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ICICI Lombard General Insurance Company Ltd

| Q2 & H1 FY2026 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤14th Oct 25

Summary : ICICI Lombard shows resilience with strong profitability and retail health growth, despite overall GDPI de-growth, driven by favorable regulatory reforms and anticipated H2 tailwinds.

Management Perspective positive : Management expressed excitement and optimism about recent regulatory reforms and their positive impact on demand across segments. They anticipate strong tailwinds in H2 FY2026 and believe the company is well-positioned to capitalize on growth opportunities, while maintaining focus on profitable growth and customer satisfaction.

Concall Report Analysis & Insights

Business Overview

  1. The company reported a Gross Direct Premium Income (GDPI) de-growth of 0.5% for H1 FY2026.
  2. Excluding Crop and Mass Health, GDPI grew by 3.5% for H1 FY2026, against an industry growth of 10.5%.
  3. Combined Ratio was 102.9% in Q1 FY2026, outperforming the industry average by over 12 percentage points.
  4. Retail Health business grew strongly by 25.2% in H1 FY2026, increasing market share to 3.7%.
  5. Profit after tax (PAT) grew by 22.9% in H1 FY2026, reaching ₹15.67 billion.

Future Growth Prospects

  1. GST reforms are expected to boost consumer sentiment and accelerate economic activity, benefiting the non-life insurance sector.
  2. Exemption of GST from individual health insurance premiums will increase affordability and coverage.
  3. Rationalization of GST rates in the automobile sector is expected to increase private mobility and vehicle ownership.
  4. Strong auto sales momentum, particularly in September and Navratri period, gives confidence for positive H2 FY2026.
  5. The company expects to gain incremental market share in H2 FY2026, capitalizing on growth opportunities.

Management Insights

  1. Management is optimistic about the demand momentum following GST reforms, especially in Retail Health.
  2. The company aims to maintain profitable growth through prudent underwriting and judicious risk selection.
  3. They are committed to passing the complete benefits of lower GST rates to policyholders.
  4. Management expects H2 FY2026 to reflect improved growth levels in Motor due to festive demand and GST cuts.
  5. They reaffirm focus on driving profitable growth and sustainable value creation for stakeholders.

Signs of Skepticism

  1. Company's GDPI de-growth of 0.5% contrasts with industry growth of 7.3% for H1 FY2026.
  2. Motor segment growth of 2.2% for H1 FY2026 lagged industry growth of 7.6%.
  3. Underwriting profit in the Fire book and Miscellaneous Corporate book declined 1H over 1H.
  4. Group Health segment recorded a de-growth of 0.6% for H1 FY2026.
  5. Market share in Motor declined from 10.9% in H1 FY2025 to 10.4% in H1 FY2026.

Risk Factors

  1. The Motor segment continues to face significant pricing pressure, leading to an elevated industry combined ratio of 125.0%.
  2. The industry experienced multiple CAT events in Q2 FY2026, impacting the combined ratio.
  3. Commercial lines portfolio is subject to volatility due to catastrophic events and large risk events.
  4. Increased competition in the commercial segment, including Fire and Marine, impacts underwriting profit.
  5. Input tax credit disallowance for Retail Health could impact distribution costs.

Good To Know

  1. India's GDP grew by 7.8% in Q2 FY2025, a 5-quarter high.
  2. S&P Global upgraded India's sovereign credit rating after 18 years.
  3. The company launched Differentiated Service Desks for senior citizens and high-density customers.
  4. IL TakeCare app downloads reached 18.4 million, with significant premium earnings.
  5. The company declared an interim dividend of ₹6.50 per share for H1 FY2026.

Key Drivers

  1. GST reforms boost consumer demand.
  2. Auto sector sales show strong momentum.
  3. Retail health segment demonstrates robust growth.
  4. Company maintains strong solvency position.

Key Analyst Discussions

Competitive Environment

  1. Motor segment faces competitive intensity, but the company maintains leadership position.
  2. Company focuses on prudent underwriting and risk selection amidst competition in commercial lines.
  3. Management believes the industry will see record numbers in the coming quarter for Motor.
  4. They expect positive news regarding Motor TP tariffs sooner than later.
  5. Market share loss in Motor is considered tactical, prioritizing profitable growth.

Market Trends & Consumer Behavior

  1. GST reforms are expected to turbocharge consumer sentiment and private consumption.
  2. Auto industry showed significant growth in September and during Navratri festival.
  3. Demand momentum is expected to sustain in the coming quarters due to regulatory actions.
  4. Health insurance is gaining importance among Indians, driven by recent stimulus.
  5. Digital adoption is growing, evidenced by the IL TakeCare app's increasing downloads.

Financial Highlights

  1. Management expects increased volumes from GST reforms to offset input tax credit disallowance in Retail Health.
  2. Overall expense of management remains within the 30% threshold.
  3. Motor OD loss ratios are within the comfortable range of 65%-67% on a year-to-date basis.
  4. Retail Health Indemnity loss ratio is within the 65%-70% target range.
  5. The company's solvency ratio is 2.73x, well above the 1.50x regulatory minimum.

Product Composition

  1. Changes in business mix, particularly lower Crop proportion and higher Retail Health, impacted net premium to gross premium ratio.
  2. Motor portfolio mix shifted to 54.3% Private Car, 25.8% Two-wheeler, and 19.9% Commercial Vehicle.
  3. New business in Motor tends to have lower loss ratios compared to older policies.
  4. The company maintains a disciplined approach in Group Health, focusing on profitable segments.

Strategic Considerations

  1. The company's core reinsurance philosophy remains unchanged, guided by underwriting filters.
  2. Management aims to sustain Return on Average Equity (ROAE) in the 18%-20% range.
  3. Strategic initiatives like IL Sahayak and Differentiated Service Desks drive operational excellence and customer-centricity.
  4. The company is well-poised to capitalize on growth opportunities across various business streams.