ICICI Lombard Stock Dips Amidst Widening Losses

Shares of ICICI Lombard General Insurance Company Ltd. tumbled as much as 4% on Wednesday, November 14, as deteriorating operational metrics overshadowed a robust top-line performance. Investor sentiment soured due to a sharp increase in underwriting losses and a decline in operating profit.

Underwriting and Profitability Woes

While net earned premium saw a healthy 13% growth, the insurer's operational performance weakened considerably. Underwriting losses expanded notably, leading to a roughly 17% drop in operating profit. Consequently, profit after tax fell by approximately 10%, even with a substantial 42% surge in investment income.
The insurer's combined ratio, a key measure of underwriting profitability, deteriorated to around 104.5% from 102.7% in the prior period.

Brokerage Views and Segment Performance

HSBC maintained a 'Buy' rating with a ₹2,285 price target, highlighting that the Q3 profit miss was driven by higher loss ratios and a one-off impact from increased wage costs, despite strong investment income. The brokerage has adjusted its FY26 earnings estimates downward and revised forecasts for FY27-FY28.

CLSA reiterated a 'Hold' rating with a ₹1,980 price target, characterizing the Q3 performance as mixed. CLSA pointed to one-off labour code charges affecting earnings, alongside gradual improvement in underlying trends. Retail health insurance emerged as a strong performer, with over 80% growth fuelled by GST adjustments and product traction. Commercial lines showed steady progress, and motor insurance saw improved growth, though pricing pressures persist.

Management Outlook

ICICI Lombard management indicated to CNBC-TV18 that the company would support regulatory decisions on commission structures by the IRDAI. The company reiterated its commitment to market share gains and a return on equity between 18-20%, with execution cited as a critical factor for achieving these goals.