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Motor segment growth improves as guided while management reiterates CoR guidance

Result Highlights (See “Our View” below for elaboration and insight)

* Net premiums earned: Net premiums earned growth was flat QoQ, where the growth in health segment was offset by the de-growth in crop segment

? Loss ratios: Overall loss ratio has improved by 70 bps QoQ to 70.0%, where Health (inc. Travel, PA) and Marine segment has evolved positively QoQ

? Expense control: Expense ratio rose 260bps QoQ to 31.2% where opex rose 8.6% QoQ and commissions rose by 14.7% QoQ

Our view – Higher combined ratio on the back of catastrophe events does not cause guidance revision

ICICIGI has started to grow faster than the industry on the back improved motor segment growth: In 3Q, GDPI for the company grew 13.4% YoY compared with 12.3% for the industry. The company was consciously losing market share in the motor segment but has gained some market share in December 2023. There was no revision in Motor TP base premium for FY24. The company’s market share in private cars is 12% and in 2W is around 22%.

Combined ratio for ICICIGI is somewhat elevated due to catastrophe events: The combined ratio for the company was 103.7% in 9MFY24 vs 104.6% in 9MFY23. Excluding the impact of CAT losses of Rs 1.37 bn in 9MFY24, the Combined Ratio was 102.6% in 9MFY24. The combined ratio for the company was 103.6% in 3QFY24 vs 104.4% in 3QFY23. The company has maintained its guidance of 102% CoR by the end of FY25.

We maintain less-than-bullish ADD rating on ICICIGI with a unchanged price target of Rs 1600: We value ICICIGI at 34x FY25 P/E for an FY23-26E EPS CAGR of 16%. At our target, the implied FY25E P/B is 5.8x whereas the prospective RoE profile is at ~17%.

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