Virat Kohli-backed Go Digit General Insurance expects its solvency ratio to surpass 200% after the initial public offering is completed.
“My sense is that after the capital raise, the solvency ratio should exceed 200%. We have not done exact calculation,” chairman Kamesh Goyal said, adding that the company does not intend to raise further capital in the near future at least.
The Bengaluru-based insurtech company’s solvency ratio fell to 160% in April-December from 190% a year ago.
In its draft red herring prospectus, the company stated that the objective of the IPO is to maintain the solvency ratio. The IPO opens for subscription on May 15, and closes on May 17.
The company has set the price band at Rs 258-272 per equity share.
“I think it is good that the people coming now are coming at a lower value. This (price range) is what bankers suggested. If it is below the previous round, I think the customers or potential retail investors should be happy,” he said.
The net profit of Go Digit improved to Rs 129 crore in April-December 2023, from Rs 10 crore a year ago. But, the company has posted an operating loss of Rs 10 crore.
The company’s loss reserves as a percentage of the gross written premium rose to 103.6% as on December 31 from 102.2% a year ago.
“Most of our business is retail and so expenses would be high in a retail business. On the other hand, in less than six years, our assets under management will be more than 50% of some the top 5 companies,” he said.
“Looking at some of things on a standalone basis would be difficult from a profitability perspective. When you are growing fast, it also leads to higher losses because your commission expenses have to be incurred on day one,” he added.
The assets under management stood at Rs 14,909 crore as on December 31. The gross written premium was around Rs 6,680 crore in April-December. The health and motor insurance segment comprise 76% of the gross written premium.
In recent years, the company has focussed on increasing its health insurance business. The contribution of health insurance to gross written premium rose to 14.9% as on December 31 from 10.5% a year ago.
“In health insurance, I think retail is growing very well. The growth rate has come down from COVID times. Group health is growing very strongly. Health overall is growth strongly. So, there are opportunities in this space,” he said.