The Hindu Business Line : ICICI-Lombard going strong on new premium accretions

Growing in stature
For the last financial year, the company had grown by 80 per cent.
Premium accretions were driven from retail, corporate and some innovative liability covers.
May end up with premium accretions in excess of Rs 3,000 crore.
Poised to displace United Insurance and become fourth largest non-life insurer

Bangalore , July 13

ICICI Lombard General Insurance Company Ltd is poised to displace the public sector United Insurance Company and become the fourth largest non-life insurer in the country.

Sources said that almost one third of the new premium accretions for the current year came from ICICI-Lombard.

ICICI-Lombard is a 74:26 per cent joint venture between ICICI Bank and Fairfax Financial Holdings of the US that owns Lombard Canada. ICICI-Lombard is currently capitalised at Rs 245 crore.

For the first two months of this financial year, new premium accretions industry-wide was Rs 840 crore, according to the latest data released by the Insurance Regulatory and Development Authority.

The industry itself has grown by 22 per cent over the last year on the back of strong economic growth.

ICICI-Lombard contributed Rs 270 crore for the first two months or an 84 per cent growth over the corresponding period of last year. This was followed by the largest insurer, New India Assurance Company Ltd (NIACL). NIACL's contribution for the first two months was only Rs 130 crore or 15 per cent over the last financial year. UIICL for the same period has contributed only Rs 50 crore of fresh premium accretions or year-on-year growth of just 7 per cent.

ICICI-Lombard's Marketing head, Mr Kartik Jain said, "In the current year, we intend maintaining our growth rates." ICICI-Lombard, for the last financial year, had grown by 80 per cent over the previous year. For the last financial year, the largest private sector non-life insurer had reported accretion of Rs 1,592 crore and a net profit of Rs 50 crore.

Sustaining the current tempo of premium accretion growth, ICICI- Lombard would end up with premium accretions in excess of Rs 3,000 crore.

For sustaining this high growth rate, ICICI-Lombard's capitalisation would also have to be raised. However, sources said, raising capital was not an issue for the company.

The insurer currently has a net worth of Rs 600 crore.

Capital from parents

In addition, the sources said, the company was also raising more capital from its parents at a premium.

The premium was in view of the strong balance sheet and countrywide distribution network for sustaining the high growth rates.

The actual premium is unknown but ICICI-Lombard currently has a book value of about Rs 25 per share.

The premium accretions for ICICI-Lombard were driven from retail, corporate and some innovative liability covers.

The retail included motor and home loan covers, which, the officials said, had shown substantial growth.

This included both auto and home financings done by the bancassurance partners.

In addition, the officials said ICICI-Lombard was also pursuing at enlarging its liability business. The insurer has already tied up with 13 States in the country for accident and medical cover of government employees.

The premiums for this are paid out partly by the respective State Government and employees themselves.

For the corporate cover, ICICI- Lombard was leveraging its parents credentials as well, industry sources said.