Release Date: April 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ICICI Lombard General Insurance Co Ltd (NSE:ICICIGI, Financial) achieved a gross direct premium income growth of 8.3% for FY2025, outperforming the industry growth of 6.2%.
- The company's health segment grew significantly, with a 22.1% increase in Q4 FY2025 and 19% for the full year, indicating strong performance in this sector.
- The company improved its combined ratio from 103.3% in FY2024 to 102.6% in FY2025, showcasing better operational efficiency.
- ICICI Lombard's digital initiatives led to a 37% growth in fresh transactions on their digital platform, enhancing customer engagement.
- The company's solvency ratio improved to 2.69 times as of March 31, 2025, well above the regulatory minimum requirement of 1.5, indicating strong financial health.
Negative Points
- The motor segment experienced a de-growth in Q4 FY2025, with a decline of 1.9% in the two-wheeler segment and 4.6% in the tractor segment, reflecting softer rural demand.
- The commercial lines segment faced challenges, with a marginal de-growth of 1.2% in Q4 FY2025 due to pricing pressures in the fire segment.
- The combined ratio for the industry worsened to 113.2% for nine months FY2025, indicating increased claims and pricing pressures.
- Profit before tax de-grew by 4.2% in Q4 FY2025 compared to the same quarter in the previous year, highlighting some financial challenges.
- The investment income for Q4 FY2025 was lower year-on-year, primarily due to reduced capital gains, impacting overall profitability.
Q & A Highlights
Q: What are your expectations for growth in the motor and health segments for FY26, considering the 1/n impact?
A: Sanjeev Mantri, MD & CEO, stated that they expect mid-single-digit growth in the motor segment, potentially reaching double digits due to government capital expenditure. For the health segment, double-digit growth is anticipated, particularly in retail health, which is expected to see more new business and increased risk coverage.
Q: Can you provide insights on the combined ratio and its potential improvement in FY26?
A: Gopal Balachandran, CFO, mentioned that while the market's combined ratios have worsened, ICICI Lombard aims to drive profitable growth and improve efficiencies. The focus will be on maintaining a favorable gap between the company's and the industry's combined ratios, with a long-term goal of improving return on equity (ROE) to 18-20%.
Q: How do you view the opportunity in reinsurance accepted business, and will it continue to be a focus area?
A: Gopal Balachandran, CFO, explained that reinsurance accepted business remains a single-digit portion of their overall premium. They will continue to explore profitable opportunities in both domestic and reinsurance markets, leveraging their international office for growth.
Q: Are there signs of improvement in fire pricing, and how does it impact your profitability?
A: Sanjeev Mantri, MD & CEO, confirmed that there are signs of better discipline in fire pricing, which is expected to positively impact profitability. However, he cautioned that more improvements are needed for sustained benefits.
Q: What is the impact of IFRS on your profitability and ROE?
A: Gopal Balachandran, CFO, stated that while IFRS transitions involve accounting changes, the company focuses on economic value. They are prepared for IFRS implementation and are working to ensure consistency in assumptions across the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
