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ICICIGI reported healthy performance in Q4FY26, with GWP at Rs80.7bn (+17% YoY) beating our estimate by ~4%. Combined Ratio (CoR) at 101.2% saw improvement of 130bps YoY, driven by 80bps improvement in Claims Ratio, while commission ratio was down by 40bps YoY. The improvement in the loss ratio was driven by lower loss ratios in the Motor TP, Health, and Crop segments. However, given the impact of lower capital gains, higher investment provisions, and acquisition-cost strain on account of strong GWP growth, PAT at Rs5.5bn (+7.3% YoY) was lower than our estimate of Rs5.66bn. Going forward, while the industry is likely to witness price aggression in the fire segment and cause growth to slow, the management remains optimistic about growth continuing in the Motor and Health segments, led by the GST rate exemption. Based on the Q4 developments and management commentary, our key FY27-28 estimates see minimal changes. We introduce FY29 estimates; maintain ADD and Mar-27E TP of Rs2,100 implying FY28E P/E of 30x.

CoR improves YoY; low investment income drives PAT lower

For Q4FY26, GWP at Rs80.7bn increased ~17% YoY and was ~4% higher than our estimate. Claims Ratio at 70.8% (-80bps YoY) missed our estimate of 68.7%. The YoY improvement in Claims Ratio was driven by improvement in loss ratios for the Motor TP, Health, and Crop segments. Commission ratio at 18.3% (-40bps YoY) was lower than our estimate of 19.1%. Opex at 12.1% was flat YoY and lower than our estimate of 14.8%. Resultantly, CoR at 101.2% (-130bps YoY) was lower than consensus / our estimates of 102.9% / 102.6%, respectively. However, owing to lower capital gains, higher investment provisions, and higher acquisition-cost strain, PAT at Rs5.47bn (+7.3% YoY) was lower than consensus/our estimates of Rs6.3bn/Rs5.66bn, respectively.

Motor and Health likely to be growth drivers in FY27

The industry is likely to witness a slowdown in the Commercial Lines segment (especially the fire segment) largely owing to increased pricing aggression, given high competition. Against such a backdrop, ICICIGI plans to focus on profitable pools of business in Commercial Lines while maintaining underwriting prudence. However, given the GST rate exemptions, the mgmt expects growth across the Motor and Retail Health segments to continue in FY27. Further, the mgmt believes the transition to Ind AS (opted for 1Y forbearance) would result in a 300-450bps decline in CoR in the year of implementation, primarily on account of Motor TP claims reserve to be built on discounted basis.

We maintain ADD and Mar-27E TP of Rs2,100

To bake in the Q4 developments, we tweak our estimates which results in 1% increase in GWP over FY27-28E. We lower FY27E CoR by 10bps, while keeping FY28E CoR largely unchanged. This leads to ~0-3% increase in FY27-28E PAT. We introduce FY29 estimates. We see ICICIGI operating with 3 profit engines: 1) Current underwriting; 2) Backbook reserves development; and 3) Investment book. Given its strong brand and conservative business strategy, at least one or two of these three engines are likely to fire, ensuring sustained profitability; retain ADD and Mar-27E TP of Rs2,100 implying FY28E P/E of 30x.

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