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    ICICI Lombard

    ICICIGI
    Financial Services·15 Jul 2025
    Management Summary

    ICICI Lombard reported a strong Q1 FY26 with significant profit growth and improved ROAE, driven by robust Retail Health performance and prudent underwriting. Despite overall GDPI growth lagging the industry, the company maintained a healthy Combined Ratio. Challenges persist in the Motor and Group Health segments due to competitive pressures and accounting norm impacts.

    Highlights

    5

    • Profit after tax (PAT) grew by 28.7% to ₹7.47 billion in Q1 FY26 compared to ₹5.80 billion in Q1 FY25.

    • Profit before tax (PBT) grew by 28.4% to ₹9.94 billion in Q1 FY26 compared to ₹7.74 billion in Q1 FY25.

    • Return on Average Equity (ROAE) was 20.5% in Q1 FY26, up from 19.1% in Q1 FY25.

    • Retail Health business grew by 32.2% in Q1 FY26, leading to an increase in market share to 3.5% from 2.9% in Q1 FY25.

    • The company's Combined Ratio stood at 102.9% for Q1 FY26, maintaining profitability focus against an industry average of 112.6% for FY25.

    Concerns

    3

    • Gross Direct Premium Income (GDPI) grew by only 0.6% in Q1 FY26, significantly lower than the industry growth of 8.8%.

    • Motor segment growth was 3.2% in Q1 FY26, lagging the industry growth of 8.7% due to elevated competitive intensity and pricing pressure.

    • Group Health segment de-grew by 2.5% in Q1 FY26, attributed to muted credit disbursements and the 1/n accounting norm.

    Key financials

    Single quarter

    07 metrics
    1. 01Gross Direct Premium Income (GDPI)$77.35B+0.6%YoY
    2. 02Combined Ratio102.9%
    3. 03Investment Income$12.88B+14.2%YoY
    4. 04Profit Before Tax (PBT)$9.94B+28.4%YoY
    5. 05Profit After Tax (PAT)$7.47B+28.8%YoY

    Segment breakdown

    Property and Casualty
    26.77 billion GDPI
    Motor
    24.44 billion GDPI10.5% Market Share
    Health
    23.81 billion GDPI
    Retail Health
    32.2% Growth3.5% Market Share
    Group Health
    -2.5% Growth10.1% Market Share
    Commercial Lines
    6.8% Growth
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    Solvency ratio was 2.70x as at June 30, 2025, against 2.69x as at March 31, 2025, which continues to be higher than the minimum regulatory requirement of 1.50x.

    Guidance & targets

    2
    CategoryTargetPriority
    Profitability
    Retail Health Loss Ratio
    65-70%
    		High
    Profitability
    Commercial Lines Profitability
    more profitable
    		High

    Retail Health Loss Ratio

    next quarter
    Current74.3% in Q1 FY26
    TargetMovement towards 65-70% for full year

    Why it matters

    To confirm if the Q1 increase was a temporary phenomenon and if the company is on track for its full-year profitability target in this high-growth segment.

    I think in all fairness, the expectation is that we should kind of end the year in the same loss ratio range of 65% to 70%. That is the range at which we are comfortable with. As of now, I think things seem to be pretty much looking around within that range. This is just a quarter 1 phenomenon.

    How to verify

    key_financials.segment_breakdown[name='Retail Health'].metrics[label='Loss Ratio']

    Risks & concerns

    4
    RiskSeverity

    Competitive intensity in Motor segment

    The Motor segment continues to witness significant pricing pressure, leading to higher industry Combined ratio and impacting the company's growth in this segment. — Management acknowledged

    medium

    Impact of 1/n accounting norm

    The 1/n accounting norm for Long-Term Products, effective Oct 1, 2024, makes Q1 FY26 numbers not directly comparable with prior periods and has impacted Group Health growth. — Management acknowledged

    low

    Sustainability of aggressive pricing by competitors

    Industry Combined Ratios remain elevated (113% overall, 124% for Motor), with some players being very aggressive, which management believes is unsustainable long-term. — Management acknowledged

    medium

    Lack of Motor Third Party (TP) price hike

    Despite industry representations and a warranted need, a Motor TP price hike has not occurred for several years, impacting the overall math for the Motor segment. — Management acknowledged

    medium

    Q&A highlights

    6

    “The simple answer is, I mean, overall, yes, with the overall sentiment in pricing getting better, we do expect it to be more profitable. If you remember, last year when we were engaging in every possible quarter, we had spoken about the excessive intensity and aggression on the pricing front. Certainly, there is a bit of a semblance overall.”

    Analyst questioned the shrinking market share in Commercial lines despite improved pricing, seeking clarity on profitability outlook. Management confirmed expectation of improved profitability due to better pricing sentiment, while acknowledging past aggressive pricing.

    asked by Nischint Chawathe

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    ICICI Lombard reported a modest Gross Direct Premium Income (GDPI) growth of 0.6% to ₹77.35 billion in Q1 FY26, significantly trailing the industry's 8.8% growth. However, the company demonstrated strong profitability, with Profit Before Tax (PBT) increasing by 28.4% to ₹9.94 billion and Profit After Tax (PAT) rising by 28.7% to ₹7.47 billion. The Return on Average Equity (ROAE) improved to 20.5%, and the Solvency Ratio remained robust at 2.70x, well above the regulatory minimum of 1.50x.

    02

    Segmental Performance and Market Share Dynamics

    The Retail Health segment was a standout performer, achieving 32.2% growth and expanding its market share to 3.5% from 2.9% in Q1 FY25. In contrast, the Motor segment grew by 3.2%, below the industry's 8.7%, maintaining a 10.5% market share amidst intense competition. The Group Health segment experienced a de-growth of 2.5%, attributed to muted credit disbursements and the 1/n accounting norm, resulting in a 10.1% market share.

    03

    Underwriting Profitability and Combined Ratio

    The company maintained a healthy Combined Ratio of 102.9% for Q1 FY26, a slight increase from 102.3% in Q1 FY25 but significantly better than the overall industry's 112.6% for FY25. Management highlighted its focus on profitable growth through prudent risk selection, especially in Commercial lines, which grew by 6.8% against an industry growth of 13.0%. The company's contribution to overall industry underwriting losses was only 2.7% despite an 8.7% market share.

    04

    Investment Performance and Capital Gains

    Investment assets grew to ₹554.53 billion as of June 30, 2025, from ₹535.08 billion at March 31, 2025. Investment income for the quarter was ₹12.88 billion, up from ₹11.28 billion in Q1 FY25. Capital gains, net of impairment on investment assets, also saw a healthy increase to ₹3.80 billion in Q1 FY26 from ₹2.84 billion in Q1 FY25, contributing positively to the overall financial performance.

    05

    Strategic Initiatives and Digital Adoption

    ICICI Lombard's 'One IL One Team' initiative led to a 78% increase in productivity and a 22% reduction in fresh acquisition team headcount. Digital service engagement rose to 38% in Q1 FY26 from 22% in Q1 FY25, supported by AI and voice bot technologies. The 'IL TakeCare App' surpassed 16.6 million downloads, and the company achieved NPS scores of 68 for Health and 69 for Motor claims in FY25, reflecting strong customer experience focus.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.