ICICI Lombard General Insurance Company Limited (NSE: ICICIGI) Q3 2025 Earnings Call dated Jan. 17, 2025
Corporate Participants:
Sanjeev Mantri — Managing Director and Chief Executive Officer
Gopal Balachandran — Chief Financial officer
Analysts:
Nischint Chawathe — Analyst
Prayesh Jain — Analyst
Sanketh Godha — Analyst
Nidhesh Jain — Analyst
Jayant Kharote — Analyst
Subramanian Iyer — Analyst
Madhukar Ladha — Analyst
Rishi Jhunjhunwala — Analyst
Avinash Singh — Analyst
Presentation:
Operator
Good evening, ladies and gentlemen, and a very warm welcome to ICICI Lombard General Insurance Company Limited’s Q3 and Nine Months FY 2025 Earnings Conference Call.
From the senior management, we have with us today Mr.Sanjeev Mantri, MD and CEO of the company; Mr. Gopal Balachandran, CFO; Mr. Girish Nayak, Chief Technology and Health Underwriting and Claims; Mr. Sandeep Goradia, Chief Corporate Solutions Group; Mr. Anand Singhi, Chief Retail and Government Business; and Mr. Gaurav Arora, Chief Underwriting and Claims for Property and Casualty.
Please note that any statements, comments are made in today’s call that may look like forward-looking statements are based on information presently available to the management and do not constitute an indication of any future performance, as future involve risks and uncertainties, which could cause results to differ materially from the current views being expressed. [Operator Instructions]
I now hand the conference over to Mr. Sanjeev Mantri, MD and CEO, ICICI Lombard General Insurance Limited. Thank you, and over to you, sir.
Sanjeev Mantri — Managing Director and Chief Executive Officer
Thank you so much. Good evening to each one of you. Thank you for joining the earnings conference call of ICICI Lombard for quarter three and nine months financial year 2025. At the outset, let me wish you all a very happy new year.
As I complete first year in my current role, I’m excited to share developments we have made together since we connected on January 16, 2024. We outlined our vision of One IL One Team, building cohesive teams to leverage synergies and complementary strength to tap into new business opportunities.
In this endeavor, we realigned our teams to work collaboratively under a unified product and business practice. Today I’m pleased to share many of our initiatives, such as One IL One Call Center, One IL One Digital and One IL One Agency has started yielding results. Any team of a significant magnitude requires continuous reinforcement and we continue to learn as we co-create an environment conducive to growth, innovation and collaboration. Let me now update on — update you on industry trends and developments that we have witnessed in the past few months of financial year 2025.
For the quarter ended September 2024, as per the data released by MoSPI, the GDP growth slowed down to 5.4% as compared to 8.1% in the corresponding quarter of previous year. Let me dwell on certain key data points during last quarter, which can have an impact on GI industry at large.
On the corporate side, the industry supporting infrastructure and construction like steel, cement and commercial vehicle sales witnessed muted growth as government spending towards capital expenditure remains sluggish, which we are also — which is also reflecting in the commercial length of general insurance industry.
On the auto sector, the industry reported muted growth in quarter three of 2025 as per CAM. The growth in private car is 4.5%, growth in two-wheeler at 3% and degrowth in CV at 0.5%. The retail reimburse as reported by FADA has seen improvement in the growth on account of uptick in rural demand with private car growing at 5.9%, two-wheeler at 12.4% and CV at 1.6%.
Health insurance continues to be the fastest-growing and largest contributor of the industry in the GDPI mix, attracting significant investment across stakeholders. The bank credit growth also moderated to 11% due to slowdown in credit to NBFC segment and unsecured loans. In addition, the MFI sector growth also got adversely impacted due to structural changes.
Further as we move towards the next quarter, we believe intra-base spending, lower insurance penetration, enhanced risk awareness in a conducive regulatory environment is expected to have a positive impact on general insurance sector over medium to long term.
Coming to the regulatory update, general insurers are mandated to recognize premium for long-term products on a 1/n basis effective October 1, 2024. As an industry, new motor policy due to long-term TP were recognized on 1/n basis. Thus there is no impact on this line of business. The premium on the long-term health and other line of business were recognized in the year of underwriting itself. This change has an impact on the reporting of health and other line of business for the industry for quarter three of financial year 2025. However, this does not impact the economic value so we continue to evaluate business opportunities, which is expected to deliver sustained returns to stakeholders.
Secondly, on solvency norms, the authority issued guidelines on inadmissibility of assets which changes disallowance of receivables, primarily from net basis to gross basis, due to the reduction of 30 basis points in our solvency ratio as at March — as at December 31, 2024. Consequently, our solvency ratio was 2.36 as at December 31, 2024, which is higher than the minimum regulatory requirement of 1.5. Thus, this change does not impact our growth journey.
The general insurance council has represented the matter to the authority, emphasizing the significant implication of this change on the solvency position for the industry players.
Now coming to the industry growth. Gross direct premium income has grown by 9.5% and 7.8% for quarter three of financial year 2025 and nine months financial year 2025, respectively, as published by GI Council. Excluding crop and mass health segment, the industry registered a growth of 5.3% and 9.1% for quarter three financial year 2025 and nine months 2025, respectively.
Speaking on the specific segments, within the industry during the quarter, under motor insurance, the industry grew at 7.6% for quarter three financial year 2025. The total numbers of vehicles sold as per CAM data is approximately 3.1 million private cars, 15 million two-wheelers and 1.2 million CVs for nine months financial year 2025.
The health segment during the quarter delivered double-digit growth within the group health — within this group health grew at 14.6% and retail health grew at 6.6% year-on-year in quarter three financial year 2025. Further, subdued credit disbursements by financial institutions has resulted in a slower growth of health business — health benefit business.
The commercial lines segment degrew at 8.4%. Within this, the fire continued to degrow, registering a degrowth of 22% on account of pricing pressure. We expect the pricing to improve in the fire segment in the coming months.
Now speaking of the underwriting performance for the industry, the combined ratio for the industry worsened to 113.3% for H1 of 2025 as against 111.9% for H1 of 2024, largely on account of increase in expense ratio. For the motor business, the industry combined ratio worsened to 124.8% in H1 financial year 2025 from 119.4% in H1 of 2024.
I will now speak about the company’s performance across key business segments during quarter three financial year 2025. The company’s GDPI for quarter three financial year 2025 registered a growth of 4.8%. With 1/n accounting norm, the company registered degrowth of 0.3% as against the industry growth of 9.5% during the same period. Excluding crop and mass health, the company de-grew by 0.7% as compared to industry growth of 5.7%.
In Commercial Lines segment, we remain cautious due to continued pricing pressure, resulting in degrowth of 8.6%. However, we continue to maintain a market share in the segment. Further, we have maintained our leadership position in liability and marine cargo segment. In motor, we grew at 9.4% for quarter three financial year 2025 as against the industry growth of 7.6%. Our growth in this segment was driven by festive-led auto sales as well as old book. During this quarter, we sustained a balanced portfolio with the mix of private car, two-wheeler and CV at 52.9%, 26.7% and 20.4%, respectively.
Moving to the health business. During the quarter, we grew at 10.3% for quarter three financial year 2025 and with 1/n accounting norm, we de-grew at 4.6%. Within health, retail health segment registered a growth at 44.3%. With 1/n accounting norm, the growth was at 19.1% as against industry growth of 6.6% during the same period. Resultantly we gained market share in retail health reaching 3.2% in quarter three financial year 2025.
As updated in our previous calls, we continue to invest in product innovation and technology integration. This includes upgrades to elevate revamping our super top-up product, Activate booster and travel product TripSecure+ during the quarter. In the group health employer/employee segment, we continue to maintain cautious approach on account of competitive intensity, resulting in muted growth at 1.1% in quarter three financial year 2025.
Our group other business grew at 1.8%. With 1/n accounting norm, the degrowth in this segment was at 33% during the same period. We continue to harness our digital capabilities to enhance customer experience leading to a customer-facing digital business growing at growth of 9.9%, constituting 7.4% of our overall GDPI.
During the quarter, our ILTakeCare app has surpassed 13.2 million user downloads, registering a premium of INR64.2 million for quarter three financial year 2025. Additionally, I would like to highlight efforts being undertaken towards improving sales efficiencies across retail line of business.
Our preferred partner network serviced 73.6% of our non-OEM claims in quarter three financial 2025 as against 57.3% in quarter three of financial year 2024. Our average claim settlement period our retail line of business has seen improvement. It has improved from 6 days in financial year 2024 to 5 days in — 9 months financial year 2025 for Motor OD, and from 5 days in financial year 2024 to 3 days in 9 months financial year 2025 for Health. Our initiative, [Indecipherable], which was launched in April of 2024, offered an on-ground support to over 65,000 customers across 2,500 hospital network.
We continue to monitor our customer feedback through independent agencies in the form of net promoter score steady on a regular basis. Our NPA continues to be healthy at 69 and 65 for financial year 2025 for health and motor claims, respectively, supported by our customer trust.
In all the previous update, we discussed on the core business and technology transformation project, Project Orion, we initiated transformation journey of our health business and have now achieved a critical milestone by ruling out our flagship retail indemnity product, Elevate, on our new core platform. Going forward, we expect a shorter period of development of products on our new system, Artemis.
We are excited to see this extending across our product categories under the health business and beyond. We firmly believe Project Orion will be a key enabler of our vision of One IL One Team. As we conclude, we are positive and determined to achieve profitable outcomes led by growth multiproduct and multi-distribution strategy, focus on product innovation, data analytics and digital enhancement with our guiding force of One IL One Team.
I will now request Gopal to take through the financial numbers for the recent concluded quarter and nine months.
Gopal Balachandran — Chief Financial officer
Thanks, Sanjeev, and good evening to each of you. I will now give you a brief overview of the financial performance of the recently concluded quarter and nine months.
We have uploaded the results presentation on our website. You can access it as we walk you through the performance numbers.
With effect from October 1, 2024, long-term products are accounted on a 1/n basis as mandated by the regulator. Hence, quarter three and nine months numbers of this year are not comparable with prior periods or prior years. Please also refer to Slide number 15 of our investor presentation for further details on this.
The gross direct premium income of the company was at INR206.23 billion in nine months of this year as against INR187.03 billion in nine months of last year, a growth of 10.3% as against the industry growth of 7.8%. GDPI was INR62.14 billion in quarter three as against INR62.3 billion in quarter three last year, a degrowth of 0.3% as against the industry growth of 9.5%.
On the retail side of the business, GDPI of motor was INR31.09 billion in quarter three as against INR28.42 billion in quarter three last year, registering a growth of 9.4%. The advanced premium numbers for Motor segment was INR36.44 billion as at December 31, 2024, as against INR35.13 billion as at September 30, 2024. GDPI of the health segment was INR13.16 billion in quarter three ’25 as against INR13.79 billion in quarter three ’24, registering a degrowth of 4.6%.
Our agents, which include the point-of-sale distribution count, was 1,40,077 at December 31 2024, up from 1,33,683 as of September 30, 2024.
GDPI for the commercial lines was INR14.63 in Q3 this year as against INR16 billion in Q3 FY ’24, registering a degrowth of 8.6%. Resultantly, the combined ratio was 102.9% in nine months FY ’25 as against 103.7% in nine months last year. The combined ratio was 102.7% in quarter three of the current year as against 103.6% in quarter three FY ’24.
Excluding the impact of CAT losses of INR0.94 billion in nine months FY ’25 and INR1.37 billion in nine months FY ’24, the combined ratio was 102.3% and 102.6%, respectively. Excluding the impact of CAT losses of INR0.54 billion in Q3 FY ’24, the combined ratio was 102.3%. There were no major catastrophic losses for Q3 FY ’25.
Our investment assets during the quarter rose to INR515.97 billion at December 31, 2024, up from INR515.57 billion at September 30, 2024. Our investment leverage net of borrowings was 3.76x as at December 31, 2024, as against 3.91x at September 30, 2024. Investment income was at INR33.73 billion in nine months FY ’25 as against INR26.57 billion in nine months FY ’24.
On a quarterly basis, investment income was INR11.21 billion in Q3 FY ’25 as against INR8.57 billion in Q3 FY ’24. Our capital gains net of impairment on investment assets stood at INR7.96 billion in nine months FY ’25 as compared to INR3.95 billion in nine months FY ’24. Capital gains net of impairment on investment assets stood at INR2.76 billion in Q3 FY ’25 as compared to INR1.08 billion in Q3 FY ’24.
Our profit before tax grew by 42.8% at INR26.53 billion in nine months FY ’25, as against INR18.57 billion in nine months FY ’24. Whereas PBT grew by 67.3% at INR9.6 billion in Q3 FY ’25 as against INR5.74 billion in Q3 FY ’24. Consequently, profit after tax grew by 42.9% at INR19.99 billion in nine months FY this year as against INR13.99 billion in nine months FY ’24. PAT grew by 67.9% at INR7.24 billion in Q3 FY ’25, up from INR4.31 billion in Q3 FY ’24.
Return on average equity was 20.8% in nine months this year as against 17.1% in nine months of the last year. The return on equity for this quarter of the current year was 21.5% as against 15.3% in Q3 FY ’24. Solvency ratio was at 2.36x. This is after factoring in the impact of 30 basis points, as Sanjeev had mentioned, as of December 31, 2024, as against 2.65x as at September 30, 2024, which continued to be higher than the regulatory minimum of 1.5x.
As I conclude, I would like to state that we are aligned with our ethos of driving profitable growth, consistent and sustainable value creation for all of our stakeholders, while ensuring that the interest of policyholders are in the forefront at all times. I would like to thank you all for attending this earnings call, and we’ll be happy to take questions that you have. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session [Operator Instructions] We’ll take our first question from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.
Nischint Chawathe
Hi, thanks for taking my question and congrats for a good set of numbers. Just a little bit of commentary on the motor side. We can see the loss ratios improving for you both on a sequential and annual basis, and significant improvement very specifically on the third-party side. So just if you could give some commentary in terms of what’s happening over here, how is the competitive intensity? And I believe we have gained market share in this quarter in both the segments?
Gopal Balachandran
Yeah. So Nischint, I think you’re right. I think clearly, over the last few years, if you would have seen, I think we have been slightly selective in the way we have been writing the risks. And therefore, to that extent, that has kind of stood us in times of reflection on the combined outcomes. Having said that, I think, obviously, what we are seeing right now is, therefore, renewed opportunities in the way we can drive risks, and that’s reflective also in terms of the increase in the market share that we have seen relative to nine months of last year.
Generally, if you see, I think we have been able to see, particularly, let’s say in this particular quarter, between new and renewal, I think largely the growth has been more or less similar when you look at at a category level. And therefore we continue to look for opportunities in each of private car, two-wheeler, CV. And broadly, if you look at the mix, it’s in line with what we have normally seen over prior periods.
On the loss experience specifically Nischint, I think this is something that we keep speaking about. Obviously, when we kind of write or maybe just select the portfolio, we have an ultimate loss experience that we kind of go with an assumption at the time of writing the risk. And over a period of time, I think given the fact that we have generally been prudent/conservative in our loss estimates as the loss experiences starts to develop, I mean, you can see this not just for this year, across years, we have been able to see, let’s say, favorable loss development. And that starts to getting — that starts to get reflected on the numbers as we kind of see across different financial periods. So that’s where we are.
But broadly, if you ask me, I think in terms of the overall loss ratio range that I have kind of spoken about even in the past, and again, as I keep saying, it’s always better to look at motor as a category rather than looking at own damage and third-party independently. And the range that we have spoken about turning overall motor in that range of 65% to 67%. I think that’s broadly the range that we believe we should continue to see as an outcome in terms of the portfolio experience. So that’s where we are.
And the positive news is, I think some of the market participants possibly who had kind of gone quite aggressive in the past you can clearly see most of those companies when you look at their individual month-on-month growth numbers, clearly, there has been an element of calibration that has happened. And that’s also reflective in the outcomes that these companies had to exhibit in some of their combined ratio outcomes. So that’s where we are. We continue to be cautious in building the book. And so far as the ethos on writing or selecting the portfolios continues to remain the same. As in we will keep looking for on a sustained basis an economic output which we think will be viable from the longer-term perspective.
Sanjeev Mantri
Absolutely. And also just the thing is in our mindset, I mean, we will do what makes sense to us. Market share, of course, this year looks better, but — we also had explained the market maybe almost 4 quarters back in terms of why our market share is where it is. So it’s more of an outcome of how multiple factors work. It’s not something that we chase. [Foreign Speech]. It’s more driven by outcome and as and when it makes us look good, it’s primely driven by an ecosystem development as we continue to pursue what we believe makes sense for us.
Nischint Chawathe
Sure. And the delta this quarter or the much lower loss ratio in TP this quarter, could it be maybe because of better releases this quarter?
Gopal Balachandran
So again, as we keep saying, Nischint, I think TP, again, I’ve spoken in numerous occasions even in the past, right? I think given that it’s obviously — and all of you understand, you all have been tracking us pretty much for a very long period of time. So — and this is clearly a book which is much more long tail in terms of loss development. Loss experiences, obviously, have to be looked at over a period of time. And as I said, obviously, the level of prudence that we kind of go with in terms of our reserving estimate, that’s stands pretty much intact. Absolutely no change in the philosophy of reserving.
And therefore, as the portfolio actually starts to experience outcomes, you could see, let’s say, some of the releases play out at different periods. It could be in a particular quarter, it could be in a particular financial year. But on overall basis, which is why if you look at our reserving triangle, now that you also have a specific triangle outcome in the context of third party as well. And there, again, you will see consistently for us, there are small amount of favorable loss development that we have seen over years. This is, again, not just for one quarter or one year or two years. It’s across financial period that we have been able to see some small amount of favorable development. And hence, to that extent, the approach to reserving will continue in terms of a favorable loss development. And that’s how we have been kind of going about risk selection, as I talked about.
Nischint Chawathe
And just finally, in this backdrop, do we really sort of now expect tariff hike — third-party tariff hike this year?
Sanjeev Mantri
So there, Nischint, again, well, industry is expecting it for the last few years, and it’s not something which we control. The answer to this is yes, we do expect a hike, but can itcome, can it not, is something which will come from the regulator as well as [Indecipherabke] the way TP price is decided. So — but we do believe, yes, it’s been 3 to 4 years and there might be possibly a hike at least which will get for next financial year.
Nischint Chawathe
Sure. Thank you very much and all the best.
Gopal Balachandran
Thank you.
Sanjeev Mantri
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, please restrict your questions to two at a time. You may join back the queue for follow-up questions. Next question is from the line of Prash Jain from Motilal Oswal. Please go ahead.
Prayesh Jain
Yeah, hi. Congrats on a very good set of numbers. Just harping, Gopal, on this point on the loss ratio on the motor side again. So you were mentioning that for the motor as a piece we should be looking at a loss ratio of 65% to 67%, but we are way below that currently. So would you still say that the full year number would be in that range? Or we should be — that’s more of a longer-term loss ratio that you would be looking at? That’s my first question.
Second is on the health loss ratio, could you give the granularity on how much was the retail health loss ratio and how much was the employer, employee loss ratio? And just on this — on the fire piece, you mentioned that there could be price hike. And why would that be, because your loss ratio outcomes seems to be pretty controlled at 50.1%? Yes, that would be my questions.
Gopal Balachandran
Perfect. Okay. So maybe I’ll go in the reverse sequence. So let me start with the commercial line. So again, Prayesh, I think all of you understand that commercial lines in general is a relatively high exposure portfolio. So therefore, to that extent, you can obviously see experiences, which could be relatively with low frequency, high severity outcomes. And therefore — and again, in a given period, you can obviously see experiences on loss numbers, which could be significantly adverse or maybe, at the same time, the portfolio will logically kind of in case you don’t have large number of catastrophic events then what you normally expect as attritional losses is what — how the portfolio will develop. I think clearly, we have seen not just in the Indian market, I think across the globe, we have clearly seen increased incidences of some of these catastrophic events impacting insurers, reinsurers, customers at large. And therefore, clearly, when you look at the overall portfolio outcome from a market standpoint, I think it’s leading to an outcome where the experiences from a — let’s say, from a reinsurance standpoint may not be necessarily in that sense viable at the level of pricing that they have given to the market at large.
So hence, given the fact that some of these events are more frequent, more in numbers, there is obviously a need for the entire market across stakeholders to look at what should be the level of price that you should kind of offer for risk selection. Equally, in the past, for example, you would have seen periods of — very long periods of soft pricing as well. So that’s how the nature of the business is. You will obviously see through various price cycles. Sometimes, you will obviously, as I said, experienced soft pricing.
Currently, the regime where maybe because of these increased incidences, you will see some bit of hardening in price. And hence, at least, which is where we are kind of coming from. The expectation is at least so far as the quarter 4 and, more importantly, the April 1 renewals, which will largely be where bulk of the corporate renewals will happen. We do expect the overall market to be far more sensible in so far as pricing those risks are concerned. So that’s where we are, and that’s what we believe from an overall positive sentiment.
To your point on the health loss breakdown and what every quarter we keep asking for this split, I think on the corporate health, which is the GHI segment, again, I’ll give the quarter three numbers for both the segments first, which is corporate wealth and retail indemnity. So for corporate health, quarter three of last year that number was 93.1%, that number for this quarter three is at 97.2%. And retail indemnity numbers last year was 66%, which is down to 65%.
On a nine-month basis, again, in the same sequence, corporate held last year was 95.8%, which is currently over 97.7%. And the retail indemnity numbers, which was 65.6% for nine months last year, that number stands at about 69.1%. But more than, let’s say, some of these numbers, in general, I think what we have seen is I think pretty much, we do see maybe some continuation of increased incidences of claims playing out in the context of some of the — in the health segment specifically. And therefore, in line with what we have spoken even in quarter 1, we said we will obviously observe for the development of this increased incidences over the next few quarters. So that’s where we are. And in that context is where the numbers are for the health loss numbers.
To your last point on motor, I think the range that we kind of spoke about at 65% to 67%, you’re absolutely right. I think that’s obviously the preferred range at which we would want to kind of run the book again, not just over a one or two-year horizon, that’s something that we would want to kind of look at it over a much more longer-term play.
Having said that, I think, obviously, when it comes to specific financial periods, it could be purely a function of what kind of mix of business that you write. And again, we have discussed this in the past, particularly when it comes to new motor, that typically comes with a relatively low loss outcome, but possibly a slightly higher cost of acquisition. But equally, on the fixed side, when you kind of start to source more of the renewal or let’s say, the older book, that invariably comes with a slightly higher loss outcomes, but obviously a lower cost of acquisition.
So that’s how we manage the overall portfolio in the way how we see the market opportunity. But over a medium to long term, I think the range that we are comfortable with to operate with will be between that 65% to 67% for motor as a category.
Prayesh Jain
Got that. Any price hikes contemplating in the health segment?
Gopal Balachandran
I think that’s something that we keep looking for, Prayesh. And we have not shied away from taking a price change. You would recollect again, slightly going back to some of our conversations even in the past, if you were to go back maybe almost 4 years back, quarter three 2021, at that point of time, we did effect an average price increase of roughly about 8% of the overall renewal book. And then roughly about 1.5, 2 years thereafter, again, we had kind of effected a price increase, which ranged anywhere between 20% to 22%.
So in general, I think, again, on the retail indemnity book specifically, again, you have spoken about the fact that the range that we are comfortable on running the book is a loss ratio of around that range between 65% to 70%. More towards, I would say, slightly on the higher end of the range. And at this point of time, I think as you would have seen, the outcome largely kind of playing out within the range that we are comfortable with. But having said that, I think if the portfolio warrants any kind of a price revision, we will not shy away from taking one.
Prayesh Jain
Yeah. Got it. Thank you.
Operator
Thank you.
Sanjeev Mantri
Thank you, Prayesh.
Operator
Participants are requested to restrict to two questions, please. Thank you. We have our next question from the line of Sanket Godha from Avendus Spark. Please go ahead.
Sanketh Godha
Yeah. Thank you for the opportunity. Gopal, you said that you want to work motor TP on motor loss ratio in the range of 60% to 65%. If I take at the other end for motor TP at 65%, is it fair to assume that in Q4, the loss ratios in motor TP will be more 70% to 75% compared to what you have reported 60.1% for 9 months FY’ 25? So that’s a fair assumption to make to remain conservative with respect to motor TP reserving?
Gopal Balachandran
Sanketh, again, I mean, just for the sake of reiterating, I will keep saying that I would always urge all of you to look at numbers more over long-term horizon, particularly for motor third-party. It will be completely — in that sense when I use this to say that ideally quarters will have multiple factors to it. As I just mentioned, one factor would be in terms of the kind of business mix that we see as an opportunity. So that by itself will determine what the loss ratio outcome could be. And as I said, we keep looking for the outcome of the large development of the book that we have written the past. And this is not just something that we do at a particular point.
This is something that we keep evaluating every quarter. And that would be true even for quarter 4. And in case if in any of the past book reflects something better in terms of outcome, then obviously, to that extent, you will see some of the impact play out even in quarter 4 as well. So hence, I think rather than talking about a point, estimate on a point number for a particular period, it’s better that we keep looking at, which is where I said, the medium to long-term range on motor as a category.
Because, again, I think this is something that all of you understand. It’s always, in that sense, given the fact that motor own damage is free to price, motor third-party is fixed and tariff. Better to look at motor as a category rather than trying to even split between motor own damage and third-party. And hence, just to kind of reiterate medium to long-term range that we are comfortable on running the book will be between 65% to 67%.
Sanketh Godha
Got it. And see you reported 102% on 1/n and 102.8% on if you exclude 1/n. So the management guidance was to end up with 102% for FY ’25 and probably 101.5% for the fourth quarter. So even factoring a bit of negative impact from 1/n, do you still continue to maintain that guidance to play out for the full year? And if I take exit as 101.5% for the fourth quarter, should we fairly assume that is a number which will be there too for FY ’26? And last — and the second thing is that if you can break down the exact growth of motor into new and old vehicle, the way you did it last time.
Gopal Balachandran
Yes. So maybe I think I will give you the numbers for new and old. This is — again, I’m just kind of giving you for quarter three. So new was again, 9.5% which is what I just mentioned in response to one of the calls, largely the numbers were similar. 9.5% growth for new and almost a similar number of 9.3% for the old. So as a category, the overall growth was 9.4%.
Sanjeev Mantri
Okay. And on the guidance part, Sanketh that you spoke about, clearly, as we had put across as to where we want to finish the whole year, at that point of time, there was no visibility that 1/n will come. And when such changes happen, the configuration of product which we procure from the market also can go through a transformation. There’s no reason to believe that, directionally, we are not there. But at the same time, we also have to evaluate what the opportunity comes through.
So it’s a combination of all this aspects that will decide the way forward. It’s early days. It’s the first quarter where the industry and us are giving numbers, which are on a 1/n basis, and the strange part is the configuration where the first 6 months are not on 1/n and this quarter is 1/n. So to that extent, it will play out over the course of time. And the industry’s performance, which we spoke about and I said, has moved to 113% whereas it was 111%. So it’s kind of relatively got worsened. So all of these factors will also weigh in. But what we also stay committed is decide the — combine the ROE range that we want to operate, which we spoke about it when we have met up. So it’s a combination that is keeping us excited in terms of doing collection also.
Sanketh Godha
Okay, perfect. That’s it from my side. Thank you.
Gopal Balachandran
Thank you.
Sanjeev Mantri
Thanks.
Operator
Thank you. Next question is from the line of Nidhesh Jain from Investec. Please go ahead,
Nidhesh Jain
Thanks for the opportunity. Sir, the first question is on this 1/n. Has the impact has been passed on to the distributor? And so are they also getting commission on a yearly basis? And do you expect any impact on the business growth because of that?
Sanjeev Mantri
The answer is yes. It’s regulatory and whatever needs to be done it’s done. So it will be also taken where the annuity commission payment will happen to the distributors. As far as growth is concerned, there is an overarching impact in terms of long-term product being sold. But internally, from our organization perspective, the economic value that comes in selling the long-term product stays intact. So we continue to pursue in the market selling long-term product. The accounting part of it will emanate as and when it happens. Gopal?
Gopal Balachandran
So Nidhesh I think the only thing that I’ll just add to what Sanjeev rightly said, I think this is the first quarter, and therefore, to that extent, the market practices will also see an evolution in terms of some of these changes that gets paid out. So for example when — 6 years back, when the regulator has mandated, let’s say, third-party mandatory for 3 years, 5 years, in between there were changes in terms of the product construct to get motor line of business recognized on a 1/n prescription, similar to what you see for the rest of the lines as we speak today. So those practices obviously kind of evolve over a period of time. And hence, we will obviously watch the market developments very, very closely. Obviously, I think the intent, when you look at it from a regulatory standpoint, I think it’s very, very positive in the way they have kind of wanted this particular change. And therefore, our practices will be very clear to make sure that we clearly kind of made regulatory expectations. But obviously, we will keep a very close watch on market development as well and keep kind of taking actions corresponding to that, yes.
Sanjeev Mantri
Also, if I was a distributor and if I am able to do a long-term health, there is no reason, because it is 1/n, that should go through a change. What you’re not getting in 1 year on the front-end business, you will get over 3 years. So there is annuity income, that will flow over a period of time. So there is — there can be a short-term thought process. If you’re not getting it, you may not want to pursue with it. Hopefully, better sense will prevail, and they will also look at economic value and go ahead and say long term as always required.
Nidhesh Jain
Sure. Second question is on the reinsurance. The retention ratio has increased quite materially this quarter to 82%. So is there any change in strategy with respect to reinsurance?
Gopal Balachandran
So honestly, there is no change Nidhesh. So if you ask us our insurance program typically gets decided at the beginning of the year. I think as what we have mentioned earlier as well. And again, purely it’s a function of what is the split between mix of corporate, mix of retail. And within that, if you recollect in the past, we have spoken about, let’s say, in the context of health, for example. On health, indemnity as a line of business, we have always operated without, in that sense, leave aside the obligatory, which is true for everyone in the market. Rather than the obligatory reinsurance, we don’t have any other reinsurance requirements from a health indemnity standpoint.
On health benefit as a category, not just again this year, across years, we have obviously kind of operated on a reinsurance structure. And hence — and if you recollect, particularly not just again this quarter, this year in general, I think the health benefit segment has seen an impact on growth. And therefore, to that extent, that will obviously have an impact on the net retention numbers. So that’s one. Second, for whatever it is, even quarter three does have an element of corporate business as well. It’s not that corporate business comes down to 0.
And there, the approach for us — again, if you look at it over a 9-month basis, we have been very, very selective. Largely, we are trying to kind of hold on to maintaining market share in that particular category. And given the fact that, that particular business is slightly in that sense subdued that again kind of contributes to the overall retention numbers. But if you see the overall retention numbers the way we kind of look at it, I mean, on a net premium to gross premium, I think at least if you look at it on a 9-month basis, at least the number stands at roughly — I’m talking about the current year, if you look at it on a — even with the 1/n impact, I think the retention number will be roughly at about 72%. I think that’s where we are.
And to answer your point, no change in the reinsurance strategy, nothing specific. It’s not a case where we had an element of reinsurance for the first 6 months or something, and suddenly we have decided to kind of change our approach to reinsurance. No significant change therein. And the other aspect is the bulk of the reinsurance renewal conversations will now happen in quarter 4 for the next financial year.
Nidhesh Jain
Okay, sir. And last question is on claims and initiatives that you’re taking.
Operator
I’m sorry to interrupt. Nidhesh, can you please join back the queue?
Nidhesh Jain
Okay, sure.
Operator
Thank you.
Nidhesh Jain
Sure.
Sanjeev Mantri
Thanks, Nidhesh.
Operator
We have our next question from the line of Jayn Karote from Jefferies. Please go-ahead.
Jayant Kharote
Thank you for the opportunity. First question is —
Operator
Can you use the handset mode, please Jayant. Not very clear.
Jayant Kharote
Sure. First question is on the competitive scenario. Given that we are approaching the EoM glide path last couple of quarters, how do you see it play out over the next year and specifically the impact on that is having on group health and fire? And what would be our sort of stance in case it intensifies going into the next, say, 4 to 6 quarters? That’s the first question. I’ll come back with the second one.
Sanjeev Mantri
So clearly on the — our stand has been pretty clear on that. We continue to operate within the UM and there is no reason under any circumstances, we would like to violate that. As and when we see intensity building up, we will choose to withdraw rather than participate in that kind of a business intensity. Another point is that the regulator has taken certain actions. So in terms of expecting companies which are not within the UM guidelines to fall in-line. With that, there is possibility that it will get disciplined and will not care Russian pricing if you see business lines like GHI and some others further going low, we would exchange rather than participate. So we have absolute clarity as a team to let go of what is not making commercial sense for us.
Jayant Kharote
So do you see this playing out in the claims of your competition? And then by when do you expect some more rationality on the pricing in these products? Any timeline?
Sanjeev Mantri
See, we do not want to judge in terms of what everyone else will do. But that being said, we did speak about where fire went and where fire is expected to be. So anything which goes below a threshold will tend to autocorrect itself as it’s not viable. It will play out. It will play out. It’s not that it will not play out. But there’s a point of time when others will and we respect that. We’d like to fall in line for EoM and manage this subsequently as and when things go up. But my sheer presumption is that each one of us who operates in the industry wants to run the business in a profitable manner, and better sense will prevail over a period of time.
Jayant Kharote
Okay. So second question is on IFRS. We know we haven’t — we’ve guided or at least indicated on some improvement on the combined ratio, but it’s been almost 3, 4 quarters now. Any more disclosures or anything that you would have gone back and then can help us understand what could be the possible impact?
Sanjeev Mantri
So on IFRS, obviously, as and when the rules come in, we will fall in line, there is no question of we not falling in line. We’ve also spoken about the overall benefit it can have on account of discounting or reserving, and also deferred expenses coming into play. It will emanate in time to come. But one fundamental thing, which we all have to understand is that this is just mode of accounting, right? The economic value that gets even, whether it’s 1/n, whether it’s IFRS, all of it is part of the process in which manner you will do the accounting of it.
The business being sought, the long-term value that is to get treated, they all remain similar. You can project this number in multiple manner. It doesn’t change how we want to operate. It’s not that IFRS will change the manner in which we want to do business. We still would like to do what we are pursuing at this point of time. So there is excitement of that coming through and we’ll be more than happy. In fact, we are very clear to say that by only last year, everybody in the industry should start publishing on IFRS basis.
Jayant Kharote
Any indicative time line by when will —
Operator
Jayant, join back the queue, please, as we have participants waiting.
Jayant Kharote
Thank you.
Operator
Thank you. Next question is from the line of Subramanian Ayer from Morgan Stanley. Please go-ahead
Subramanian Iyer
Hi, thanks for the opportunity. I had an accounting question. So on Slide #15, you have given basically the comparison between profits, excluding 1/n and without 1/n — with 1/n. And you have given the GDPI and PAT. So PAT is actually higher under the with 1/n impact. So is it fair to conclude that your commissions are lower because of deferrals under with 1/n method and that’s what is resulting in higher profits?
Sanjeev Mantri
Subbu, again, this is, again — which is why I kind of responded to say that the prescription under 1/n need not necessarily be, in terms of outcome, go in the direction of only an increase in profit. Because again, this will be a function of what kind of business mix that you source, what is the kind of reinsurance structure that you may have in practice and what is the kind of acquisition cost that you kind of relate to with respect to sourcing any of those businesses. So there are multiple factors which will drive, let’s say, an outcome when you look at it from a transition to a 1/n slash without a 1/n outcomes.
Now talking specific in the context of quarter three, I think obviously this has been a quarter where we were just kind of talking about. In general, I think the credit-linked disbursement across financial institutions have clearly been muted. And obviously, to that extent, and we have been one of the key writers of some of those risks. And that’s an area where I said we have always been historically operating also with the reinsurance structure. The fact that the business growth has been relatively subdued. Obviously, that does have an impact, both in terms of growth in premiums and therefore, correspondingly the impact that it has.
I mean when you look at it, 1/n, effectively, the prescription is to say that whatever acquisition costs that you incur, you defer it over the contract period. Similarly, if there’s an element of reinsurance income that you may have, that is something, again, you defer it over the policy contract. So in the quarter, if you do see businesses where you already had an element of a reinsurance arrangement and if that business gets subdued, and therefore, the relative impact in outcome will not necessarily be the same as compared to a line of business, for example in quarter three, we also have contracts of other lines of businesses where we don’t have a reinsurance arrangement, but there’s a cost of acquisition. And by this very inherent nature of a transition to 1/n, the cost gets deferred. There is nothing in terms of income for us to kind of defer over the policy period. Leave aside the obligatory. That’s a very, very small component. So that’s the reason why you see an outcome for quarter three in terms of profits to be higher than what you would have normally reported on a — without 1/n approach.
Now this can change. Going ahead, if actually, the proportion of mix of businesses undergo a change in terms of the various factors that I spoke. The outcome could either reverse. You could possibly see a situation of neutrality in terms of no change in profits. Or equally, you could see maybe an outcome similar to what we are seeing for quarter three this year. So there’s a lot of moving parts. So hence, to that extent, very difficult to say, attribute any specific reasons. But quarter three, this is the reason. It has been more businesses which are long term are the ones where there are only cost of acquisitions to be amortized, but relatively, there are no reinsurance commissions to be cut.
Subramanian Iyer
Thanks. That’s very clear. Wish you all the best. Thank you.
Gopal Balachandran
Thank you.
Operator
Thank you. Next question is from the line of Madhukar Lada from Nuvama Wealth Management. Please go-ahead.
Madhukar Ladha
Hi, congratulations on a very good set of numbers. A couple of questions from me. First, see, I see a very sharp increase in commission cost. Now can you explain what has led to that? And second is in the new 1/n now — that’s the way we will be reporting numbers, so what should our guidance do in terms of exit in Q4 for combined ratio? And also then what are we looking at for the next few years. So some help on that would be very useful, yeah.
Gopal Balachandran
So Madhukar, again, I mean, I will always keep again kind of urging all of you to look at numbers more on combined ratio prescription rather than even looking at breakdown of that combined into loss ratio and, let’s say, maybe the expense ratio. And within that, you are maybe asking the question which is more further breakdown on commission number corresponding to that.
So given the nature of the business that we have, you will obviously see a mix of outcome. As I just mentioned, Q3 in specific, I think you have seen on let’s say, for whatever corporate business that we used to write in the past, that particular part of the business has been muted. And therefore, to that extent, you will obviously see a relatively lower cost of acquisition, which otherwise would have been there had that particular growth of commercial business being there in quarter three.
And hence, the large part of quarter three are businesses which are fundamentally driven in so far as the retail line of opportunity is concerned. And two, quarter three in general if you see, it’s a period of festive season. So when you kind of put both of these together, you will obviously find an outcome in terms of — even in the context of just the commission numbers or let’s say, the commission ratio, you will obviously possibly see an increase there in.
But at the end of the day, even as what Sanjeev mentioned, I think for us, I think what is something that we are very, very conscious of is to make sure that we run the overall operations at an expense of management which cannot kind of exceed 30%. So that’s a guardrail for us. It’s something that we are very, very conscious of. And 2, and more importantly, I think for us, we will obviously keep looking for outcomes in the form of combined ratios and businesses.
And at the end of the day, we are all here to give at what we have put also in the opening remarks, which is a sustained return on capital for stakeholders. So that’s equally important. From an ROE outcome, it’s something that, again, we are very, very conscious of. I think the range that we have spoken about is to be within that range of 16% to 18%. And as things start to improve relative to the market, obviously, we would want to see that getting better as well.
So those are guardrails within which we kind of operate with. And hence, to that extent, I would again urge each of you to look at outcomes with some of these guardrails at the benchmark. And to your point on what would be the outcome on quarter 4 combined and maybe, let’s say, as we get into the next financial year, I think Sanjeev already kind of responded to that in response to one of the earlier questions.
I think again, as we keep saying, let’s say, when we look at quarter 4, 2 factors. One, we obviously have to wait and see how the environment plays. To that extent, that’s a variable. Second, I think we will have to see how the market responds. I think what we have said, our combined will, again, be in relation to the industry outcomes. At least the first half seems to indicate that the market is slightly more adverse compared to 111, it’s at about 113. So we’ll wait and see how quarter three numbers are for the other players in the market. And corresponding to that is how our own quarter 4 outcomes will play out.
But what we are conscious of, I think in all fairness, when we look at maybe just the return on equity to stakeholders, I think the broad comfort that we can give you is we should definitely end the year within that range of about 16% to 18%. And as we head into the next year, the approach to writing risk will still remain the same and then we will keep looking for profitable opportunities.
Sanjeev Mantri
I’ll give you a small perspective. So clearly, we’ll get a better understanding of what Gopal also is talking about it. If you look at our last year number, even before that, commercial business for us was clearly doing a very good growth numbers. And you know that commercial business overarchingly worked in a combined ratio which is far lower. So when we got — when we started working on the planning for this year itself, we had a belief that commercial line per se remains secular on the contribution, which is what Gopal also alluded in this conversation.
As things stand, it’s not commercial line which has grown, but the retail line of business, which is — we’re talking about retail indemnity that motor line of business which has given us growth. And when the configuration changes, it’s pertinent to understand that the combined ratio will also change. But the overall value that we want to give the stakeholder may not get impacted at all. So the obsession with combined ratio, I do understand from your angle. But how we look at businesses has to be understood in a far more comprehensive manner to give a particular level of targeted ROE. There will be changes. If we had stuck to the same plan, maybe we wouldn’t have done what is required on retail and still stuck to a slow growing growth. So we would have done a much lesser top line as well as on a better combined, but it would not have served the purpose.
So the point that Gopal keeps making is, look at the business in a far more comprehensive manner. We will have to stay agile in terms of what opportunities get provided. We do not want to — while we do give guidance and we did speak about it, we don’t want to get ourselves tied down because we have had a X combined number, we will let go an opportunity, which will serve us much better in long term. It’s an overarching thought which I want to put across and why we’ll have to also real time change our plans as the market forces us to react to it.
Madhukar Ladha
Understood, sir. Got it. I’ll come back in the queue. The queue.
Operator
Yeah. Thank you.
Gopal Balachandran
Thanks for the best.
Sanjeev Mantri
Thank you. Thank you, Madhukar. Next question is from the line of Rishi Junjunwala from IIFL Institutional Equities. Please go-ahead.
Rishi Jhunjhunwala
Yeah, thank you.
Operator
I’m sorry to interrupt. Rishi, I request you to restrict to one question, please. Thank you.
Rishi Jhunjhunwala
Okay. I’ll make it a long one. Thank you.
Sanjeev Mantri
Well said.
Rishi Jhunjhunwala
Yeah. So just firstly, on the investment leverage, right? So if you look at it, it’s already down to 3.77% for us and there has been a sharp decline in the last 6 months. And this is despite the fact that I’m assuming that motor vehicle act-related benefits haven’t really completely played out as yet. So just wanted to understand your thoughts in terms of with or without that implementation on a pan-India basis, where do you see the investment leverage stable out or stabilize?
And a related question to that is two, three years ago, we had given up this 20% ROE and 100% combined ratio target in order to ensure that we are not missing out on growth opportunities. Given that we are now at 20% ROEs and combined ratios are trending closer to 100%, I mean, they are still 200 bps away, do you think there could be a recalibration to that target in the medium term?
Gopal Balachandran
So Rishi, let me take again in the reverse sequence. So I think if you ask us, we actually — relative in terms of our intent to keep looking for profitable growth opportunities remains the same. So therefore, to that extent, do we stand committed to staying within that return on equity objective. Of course, I think that pretty much kind of stays intact. And that’s the range why I kind of talked about.
In the medium term, given the level of combine, we should be kind of getting to an outcome, which would be between 16% to 18%. The reason why I’m saying this is because you will still appreciate the fact that we don’t want to lose opportunities for investment in areas which will propel growth for — in the future. So that’s something that we are very, very conscious of. And therefore, these investments, which we have been kind of speaking to even in the past, will entail an upfronting of expense in the P&L.
And that by itself, when you look at it from a just years outcome, it will possibly look at maybe an ROE which may not be equal exactly to 20%, for that matter of fact. But these are investments, which we think is something that we should make at this point of time, the effect of which will play through maybe over the next two, three years.
But if you ask us, again, the point that we keep saying, I think the economic objective in terms of what we want to write clearly is within that range of ROE objective that I responded in response to one of the earlier questions. Same thought process on combined. I think the lens with which we look at each of the business opportunity, again, not just any particular line, across lines, I think the lens that we kind of apply is obviously combined. And equally, ultimately, the returns that would kind of pitch to stakeholders for the capital that is being infused.
So obviously, that — both of this doesn’t — has not fundamentally changed, and we kind of stand committed to the range that we have kind of spoken through. But all of these have to be looked at in the context of how the market operates. And hence, to that extent, this may be something that you will see playing out over long term, assuming the market starts responding sensibly. But at times in case if the market responds more aggressively in terms of competition, then to that extent, maybe some of these metrics will possibly get postponed by a year or two. So that’s where we are.
On the first point, the investment leverage, I think, again — this is again — if you look at the way the leverage gets computed, obviously, there is a numerator, which is the investment assets; and the denominator, which is, let’s say, net worth. And then investment assets is obviously in the context of the various investments. Some of these investments are carried at a market value and these are point estimates at the point of time.
And as you would have seen, particularly since you’re looking at the numbers on a quarter three basis, for example, we have seen obviously particularly equity markets relatively exhibiting a slightly more subdued sentiment. And in that context, I think if you look at maybe the mark-to-market position that you would have at the book September related to as of December, obviously, at a point of time, that number would have seen a decline. So that would have some impact when you look at the investment leverage.
Second, I think, again, as what we have been speaking, there has also been a relative slowdown in growth in general for us. And that, by itself, clearly also contributes to the overall available cash flows and that has also had an impact in the overall investment leverage. And third, I think, again, clearly, when you look at — particularly for some of the commercial lines, which generally is very, very profitable, that’s also been a segment where we have not seen as much of growth as what one would have expected. So all these factors is where we are on the leverage. But as the environment improves, we should start seeing the leverage kind of coming down.
Sanjeev Mantri
And also the small thing, thanks Gopal, is that the motor vehicle act that you refer to, Rishi, is a faster intimation, then there will be a lower investment leverage, not higher. So that’s one small thing. It’s more driven by cash flow and contribution in terms of the nature of business that comes through. Ironically, as much I don’t want to, but if you have a growth of PAT also, that [Indecipherable] the denominator and net worth will go up and that itself will lead to investment leverage going down. I mean it’s more mathematical that is what I’m saying, but there are multiple things will go in.
It’s, again, an outcome — we do understand the value of leverage in your mind. But the right business in terms of what makes sense and this comes out as an outcome, we do — it’s not that we don’t look at cash flow, but that is not the reason why we end up writing certain businesses or eliminate many businesses.
Rishi Jhunjhunwala
Okay. Thank you so much and all the best.
Sanjeev Mantri
Thank you.
Operator
We request participant to restrict to one question, please. We’ll take the next question from the line of Avinash Singh from Emkay Global. Please go ahead.
Avinash Singh
Yeah. Hi. Thanks for the opportunity. Great set of numbers. Just one question. Again coming to that, I mean, I recall your kind of focus on combined, not of claims and expenses. But more on the expenses, if you put together — I mean, one that each regulator now kind of looking for any change with their EoM targets because the rule of game has been changed in between this 1/n accounting? And if you can help us — I mean, even kind of a commission plus opportunities, which are the business lines particularly that you see a bit of, I would say, intensified payouts or competition in terms of payout that is leading to this overall OpEx, including commission increase?
Gopal Balachandran
Yeah. So again on the point on EoM, Avinash, so the first — at this point of time, I think, obviously, I don’t think the regulatory is contemplating anything specific in terms of any change in the thought process. I think as a regulator, I think what they’re looking for is to make sure that the overall industry operates within a defined threshold. And at this point of time, that number stands at about 30% or 35% as the case maybe.
And there is — this has been just put into practice maybe since the last 1 year or so. So hence, to that extent, to expect anything suddenly changing given even the — given the change that they have put in the context of 1/n or thereabout, I think that’s something that’s not within our knowledge in terms of whether the regulator is looking for any specific changes to be made. So at this point of time, the limit of 30% or 35% stands intact.
Having said that, I think what we at least understand from the market is the regulator is obviously keeping a very, very close watch on making sure that the larger market players continue to make — need to make sure that they run their overall operations at an AUM which is less than 30% or 35% as the case maybe. And if you look at basis public disclosure of financial outcome, still there are a large number of players who, even on an FY ’24 basis, have exceeded the threshold.
And clearly, from market, we understand that the regulator has asked each of these companies to come out with a plan of action to make sure that they are able to kind of come within the threshold. So that is where we are. We don’t think there is going to be anything immediate in so far as changing the expectations on meeting the limits or expense of management is concerned from the market perspective.
To your second point on what are the business lines that invariably kind of contributes to, let’s say, a high expense of management. Again, multiple factors. So for example, the point that I made saying that if you make any investments in opportunities for the future, so that entails the cost, that will be a part of my expense of management numbers today. So that will increase the ratio.
Second, in terms of the mix of business that you write, which is what I explained earlier, if I’m writing, let’s say, an old — a relatively new portfolio on the motor side, that invariably comes with maybe a low loss ratio, high expense. So that will let resulting in higher expense numbers. And the third will be, again, given the fact that we are driving a lot more on retail health, so that invariably comes with a slightly higher cost of acquisition. So multiple moving parts. And that’s the reason why I keep saying look at more on combined as compared to just the expense ratio number.
Avinash Singh
Okay, clear. Thank you.
Gopal Balachandran
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the call over to Mr. Sanjeev Mantri for closing comments. Over to you, sir.
Sanjeev Mantri
Great. I thank you so much for joining us. This is always a pleasure and your questions also give us tremendous clarity. We look forward to interacting with each one of you over the course of next few weeks. Look forward to your support, as always, and have a great year ahead. Thank you so much. Bye-bye.
Operator
Thank you. [Operator Closing Remarks]