ICICIGINSEJanuary 23, 2025

ICICI Lombard General Insurance Company Limited

11,073words

40turns

10analyst exchanges

7executives

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Management on call

Sanjeev Mantri

MD & CEO

Gopal Balachandran

CFO

Anand Singhi

CHIEF RETAIL AND GOVT BUSINESS GROUP

Sandeep Goradia

CHIEF CORPORATE SOLUTIONS GROUP

Girish Nayak

CHIEF TECHNOLOGY & HEALTH (UW & CLAIMS)

Gaurav Arora

CHIEF UNDERWRITING AND CLAIMS – PROPERTY & CASUALTY

Sanjeev Mantri

MD and CEO of the Company; Mr. Gopal Balachandran –

Key numbers — 40 extracted

5.4%

quarter ended September 2024, as per the data released by MoSPI1, the GDP2 growth slowed down to 5.4% as compared to 8.1% in the corresponding quarter of previous year. Let me dwell on certain key

8.1%

mber 2024, as per the data released by MoSPI1, the GDP2 growth slowed down to 5.4% as compared to 8.1% in the corresponding quarter of previous year. Let me dwell on certain key data points during l

4.5%

industry reported muted growth in Quarter 3 of 2025 as per SIAM3, with growth in private car at 4.5%, growth in two-wheeler at 3%, and de-growth in CV at 0.5%. The retail numbers as reported by FADA

in Quarter 3 of 2025 as per SIAM3, with growth in private car at 4.5%, growth in two-wheeler at 3%, and de-growth in CV at 0.5%. The retail numbers as reported by FADA4 has seen improvement in t

0.5%

SIAM3, with growth in private car at 4.5%, growth in two-wheeler at 3%, and de-growth in CV at 0.5%. The retail numbers as reported by FADA4 has seen improvement in the growth on account of uptick

5.9%

seen improvement in the growth on account of uptick in rural demand with private car growing at 5.9%, two-wheeler at 12.4% and CV at 1.6%.  Health Insurance continues to be the fastest growing an

12.4%

the growth on account of uptick in rural demand with private car growing at 5.9%, two-wheeler at 12.4% and CV at 1.6%.  Health Insurance continues to be the fastest growing and largest contributo

1.6%

ount of uptick in rural demand with private car growing at 5.9%, two-wheeler at 12.4% and CV at 1.6%.  Health Insurance continues to be the fastest growing and largest contributor of the industry

11%

racting significant investment across stakeholders.  The bank credit growth also moderated to ~11% due to the slowdown in credit to NBFC 5 segment and unsecured loans. In addition, the MFI6 sect

rs 4

nomic value, so we continue to evaluate business 3 SIAM - Society of Indian Automobile Manufacturers 4 FADA - Federation of Automobile Dealers Associations 5 NBFC – Non-Banking Financial Company 6 MFI

30 basis point

of receivables, primarily from net basis to gross basis. Due to this, there is a reduction of ~30 basis points in our solvency ratio as at December 31, 2024. Consequently, our solvency ratio was 2.36x as at

2.36x

basis points in our solvency ratio as at December 31, 2024. Consequently, our solvency ratio was 2.36x as at December 31, 2024, which is higher than the minimum regulatory requirement of 1.5x. Thus,

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Guidance — 20 items

Sanjeev Mantri

opening

“Further as we move towards the next quarter, we believe infra based spending, lower insurance penetration, enhanced risk awareness in a conducive regulatory environment is expected to have a positive impact on the general insurance sector over medium to long term.”

Sanjeev Mantri

opening

“We expect the pricing to improve in the Fire segment in the coming months.”

Sanjeev Mantri

opening

“ In one of the previous updates, we discussed the core business and technology transformation project- ‘Project Orion’.”

Sanjeev Mantri

opening

“Going forward, we expect a shorter period for the development of products on our new system, Artemis.”

Sanjeev Mantri

opening

“We firmly believe Project Orion will be a key enabler of our vision of One IL One Team.”

Nischint Chawathe

“As in, we will keep looking for on a sustained basis economic output, which we think will be viable from a longer-term perspective.”

Nischint Chawathe

“And just finally, in this backdrop, do we really sort of now expect a third party tariff hike this year?”

Sanjeev Mantri

“The answer to this is, yes, we do expect a hike, but can it come, can it not, is something which will come from the regulator as well as MoRTH, the way TP price is decided.”

Prayesh Jain

“Therefore again, in a given period, you can obviously see experiences on loss numbers, which could be significantly adverse or maybe, at the same time, in case you don't have large number of catastrophic events, then what you normally expect as attritional losses is how the portfolio will develop.”

Prayesh Jain

“We do expect the overall market to be far more sensible so far as pricing those risks are concerned.”

Risks & concerns — 15 flagged

 The bank credit growth also moderated to ~11% due to the slowdown in credit to NBFC 5 segment and unsecured loans.

— Sanjeev Mantri

Further as we move towards the next quarter, we believe infra based spending, lower insurance penetration, enhanced risk awareness in a conducive regulatory environment is expected to have a positive impact on the general insurance sector over medium to long term.

— Sanjeev Mantri

Within this, the Fire segment continued to de-grow, registering a de-growth of 22.0% on account of pricing pressure.

— Sanjeev Mantri

 In Commercial lines segment, we remained cautious due to continued pricing pressure, resulting in de-growth of 8.6%, however, we continue to maintain our market share in the segment.

— Sanjeev Mantri

o In the Group Health – Employer Employee segment, we continue to maintain cautious approach on account of competitive intensity resulting in muted growth at 1.1% in Q3 FY2025.

— Sanjeev Mantri

 Excluding the impact of CAT losses of ₹ 0.94 billion in 9M FY2025 and ₹ 1.37 billion in 9M FY2024,the Combined ratio was 102.3% and 102.6% respectively.

— Sanjeev Mantri

 Excluding the impact of CAT losses of ₹ 0.54 billion in Q3 FY2024, the Combined ratio was 102.3%.

— Sanjeev Mantri

This is after factoring in the impact of 30 basis points as Sanjeev had mentioned, as at December 31, 2024, as against 2.65x as at September 30, 2024, which continued to be higher than the regulatory minimum of 1.50x.

— Sanjeev Mantri

We continue to be cautious in building the book and so far as the ethos on writing or selecting the portfolios continues to remain the same.

— Nischint Chawathe

That's how we have been kind of going about risk selection, as I talked about.

— Nischint Chawathe

So hence, given the fact that some of these events are more frequent, more in numbers, there is obviously a need for the entire market across stakeholders to look at what should be the level of price that you should offer for risk selection.

— Prayesh Jain

Hence, to that extent, very difficult to attribute any specific reasons, but Quarter 3, this is the reason.

— Subramanian Iyer

As we head into the next year, the approach to writing risk will still remain the same, and then we will keep looking for profitable opportunities.

— Madhukar Ladha

So just firstly, on the investment leverage, right, So if you look at it, it's already down to 3.77x for us, and there has been a sharp decline in the last 6 months.

— Rishi Jhunjhunwala

In that context, if you look at maybe the mark-to-market position that you would have at the book as at September, relative to as of December, obviously, at a point of time, that number would have seen a decline.

— Rishi Jhunjhunwala

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Q&A — 10 exchanges

Just a little bit of commentary on the Motor side. We can see the loss ratios improving for you, both on a sequential and annual basis, and significant improvement very specifically on the third-party side. Just if you could give some commentary in terms of what's happening over here, how is the competitive intensity? And I believe we have gained market share in this quarter in both the segments. Gopal Balachandran: Yes, so Nischint, you're right. Clearly over the last few years if you would have seen, we have been slightly selective in the way we have been writing the risks, and that has stoo

Sanjeev Mantri

Absolutely. And also, just the thing is, in our mindset, we will do what makes sense to us. Market share, of course, this year looks better, but we also had explained the market maybe almost 4 quarters back in terms of why our market share is where it is. So, it's more of an outcome of how multiple factors work. It's not something that we chase that this month we have to do this much only. It's more driven by outcome, and as and when it makes us look good, it's primarily driven by an ecosystem development, as we continue to pursue what we believe makes sense for us. And the delta this quarter

Just harping, Gopal, on this point on the loss ratio on the motor side again. So you were mentioning that for the Motor as a piece, we should be looking at a loss ratio of 65% to 67%, but we are way below that currently. So would you still say that the full year number would be in that range? Or that's more of a longer-term loss ratio that you would be looking at? That's my first question. Second is on the health loss ratio, could you give the granularity on how much was the Retail Health loss ratio and how much was the employer-employee loss ratio? Also, just on the Fire piece, you mentioned

Prayesh Jain

Any price hikes contemplating in the Health segment? Gopal Balachandran: That's something that we keep looking for, Prayesh and we have not shied away from taking a price change. You would recollect again, slightly going back to some of our conversations even in the past, if you were to go back maybe almost 4 years back, Q3 FY2021, at that point of time, we did effect an average price increase of roughly about 8% on the overall renewal book. And then roughly about 1.5 to 2 years thereafter, again, we had effected a price increase, which ranged anywhere between 20% to 22%. ICICI Lombard General

So, Gopal, you said that you want to work Motor TP and on Motor OD loss ratio in the range of 60 -65%. If I take at the other end for Motor TP at 65%, is it fair to assume that in Q4, the loss ratios in Motor TP will be more 70-75%, compared to what you have reported 60.1% for 9M FY2025? So that's a fair assumption to make to remain conservative with respect to motor TP reserving? Gopal Balachandran: Sanketh, just for the sake of reiterating, I will keep saying that I would always urge all of you to look at numbers more over long-term horizon, particularly for Motor third-party. It would be in

Sanketh Godha

Got it. And see you reported 102% on 1/n and 102.8% if you exclude 1/n. So the Management guidance was to end up with 102% for FY2025, and probably 101.5% for the fourth quarter. So even factoring a bit of negative impact from 1/n, do you still continue to maintain that guidance to play out for the full year? Also, if I take exit as 101.5% for the fourth quarter, should we fairly assume that is a number which will be there too for FY2026? The second thing is that if you can break down the exact growth of Motor into new and old vehicle, the way you did it last time. Gopal Balachandran: Yes. So

The first question is on this 1/n, has the impact been passed on to the distributor, are they also getting commission on a yearly basis? Do you expect any impact on the business growth because of that?

Sanjeev Mantri

The answer is yes. It's regulatory, and whatever needs to be done is done. So it will be also taken where the annuity commission payment will happen to the distributors. As far as growth is concerned, there is an overarching impact in terms of long-term product being sold. But internally, from our organization perspective, the economic value that comes in selling the long-term product stays intact. So we continue to pursue in the market selling long-term products. The accounting part of it will emanate as and when it happens. Gopal? Gopal Balachandran: So Nidhesh I think the only thing that I'

First question is on the competitive scenario. Given that we are approaching the EoM glide path last couple of quarters, how do you see it play out over the next year, and specifically the impact that is having on Group Health and Fire and what would be our sort of stance in case it intensifies, going into the next, say 4 to 6 quarters? That's the first question. I'll come back with the second one.

Sanjeev Mantri

So Jayant, clearly, our stand has been pretty clear on that. We continue to operate within the EoM guidelines, and there is no reason under any circumstances, we would like to violate that. As and when we see intensity building up, we will choose to withdraw rather than participate in that business intensity. Another point is that the regulator has taken certain actions. So, in terms of expecting companies which are not within the EoM guidelines to fall in line with that, there is a possibility that it will get disciplined and will not crush in pricing. If you see business lines like GHI and s

I had an accounting question. So on Slide #15, you have given basically the comparison between profits, excluding 1/n and with 1/n and you have given the GDPI and PAT. So PAT is actually higher ICICI Lombard General Insurance Co. Ltd. January 17, 2025 under the with 1/n impact. So is it fair to conclude that your commissions are lower, because of deferrals under 1/n method and that's what is resulting in higher profits? Gopal Balachandran: Subramanian, again, which is why I responded to say that the prescription under 1/n need not necessarily be, in terms of outcome, go in the direction of onl

Management

A couple of questions from me. First, I see a very sharp increase in commission cost. Now can you explain what has led to that? And second is in the new 1/n, now that's the way we will be reporting numbers, so what should our guidance deal in terms of exit in Q4 for Combined ratio and also then what are we looking at for the next few years. So, yes, some help on that would be very useful. Gopal Balachandran: So Madhukar, I will always keep again urging all of you to look at numbers more on a combined ratio prescription, rather than even looking at breakdown of that combined into loss ratio, an

Sanjeev Mantri

I'll give you a small perspective. So clearly, you'll get a better understanding of what Gopal also is talking about it. If you look at our last year number, even before that, Commercial Business for us was clearly doing a very good growth numbers and you know that Commercial Business overarchingly worked in a Combined ratio which is far lower. So when we started working on the planning for this year itself, we had a belief that Commercial Line per se remains secular on the contribution, which is what Gopal also alluded in this conversation. As things stand, it's not Commercial Line which has

So just firstly, on the investment leverage, right, So if you look at it, it's already down to 3.77x for us, and there has been a sharp decline in the last 6 months. This is despite the fact that I'm assuming that Motor Vehicle Act-related benefits haven't really completely played out as yet. So just wanted to understand your thoughts in terms of with or without that implementation on a pan-India basis, where do you see the investment leverage stable out or stabilize? A related question to that is 2 - 3 years ago, we had given up this 20% ROE and 100% combined ratio target in order to ensure t

Sanjeev Mantri

Also, just a small thing is that the Motor Vehicle Act that you refer to, Rishi, there's a faster intimation, then there will be a lower investment leverage, not higher. So that's one small thing. It's more driven by cash flow, and contribution in terms of the nature of business that comes through. Ironically, as much I don't want to, but if you have a growth of PAT also that bulges the denominator and net worth will go up, and that itself will lead to investment leverage going down. I mean it's more mathematical is what I'm saying, but multiple things will go in. It's, again, an outcome, we d

Just one question. Again coming to that, I mean, I recall your kind of focus on combined, not of claims and expenses. But more on the expenses, if you put together, one that each regulator now kind of looking for any kind of a change with their EoM targets, because the rule of EoM has been changed in between this 1/n accounting. And if you can help us, even kind of a commission plus OPEX basis, which are the business lines particularly that you see a bit of, I would say, intensified payouts or competition in terms of payout that is leading to this overall OPEX, including commission increase? G

Management

Great. Thank you so much for joining us. This is always a pleasure, and your questions also give us tremendous clarity. We look forward to interacting with each one of you over the course of next few weeks. Look forward to your support, as always, and have a great year ahead. Thank you so much. Bye-bye. Gopal Balachandran: Thank you.

Management

Speaking time

Moderator

Sanjeev Mantri

Nischint Chawathe

Jayant Kharote

Prayesh Jain

Sanketh Godha

Nidhesh Jain

Subramanian Iyer

Madhukar Ladha

Rishi Jhunjhunwala

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Opening remarks

Sanjeev Mantri

Thank you so much. Good evening to each one of you. Thank you for joining the Earnings Conference Call of ICICI Lombard for Q3 and 9M FY2025. At the outset, let me wish you all a very happy New Year. As I complete my first year in my current role, I am excited to share developments we have made together since we connected on January 16, 2024. We outlined our vision of “One IL One Team,” building cohesive teams to leverage synergies and complementary strengths to tap into new business opportunities. In this endeavor, we realigned our teams to work collaboratively under a unified product / business practice. Today, I am pleased to share many of our initiatives such as One IL One Call centre, One IL One Digital, and One IL One Agency have started yielding results. Any change of a significant magnitude requires continuous reinforcement, and we continue to learn as we co-create an environment conducive to growth, innovation and collaboration. Let me now update you on industry trends and dev

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ICICI Lombard General Insurance Company Limited

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