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ICICI GI: 1904 Long Term Sales Gr: 14% | H1_FY25 GR: 15% Q2_fy25 Result Update
### *Company Overview*:
ICICI Lombard is a leading private general insurance company in India, offering a comprehensive range of products including motor, health, crop, fire, personal accident, marine, engineering, and liability insurance. With a legacy of over 20 years, the company has issued over 36.2 million policies and honoured over 2.9 million claims. Gross Written Premium (GWP) of ₹25.6K Cr for the year ended March 31, 2024. ICICI Lombard has 312 branches and 13,670 employees, as on March 31, 2024. They are the leading private sector non-life insurer in India since FY2004 with a Market share of 8.2%. Among the largest private-sector non-life insurer in India based on gross direct premium income, a position they have maintained since fiscal 2004 after being one of the first few private-sector companies to commence operations in the sector in fiscal 2002. Bajaj Allianz, ICICGI, HDFC Ergo, and SBI General are among the leading companies from GI. The company focuses on customer-centricity and technological advancements, being the first large-scale insurance company in India to migrate its core systems to the cloud.
### *Industry Overview*:
The non-life insurance industry in India is significantly underpenetrated. India is the 4th largest non-life insurance market in Asia and the 15th largest globally. Non-life insurance penetration in India was around 1/4th of the global average in 2023.
### *Peer Comparison*:
ICICI Lombard continues to outperform the industry average in terms of premium growth and profitability. The company's diversified product portfolio and robust risk management practices contribute to its competitive edge. ICICLombard is the leader among Private companies followed by BajajAllianz & HDFCERGO.
### *Historical Performance*:
FY_04: 20 Years back the GDPI was 500 Cr & Profits of 32 Cr.
FY_14: 10 Years back the GDPI reached 7000 Cr & Profits of 500 Cr.
FY_18: 6 Years back they came up with the IPO. GDPI reached 12,000 Cr & Profits of 900 Cr. The IPO was at a price of 661. We recommended it as a long term wealth creator with 12-15% growth estimates and consistent profits.
During fy_20 we saw the wave-1 of Covid with next year again with wave-2. Both of this year were challenging as high claims were seen during this time which largely affected the profits. During Fy_23 Covid was gone but the Russia-Ukraine war attracted a volatile bond market which again affected the profitability of Insurance companies as they are Big investors in Fixed securities. Hence share was also in the long range bound mode during all this time.
FY_24: GDPI reached 25,600 Cr & Profits of 2100 Cr which are again lifetime high. The share rallied towards 1700 giving the breakout for the first time after a long 4 Years.
Q2_fy25 Result Update
*Gross Direct Premium Growth:*
- *H1 FY25*: The Gross Direct Premium Income (GDPI) stood at ₹144.09 billion, representing a growth of 15.5% compared to ₹124.72 billion in H1 FY24. This growth outpaced the industry growth of 7%.
- *Q2 FY25*: GDPI for Q2 FY25 was ₹67.21 billion, growing 10.4% compared to ₹60.86 billion in Q2 FY24. This growth also surpassed the industry growth of 2%. Growth was muted for the whole Industry during Q2_fy25.
*Combined Ratio:*
- *H1 FY25: The combined ratio improved slightly to **103.2%, compared to **103.8%* in H1 FY24. Excluding catastrophic (CAT) losses, the combined ratio was *102.2%* in H1 FY25, compared to *102.7%* in H1 FY24.
- *Q2 FY25: Combined ratio was **104.5%, compared to **103.9%* in Q2 FY24. Excluding CAT losses, it stood at *102.6%* for Q2 FY25, compared to *102.8%* in Q2 FY24. Looks attractive in H1_fy25 but when we see for Q2 majorly Gujarat Floods have raised the claims and Combined ratio is again high 104.5% which is not a good thing.
*Profitability Ratios and Margins:*
- *H1 FY25: Profit after Tax (PAT) increased by **31.7%* to ₹12.74 billion, compared to ₹9.68 billion in H1 FY24. The *Return on Average Equity (ROAE)* also improved to *20.3%* from 18.0% in H1 FY24.
- *Q2 FY25: PAT increased by **20.2%* to ₹6.94 billion compared to ₹5.77 billion in Q2 FY24.
*Key Financial Ratios:*
- *Capital Gains*: Increased significantly to ₹5.21 billion in H1 FY25 from ₹2.87 billion in H1 FY24 majorly due to boom in stock market.
- *Solvency Ratio: As of September 30, 2024, ICICI GI had a solvency ratio of **2.65x*, well above the regulatory requirement of 1.50x.
- *ROAE (Annualized)*: 20.3% in H1 FY25 vs. 18.0% in H1 FY24.
*Near-Term and Long-Term Outlook:*
- *Near-Term: The company's focus on leveraging **technology* and its diversified product portfolio will continue to drive growth. Its ability to manage risks through prudent underwriting and robust reserves positions it well to navigate near-term challenges.
We may See ICICI LOMBARD with 13% Premium Growth and 39% profits growth this year due to increased profit margins after a long time. All those holding since long can add more during any fall near 1491 while 2 years target should be 3681 where some 5% Profits can be booked.
- *Long-Term*: With India's low insurance penetration and ICICI GI's leadership position in the private sector, the long-term outlook remains positive. The company is expected to benefit from continued economic growth, urbanization, and increasing awareness of insurance products. Can expect 13% long term growth which could give a multiyear rally along with high and consistent dividend earnings. Over the long run we may see ICICIGI reach the benchmark 50000 Cr premium till fy_30.
### Disclosure:
We are not a tip provider, we should check the data and invest accordingly if we feel confident.
