* Gross Written Premium ‐ GWP came at Rs. 35.6bn against our expectation of Rs. 34.6bn, a growth of 10% on YoY and sequential degrowth of 13%.
* Net Earned Premium – NEP at Rs.26.1bn was higher than our estimates of Rs. 25bn, growth of 12% yoy, backed by strong performance across all major segments with growth of 51% in Fire segment and 18% growth in Health business. Motor segment saw a decent growth of 5.8% yoy. On Sequential basis NEP was flat
* Claims – Claims at Rs. 18.7 bn were higher than our estimate of Rs. 17bn and incurred claims ratio increased by 180bps to 71.7% in Q4FY21 from a year ago.
* Underwriting Performance – Underwriting loss at Rs. 912mn against our estimate of underwriting loss of Rs. 363mn on back of higher claims. Combined ratio was at 101.8% v/s 100.1% yoy and 97.9% qoq.
* Investment Income – Income on Investments was flat yoy at Rs 4.2 bn and was in line with our estimates.
* Operating Profit – Operating profit at Rs. 7.8 bn was higher than our estimate. Expenses of management increased by 170bps on YoY basis.
* Profits – PAT stood at Rs. 3.5 bn which was tad higher than our estimates of Rs 3.4 bn.
* Solvency – Solvency Ratio stands strong at 290%. Dividend – Board has recommended a dividend of Rs 4 per share
Our view: The second wave of COVID has brought across challenges for the sector. Nevertheless, the impact is likely to be less severe this time around. We have cut our premium growth estimates while slightly tweaked our claim ratios to factor 1) Lower growth in the Motor OD segment 2) Motor TP price hike may not come across for the full year, 3) claim ratios in health and motor segment to inch higher. Resultantly, our earnings estimates for FY22 and FY23 have been cut by 3% and 10% respectively. We retain our ADD rating with a revised 1‐year target of Rs1500 (cut by 4%).
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