Anand Rathi

ICICI Lombard (Buy)

CMP: ₹1,032.85

Target: ₹1,210

ICICI Lombard General Insurance Company (ICICIGI) is the fourth largest non-life insurance company and the largest private player in the industry.

 ICICIGI issued 23.5 million policies in FY18 and its gross direct premium income (GDPI) increased 15.2 per cent year over year(y/y) to ₹123.57 billion. During 9MFY19, GDPI increased 16.7 per cent y-o-y, outpacing the industry growth rate of 13.1 per cent. Focussing on retail health, ICICIGI grew its retail indemnity new business by more than 50 per cent during 9M2019.

 ICICIGI’s improved risk selection, conservative reserving and disciplined underwriting practice has helped in prudent management of combined ratio, a key measure of profitability of a non-life insurance company. Combined ratio which is the sum of the loss ratio and the net expense ratio, has improved to 98.7 per cent in 9MFY19 from 100.4 per cent in 9MFY18. Combined ratio of less than 100 per cent indicates earned premiums are greater than losses and expenses.

 Given ICICIGI’s impressive underwriting performance, diversified product mix and favourable macro traits, we believe the company is well positioned for long term growth and initiate our coverage on ICICI Lombard General Insurance Company with a ‘buy’ rating and a target price of ₹1,210 a share.

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