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Readiness to capitalize on the future growth

* The Indian insurance industry is undergoing radical transformations. Tighter regulatory norms, volatile equity markets, and rapidly changing customer expectations are some of the biggest challenges that the market is sailing through. Despite these challenges, the industry is poised for robust growth, riding on tech-driven disruptions.

* ICICIGI, through its annual report, has re-iterated its readiness to capitalize on this fast-growing general insurance industry.

* Its core business strategy is built on six pillars namely (1) enhancing market share (2) delivering customer service and technology (3) expanding product suite (4) capturing newer market opportunities (5) robust risk management (6) operating profitability

* The Company has increased its focus on delivering growth within preferred profitable segments such as increasing presence in CV, within group health emphasizing on SME business, thereby ensuring profitability.

* During the year, ICICIGI successfully completed the merger and integrated with Bharti AXA. The Company has partially realized the synergistic benefits of the deal in FY22 and the remaining is expected next year.

* However, the Company intends to utilize these incremental savings towards expansion of its distribution channels, digital, technology and claims service. It plans to make additional investments of about INR1.0b to INR1.5b in FY23 towards the same.

* The Company had undertaken a strategic call of expanding its health agency channel, given its huge potential for growth. The company hired 1000 retail health agency managers in FY22. Going forward, the company expects accelerated growth in this business segment, led by increasing agents productivity.

* Expanding its product suite, the company launched 21 new products in FY22. It launched a retail health product “Health AdvantEdge” with zonalbased pricing. It also launched “BeFit”, offering customers coverage for their complete OPD requirements on a cashless basis; and “CritiShield plus”, a critical illness health insurance policy.

* ICICIGI has also been able to strengthen its market share across all the commercial lines of business, led by its strong position in the SME segment, investments in emerging geographies, innovative value-added services, extensive direct engagement and domain expertise.

Valuation: We expect the Company to deliver a gross premium/PAT CAGR of 19%/27% over FY22-24, led by stronger new Auto sales, investments in the Health distribution channel and technology. We expect the expense ratio to fall to 27.9% in FY24 from 29.1% in FY22. The combined ratio/RoE is likely to improve to 102.2%/18.8% in FY24E from 108.8%/15.4% in FY22. We maintain our BUY rating on ICICIGI with a TP of INR1,500 (35x FY24E P/E

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