ICICI Lombard Q4 Results Review - Strong Show; Better Guidance For Combined Ratio: Motilal Oswal

Motilal Oswal Report

ICICI Lombard General Insurance Company Ltd.’s net earned premium came in line with our estimate at Rs 44 billion (up 17% YoY) in Q4 FY24. Total investment income was in line with our expectations (3% beat on policyholders account and 5% miss on shareholders account).

The claims ratio came in at 68.6% versus 70.0% Q3 FY24 (our estimate: 70.9%). The combined ratio stood at 102.2% versus 103.6% in Q3 FY24 (our estimate ~104.3).

Profit after tax grew 19% YoY to Rs 5.2 billion in Q4, beating our estimate by 17%. For FY24, profit after tax came in at Rs 19.2 billion versus Rs 16 billion in FY23 (20% growth YoY).

ICICI Lombard has improved its combined ratio guidance to 101.5% as the exit rate for FY25 versus 102 earlier.

Management is upbeat about continued gains in market share in the motor segment and retail health segment. With favorable regulatory moves industry trends would be supportive. With FY24-26 profit after tax compound annual growth rate at 25%, return on equity reaching 20% in FY26 and combined ratio expected to improve to 101.5%in FY26, we maintain Buy with a target of Rs 2,100 (35 times FY26 earnings per share).

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