ICICI Lombard reported solid growth in its premium collections for the third quarter of FY26, but earnings slipped, leaving investors wondering what the numbers mean.
Key Financial Highlights
- Gross written premium (GWP): grew 15% year‑on‑year to ₹74.3 bn.
- Net earned premium (NEP): rose 13% YoY to ₹56.9 bn, slightly below expectations.
- 9‑month total premium: up 13% YoY to ₹165 bn.
- Claims ratio: 68.7%, higher than the estimated 67.4% and up from 65.8% a year earlier.
- Commission ratio: 22.5% (down from 22.9% last quarter).
- Operating expense ratio: 13.3% versus 14% a year ago.
- Combined ratio: 104.5% (vs. target 101.6%). Ex‑cluding one‑off items, it was 102.2%.
- Profit after tax (PAT): fell 9% YoY to ₹6.6 bn, missing the estimate by 23%.
- 9‑month PAT: grew 11% YoY to ₹15.7 bn.
Management Outlook
The company said demand for motor and health insurance remains strong after the recent GST changes. It plans to grow 100–200 basis points faster than the industry in FY27 while keeping return on equity around 18–20%.
Analyst Viewpoint
Motilal Oswal kept its premium forecasts unchanged but raised the expected claims cost for the motor line, which trims the EPS outlook for FY26‑28 by about 4%. Despite the higher cost pressure, the analyst maintains a **BUY** rating with a target price of ₹2,260, based on a 28x FY28 earnings multiple.
What This Means for Retail Investors
- Premium growth shows the business is expanding, especially in motor and health segments.
- Higher claims and expense ratios squeezed profit this quarter.
- The management’s confidence in out‑pacing the market could support future earnings.
- Analysts still see upside, but the price target reflects the added risk from rising claims.
Bottom Line
ICICI Lombard’s top‑line is improving, yet profitability took a hit due to higher claim payouts. The stock remains a **BUY** in the eyes of Motilal Oswal, but investors should keep an eye on claim trends and expense management.
Remember, this is my perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.