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ICICI Lombard General Insurance - Q2FY22 Result Update - YES Securities

Posted On: 2021-10-23 09:26:19 (Time Zone: IST)


Guidance for sequential rise in health segment loss ratio applies only to 2HFY22

Result Highlights

- Net premiums: Net premiums rose 3.1% QoQ, driven by the crop segment, fire segment and health segment

- Loss ratios: Motor TP loss ratio rose 400 bps to 75% with IRDA still not having effected a price hike

- Expense control: Expense ratio rose 120 bps QoQ to 29.0%. We highlight QoQ numbers as YoY numbers are not comparable due to merger with Bharti Axa

Our view - Guidance for sequential rise in health segment loss ratio applies only to 2HFY22, Upgrade to BUY

The growth in the crop segment was 1074% QoQ as Bharti Axa resumed crop business during the quarter: The sequential growth figures are calculated on comparable merged entity figures of ICICIGI. The fire segment and health segment (including personal accident) grew 8.9% QoQ and 3.4% QoQ, respectively. Motor segment dragged, inching up 0.8% QoQ.

Loss ratio for Motor OD, however, saw 500 bps decline to 63% as ICICIGI continued to focus on profitable segments: On the Motor TP side, it has been 2 years since IRDA has effected a price hike and now, management expects one on 1st April 2022. Loss ratio for health segment (including Travel and PA) plummeted 82% points to 71% as Covid claim intimations declined. However, management guided for a rise in health loss ratio in 2HFY22 due to non-Covid claims, which we think will normalize lower post FY22.

Management stated that the Bharti Axa crop portfolio was performing well so far but would monitor it before taking a final call: The Crop insurance contracts signed by Bharti Axa are in 2 states for a duration of 3 years ending FY23 and these are the contracts that have been continued with no new crop insurance contracts being added.

We upgrade ICICIGI to 'Buy' with a revised price target of Rs 1843: We value ICICIGI at 36x FY23 P/E for an FY21-24E EPS CAGR of 24%.

Shares of ICICI Lombard General Insurance Company Limited was last trading in BSE at Rs. 1498.80 as compared to the previous close of Rs. 1506.25. The total number of shares traded during the day was 22705 in over 2598 trades.

The stock hit an intraday high of Rs. 1537.00 and intraday low of 1490.00. The net turnover during the day was Rs. 34267329.00.


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