but it actually has no impact on the P&L. And I think just wanted to reemphasize this point that Indian accounted now is becoming even more from a combined issue perspective, misleading because some companies will say we have moved the premium to next year. And the commission also, if we are not paying this year, we will also move it to next year.
Now when you do that, then this year, in this quarter, you are actually not showing that as actual expenses, which have been accrued, which are payable for next year. In our case, though we have shown the premium of about INR60 crores, which has moved to next year. The commission on that, which is roughly about INR19 crores or so, we have actually provided that in Q3 already. So on a like-to-like basis, our combined ratio has improved by 3%. Premium recognition will happen in future years, but the commission of that is already excluded in quarter 3.
Now if you think from this perspective, some companies who might or this commission on the premium, which has been, then there is no like comparison with previous years. And then we’ll move to IFRS. And there again, then another definition of combined ratio comes. So I think the challenge which I see for every month, is that how do you compare two or three different companies’ results, if every company, each of these companies is following a different accounting practice. So in case of Digit, when we published in April our fourth quarter results and the full year, we are actually going to show that what is the combined ratio we look at from a profitability perspective, which has a direct correlation to profitability. And when one will move to IFRS then what exactly is the equation? What do you need to add to arrive at the IFRS combined ratio?
And when we look at both these numbers, then irrespective of the accounting, which one is doing, one can actually compare the past results with these numbers because we feel it is extremely important to define the benchmark correctly against which future performance will be seen. Otherwise, it will give you misleading results. I’ll just stop here. I don’t want to cover this point too much, but we’ll be more than happy to answer any questions in detail as we go forward.
I think profit, we have already looked at 9 months, INR129 to INR309, INR43 to INR119 crores. And in this profit also, I want to maybe give color 2, three things because this again is something which I said last time. One, that expense ratio and loss ratio should be seen in totality because based on the product mix, et cetera, one can increase and other can reduce. And this will happen as the product shift is happening. So I think that is 1 point which is clear.
The second point I wanted to make in our case, and if you remember, I had said that one should look at core insurance profitability, investment income without capital gains, what sort of a reserve release is happening over a period of a year and on the quarter-by-quarter. In case of third party, I had mentioned last time that almost 40% of the results were released in Q2, and that is why the loss ratio is looking higher. When we look at previous years, in ’23, ’24, the total business release we had was, in the whole year was INR577 crores. Out of INR577 crores, INR499 crores were actually released in the first three quarters. So quarter 4 had a reserve release only INR78 crores.
This year, in 9 months, we have reserved — release, TP reserve release of about INR336 crores. And if we look at quarter 4, I’m not giving any guidance. We don’t really know because we — our actuarial colleagues will do this as of 31st of December. But my personal best guess is that if last year was INR577 crores, we would be in a plus/minus 5% range in this. So I wanted to also emphasize the point that this year, there is no extra TP reserve release, which is impacting the loss ratio, which was not the case last year.
The last point is capital gains and investment income. So if you actually see in third quarter, we had a capital gain of about INR7 crores. On a YTD basis, we still have a small loss of INR2 crores. And when we look at our investment yield, our investment yield is 1.83 without capital gains in Q3 compared to 1.76 in the previous year. So our investment yield on fixed income is good. So when we look at overall profitability, just to summarize what I said, basically, there is no extra third-party digital release, which we are doing, which is impacting the loss ratio. There is no capital gains either in 9 months or in the quarter, which is actually changing the investment income perspective. So whatever profitability you are seeing? It is actually coming from the core insurance business. So there is no, I would say, anything exotic about the profit. This is, in my view, the normal boring way of doing business, which is leading to this profitability.
Now moving to the next — sorry, at 1 point here, again, if you look at, overall, we have now increased our AUM by INR3,200 crores. And when we look at the reserves — the total capital which we had raised in the IPO, even without that, we would have increased this roughly by about more than INR2,000 crores or so of AUM. And in case of AUM also, while one might say and that growth in AUM is good, though the growth in GDP and GWP seems a bit low, especially third party. Because in third party, the reserves are created for long term. Here again, I wanted to say this has happened in case of Digit in Q3, that there are some businesses which come at a higher commission. And some businesses which TP have come with a lower commission.
In case of Q3, growth in AUM despite a lower growth in TP. It’s good because high commission business has reduced in proportion while lower commission business has increased. So I just want to maybe emphasize this, that all of us like some sort of a thumb rules for this, but our business, unfortunately, is more grounds up. And doing some macro calls based on how our portfolio is moving, how the growth rate in TPs, how the leverage will happen. All that becomes a bit difficult. And you can see our leverage despite rating capital just 6 months back continues to be 4.8. And if I remember correctly, 6 months previous quarter, this number was 4.7. So this has increased to 4.8. And as we had also said this, as we go forward, this should again slowly increase.
Now moving to the next. I think this is our asset allocation. No major real change, a very small increase in equity, 0.5% some increase of roughly about 80 basis points in AT1 Bonds. Otherwise, I think asset allocation is more or less stable in our payment. I think when we look at loss ratios, as I said, I explained already when we compare TP last year to this year, about 9 months actually having more than 85% of the reserves. If you look at others, especially health, et cetera, you can see that our loss ratio has improved substantially. And especially in Q3, our loss ratio has improved compared to previous year Q3.
And this, again, I think just to reemphasize, and this is the point I’ve made in the last two calls also, that we have seen some intense price competition in employer employed. This business is even on a 9-month basis is still be growing for Digit. But I think the discipline on that is actually showing on the loss ratio. If we had gone for a 3%, 4% additional growth in employer/employee business, and it would have come at a higher loss ratio. Actually, our profits would have reduced. So in our business, I think we have to keep this always in mind, and I’m saying this to remind it to myself and all my colleagues sitting with me here is that growth in revenue does not translate into growth in profits. If you’re grow in the wrong areas, then it can actually be counterproductive. I think that’s the point I wanted to make.
Even if we look at fire, our loss ratio this year has reduced a lot. But again, last year, and we had repeated it this in our previous calls, especially in our Q4 call, first call after listing that last year was bad for NAT CAT and there were a lot of large losses. While this year, we have also seen some large losses but NAT CAT hasn’t been as big. But again, over a period of time, these are the loss ratios, et cetera, which would change. In case of fire business, I think we are seeing some market discipline in pricing from 1st of January. So I think this is good from a industry perspective also from Digit’s perspective because overall, in 9 months in fire, our growth rate has been better than the industry as some sort of a rediscipline comes. I think this is something which we see as positive, both from a growth perspective as well as from a profitability perspective.
Moving further, I think these are standard, again, like the first slide, Slide number 4. This slide is similar. Our number of APIs are increasing. We had started with some time back with 1 API, that has also started getting traction. So this is something in terms of all of this, I would say, is something I would say more like a core principles of Digit and the path of the journey on this path continues.
In terms of additional information, as we also said last time, we will continue to publish our IFRS results. So you can see the 9 months unaudited results on IFRS. And just to repeat what I said when we publish our full results in April, we’ll actually cover this in more detail as to how we internally look at profitability, having the same benchmark so that you are not changing the goal post every time. So you don’t really know where you stand.
So that’s briefly on the presentation. I think I’m just in time or 20 minutes. We’ll now be more than happy to answer questions. And for that, I hand it back to. Thank you so much for patient listening.
Questions and Answers:
Operator
[Operator Instructions] We have our first question from the line of Avinash Singh from Emkay Global Financial Services.
Avinash Singh
A few questions. The first one is on your inward reinsurance if we see — it seems that has seen a strong growth. If you can help us understand the underlying segment in this kind of nearly INR560-odd crores of annual reinsurance premium that you have got this quarter. So what was the underlying segment? And second is on your corporate health, that segment, I mean, you said that the price competition is there and seeing kind of a decline. But in terms of profitability, it seems that had kind of dramatically improved with that corporate health segment delivering a strong underwriting profit.
So what do you see — I mean, how do you see this thing? I mean is this trend going to be sustainable? Or I mean, with your sort of changing mix or that corporate health becomes relatively less meaningful? So I mean, some color on that, that, okay, what has worked in terms of profitability there because the underlying profitability improvement is strong. And thirdly, I mean, on Motor TP, now, of course, as there has not been a tariff hike. But if we see your performance, some peers and overall industry also, still the reserve release trends are kind of really strong. And if you were to adjust that, I mean the claims ratio in Motor TP are still somewhat where, I mean, it’s profitable. The reason being that you wanted to look a discounted basis. And given this kind of a regulated mandatory product, I mean, the tariff cannot be decided allowing for a higher expenses. So it will be more like deiclaims.
So how do you see, I mean, a motor tariff playing out next year? Do you see kind of a gain, no hike on there, could be certain segments where there could be hike, but no broad-based side?
Kamesh Goyal
Thanks, Avinash. In inward business, we basically write facultative inward and facultative means every risk is seen on a stand-alone basis. So you might even get some repeat business or further, but every sleep is to be seen summer fresh ice perspective because this is not a business where you are saying, I’ll write this now in the future. So every step has to be seen and then you write this business.
And here in involve fact, the regulations also encourage IDA government of India, everyone is encouraging to increase retention within India. And we basically try and write business and property, basically fire and engineering, liability, marine, health, crop. So in every single area, we keep on looking at slips.
On, I would say, on an average, and if I’m — this is — I’m saying based on what I remember, that roughly if we see 100 less, we probably would be accepting business in about 40 of them. So 60 of them, we would actually not be accepting the risk. So this is the answer to the first question.
Now in corporate health, I would say two things. In the last year, obviously, I would say it was a mistake which we made in terms of some pricing, et cetera, because until less, you have two, three years of good data from the market on the basis of which you are quoting, it is a bit difficult to develop our pricing engine. So our team has done a great job in developing a good pricing engine.
We also shared whether the data which one is getting on which one is quoting whether that is reliable or not. We actually have a strong team and health claims, which is also negotiating with hospitals for discounts and other areas. So in health, and we also have a new system in which we can do better customization of the product, but also have more control in terms of claims to reduce the leakage.
So there is a lot of work which has gone into this. But equally importantly is the fact that if the pricing is not looking decent, our team is leaving the business. And you can imagine when the pressure of growth is so much, assumed pressure, I would say. Our team has been able to manage and keep the discipline for continuously 9 months. So I would say this is really — the last month is equally important. What others we are doing, learning from mistakes, improvement, et cetera, that obviously is continuous journey. We have recently put in a new fraud engine to detect fraud and health claims, that is also helping.
So I would say if we keep the discipline as loss ratio of others declarate, our other initiatives of improvement continue pace. We would make up this market, whatever business, additional INR500 crores, INR400 crores, I would say, in less than a quarter. And I think this we have to keep in mind. On motor third party, I think I would say that normally, in a long-tail business, good companies would actually be conservative initially. And then each year, they would want to look at the reserves and divide them based on what they have learned. We also know, and I think on our slide, we are publishing — everyone publishes this ML 31, whatever that number is, declaration.
If you look at those triangles for TP claims, I think it’s there on Slide 15 as of 31st March ’24, we’ll actually see that from 17, 18 was only INR50 lakh estimate, 1 large claim came. And there, again, if you see 5.1, we increase it to next year. And then again, it’s coming back to INR57 lakhs. Maybe by the time it comes, it will be adequate. But if you look at everything else, our results, we start with a higher and then they reduce slowly.
Now I don’t — I cannot comment for others, but I think this will again get published as of 31st March. Our confidence level in our TP reserves is very, very high of our actuaries. So we are very comfortable with the loss ratios. And as this — you will see each year when three years later, 4 years later, 5 years later, if the reserve release is happening, you basically, when you are writing business, you actually feel that the economic loss ratio is likely to be in this range, but you provide a higher reserve just to be prudent.
Now it some law changes, some Supreme Court judgment comes, don’t want to be caught. And if you look at even in non-TP which is in the second slide, our overall whole account, which is, say, in the 15th, Slide 15 here, you will actually see within the whole account. Can you go to 15? If you go to Slide 15, you will also see even on the full account basis, our reserving is pretty good here. So I think that’s the answer to the TP questions, Avinash. Thank you.
Operator
We have our next question from the line of Supratim Datta from AMBIT Capital.
Supratim Datta
On the on Motor TP, now we have seen as an industry the reserve releases over the last 1.5, two years has increased. Now going ahead, some of this benefit from the COVID detail, during the COVID and applying that much on roads, that would not be seen over the next two years? Hence, while I understand that in this year, we can maintain that the reserve releases are similar to last year. Going forward, do we see that could come from? That’s my first question.
Secondly, on Motor OD if I see over the quarters, the loss ratio has increased. And on the call, you also mentioned that you are moving away from high commission business to lower commission business. Now is this also moved from new vehicles towards older vehicles? And so if you could give us the split between what is your new versus old mix and how that has changed, if it has? That would be my second question. And currently, on the group health side, while you mentioned the initiatives that you have taken.
Kamesh Goyal
Sorry, your voice is cracking.
Supratim Datta
So what I was saying is on the group health side, does that include personal accident as well the underwriting result in the P&L that you have mentioned?
Kamesh Goyal
Yes. Group help includes personal extent also, Supratim. On Motor OD, I would say that new vehicles typically have the lowest loss base in private commission is a bit higher. When you do your own renewals, then your commission reduces and loss ratio goes up. And the same is the situation for roll over. Now obviously, in case of Digit, as our renewal book is increasing year by year, and we are also seeing some OEMs moving towards real-time pricing for all over 1 large doing has just recently gone live with that.
So the mix of — in private car business because OD basically means 70% of the premium is coming in from private cars in OD. Two-wheelers constitute about 22 and commercial vehicle. So when we see it from that perspective, we obviously foresee that OD loss ratio could be going slightly up as new business mix reduces and commissions will be going down. And that’s the reason I was saying, one should always look at these both numbers together.
Now in case of TP, what you said is 100% true that in case of TP, the benefit as an industry, which was coming in from the past would not come in the future. Now what is it that one can do if the rates are not increasing. And here, again, Supratim, I’ll give you some numbers, So you might recall that initially, digit had about 4, 5 years back, 75% of the motor premium or maybe 78%, if I remember, was coming from TPO was only 22.
If you look at OD premium is 39 per Digit and TP, 61, while for the industry, OD’s 41 and TP is 59. So what we have been doing on from a Digit perspective is that, one, OD proportion is increasing and TP is reducing. Secondly, even within TP, as we write business, we — our portfolio mix has substantially changed. And that is how we are actually trying to manage the loss ratio. And that is the only way one can do this. At the way, one can get caught badly in this.
Supratim Datta
Got it. Just one, what do you mean by raw portfolio? You are changing the portfolio. So if you could help me understand that.
Kamesh Goyal
The portfolio, Supratim, when you think about it and in terms of geographies. You can think in terms of vehicle mix, commercial vehicles, 2-wheelers, private cars within commercial vehicles within private cards, again, it could be more granular, could be based on say, fuel, for example, new oild, for example, it could also be type of vehicle, like everyone knows, a bus is a bus, but school bus is different, say, for example, CC of vehicle makes a lot of difference in terms of loss ratios. So that is how we have to keep managing the portfolio.
Operator
We have our next question from the line of Kunal Thanvi from.
Analyst
So my first question was with regards to your initial comment on the combined ratio of underlying. So just wanted to have a view on the fact that if we look at, say, both expense and loss issues on NEP that is in net earned premium, does it give a better picture because both of those items — all the three items kind of flowed through the P&L.? That was question number one.
The second question was with regards to the competitive intensity in motor, health and group health business especially the group health business, how we are looking at it now? And let’s say maybe a lot of media reports about reinsurance rates expected to go up from March, April any thoughts on that? Like is there any possibility of pricing synergy coming back in the group segment? And the third question was on long-term investment book mix. How do we think about equity mix in the book from a longer-term perspective since now we are profitable on solvency is also in reasonable shape?
Kamesh Goyal
Yes. Thank you. So let me start with the equity. I think I would say two things here. One is if you look at our IGAAP, net worth is close to about INR4,000 crores. Now our solvency already is more than 220%. Even if we raise, I’m just — we don’t need any capital at 2.22, but I’m just giving hypothetical answer to say, even if we raise INR500 crores more capital, our solvency can say, most to 250%, 260%. The cost of this additional capital, which is the process which we are raising it compared to the interest rate to the investment income, which we are generating, even if we take it at 150 basis point difference, INR500 crores is roughly INR7.5 crores. It is — it will be maybe less than 2% of our pretax profit.
So now capital from any perspective is not really a constraint from either a growth perspective or from a set allocation perspective. And INR500 crores and INR4,000, even if will be less than 12% or so. And in regulations, you can actually raise it up to 50%. So there is no real constraints. I think our investment committee of the Board, our investment team is looking at opportunities. We are very comfortable to do 10% of our asset allocation in equity. I think you can see that in quarter 3, when our investment team felt that the market to them is looking better. They have increased it by 0.5%. So increasing 0.5% over increasing.
So we — so they are doing it. We don’t have an artificial time line that we have to hit 10% equity in this. We have left it to the judgment of our investment team as well as our investment community. So that is on investment. On any day, what you said is true. I’ll give a very brief answer because we’ll cover this in detail in April. And it gives you a good idea. But I think we have — I’ve said this in the past that if you leave your future premiums today and book all the reinsurance commission today, then it actually improves your expense ratio substantially. And then when you move to IFRS, this — there will be a huge difference between the combined ratio of the two.
So when you’re going to meet to IFRS, suddenly, results will start looking bad. So the idea is to find a way how do you move seamlessly from IGAAP combined ratio to IFRS and you actually know the economics of that. And this is what we’ll try and do in April because as I think I’ve been seeing this and our, initially as our CFO wasn’t happened when I would say this, that IGAAP combined ratio doesn’t make any sense at all. as far as somebody like me is concerned from a profitability perspective. And I’m saying this after having spent decent actually are working life in insurance in different places.
Now on the group side, several December, we have actually not seen any significant improvement in reduction of competition intensity. It continues to be strong as of now. But as I said earlier, this is like, if I have to use in Hindi. So this will come of this. I think people will lose money and then the correction will happen. As far as the reinsurance rates, et cetera, are concerned, this employer/employee business is typically return, no reinsurer would touch it even with a large pool, employer/employee. So this goes to the net of each company. So I personally feel that reinsurance rates would not really make a difference here.
Analyst
If I can squeeze 1 more question.
Kamesh Goyal
Your voice is starting speak closer to the phone.
Analyst
So 1 more question I had was on in-house versus outsourced DPA for claim processing for group and the retail, if you can touch upon that, like how do you think about it given the fact that retail is a small, very small segment today, going ahead, will we be comfortable doing it in-house versus, say, using tapping the network of some of the large TPAs that are already there in the market?
And secondly, with our TP book, Motor TP book kind of coming down, does it also mean that your investment leverage incrementally could be lower than what we have seen in the past because Motor TP is typically a long-term approach that you get for?
Kamesh Goyal
So I think on TP, I already explained that all TP business is not the same. If you would listen to the recording, I tried to cover this already. So I don’t want to honestly answered that question. Overall, leverage with that mix in TP change, which we are seeing, we should not reduce our leverage where we are now. All retail business is anywhere serviced today in-house. We have a very large network of in-house TP. On the group side, we also continue to work with the TP and also do business in-house.
So I think at the end of the day, we have to these are customers. There is obviously an insurance company. So we have to find what works not for both under circumstances. In retail, I think in-house has been working quite well. In corporate also, you see group employer employees, a lot of groups prefer to be part of in-house. But we are happy to work with our TP networks. And we see — we are not driving business to say we will only do it in-house. We are happy to work with TPs, 1 or two TPs, I don’t want to state names. Two of them have also worked with us in improvement of processes, tech integration, et cetera. So we would be happy to double the relationships with them.
Operator
[Operator Instructions] We have a next question from the line of Nidhesh Jain from Investec.
Analyst
So first question is on the retail health insurance.
Kamesh Goyal
Sorry, you have to be a bit closer to the phone. I think certainly, the voice vanishes.
Analyst
So sir, on retail health insurance, the question is that there is a change in regulation where now discounting of premiums is allowed. If the claims experience is better. So have you changed your views on retail health insurance? Or you still remain cautious on that segment?
Kamesh Goyal
No, I think we continue the questions in this segment. We are of the view that the whole set of regulations in retail health haven’t really stand out. So obviously, nobody has an internal information. But I think whatever we are seeing in terms of loss ratios, development in terms of what one hears, we feel that retail health as of now is not an area which we want to aggressively grow. We obviously are growing this business, but the only difference is that even from a small base, the growth rate is more or less similar to the industry. As of now, we are not seeing opportunity to grow retail health with a higher growth rate.
Analyst
Sure. And secondly, I have a question on reserve releases. How much management discretion — how much discretion do management have on the reserves in Motor TP and other lines of business? Because that is becoming a bit of an issue when we compare results across companies.
Kamesh Goyal
So Hitesh, I think I gave the numbers for last year of TP for the first three quarters, fourth quarter overall number, we also gave you a number for three quarters this year. I also suggested what the overall reserve would be. So in our case, this decision is completely of the actuaries. And management get into this to say, increase it by — because if you have reserved, they actually feel that the total reserve release this year will be x amount. Now one can have a discretion or to say, you can make it x plus 5% or x minus 5%. But you cannot come out and say, make it two x, make it half x, because there is a clear review in actuarial of actual colleagues also. The report also of all this reserving, et cetera, goes to the regulator, and they also look at this.
So I don’t think in any decent company, management would try to influence reserve relief artificially because if you start doing these things, then you’re basically fooling yourself. And no good professional actual, professional would be willing to just do what the management is saying. I wouldn’t do that ever, right? I’m not — neither any of our colleagues. I obviously cannot talk about no others.
Operator
We have our next question from the line of Sanketh Godha from Avendus Park.
Kamesh Goyal
Sorry, I think you have to speak a bit louder, I think, closer to the phone, please.
Sanketh Godha
Yes. So the question I was asking is you release of around. And since if I take it some minus 5% in the last year, I think it would be somewhere been so in INR200 crores can potentially happen in fourth quarter, which needs you end up doing any fee of similar number, what you did in the current quarter, some around that number. So is it safe to assume that this improve your loss ratio or combined ratio by 10% to. So I just wanted to confirm that, that math.
Kamesh Goyal
No, no. So I was saying that last 9 months, it is. So I said, based on where we are, and I would again say this is not a guidance or anything. We could be say somewhere — I don’t foresee reserves going above 577 as of now. But what we had — I was saying is that we could be somewhere around, say, 510, 520. Now exactly what this will be, will be decided by the actual are appointed actually and our product has.
But all I wanted to say is going forward, unlike last year where we saw quarter-on-quarter volatility on reserve release. Now we have a very decent experience of 5, 6 years, cold year is also behind. So we will see lesser volatility that 1 quarter, next quarter, 2x. I think that is something which I feel should not happen.
Sanketh Godha
Got you. Got it. And the next question, what I had was on motor third-party growth basically. So in third quarter, growth looks a little better at 6 percentage compared to industry growth of 8. And in 9 months, it is still very weak, two percentage compared to industries’ 8. So you’ve mentioned in the past that you are cautious with respect to the space right now. So have you seen any change in the behavior in the environment? And given December month was — or third quarter is marginally better, do we expect motor growth to come back in a better way compared to — or at least grow in line with the industry, which is not the case for 9 months at least?
Kamesh Goyal
Sanketh, last year, for full year, our TP market share was 6.5%. On 9 months, our market share in TP, 6.4%. In quarter 4 of last year, our market share was only 5.7%. Now, again, no guidance of anything in quarter 1, where our market share was quite low in and quarter three is only 6.2%. So if this trend continues, if this can continue. And since we are coming in from a lower base last year, there should be growth in PP in this year. But again, I just want to say that though some people feel that we are degrowing TP and things like that. If you look at whole year, market share last year was 6.5%, 9 months in 6.4%. So it’s not that things have substantially changed even on the TP side.
And this, after taking a very big — and I think I said this earlier that we redid our TP portfolio in a very big way where in H1 of last year, our TP market share was 7.1%. In H2, this had actually reduced to 6%. So we — last year in quarter two in the second half, we have actually taken a lot of corrective actions on TP once we realize that the TP hike is not coming to ensure that we meet our target loss ratio.
Sanketh Godha
Got it. But in broader sense, are you seeing a better environment now even given you have sat a bit of market share. So you’re comfortable with the current pricing or payout structure in certain ETP business?
Kamesh Goyal
I would say, Sanketh,there are about — in my view, as a rough number, and I think recently, our industry has also met the IDA on a discussion on this. What I understand is that about maybe about 40% of the TP book of the industry is rightly priced. Maybe 10% book might actually can even see some small reduction in premium. But there is about half roughly half book of TP of the industry, which needs price increase because there is TP inflation and for the last 4 years, there has not been any increase in TP business.
And I think the way one should — one can see this also is to say that the regulatory still is giving say no TP obligation and things like that. It means that regulator sees that industry is not writing TP business really. And if industry is not writing TP business really, if — then obviously, it means they’re not finding the right price. So my sense is, and again, this I’m seeing as industry professional. This is not a biggest view that about 50% of the book needs some price increase.
Operator
We have our next question from the line of Dipanjan Ghosh from Citibank.
Dipanjan Ghosh
Just two questions from my side. First, while you have mentioned that for the 9 months, the employer/employee business has equaled. But given that seen a little bit of better growth in on a Y-o-Y basis, would you like to kind of break it up between the employer/employee and the nonemployer/employee for the quarter? And if there are some improving trends, while keeping in mind that we’ve already acknowledged that the pricing pressure sustains.
And also within the group on the employer/employee, when you look at the claims ratio, and you mentioned that it has improved. So if you can kind of quantify the number can also kind of highlight is it from the large corporate or the SME side? Or is it a mix change in favor of the lending linked products, which is really driving this improvement?
Kamesh Goyal
Dipanjan, I think all I’ll say is that in the nonemployer/employee business, the growth rate is not definitely. Employer/employees, there is a slight degrowth. And you’ll have to excuse me, we don’t want to give loss ratios in group that sort of granularity.
Dipanjan Ghosh
Just for the third quarter, could you like mention if the employer/employee business has been decline even, let’s say, for the last three months or 4 months? I mean, has the trend directionally been improved there?
Kamesh Goyal
So quarter three also in employer/employees saw degrowth. You can take maybe 1 question, Manav.
Operator
Okay, sir. We have a follow-up question from the line of Supratim Datta from AMBIT Capital.
Supratim Datta
Just wanted to understand now that we have moved to this method of accounting. So what happens to our UM targets? And how are those changing? Have you had any discussions with.
Kamesh Goyal
No, no. Thanks, Supratim, I think I missed this point completely. So I think last time, if you remember, we had given the full time lines of the AUM. So we actually, on December 27, ’24, we have received a regular letter from the regulator granting us forbearance for AUM for year ’23, ’24. So last year, they have already given us a forbearance. For ’24, ’25, obviously, once the year is complete and we update the regulator, we will know. They’ve also asked us that we should give them a guidance on AUM for next year, ’25, ’26. And then they have asked us to give quarterly updates both to the board as well as to the regulator. But just to repeat, for year ’23, ’24, they have given us forbearane on the AUM.
Supratim Datta
Got it. And what happens to that AUM target of 30% now that we have moved to, will that also be device? Or will it be looked at on the older version of — if you could give us some sense on that?
Kamesh Goyal
This, Supratim, we don’t know. But I think as we have been saying that as the year is over, ’24, ’25, we obviously will give an update on the AUM to the regulator and to the board. And any development on that, we will just keep our investors and analysts posted on that. But as of now, we — at least, we are not aware of if ID has made any changes to the AUM. So until we see some circular, I would say the definition of GWP space as it is.
Supratim Datta
Got it. And just 1 final question. So you initially mentioned that you are booking the commissions upfront but on the long-term policies, but the premium growth in — on the premium is going to come in the later years based on one-by-end recognition. So does — that implies, right, that your commission ratio going forward should be coming down because as this premium starts coming in, there wouldn’t be a corresponding commission attached to it. And hence, we should see the commission ratio going down from 3Q. Would that be a correct assumption to make?
Kamesh Goyal
So mathematically, yes. But on the other hand, if you say next year, you have again done this business. Then you’ll again be booking that commission here. So my sense, suggestion, Supratim, is that there are companies which do substantial business on this one by end. While AUM is something which one has to look at, one should also, as I was saying, if one is not showing the commission as an expense this year, future commission, then even the P&L is not actually an apple-to-apple comparison of previous quarter.
So one should wait for the full year on AUM. I’m sure from a regulator’s perspective since they are monitoring this very seriously. We will see in the next 3, 4, 5 months, if any changes, et cetera, are coming, as I said, I’m sure they will issue a circular for that. And we will also see how other players in the industry, which still now are AUM compliant can they continue to be compliant on AUM. And thanks, everyone, for joining. I think we’ll just pass it back to Ansuman.
Ansuman Deb
Thank you. And thanks a lot, everyone, for joining the call. And on behalf of ICICI Securities, I wish you all have a very good evening. Thanks a lot.
Kamesh Goyal
Thank you.
Operator
Thank you. On behalf of Go Digit General Insurance Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.