Thank you. Good afternoon, everyone.

Welcome to Cholamandalam Financial Holdings Limited Q3 FY26 earnings call. From the management, we have Mr.

Sridharan Rangarajan, Non-Executive Director, Cholamandalam Financial Holdings; Mr. N.

Ganesh, Manager & CFO, Cholamandalam Financial Holdings; Mr. V.

Suryanarayanan, Managing Director, Cholamandalam MS General Insurance; Mr. Santosh Pandey, CFO, Cholamandalam MS General Insurance.

I'll now hand over the call to the management for their opening remarks, post which we can open the floor for Q&A. Over to you, sir.

Thank you.

Thanks. Good afternoon to all of you who have joined the earnings conference call.

I welcome Santosh Pandey to the call, who has joined us as the Chief Financial Officer. He has taken over from Mr.

Venugopalan who retired as of 30th November 2025. Santosh joined us in the month of August 2025 and comes with prior experience with the Aditya Birla Group.

I shall now proceed with the overview of the performance of Chola MS for the quarter and nine months ended December 2025. In line with the 1/n method of accounting and reporting of GDPI with respect to long-term non-motor business, Chola MS recorded a GDPI of ₹2,067 crores for Q3 and ₹5,714 crores for the nine-month period.

Chola MS suffered the loss of crop insurance business consequent to the re-tender which impacted the quarter's GDPI by about ₹84 crores and cumulatively by ₹467 crores for the nine months. With the base effect of 1/n reporting coming to an end as at the end of Q2, the growth in non-crop business is visible from Q3.

The premium received in advance on long-term non-motor products was ₹103 crores for quarter three and for ₹306 crores for the nine-month period. Together with the reinsurance inward business, the GWP for Q3 was ₹2,338 crores and ₹6,555 crores for the nine-month period.

In motor, the principal line of business, the market share stood at 5.25%. Within motor, the company had a composition of 51% in cars, 38% in CVs, and 11% in two-wheelers.

The company secured about 25% of its total motor premium from new vehicles in quarter three. The company has adopted a cautious stance with respect to growing the two-wheeler book, particularly new vehicles, in the context of the absence of motor third-party premium increases over the last four years.

The EoM for Chola MS for Q3 stood at 30.63, which measured without 1/n works out to 29.27, and is lower than the glide path plan approved by the board and presented to the regulator. The EoM for the corresponding quarter of previous year was 33.76.

The claims ratio for the quarter and year to date were at 80.5 and 81.1, which is higher than the levels in the corresponding periods of previous year. Motor OD claims ratio has been higher and also reflects the competitive intensity in the industry.

Chola MS continues to be prudent and conservative in its provisioning for motor TP losses, with the level of provisioning a good 12% higher than many of its peers. Recognizing the rising severity in motor third-party claims and the continued absence of increase in motor third-party premium for the last three to four years, Chola MS stepped up its motor third-party reserving in the year.

This has rendered the overall claims ratio higher than the corresponding period by about 3.05%. Consequently, the combined ratio for nine months was at 116.2, which is 113 without the 1/n effect.

The combined ratio of 113 includes the impact of motor third-party reserving, which is 3.05%. The investment corpus as at December was over ₹18,700 crores, and the company had mark-to-market gains of ₹162 crores in debt and ₹294 crores in the equity portfolio.

The profit before tax for the nine-month period was at ₹346 crores, after absorbing the labor code related gratuity provisioning impact, which was about ₹7 crores. The RoE for the nine months was at 7.9, not annualized.

Solvency was at 2.04 times as at December. We'll now be happy to take any questions that you may have.

Hello. Thank you for the opportunity.

Am I audible?

Yes, please.

We had discussed earlier our ambition to sustain RoEs in the 16% to 18% range. Given the currently non-annualized RoE at 8% along with some pressures on loss ratios as well as competitive environment specifically in motor OD and TP business, could you please share your thoughts on factors that led to decline in RoE and our plans to improve returns and move back towards the guided 16% to 18% range over the medium-long term?

See, clearly the motor OD loss ratios is one aspect which has been going north for the industry. Of course, the numbers of some of the listed entities and others are already available in public domain.

One can notice that over a period to period, nine months to nine months, or even if one were to compare the corresponding with the corresponding quarter, we can see that numbers have gone up by 6% to 7% in the motor OD loss ratios for almost all players. For us, it's been a tad higher.

When it is 6% to 7% for others, we have had an 8% to 9% increase in our. That is something which we are working at restoring back efficiencies across the operating paradigm.

This is the overhang in which the industry is operating at this point in time. While that is on the OD loss side, with respect to the motor third-party, our provisioning, as I had mentioned even in the initial remarks, is clearly about even 14% higher than what competition has been providing.

That differential is what is reflected in the overall combined ratio as well as ultimately even the return on equity. This is broadly the situation.

Of course, in motor third-party, these are provisions at this point in time. These are not actual cash outflows or an actual incurred loss, but what we have been providing based on the actuarial estimates and the view of our appointed actuary on the subject.

Sir, our plans to improve RoEs, if you could elaborate on the efforts we are taking?

See, this has also been a year where we've been converging to the expense of management glide path. You would notice that even from the initial remarks as well as the data that is put out in page 46, you'll find that the EoM is now at about 30.6, even at a very extended method of reckoning, and on a full-premium basis, which is how we used to measure previously, it is come down to about 29.3.

Now, therefore, with the passing of this year, we should be able to get back to our normal growth path. Plus, this year, we were also impacted by the loss of crop business, which was operating at a combined ratio of about 95.

The loss of that business, which is, as I mentioned, about ₹470 crores up to the nine months, is also impacted. Now, next year, we will have a new season tender, which will be across the country, and for a three-year tender, the company will be participating and hopes to be back in the crop business in its framework next year, which should bring back the profitability related thereto and bring the combined ratio under control, with obvious improvements in the RoE as well.

Okay. One more question.

This is a data-related question. If I look at the profit before tax numbers for Chola MS, for Q3 FY26, it's around ₹79 crores if I refer to the report of Chola MS.

The PBT—

Sorry, we missed you. We are missing you.

We are missing you. Yeah.

Thank you for the opportunity. Sir, honestly, it's the same question probably on the combined ratio.

If I look at your numbers, nine months to nine months, even if I assume that your motor TP, you are being conservative, there is a possibility of reversal going ahead, then the two segments which gave the most pain is OD and health and PA on delta change compared to last year to current year. Motor OD, you already told in the call that you took a corrective action with respect to not chasing two-wheelers.

Despite not chasing two-wheelers or taking corrective action, still our OD loss ratios are higher. Is it fair to say that if the competitive intensity remains the way it is, then are we to see any respite to happen?

Because one leg of corrective action you have already taken. That's the way I wanted to understand whether there is any room leftover further to take any corrective actions.

Honestly, maybe I asked this question last time also, on health, maybe the loss ratio being 14% is higher compared to the last year. Any way to improve it?

Maybe in EoM compliance, we probably doing little more group health. We probably ended up with more combined rather than improving the combined.

Any thoughts you have how to change it or honestly, if these three products are fixed, I think our combined might come back fast. I just wanted to understand this part a little better.

Yeah. I think I would draw your attention more to page 55 first and then come back to page 53.

Page 55, no, the waterfall chart please. 51.

Yeah, 51. See, this waterfall chart highlights as to how the profits have moved from last year to current year.

Obviously, the green ones are self-explanatory. What we have achieved in terms of EoM reduction or what has come by way of investment income, there was not there.

The effect of the TP-linked provisioning vis-à-vis last year is about ₹150 crores. That essentially is the difference between the ultimate numbers for this year and last year.

If we are at ₹346 plus ₹150 is ₹506 crores, which would have what kept it there. Then if you are to look at increase in LR, which is the non-motor TP LR, which is largely impacted by the motor OD component there, which is where we do expect improvements to come in because of the corrective steps taken.

The decrease in RI commission for the full year is at 60 because the effect of 1/n means that we are not ceding future premiums and therefore the commission will come, but it will come in the subsequent years and not get up-fronted in the current period's income. That is where the position is.

The impact of RI inward arrangements, which has incidentally brought our EoM structure down, but it has had its effect on cost and which is what is reflecting. I also mentioned about the loss of crop business which was running at a 95 CoR, which the impact of that is also included in that ₹76 crores of increase in LR non-motor TP.

Apparently, it's a combination of two, three things. The single large effect is the increase in TP-linked provisioning, which is ₹150 crores for the nine months.

As we see the improvements actually pan out on the operational side, the company has been as efficient as ever in terms of its compromise settlement proportion and the actual severity jumps that we have seen in the nine months as compared to earlier periods. At an appropriate time in future, we should be able to make a calculated call on what is actually required and it can then flow back into the P&L in due course.

Now I will go back to the OD loss ratio slide, which is page 53. Now you will notice that this is the effect that is causing on the motor TP from 71.3 of last year to 78.9.

This is our loss ratio for motor TP. If we were to compare with the published numbers of motor TP of competition, even making allowances for geography mix that we may have and others may have, we certainly see that what we are carrying is a conservative stance that we have taken at this point in time.

We will wait to see as to how this actually pans out. When it comes to the motor OD, I certainly see a reduction of at least 3% to 5% over the next two quarters.

Understood. Sir, within the motor part, given you scaled down the two-wheeler business, the pain is more in CV segment or car segment which is leading to this little elevated numbers?

Suppose I want to

Two-wheeler, actually to clarify, Sanket, the two-wheeler perspective is more from a TP perspective rather than a OD perspective. Because the OD is invariably only 1+5.

It is only one year's OD. Technically the OD loss ratios in two-wheeler is much, much lower.

The call is that if you are writing for four, five years for the future now, and at the price that you are collecting today, the accident may happen next year and in each of those four years it can happen. Based on the accident year, there will be year-on-year increase in severity, plus the view that comes out in the minimum wages.

Already the central government is talking of a revision in central minimum wages to 25,000. Then the compensation levels will certainly go up.

Unless there is a fundamental shift in the motor TP pricing that one makes for two-wheelers, our call is that it may land and it may plague the future if you were to write that business now. We could have written it.

We would have had a good accretion in the investment corpus. We would have had an investment income.

The liability that you will have to provide in the respective four years of the future would certainly have gone up. That is the call that we have taken with respect to pruning or slowing down on the two-wheeler book now.

It is not so much on the OD side, but with a view to protecting the TP of the future is where we have taken this call.

Understood. Sir, in OD then the pain is most predominantly sitting in to cars or private vehicles?

The pressure is more in cars. The pressure actually is more in cars.

That is where, in fact, as we even talk to competitors and we ourselves are fairly large in that space, and even when we talk to peers and players bigger than us, and that's where the pain is seen, and these are reflected even in the published numbers of competition as you see.

Sir, but sir, given you said OD will improve back in couple of quarters' time, then if the competitive intensity is largely there, then any measures like geographic or vehicle models? I don't know.

Just asking you, which can lead to that improvement in 3, 4 percentage points what you just told on OD side?

It is actually, yeah, some calls with respect to the particular make-models that we are playing and to an extent in geography. That is where the corrections are happening and we are seeing those changes in the sourcing.

It is not reflected for you in the LRs now, but we have the confidence that it will show up in the OD LRs because the sourcing mix and pattern is changing.

Understood, sir. Maybe on the health and PA part, again, that was also a pain point in my view, given other segments actually did not give that much pain relatively.

Health is to do with also, yeah, I did show you in page 51 on account of the impact by way of some RI arrangements, which includes health, and that is what is impacting this LR. Which is what even in this page 53 we have indicated that includes effect of reinsurance inward transactions.

Understood, sir. Then, sir, given now we are largely EoM compliant even on 1/n basis, is it fair to say that you will probably revisit your decision to do little more long-term health or PA in general, which probably I think in the current year slowed down a bit from an EoM perspective?

Yes, we should be looking at such opportunities again now that we are closer to the regulatory requirement of the EoM levels. We should be looking at.

Understood, sir. Given our current experience in RI inward has been not as great, given we reported a loss there or it was a drag on profitability, will we continue to do that business say next year or we will revisit in the strategy which we adopted in the current year to do RI inward business?

We will be more careful on the choices of business lines where we do it. On that, the change will happen.

That change will happen. Then fundamentally, see, as I said, we lost about overall about ₹590 crores of crop business this year.

467 is already digested in the nine months and 124 we will take that reduction in Q4. There has to be some rearguard action which we had to take.

Hopefully, when the new tender cycle opens, we can probably get more crop business under the scheme, which can really bring back a whole lot of reasonableness to the entire numbers. It's actually a heady mix of three, four different factors all operating together.

One is the crop business loss, A. Second is the provisioning that we have done for motor third-party, which is significantly higher than what many others have opted to do.

Three is the motor OD effect, which has happened in the industry. I think these three have combined together to leave us with this impact.

Sir, then suppose next year you win crop and you end up with that same 95 combined in crop incrementally, and your motor OD improves by 4%, 5% next year compared to what you're reporting today, then is it fair to say that even if you continue to provide this TP at 78, 79 kind of a number, still a 4%, 5% delta improvement in the loss ratio compared to 81 what you're reporting can happen next year, sir?

No, the OD proportion to the total, for us, because of motor heavy focus, the TP component weight will be there. You can expect that a good portion to come back into the overall loss ratio.

Certainly, I think no reason why from an 81.1, it can't go back to, say, a 77, 77 and a half at least. That is very much certainly possible.

Understood, sir. Sir— Just a minute, Sanket, without even considering the possible effect of the surplus provisioning that we may be making at this point in time.

When we have a good measure of that, I'm sure it will again come back into the P&L. Understood, sir.

Understood. Sir, maybe it's a million-dollar question, on likelihood of TP price hike, I'm not sure whether you'll be in a position to answer it or you intend to answer it.

We have been guessing and then talking of this. The industry itself has been talking of this for now almost three to four years.

The positive element that we see is that in the proposed Motor Vehicle Amendment Bill, the government is thinking of giving the power back to the regulator for making the pricing correction. It is there in the draft amendment bill.

Hopefully, if that comes through, then probably the regulator may take a sympathetic look on this.

Understood. Sir, again maybe because TP has been a pain, if tomorrow hypothetically assume there is no price hike, given we are seeing too many complaints regarding the expenses what insurance companies do to procure the business, and regulator probably asked you to cut the commissions and the better save there rather than asking for a price hike, then is it fair to say that your TP loss ratios will remain at the current levels or it can further increase?

See, because we have taken this provisioning which is higher now, I would tend to think that we will be in a better position. Because we would have then advanced that absorption.

We would probably be in a better position there. That's how I would tend to look at it.

Understood, sir. Understood.

Then, I think most of my questions are answered. Thanks for your answer, yeah.

Thank you.

Thank you. A reminder to all the participants, you may press * and 1 to ask question.

The next question is from the line of Rachna from SCIL Ventures. Please go ahead.

Yes, Ms. Rachna, go with the question, please.

Hello, Ms. Rachna?

Hello?

She was the one who had earlier asked, yes.

Hello, am I audible?

Yes, yes.

Yes. Just a data-related question.

Why there is a difference in profit before tax for Chola MS General Insurance? See, if the PBT reported in Chola MS report is for Q3 FY26 is around ₹79 crores, and the PBT reported for the insurance business in our parent company, Chola Holdings, is ₹123 crores.

Just wanted to understand the reason between the difference between these two numbers if you could please help me understand.

Santosh can answer.

Hi. For insurance company, the standalone books are prepared basis the I-GAAP norms.

Insurance company are not under the IFRS. However, the holding company is on the IFRS.

Their profit is computed as per the Ind AS accounting standard. That's the reason you are seeing a difference in terms of the profitability shown in Chola's statutory book versus the holding company financials.

Both follow the two different accounting regime. Under Ind AS, most of the mark-to-market of investment value, everything goes to the P&L, especially relating to the equity.

That's the reason there's a higher profit. Also, the acquisition costs differ because of DAC and DAF.

There is a different accounting regime for Ind AS versus I-GAAP. That's the reason profit is different.

Understood.

Hi there. Good afternoon there.

Just wanted to check, in case there is a price hike in the third party and since you have done more provisioning right now, is it fair a lot of this provisioning will come back? It will be reversed?

This is the first question. The second question is on the equity proportion of the investment book.

Probably we are single-digit. Is there a chance in the medium term can we increase it to let's say 15% or something like that?

The first question first. Yes, the TP provisioning can go down in the future based on the way our portfolio actually behaves.

Though, today, it is more precautionary provisioning. Of course, if the price goes up, certainly, I think it will come back.

That's the first part. Second, today, we are equity at about 7%, 6.7% of the portfolio.

Our first stop would be to take it up to 10% of the portfolio. Then we'll have to see as to where it can go from there.

You will notice that in fact, less than two years, it's doubled from 3.5% to close to about 7%. Which is where we are done.

Okay. The third one is probably just trying to think that insurance companies are trying to list now.

Obviously, we are not that profitable right now. Let's say in two, three years probably become more profitable.

Then is there a chance that we want to list this company, General Insurance MS?

Sorry, this I think we have been taking this call and our view is that I think the board of CFHL will take an appropriate call closer to the time. We have not considered anything at this point in time.

Okay. Understood, yeah.

Thanks for answering my question.

Thank you.

Hi. Most of my questions have been answered.

Just one bookkeeping question to understand the numbers better. Right?

One of the previous participants had asked about this reported numbers difference between what Chola MS reports and what we report under the holding company, right? When we report in the presentation the RoEs of our business, which is a more representative number that we should be or you also are kind of, when you kind of evaluate business performance on a day-to-day basis, which numbers does the team there follow?

Because a lot of general insurance companies have started reporting two sets of numbers, IFRS, non-IFRS. They want everyone to get anchored to IFRS numbers because of allowance of cost spread out over long period of time, etc., etc.

If you could kind of help us and guide us to saying which number should we focus on? What is really the true RoE of our business and what's our long-term view on that?

See, the governing framework for insurance company today is only I-GAAP. IFRS, while there is the transition that is going to happen, it is not yet mandated.

We are only doing an as-if for an IFRS translation. Where will the big changes in IFRS come through?

Broadly in three areas. When it comes to discounting of liabilities, and given our motor TP provisioning that we are doing, these are all at the full ULRs.

The positive impact that can come for us from a discounting of such liability which is time-indexed can be quite large for a Chola MS part, A. Second is DAC.

We are absorbing all costs upfront today, including those that we pay for long-term policies where the business or risk is not even commenced. When that again is going to be a positive as and when it comes through.

To an extent that yes, the RI commissions could also get deferred. Then there also we have adopted only a conservative stance with the 1/n, you're not even ceding anything that is pertaining to the future, even though costs have been incurred upfront.

These are two large positives. Third is on the investment side, where we are not recognizing any mark-to-market benefit and seeing volatility in it.

Whichever way you see the numbers, what the company is reporting under I-GAAP is conservative. At most conservative is what we would see.

Then we would like the regulations to actually come through before we start talking about the IFRS numbers, which has been our stance. Of course, for the purpose of holding company consolidation, some re-workings have been done, which Santosh can explain to you.

See, just adding to it currently also few players who are doing few reportings on an Ind AS, they're not doing the full proof. They're just doing basically the investment mark-to-market and DACed off from 1/n perspective so that acquisition cost is also deferred and premium also deferred, they wanted to present like that.

If somebody wants to really make a full IFRS compliant numbers want to present, then also need to consider a liability discounting and everything. Coming back to our numbers, see, Chola MS General publish all its numbers as per the I-GAAP, which is an accounting standards prescribed by the ICAI for the general insurance company.

Ind AS adoption is not yet been done for the insurance company in India. However, holding company is already with the Ind AS, and all the numbers reported for the holding company are as per Ind AS.

We have computed for the Chola MS as per the I-GAAP and for the holding company we have computed as per the Ind AS accounting standards. That's the reason you're seeing the number difference.

Answering to your question which number is better, at this point of time, we feel like since all the companies are reporting their numbers as per I-GAAP, we feel like that will be the right number because that's as per the regulatory requirement and the statutory book. That number should be considered.

Thanks a lot for the clarification. What I really wanted to know is how do you assess internally, right?

In the sense whether, let's say I think we have long back repeatedly said that we would like to be around the 17%, 18% RoE mark or 16% to 18% RoE mark. Now, when we see RoEs, we see two RoEs between the two companies, right?

One is let's say what the holding company report based on those numbers and one is what Chola MS reports, right? Which is a true economic RoE, to speak, right?

Whether regulation allows you to report certain things or not, but from your point of view if you have to analyze your business and you're saying that this is my economic RoE, which number would that be? If you could kind of just throw some light on that, it would be great.

For us, if you ask, economic purpose, we always consider the regulatory number to be a final number because there's all numbers till the final regulation on the liability side come by the IRDAI basically the guidelines come, till that time, we cannot consider that is a final number. Yes, but for the holding company consideration, you have to consider the Ind AS number because they are under the different accounting regime.

Let me ask this differently. When we have mentioned in the previous calls that we would like to be in the 16% to 18% RoE, are we talking about 16% to 18% RoE as per IRDAI calculated numbers?

Exactly. Yes, which is where we were even last year where we were at 18.3.

It was only under the same framework. Even now, as at nine months, we were at 8.2 at this point in time, not annualized.

Okay. Is it fair to assume that once the transition happens, the true economic RoE of the business is probably closer to 19%, 20% if those positives that you alluded to earlier get added back to the profit numbers?

Definitely, it should be higher only. See, it can be only higher.

Great sir. Thanks a lot and all the best.

Thank you.

Thanks once again to each one of you who have participated in the earnings conference call. Certainly, this has been a difficult year so far for the company, but the management is fairly confident that changes will happen which will put numbers much better in the ensuing quarters.

Thank you.

Thank you.