ICICI Lombard Q2 Results Review - Combined Ratio Higher Than Estimates By ~200 Basis Points: Motilal Oswal

Motilal Oswal Report

ICICI Lombard General Insurance Company Ltd.’s gross direct premium grew 11% YoY in Q2 FY25 to Rs 69 billion (3% miss). Net earned premium grew 17% YoY to Rs 50 billion (3% ahead of our estimates).

Claims ratio was largely in line with our estimate at 71.4% (versus 70.7% in Q2 FY24). On a sequential basis, the commission ratio increased ~50 bp to 17.5% in Q2 FY25 from 15% in Q1 FY25 (our estimate 17%). The expense ratio increased to 15.6% from 13.3% in Q1 FY25 (estimate 14%).

A higher-than-expected expense ratio led to a miss in the combined ratio at 104.5% (estimate 102.5%) compared to 103.9% in Q2 FY24.

PAT grew 20% YoY to Rs 6.9 billion (2% miss).

The management expects the momentum in the auto segment to pick up during the festive season and investments in the health business to yield results over the medium term. Combined ratio guidance of 101.5% in Q4 FY25 is maintained.

We have cut our FY25/FY26 earnings estimates by 4% each on the back of weaker-than-expected performance in Q2 FY25. Reiterate Buy with a target price of Rs 2,400 (based on 36 times Sept’26E earnings per share).

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