Sharekhan's research report on ICICI Lombard General Insurance Company
ICICI Lombard reported PAT of Rs. 591 crore (up 32% y-o-y) led by higher investment income (due to higher yields) and large tax reversals although PBT was up by only 3% y-o-y. Underwriting loss stood at Rs. 152 crore in Q2FY23 versus a loss of Rs.101 crore in Q2FY22 and loss of Rs. 193 crore in Q1FY23. Gross direct premium grew by a healthy 18% y-o-y, led by rapid growth in commercial lines and group health, however, motor business was a drag with 4% y-o-y growth due to a 4% y-o-y decline in Motor OD. Retail health premium grew by 16% y-o-y & Group Health grew by 47% y-o-y. Company reported higher combined ratio at 105% in Q2FY23 versus 104% in Q1FY23. Claims ratio increased by 300 bps y-o-y to 72.8% due to increase in claims ratio for the Motor OD (1,150 bps) and Health (1,040 bps) segments. Expense ratio reported at 28.8% was down by 190 bps y-o-y and commission ratio was down by 125 bps y-o-y reported at 3.5%.
Outlook
Stock currently trades at 30.2x/27.7x its FY2023E/FY2024E EPS. We maintain a Buy with a revised PT of Rs. 1400.
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