Result-Analysis-Elite-Wealth
Result Analysis: ICICI Lombard General Insurance Company Ltd. (CMP: Rs. 1250) Result Update: Q3FY23

ICICI Lombard General Insurance Company Ltd. (ILGI) is 4th largest general insurance companies in Asia and 14th largest company globally in 2021. The company is leading private sector non-life insurer in India with 8.6% market share as on 31st December, 2022. It offers a well-diversified range of products which includes Motor, Health, Fire, Marine, Crop & other insurance products. The company’s key distribution channels are direct sales, individual sales, corporate agents, brokers and digital channel.


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    Stock Details
    Market Cap. (Cr.) 61395
    Equity (Cr.) 491
    Face Value 10
    52 Wk. high/low 1471/1071
    BSE Code 540716
    NSE Code ICICIGI
    Book Value (Rs) 202.53
    Sector Insurance

     

    Key Ratios
    Debt-equity: 0.04
    ROCE (%): 18.62
    ROE (%): 15.36
    TTM EPS: 31.96
    P/BV: 6.2
    TTM P/E: 39.12

    Result Highlights:

    • ICICI Lombard reported degrowth of ~1.2% QoQ in the net premium earned driven by lower premium income in the fire and crop segments.

    • Company’s Net Profit has lowered by 40% QoQ to Rs.352.5 cr. mainly because of the increased operating expense.

    • Motor insurance segment which accounted 56.5% of the net premium earned, has shown sluggish performance in the quarter, net premium earned through the segment has grown marginally by 1.4% QoQ and 10.3% YoY. Private cars GDPI has de-grew in the quarter compared to marginal increase in the Two-wheeler and Commercial vehicle segment.

    • Fire and Crop segments de-grew in the quarter by 1.57% and 75% QoQ and 8.9% and 32% YoY respectively.

    • The Health segment displayed relatively positive performance, Overall health segment has grown by 5.2% QoQ and 31.8% YoY.

    • Solvency ratio of the company is at 2.45x in the December quarter’22 compared to 2.47x of September quarter’22, which is higher than the minimum regulatory requirement of 1.5x.

    • Gross Direct Premium Income of the company is growing consistently and has grown to Rs.5,493 cr. by 16.9% YoY in the December’22 quarter.

    • Claim ratio of the company has decreased sequentially by 250 bps and increased 70 bps YoY.

    Financial Performance:

    Financial-Performance-icici-lambard

    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 48.02
    FIIs 24.61
    DIIs 16.02
    Public 6.74
    Others 4.61

       Management Commentary:

    Commenting on the December quarter performance, Bhargav Dasgupta, MD & CEO of the company said, The Company grew by 16.9% as compared to the industry growth of 18.1%. Excluding crop, the Company grew by 17.1%. We remain on track and are focused on growth levers such as innovation, digital advancements, launching new products, strengthening our distribution engine, rationalizing cost while scaling up our preferred lines of business.

     

      Outlook:

    ICICI Lombard has shown subdued growth in the December quarter’22 and missed the broader estimates with de-growth of 40% in Net profit and 1.16% in the Net premium earned on QoQ basis. The expense ratio of the company has increased in the quarter by 330bps vs previous quarter while the total loss ratio in the overall segments has improved by 250bps QoQ. The company remains key player in the non-life insurance industry in the country and has large underpenetrated market compared to the global average. ICICI Lombard has delivered the earnings of Rs.26.31 in the last nine months and we expect it to close the FY23 at the EPS of Rs.35.08. Based on the expected earnings the estimated PE of the company terms to be at 35.63x on the CMP.

    Results:

     

    Particulars (In Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY%
    Net Premium Earned 3792.05 3836.55 3311.88 -1.16% 14.50%
    Other Operating Income 766.93 832.23 695.05 -7.85% 10.34%
    Other Income 11.13 35.73 12.2 -68.85% -8.77%
    Total Income 4570.11 4704.51 4019.13 -2.86% 13.71%
    Total Operating Expenditure 4103.99 4005.89 3598.33 2.45% 14.05%
    Operating Profit 466.12 698.62 420.8 -33.28% 10.77%
    Provisions & Write Offs 0.86 88.95 -0.14 -99.03% -714.29%
    Profit Before Tax 465.26 609.67 420.94 -23.69% 10.53%
    Tax 112.73 19.14 103.41 488.98% 9.01%
    Profit After Tax 352.53 590.53 317.53 -40.30% 11.02%

     

    Segments Premium Income (In Cr.) Q3FY23 Income% Q2FY23 Q3FY22 QoQ% YoY%
    Fire 168.12 4.43% 170.8 184.56 -1.57% -8.91%
    Marine 109.20 2.88% 105.72 95.97 3.29% 13.79%
    Health including Personal Accident 1122.94 29.61% 1,067.43 851.86 5.20% 31.82%
    Motor 2142.81 56.51% 2,113.26 1,942.19 1.40% 10.33%
    Miscellaneous 204.29 5.39% 199.87 171.44 2.21% 19.16%
    Crop Insurance 44.70 1.18% 179.47 65.86 -75.09% -32.13%
    Total 3792.06 100.00% 3,836.55 3,311.88 -1.16% 14.50%

     

    Ratios (%) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY%
    Combined Ratio 104.4 105.1 104.5 -70 bps -10 bps
    Expense Ratio 31.2 27.9 31.5 330 bps -30 bps
    Solvency Ratio 245 247 245 -200 bps
    Incurred Claim Ratio 70.3 72.8 69.6 -250 bps 70 bps
    Retention Ratio 74.3 69.9 76.4 440 bps -210 bps
    Source: Company website, EWL Research

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