IIRM Holdings India Ltd Management Discussions

Global Economy

The global economy in 2025 is expected to deliver only moderate growth, reflecting the influence of persistent disruptions and heightened uncertainty. According to the International Monetary Funds April World Economic Outlook, global GDP growth is projected at about 2.4% for 2025, with the World Banks March report offering a slightly stronger estimate at 2.7%. Both forecasts indicate a decline compared to the estimated 2.9% achieved in 2024, highlighting the fragility of the current economic recovery.

Trade barriers have re-emerged as a primary restraint on global activity. The escalation of tariff levels to historic highs and the resulting retaliation among major economies have placed strain on supply chains, increased production costs, and curtailed investment. The United Nations has cited rising trade and policy uncertainty as reasons for downgrading its mid-year global growth outlook. Growth prospects continue to diverge across regions. Advanced economies face slower expansion as the post-pandemic momentum gives way amid tighter financial conditions. In the United States, growth is expected to moderate to 1.8% in 2025, while the Euro Area anticipates growth below one percent. Conversely, emerging markets, especially in Asia, are forecast to demonstrate resilience.

Structural headwinds remain, such as ongoing supply chain bottlenecks, inflation risks, and the rising economic impact of climate-related events. Policy initiatives focused on supply chain diversification, infrastructure improvement, and climate adaptation are becoming ever more vital for supporting both resilience and long-term growth.

Indian Economy

India has continued to distinguish itself as an outlier in global economic performance, securing robust growth momentum despite external volatilities. Real GDP is estimated to have expanded by approximately 6.5% in FY25, with the Reserve Bank of India anticipating a comparable trajectory for FY26. This follows the robust 9.2% growth observed in the previous year.

Performance across the principal sectors has been broadly constructive. The agricultural sector rebounded meaningfully, aided by favourable climatic conditions and timely policy measures. The industrial sector, with manufacturing at the forefront, recorded real output growth of 12.3% in FY24, its highest in over a decade. This acceleration is attributable to enhanced capacity utilisation and the impact of Production-Linked Incentive schemes. The services segment continues to underpin Indias economic narrative, projected to record growth of around 7.2% in FY2024–25 and thereby maintaining its pivotal role. On the policy front, the governments recommitment to fiscal consolidation remains clear, with targets to reduce the fiscal deficit to 4.8% of GDP in FY25 and to 4.4% by FY26, supported by buoyant tax collections and efficiency-driven spending. Concurrently, consumer price inflation has moderated to the 4.5–5.0% range, comfortably within the stipulated range of the Reserve Bank of India.

Looking ahead, a diversified export base, sustained structural reforms, and entrenched macroeconomic stability are expected to mitigate external headwinds. India, as it enters FY26, is firmly positioned to preserve its status as the fastest-growing major economy, supported by resilient domestic fundamentals and ongoing policy enhancements.

Global Insurance Industry

The global insurance industry is navigating a period of moderation in premium growth, following robust expansion in 2024. Industry forecasts indicate that total global premium growth will slow to approximately 2% in real terms in 2025, reflecting roughly half the pace observed last year. A modest uptick is expected in 2026, with premium growth forecast to reach 2.3%. These projections reflect underlying macroeconomic headwinds, including a weaker world economy and ongoing policy uncertainties that are creating challenges for insurance providers worldwide.

In non-life insurance, global premium growth is projected to dip to 2.6% in 2025 from 4.7% in 2024. Commercial lines are experiencing softer pricing, while competition within personal lines is intensifying. Certain market segments remain resilient; in the United States, motor and casualty lines are encountering significant claims cost increases. The UKs non-life premium growth is expected to fall from around 3% in 2024 to less than 1% in 2025, as motor insurance pricing returns to more stable levels. Emerging market non-life growth is expected to outpace advanced economies, with emerging Asia forecast to grow at roughly 4.8% in 2025, excluding China, which itself is moderating to around 5.3% growth.

Life insurance experienced a significant jump in premiums, up 6.1% in 2024, though forecast growth is set to slow to around 1% in 2025 as the surge in demand for savings products, propelled by higher interest rates, begins to unwind. Recent financial market volatility has led consumers towards low-risk policies with guaranteed returns. Protection-oriented products, such as traditional life cover, demonstrate stable demand, even as economic factors temper new policy uptake. A recovery is anticipated in 2026, with global life premium growth estimated to return to around 2.4%, in line with longer-term trends.

From a profitability perspective, the industry continues to benefit from elevated investment yields against a backdrop of moderating inflation. Strong labour markets have supported real incomes and sustained insurance demand, contributing to a positive outlook for operating margins. Policy-related uncertainty, geopolitical tensions, and US tariff actions are notable risks that could influence performance, potentially increasing inflation and claims costs, especially within property and casualty lines. Natural catastrophe losses remain significant, frequently exceeding USD 100 billion annually, which may impact property insurance pricing trends.

Looking ahead, insurers are expected to see continued improvement in profitability, aided by easing claims inflation and improved investment returns. Non-life underwriting margins should benefit from lower claims costs, while life providers will continue to see gains from strong portfolio yields. However, the industry remains vigilant, monitoring macroeconomic shifts and policy developments to safeguard financial resilience and capitalise on emerging opportunities.

Indian Insurance Industry

Indias insurance sector continues to stand out internationally, distinguished by its strong growth trajectory and expanding relevance within the global insurance community. Swiss Re forecasts position India as the fastest-growing insurance market among the G20 nations over the coming five years. This optimism reflects the countrys broad-based economic growth, increasing disposable incomes, favourable demographics, deeper risk awareness, digital adoption, and a dynamic regulatory framework. India, alongside Canada and Brazil, advanced its share of global insurance premiums in the last year, confirming its strategic importance on the world stage. Asias emerging prominence is further highlighted with five regional markets in the global top 20, collectively accounting for 22% of global insurance market share.

Despite being among the fastest-growing markets, Indias insurance industry has recently faced certain challenges. According to Swiss Re, rising inflation and revised tax regulations for high-value policies contributed to a slowdown in the growth of the life insurance segment, where premium volumes increased by only 0.6% in 2023–24. In contrast, the non-life sector registered robust expansion, with real premium growth reaching 7.9% in the same period. The appetite for term life coverage continues to rise, underpinning a projected 5% real growth in life insurance premiums for the near future.

Insurance penetration and density remain key indicators in assessing the sectors development. Insurance penetration refers to the share of insurance premiums in relation to GDP, while density is measured by per capita premium levels. In 2023–24, Indias overall insurance penetration stood at 3.7%, compared to 4% in 2022–23. The life insurance segment saw a marginal fall in penetration, moving from 3% to 2.8%, whereas non-life penetration maintained stability at 1%. This trend reflects both the resilience of the industry and the evolving dynamics of consumer demand.

Insurance density in India marked an improvement in 2023–24, rising to USD 95 from USD 92 in 2022–23. Non-life insurance density increased from USD 22 to USD 25, highlighting the segments growing contribution, while life insurance density remained constant at USD 70. The upward movement in density has been steady since 2016–17, demonstrating the countrys increasing engagement with insurance solutions. When compared internationally, Indias insurance market still offers considerable scope for further growth. The Swiss Re Sigma World Insurance Report shows that in 2023, the global average penetration and density figures were 2.9% and USD 361 for life insurance, and 4.2% and USD 528 for non-life, resulting in overall global averages of 7% and USD 889 respectively. Indias figures, while trailing these benchmarks, suggest significant untapped potential in the domestic market.

In summary, Indias insurance industry remains on a promising path, propelled by economic expansion, reforms, and growing public awareness. The combination of favourable structural factors and rising insurance adoption positions the sector to close the penetration and density gap, thereby aligning more closely with international standards in the years ahead.

Role of Intermediaries

Intermediaries occupy an indispensable position within the Indian insurance value chain, underpinning the efficient delivery and service of insurance solutions to a broad and diverse clientele. Insurance brokers represent the principal intermediary category, bringing distinctive strengths and reach to the market.

Insurance brokers play a central role in expanding access to insurance services. As of today there are 798 Insurance Brokers, 655 Corporate Agents Throughout the preceding financial year, 64 new Certificates of Registration were granted, while 189 renewals were processed, reflecting the dynamic participation and resilience of the broking community.

Intermediaries play a vital role in Indias insurance distribution landscape. In life insurance individual agents remained the principal channel for new individual business, accounting for 50.90% of total premium in 2023-24. Corporate agents followed, contributing 35.05% of new individual premium. In the private sector, corporate agents held a significant share at 55.12%, compared to 22.69% contributed by individual agents. Direct sales represented 9.91% of new individual business, with private sector insurers attributing 16.11% of new premium to this channel. Brokers and online channels together contributed just under

4%. For health insurance, individual agents garnered 30% of premium, brokers 29%, and bancassurance nine percent. In general insurance, brokers led with 37.1%, closely followed by direct sales (25.6%) and individual agents (20.1%). These figures emphasise the continuing dominance and essential function of intermediaries in reaching diverse customer segments and supporting insurance growth across India.

Company Overview

IIRM Holdings India Limited is a leading insurance distributor, supporting organisations and individuals across diverse geographies with robust risk management and insurance solutions. The company operates through a group structure comprising subsidiaries in India, Singapore, Sri Lanka, Maldives, and Kenya, offering a comprehensive suite of products including commercial lines (group employee benefits and corporate policies), reinsurance, personal lines (retail), and advisory services.

The business is defined by its integrated approach, combining traditional expertise with modern technology through its proprietary PHYGITAL model. By blending physical distribution channels and digital platforms, IIRM Holdings enhances customer experience, expands market accessibility, and delivers operational efficiency. Its solutions are tailored to address the needs of industries, corporates, SMEs, and individual policyholders, with a focus on risk protection, employee benefits, and specialised consultancy.

The companys ongoing commitment to professional development ensures a skilled workforce capable of meeting evolving sector requirements. As a listed entity on the Bombay Stock Exchange, IIRM Holdings India Limited continues to strengthen its position as a trusted partner, advancing insurance distribution and broadening access to comprehensive insurance services throughout the regions in which it operates.

RISKS AND MITIGATION STRATEGY

Regulatory Changes
Description	Mitigation Strategy
Frequent changes in insurance regulations can impact business operations and compliance.	Stay informed of regulatory updates and maintain a dedicated compliance team to ensure adherence.
Market Competition
Description	Mitigation Strategy
Intense competition from established and new players can affect market share and profitability.	Differentiate through innovative products, superior customer service, and strategic partnerships.
Technological Disruptions
Description	Mitigation Strategy
Rapid technological advancements may render existing systems obsolete.	Invest in continuous technological upgrades and leverage AI and ML for enhanced service delivery.
Data Security Breaches
Description	Mitigation Strategy
Cyber threats and data breaches can compromise sensitive customer information.	Implement advanced cybersecurity measures and conduct regular audits to safeguard data integrity.
Economic Volatility
Description	Mitigation Strategy
Economic downturns can affect customer spending on insurance products.	Diversify product offerings and expand into emerging markets to mitigate economic risks.
Talent Retention
Description	Mitigation Strategy
High turnover rates can lead to loss of skilled professionals and impact service quality.	Offer competitive compensation packages and implement talent development and retention programs.

Disclosure of Accounting Treatment

Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the managements explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.

Financial Performance and Outlook

In FY25, IIRM Holdings India Limited reported robust financial performance, with revenue from operations increasing by 23.4% to 2,194 million, up from 1,778 million in FY24. Total income rose to 2,210 million, reflecting growth supported by strength in health, motor, and reinsurance verticals. The gross written premium portfolio stood at 13,268 million as compared to 11,444 million previously, registering a 16% advancement. EBITDA for the year reached 471 million versus 466 million in FY24, with the margin at 21.4%. Profit after tax amounted to 216 million, demonstrating resilience amid prioritised volume growth and significant upfront investment in operational capabilities. The conscious focus on expanding the retail segment, especially through motor insurance, has positioned the company for future margin enhancement.

Looking forward, the company is poised to leverage the substantial untapped potential within target markets, where insurance penetration remains low for key lines such as motor and health. IIRM expects to transition toward higher-margin products and benefit from completed technology investments, laying the foundation for continued growth and margin improvement from FY26 onwards. Confidence remains high in sustaining a robust growth trajectory in both revenues and profitability.

Opportunities and Threats

Opportunities

• Expansion in emerging markets promises growth with untapped demand and regulatory support.

• AI, data analytics and automation hold potential to enhance pricing, efficiency and customer engagement.

• Specialised products for ageing populations and climate risk create new value propositions.

Key Financial Ratios

Particulars	FY25	FY24	Change	Reason for Variance
(a) Current Ratio	3.26	2.57	26%	Change is on account of increase in trade receivables as well as borrowings [payable within 1 yr]
(b) Return on Equity Ratio	16%	20.23%	(20%)	Change is on account of higher taxes recorded in books due to settlement of previous year taxes under Vivad se Vishwas Scheme resulting in lower PAT.
(c) Trade Receivables turnover ratio	3.74	7.91	(53)	Change is on account of higher receivable balance outstanding considering the type of business.
(d) Net Working Capital turnover ratio	3.26	3.16	3%	Increase in Net Working Capital turnover ratio is due to increase in revenue.
(e) Net Profit ratio	9.86%	12.73%	(23%)	Change is on account of higher taxes recorded in books due to settlement of previous year taxes under Vivad se Vishwas Scheme resulting in lower PAT.
(f) Return on Capital Employed	24.79%	30.51%	(19%)	Change on account of higher payroll cost resulting in a lower EBIT.
(g) Debt Equity Ratio	0.16	0.12	33%	Increase in Debt Equity Ratio is due to increase in borrowings.

Note: Consolidated Figures

*Shareholders Equity = Paid up share capital + Reserves & surplus

Average Trade payable = (Opening trade payable + Closing trade payable)/2

Working Capital = Current assets - Current liabilities

Capital Employed = Paid up share capital + Reserves & Surplus

Threats

• Rapid regulatory shifts may heighten compliance burdens and raise distribution costs.

• Rising cyber and operational risks from digital transformation could undermine trust and strain resources.

• Intensifying competition from insurtechs and direct to consumer models may erode traditional channels.

Internal Control

IIRM Holdings India Limited maintains a comprehensive internal control framework to support operational efficiency, accuracy in financial reporting, and adherence to regulatory requirements. The system is structured to provide reasonable assurance in achieving objectives related to effective operations, reliable financial information, and compliance. Internal controls are periodically reviewed and audited, allowing the company to identify gaps and implement necessary corrective measures. The Audit Committee works closely with management to supervise these processes, ensuring alignment with strategic direction and risk management standards. This established approach safeguards company assets, enhances operational efficiency, and supports continued stakeholder trust.

Human Resource

Our employees form the foundation of IIRM Holdings continued progress. The company fosters a work environment that promotes professional growth and development at all levels. Human resource priorities include attracting, retaining, and developing talent through targeted training initiatives, competitive benefits, and structured career advancement. Employee well-being and engagement are actively supported as key drivers of organisational success. As of 31 March 2025, the company employed over 500 individuals. A commitment to diversity and inclusion enhances innovation and teamwork, enabling IIRM Holdings to fulfil its objectives and maintain a collaborative culture throughout the organisation.