HDFC Ergo Annual Reports, Balance Sheet and Financials

HDFC Ergo General Insurance Company Limited Balance Sheet (Rs in Thousands)

 HDFC Ergo General Insurance Company Limited Profit & Loss Statement (Rs in Thousands)

 HDFC Ergo General Insurance Company Limited Consolidated Cash Flow Statement (Rs in Thousands)

Here is a summary of the Cash Flow Statement for the years 2024 and 2023:

Cash Flows from Operating Activities

The company generated a net cash inflow of ₹1,45,63,520 thousand from its core operations in 2024, down from ₹2,83,27,512 thousand in 2023. Key inflows included premium received from policyholders totaling ₹21,46,09,557 thousand, a significant increase from the previous year, reflecting strong premium growth. However, these were offset by substantial cash outflows, including:

Payments to re-insurers of ₹-3,64,01,704 thousand and payments of claims of ₹-10,67,76,348 thousand, showing higher payouts and insurance claims.

Commission and brokerage expenses (₹-2,70,85,952 thousand) and other operating expenses (₹-1,75,77,694 thousand) also contributed to the outflows.

Other notable outflows included taxes and Goods and Services Tax (GST) payments, with income taxes paid (₹-20,74,403 thousand) and GST payments (₹-90,77,655 thousand). The decline in net cash from operations compared to 2023 suggests increased operational costs and claims payouts, despite higher premiums received.

Cash Flows from Investing Activities

Investing activities resulted in a net cash outflow of ₹-1,45,99,965 thousand in 2024, an improvement from ₹-2,65,67,364 thousand in 2023. The company made significant investments (₹-13,95,45,317 thousand), which were partly offset by the sale of investments (₹11,49,65,471 thousand). Other inflows included interest, rent, and dividends received totaling ₹1,50,07,176 thousand. The net outflow reflects substantial reinvestments into financial instruments and assets, with a marginal improvement compared to the previous year.

Cash Flows from Financing Activities

Financing activities produced a net cash outflow of ₹-2,33,757 thousand in 2024, a shift from the positive inflow of ₹78,450 thousand in 2023. The major inflows came from proceeds from borrowings (₹32,00,000 thousand) and issuance of share capital (₹4,94,174 thousand). However, these were offset by borrowings repaid (₹-7,40,000 thousand), interest paid (₹-6,77,661 thousand), and dividends paid (₹-25,01,501 thousand). The net outflow indicates higher borrowing repayments and dividend payouts during the year, reflecting a focus on returning value to shareholders.

Effect of Foreign Exchange Rates on Cash and Cash Equivalents

There was a minor net foreign exchange impact of ₹-1,057 thousand in 2024, compared to ₹-1,571 thousand in 2023, which had a minimal effect on cash flow.

Net Increase/Decrease in Cash and Cash Equivalents

Overall, the company experienced a net decrease in cash and cash equivalents of ₹-2,71,259 thousand in 2024, compared to a net increase of ₹18,37,027 thousand in 2023. This decrease was primarily due to large outflows in investing activities, which outweighed the inflows from operations and financing.

 Financial Ratios of HDFC Ergo General Insurance Company Limited

 Here is a summary of the financial and operational metrics for HDFC Ergo General Insurance Company Limited for the year 2024 and 2023:

Gross Premium Growth Rate

This ratio measures the year-over-year increase in gross premiums collected by the company. In 2024, the growth rate was 11.61%, a significant slowdown from 23.25% in 2023. While the company continues to grow its premium base, the lower growth rate in 2024 could suggest market saturation or more challenging conditions compared to the previous year.

Net Retention Ratio

The net retention ratio shows the percentage of premiums retained by the company after paying reinsurance costs. In 2024, the retention ratio increased slightly to 55.52% from 52.63% in 2023, indicating that the company retained a higher proportion of premiums. This suggests that the company is taking on more risk or has reduced its reliance on reinsurance.

Net Commission Ratio

This ratio reflects the proportion of net premiums that are spent on commission expenses. In 2024, the net commission ratio increased to 8.77% from -2.69% in 2023, indicating a significant rise in commission expenses. The negative ratio in 2023 may have resulted from the recovery of prior commissions, but the positive ratio in 2024 suggests higher current commissions being paid to agents and brokers.

Expenses of Management to Gross Direct Premium Ratio

This ratio measures the company’s management expenses as a percentage of gross direct premiums. It increased slightly from 22.87% in 2023 to 23.03% in 2024, indicating that management costs have grown in line with premium income. This suggests stable efficiency in managing operational costs relative to premiums.

Expenses of Management to Net Written Premium Ratio

This ratio measures management expenses as a percentage of net written premiums (premiums retained after reinsurance). The ratio decreased slightly from 42.84% in 2023 to 40.96% in 2024, indicating improved cost efficiency relative to the premiums retained. This suggests that the company is managing its costs more effectively.

Net Incurred Claims to Net Earned Premium

This ratio shows the proportion of net earned premiums that is used to cover claims. The ratio increased from 79.94% in 2023 to 87.70% in 2024, indicating that a larger portion of premiums earned went toward claims payments. This rise suggests an increase in claims or higher payouts, which could impact profitability.

Combined Ratio

The combined ratio measures the company’s underwriting profitability by adding the claims ratio and expense ratio. A combined ratio over 100% indicates an underwriting loss. The ratio increased from 103.29% in 2023 to 112.14% in 2024, signaling that the company experienced higher underwriting losses in 2024 due to increased claims and expenses relative to premiums earned.

Technical Reserves to Net Premium Ratio

This ratio reflects the adequacy of the company’s reserves relative to its net premiums. In 2024, the ratio increased slightly to 1.58 from 1.52 in 2023, indicating that the company has set aside more reserves relative to its premium base, which suggests prudent risk management and preparedness for future claims.

Underwriting Balance Ratio

The underwriting balance ratio measures the underwriting profit or loss as a percentage of net premiums. The ratio worsened to -0.14 in 2024 from -0.06 in 2023, indicating a larger underwriting loss relative to premiums. This decline reflects increased claims and expenses impacting the company’s underwriting performance.

Operating Profit Ratio

The operating profit ratio shows the profitability of the company’s core insurance operations. The ratio decreased to 2.97% in 2024 from 8.37% in 2023, indicating a significant decline in operating profitability. This suggests that despite revenue growth, increased claims and expenses negatively impacted operational profit margins.

Liquid Assets to Liabilities Ratio

This ratio measures the company’s liquidity by comparing liquid assets to total liabilities. The ratio decreased from 0.23 in 2023 to 0.16 in 2024, indicating that the company’s liquidity position has weakened, with fewer liquid assets available to cover liabilities. This may suggest a need for improved liquidity management.

Net Earnings Ratio

The net earnings ratio measures the company’s overall profitability as a percentage of revenue. It decreased from 7.35% in 2023 to 4.19% in 2024, indicating a decline in overall profitability. This reduction may be due to higher claims, increased operating expenses, and a lower contribution from underwriting activities.

Return on Net Worth

Return on net worth (RONW) shows how effectively the company is generating profits from shareholders ' equity. The ratio decreased from 18.05% in 2023 to 11.36% in 2024, reflecting a decline in the company’s profitability and a lower return for shareholders. The drop in RONW is likely linked to increased claims and reduced profit margins.

Gross NPA Ratio

The gross non-performing assets (NPA) ratio measures the proportion of non-performing assets in the company’s loan portfolio. The ratio improved slightly from 0.99% in 2023 to 0.82% in 2024, indicating better management of credit risk and fewer non-performing assets relative to the total loan portfolio.