Digit

[Maxwave28]

Anyone have any insight into if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities (both public and private) and slowly morph into a conglomerate with a similar business model to brk/ffh/mkl over time? 
 

would seem like a logical next step given BRK/FFH success. 

 

Separately, Prem mentioned that FFH manages float of majority owned insurance subsidiaries. I don’t think this applies to Digit but don’t know for sure. Does anyone know?
 

 

[dartmonkey]

if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities 

 

What about Odyssey or Brit or Allied? Should they also start to invest their profits in equities (both public and private) and slowly morph into conglomerates? Seems like a waste to replicate the Fairfax structure at the subsidiary level.

[nwoodman]

49 minutes ago, dartmonkey said:

if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities 

 

What about Odyssey or Brit or Allied? Should they also start to invest their profits in equities (both public and private) and slowly morph into conglomerates? Seems like a waste to replicate the Fairfax structure at the subsidiary level.

I think you will find the equities are  held at the sub level. This is also the case with Berkshire.

 

It will be the same for Digit.  Take Eurobank for example (from Perlexity):

 

Several subsidiaries of Fairfax Financial Holdings Limited own shares in Eurobank Ergasias S.A., a major Greek bank. According to the search results:

Zenith Insurance, Odyssey Reinsurance Company, TIG Insurance Company, United States Fire Insurance Company, First Capital Insurance Limited, TIG Insurance (Barbados) Limited, Advent Capital (Holdings) Ltd., Falcon Insurance Company (Hong Kong) Limited, Brit Insurance (Gibraltar) PCC Limited, Advent Capital (No. 3) Ltd., Newline Insurance Company Limited, Newline Corporate Name Limited, and Fairfax Financial Holdings Master Trust Fund have all acquired shares in Eurobank over the years.

 

For example, in December 2017, Zenith Insurance acquired 2,335,000 shares, Odyssey Reinsurance Company acquired 5,837,500 shares, TIG Insurance Company acquired 1,167,500 shares, and United States Fire Insurance Company acquired 2,335,000 shares in Eurobank.

A slightly more interesting question is where are the investment ideas going to originate?  Ultimately HWIC would sign off I would think.

Edited May 13 by nwoodman

[Maxwave28]

Fair points, and yes I agree the insurance subs are where much of the investments are held. However those subs are controlled so that FFH fully controls distributions and investments. 

 

Perhaps i am thinking about it incorrectly but was thinking that since Digit is going public and prolly wont be taken private anytime soon (at least that’s not the plan) it wont be fully controlled the same way Odyssey, Brit etc.. are so therefore FFH will not be able to spread its investments in Eurobank like equity securities across Digit’s capital. Would have thought Digit equity investments if any would be controlled by Digit which may have different desires than FFH. It might work for large market cap public investments (eg Micron) but it wont work for Atlas for example, b/c there is no public market for Atlas’ shares.  Plus would think Digit would want the majority of its equities portfolio to generate their earnings in Indian Rupees. 

 

Maybe i am over complicating it 

 

 

[nwoodman]

7 minutes ago, Maxwave28 said:

Fair points, and yes I agree the insurance subs are where much of the investments are held. However those subs are controlled so that FFH fully controls distributions and investments. 

 

Maybe i am over complicating it 

 

 

All good, I think you touched on the key point and that is control.  After all  Odyssey isn’t wholly owned either

[smed]

On 5/9/2024 at 10:17 AM, nwoodman said:

Double points for a link either on the Digit Website, SEBI or the BSE/NSE to the IPO.  I had a quick look but no joy from my quick search

It's official, Go Digit is now visible at NSE by choosing "Upcoming IPOs" at the following link:

https://www.nseindia.com/market-data/all-upcoming-issues-ipo

 

Ticker/symbol: GODIGIT

[nwoodman]

17 minutes ago, smed said:

It's official, Go Digit is now visible at NSE by choosing "Upcoming IPOs" at the following link:

https://www.nseindia.com/market-data/all-upcoming-issues-ipo

 

Ticker/symbol: GODIGIT

Top stuff

[nwoodman]

There was an interesting article in  The Ken today regarding health insurance in Digit’s mix. Summary:

 

Summary

1. Go Digit, India's first insurtech unicorn, is launching its IPO on May 15 at a $3 billion valuation, lower than its last private valuation of $3.5 billion.

2. Go Digit's business mix is shifting, with motor insurance premiums falling from 93% to 70% of total premiums and health insurance premiums growing 26.8X from Rs 48 crore (3% of total premiums) in FY20 to Rs 1,288 crore (16% of total premiums) in FY24.

 

 

 

3. However, 96% of Go Digit's health insurance premiums come from the less profitable group insurance segment, concerning industry experts.

4. Go Digit's focus on group health insurance has led to a higher incurred claim ratio (93% in Q3 FY24) and a combined ratio of 109%, while competitors like Star Health are pivoting to more profitable retail policies.

5. According to industry insiders, insurers often focus on group health insurance as a "low-hanging fruit" to grow their topline and market share quickly, even if profitability suffers.

6. Go Digit remains committed to group health insurance in the near term, expecting to rely heavily on corporate clients for a substantial portion of its health insurance premium revenue.

 

 

 

7. Some believe Go Digit's strategy could work if it targets the right corporate segments, such as IT and startups willing to pay well for employee health benefits.

8. As a public company, Go Digit will face pressure to deliver both growth and profitability in the challenging group health insurance segment.

9. Founder Kamesh Goyal acknowledges that success in the stock market, like in life, is not a linear climb, and Go Digit will need to prove its ability to buck industry trends profitably.

 

Personally I think the pie is growing so fast it doesn’t really matter.  Also I would see the health data you are gathering for the Life business and vice versa as material.  This quote is salient for their future retail book of business:

 

“But why isn’t a venture capital-backed internet company like Go Digit giving top priority to retail customers just yet, especially when many are singing its praises?

“Go Digit has the best mobile app among all general insurers, and getting health insurance through it was incredibly convenient,” said a 32-year-old Chennai-based financial analyst who got introduced to the insurer through a short-term Covid-19 insurance provided by their employer. They have been renewing their policy for the past four years, paying Rs 20,000 (US$240) annually for Rs 20 lakh (US$24,000) coverage, which includes modern treatments like robotic surgeries.

 

Go Digit wanted to build brand recognition through corporate clients before diving into retail, but the shift won’t be a breeze. “It’s easy to attract users for motor insurance, but health or life insurance requires trust in the company,” as the Gurugram-based insurtech employee put it.

 

IMHO if there is one insurance executive that gets this, it is Kamesh Goyal 

Edited May 14 by nwoodman

[Hoodlum]

Here are some of the initial pre-IPO investors.  
 

https://www.ndtvprofit.com/amp/ipos/go-digit-mops-up-rs-1176-crore-from-anchor-issue-in-pre-ipo-fundraise

 

Go Digit General Insurance Ltd. has raised Rs 1,176 crore from anchor investors, ahead of its initial public offering. The company allotted 4.32 crore shares at Rs 272 apiece to 56 anchor investors.

 

The American multinational Fidelity Investments-backed fund got the highest allocation of 7.95%.

 

Goldman Sachs Funds (5.31%), Abu Dhabi Investment Authority (5.31%), Custody Bank of Japan (4.25%) and Bay Pons Partners (4.11%) are among the other marquee investors in the pre-IPO round fundraising.

 

Eleven domestic mutual funds have applied through a total of 23 schemes, the company said in an exchange filing on Tuesday. They have collectively netted 33.5% of the anchor portion of Rs 204 crore.

 

ICICI Prudential Mutual Fund, SBI Mutual Fund, Mirae Asset and Axis Mutual Fund are among the key investors in this category.

[Haryana]

14 hours ago, smed said:

It's official, Go Digit is now visible at NSE by choosing "Upcoming IPOs" at the following link:

https://www.nseindia.com/market-data/all-upcoming-issues-ipo

 

Ticker/symbol: GODIGIT

 

This is now under CURRENT as it is "Active" on May 15 after midnight in India.

 

Also, worth watching is their listing on the other major exchange, BSE -

https://www.bseindia.com/markets/publicIssues/DisplayIPO.aspx?id=3439&type=IPO&idtype=1&status=L&IPONo=6575&startdt=15/May/2024

 

[Haryana]

2 hours ago, Hoodlum said:

Here are some of the initial pre-IPO investors.  
 

https://www.ndtvprofit.com/amp/ipos/go-digit-mops-up-rs-1176-crore-from-anchor-issue-in-pre-ipo-fundraise

 

Go Digit General Insurance Ltd. has raised Rs 1,176 crore from anchor investors, ahead of its initial public offering. The company allotted 4.32 crore shares at Rs 272 apiece to 56 anchor investors.

 

The American multinational Fidelity Investments-backed fund got the highest allocation of 7.95%.

 

Goldman Sachs Funds (5.31%), Abu Dhabi Investment Authority (5.31%), Custody Bank of Japan (4.25%) and Bay Pons Partners (4.11%) are among the other marquee investors in the pre-IPO round fundraising.

 

Eleven domestic mutual funds have applied through a total of 23 schemes, the company said in an exchange filing on Tuesday. They have collectively netted 33.5% of the anchor portion of Rs 204 crore.

 

ICICI Prudential Mutual Fund, SBI Mutual Fund, Mirae Asset and Axis Mutual Fund are among the key investors in this category.

 

Not a cent less, at the top of the -

"Price Range	Rs. 258 to Rs. 272"

[Haryana]

There is a link on BSE listing the anchor investors -

https://www.bseindia.com/markets/MarketInfo/DownloadAttach.aspx?id=20240514-77&attachedId=e73ef530-5a28-43fa-815d-9f3dac7602d6

 

Also, the details of total (NSE+BSE) Bids by category -

https://www.bseindia.com/markets/publicIssues/CummDemandSchedule.aspx?ID=6575&status=L

 

Day 1 of 3:

Yet to have a full go at it by the Qualified Institutional Buyers.

Overall, underwhelming demand by Non Institutional Investors.

However, oversubscribed 1.4 times by Retail Individual Investors.

 

[Haryana]

Chairman Kamesh Goyal

 

 

[netcash1]

What is the IRDAI website for the non life monthly numbers please?

 

 

[nwoodman]

1 hour ago, netcash1 said:

What is the IRDAI website for the non life monthly numbers please?

 

 

The reports you are after are now published here: https://www.gicouncil.in/statistics/industry-statistics/flash-figures/

[netcash1]

A big thank you 

[Hoodlum]

The IPO had a big jump in share bids on the final day of the subscription.  I was a little worried yesterday as we had not met the required share allocation in some of the categories. This should help with a good open on the market next week. 
 

https://www.moneycontrol.com/news/business/ipo/go-digit-ipo-issue-subscribed-retail-investors-niis-qibs-virat-kohli-anushka-sharma-12724760.html/amp
 

The public issue was subscribed 3.7 times in the retail category. Non-institutional investors bought 4.17 times their allotted quota. The portion for qualified institutional buyers (QIBs) was booked nearly 9 times their portion, exchange data showed.

Edited May 17 by Hoodlum

[nwoodman]

23 minutes ago, Hoodlum said:

The IPO had a big jump in share bids on the final day of the subscription.  I was a little worried yesterday as we had not met the required share allocation in some of the categories. This should help with a good open on the market next week. 
 

https://www.moneycontrol.com/news/business/ipo/go-digit-ipo-issue-subscribed-retail-investors-niis-qibs-virat-kohli-anushka-sharma-12724760.html/amp
 

The public issue was subscribed 3.7 times in the retail category. Non-institutional investors bought 4.17 times their allotted quota. The portion for qualified institutional buyers (QIBs) was booked nearly 9 times their portion, exchange data showed.

Excellent.  I was following the QIB interest that @Haryana kindly posted above, it filled out nicely from what I saw earlier today.  This looks to be a “rip roaring success”

[Haryana]

On 5/17/2024 at 3:48 AM, Hoodlum said:

...

The public issue was subscribed 3.7 times in the retail category. Non-institutional investors bought 4.17 times their allotted quota. The portion for qualified institutional buyers (QIBs) was booked nearly 9 times their portion, exchange data showed.

https://www.moneycontrol.com/news/business/ipo/go-digit-ipo-issue-subscribed-retail-investors-niis-qibs-virat-kohli-anushka-sharma-12724760.html/amp
"The public issue was subscribed 4.27 times in the retail category. Non-institutional investors bought 7.24 times their allotted quota. The portion for qualified institutional buyers (QIBs) was booked 12.56 times their portion, exchange data showed."

 

@nwoodman Final update on last day display the roaring numbers ripping even higher.

 

Bodes well for Thursday that a QIB will dig in their deep pocket to bid up the secondary.

However, others might be flippers too who would get out the moment it hits the market.

 

Edited May 19 by Haryana

[nwoodman]

FWIW current Grey Market Pricing (GMP) stands at 9.6% above the allotment price ahead of Thursday’s listing

 

https://www.investorgain.com/report/live-ipo-gmp/331/

[Haryana]

On 5/9/2024 at 6:22 AM, gfp said:

The final prospectus will show up at this link when it is final:

https://www.sebi.gov.in/sebiweb/home/HomeAction.do?doListing=yes&sid=3&ssid=15&smid=12

 

Now available on your link.

 

Also, on the company site - https://www.godigit.com/investor-relations/view-prospectus# 

 

[treasurehunt]

On 5/21/2024 at 10:01 AM, Haryana said:

 

Now available on your link.

 

Also, on the company site - https://www.godigit.com/investor-relations/view-prospectus# 

 

 

Thanks. Lots of great information in the prospectus on the non-life insurance market in India and on Digit itself.

[nwoodman]

https://finance.yahoo.com/quote/GODIGIT.NS

 

First day of trade..for posterity.  Ended at around 5x’s GWP

 

 

Some recent contemporaries, take it or leave it in terms of relevancy

 

Lemonade Inc. (LMND)

• IPO Date: July 2, 2020
• IPO Price: $29 per share
• Opening Price: $50.06 per share
• Closing Price on First Day: $69.41 per share
• First Day Gain: +139.3%
• GWP Multiple: 13.8
• Most Recent Stock Price: $14.50

Root Inc. (ROOT)

• IPO Date: October 28, 2020
• IPO Price: $27 per share
• Opening Price: $27 per share
• Closing Price on First Day: $27.00 per share
• First Day Performance: 0%
• GWP Multiple: 14.9
• Most Recent Stock Price: $3.20

 

Oscar Health (OSCR)

• IPO Date: March 3, 2021
• IPO Price: $39 per share
• Opening Price: $36 per share
• Closing Price on First Day: $34.80 per share
• First Day Loss: -10.77%
• GWP Multiple: 3.3
• Most Recent Stock Price: $6.70

 

Hippo Holdings (HIPO) (via SPAC Merger with Reinvent Technology Partners Z)

• Merger Close Date: August 3, 2021
• Initial Trading Price: $10.00 per share (SPAC standard price)
• Closing Price on First Day: $8.50 per share
• First Day Loss: -15%
• GWP Multiple: 12.3
• Most Recent Stock Price: $1.60

Summary

 

 Lemonade Inc. (LMND): Had a highly successful debut with a 139.3% gain but is currently trading at $14.50, a 50.0% loss from its IPO price.

 

Root Inc. (ROOT): Had a flat debut with no change in stock price on the first day, currently trading at $3.20, an 88.1% loss from its IPO price.

Oscar Health (OSCR): Experienced a decline of 10.77% on its first day and is now trading at $6.70, an 82.8% loss from its IPO price.

Hippo Holdings (HIPO): Saw a 15% decline on its first day after the SPAC merger and is now trading at $1.60, an 84.0% loss from its initial trading price.
 

My take (but really what a bunch of smart people who actually matter):

 

Fairfax (Digit) gets one chance to do this right and be accretive to all stakeholders.  I think they have threaded the needle.

 

 

 

Edited May 23 by nwoodman

[giulio]

Started reading the docs. I understand that the convertible notes are still an issue. They have not been converted and Fairfax is working on a solution. Fairfax will own 68.65% max when (if) conversion happens.

Something to ask on the next cc.

[newtovalue]

Apologies if this has been discussed before - but now that Digit is public - any idea what the impact to book value will be when Fairfax reports Q2?