It isn’t a sprint. Insurance business is like a marathon. It requires enormous patience. Perseverance is the key. Well, this one has it in plenty. As many as 20 summers have gone by since it came into being in 2002. This joint venture is steadfastly focussed on Three ‘Ts’ (Trust, Transparency and Technology). This ‘3T’ focus appears to have kept Cholamandalam MS General Insurance Co (Chola MS) in good stead all along. For the 60:40 joint venture between the Chennai-based Murugappa group and Mitsui Sumitomo of Japan 2022-23 was a momentous year. If one were to go by the numbers, the year was indeed a good augury for Chola MS. The capital profile of the insurance JV has improved over the last two-three years, with a solvency ratio of 2.01x as on 31 March 2022 from the low of 1.58x as on 31 March 2020. The minimum regulatory requirement of solvency ratio is 1.5x. The ratio gives a clue or two to the ability of a company to meet its long-term debts and financial obligations. Solvency can be an important measure of financial health, since it’s one way of demonstrating a company’s ability to manage its operations into the foreseeable future. “The improvement in the solvency was partly due to lower GDPI (gross direct premium income) and lower claims in 2020-21 and 2021-22 with the impact of the Covid-19 pandemic,” says rating agency ICRA, in a recent report on Chola MS. “Further, despite the higher growth, the solvency improved due to the reduction in some of the disallowances in the available solvency margin”. Given this, ICRA does not expect any incremental capital requirement for Chola MS in the medium-term for achieving the projected business growth. Should there be any need, the parents, who have a strong pedigree, will have little difficulty in stepping in with the support. The JV has so far chosen to plough back all the profits into the business rather than rewarding the parents with dividends. At about Rs6,200 crore, the gross written premium (GWP) of Chola MS has grown by 27.6 per cent in 2022-23 – well above the industry growth of 16.2 per cent. Chola MS has about 33.6 million active customers. In 2020-21, it sold 12.1 million policies. On the critical financial parameters, the JV has turned out robust numbers. The PBT (profit before tax) had risen to Rs264 crore in 2022-23 – up from Rs106 crore in 2021-22. And, the net worth stands at Rs2,160 crore at the end of March 2023. The investment corpus has risen to Rs14,715 crore. Chola MS claims that it has a market share of 2.87 per cent among the multi-line insurance players. “We will continue to grow ahead of the industry in 2023-24 to step up our share,” affirms V. Suryanarayanan, managing director, Chola MS. Significantly enough, the Chennai-based insurer has grown robustly across segments, when compared to the industry as a whole. It grew by 33.4 per cent in fire, 26.8 per cent in motor, 36.7 per cent in health, 20.9 per cent in other commercial lines and 16.7 per cent in personal accidents during 2022-23. “We have seen growth on all fronts,” the MD acknowledges. What is gratifying to the management is the fact that the JV has also out-performed the industry’s growth.
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Chola MS claims that it has a market share of 2.87 per cent among the multi-line insurance players
