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Positives seem largely priced in

Our view – CoR decline and growth turnaround not new phenomena

Combined Ratio - ICICIGI maintains FY25 exit quarter / 4Q guidance for combined ratio at 101.5%: The combined ratio for the company was 102.3% for 1QFY25 compared with 103.8% for 1QFY24. The overall combined ratio for the industry has improved materially to 112% in FY24 compared with 115.8% in FY23. This was driven by the Motor business for which the combined ratio was 118.5% in FY24 compared with 121.1% for FY23. If these trends continue, the company will exit with a 4Q combined ratio of 101.5%. For retail health, the company has launched a new health insurance solution, which should help reduce the segmental loss ratio.

GDPI Growth - ICICIGI's growth turnaround continues with the company outpacing the industry, driven by the previously sluggish Motor segment: In 1Q, GDPI for the company grew 20.4% YoY compared with 13.3% for the industry. Excluding crop and mass health segment, the growth for the company was 19.7% YoY compared with 14.8% for the industry. GDPI of the health segment was at Rs 23.37bn in 1QFY25, up 28.5% YoY. Management stated that the company remains committed to Motor business. Within Motor, while new vehicle business has grown 16-17%, old vehicle business has grown faster at more than 30%. Last year, around the same time, it was not making commercial sense to pursue Motor business. We maintain ADD rating on ICICIGI with a revised price target of Rs 2075: We value ICICIGI at 36x FY26 P/E for an FY24-26E EPS CAGR of 22%. At our target, the implied FY26E P/B is 6.4x for an FY25E/26E RoE of 17.5/17.7%. (See Comprehensive con call takeaways on page 2 for significant incremental colour.)

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

* Net premiums earned: Net premiums earned growth was 3.1% QoQ, driven by growth in Motor, Crop and Health segments.

* Loss ratios: Overall loss ratio has deteriorated by 540 bps QoQ to 74.0%, where except Motor TP all segments have evolved negatively QoQ

* Expense control: Expense ratio declined -610bps QoQ to 26.8% where opex rose 8.6% QoQ but commission and brokerage fell by -15.3% QoQ

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