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Delivery and near-term guidance relatively sombre

Result Highlights

Net premiums earned: Net premiums earned remained broadly flat QoQ, where Crop and Motor segments have acted as a drag

Loss ratios: Overall loss ratio has deteriorated by 240 bps QoQ to 72%, with all segments except Fire and Engineering evolving negatively on sequential basis

Expense control: Expense ratio was flat QoQ at 31.5% where opex rose just 0.2% QoQ but commissions fell by -21% QoQ

Our view – Delivery and near-term guidance relatively sombre

Net premium growth was dragged lower by de-growing Crop and Motor segments, while Health (including Travel & PA) and Marine segments displayed robust growth: Crop segment de-grew -91.4% QoQ as ICICIGI continued to de-focus this segment, including the business acquired from Bharti. Motor segment de-grew -0.7% QoQ but there has been improvement in the Motor TP growth (within the quarter). ICICIGI has been re-calibrating its approach and increasing focus on the CV segment. Management expects that market share in CV segment would continue to improve till share of CV within the portfolio reaches mid-20s from teens, currently. Health (including PA) growth was 7.3% QoQ and whereas Marine segment grew 8.0% QoQ.

Loss ratio rose on the back of rise in loss ratio for key segments, including Health (including Travel & PA), Motor OD and Motor TP: The Motor TP loss ratio deteriorated 760 bps QoQ to 78% but the regulator has approved Motor TP price amounting to ~3% on an aggregate basis, which will be effected in May. Motor OD loss ratio has also deteriorated 110 bps to 73% but for Motor OD, too, ICICIGI has effected price hikes in the private car segment. For Health (including Travel & PA), loss ratio worsened 150 bps QoQ to 77%. Management stated that it expected Retail Indemnity loss ratio to remain high as the company was adding distribution in this area.

We maintain ‘Buy’ rating on ICICIGI with a revised price target of Rs 1612: We value ICICIGI at 36x FY23 P/E for an FY21-24E EPS CAGR of 17%.

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