Company Overview

ICICI Lombard GIC Ltd. (NSE: ICICIGI) is one of the leading private sector general insurance companies in India with a Gross Written Premium (GWP) of Rs135.92 billion for the year ended March 31, 2020. The company issued over 26.2 million policies and settled over 1.86 million claims as on March 31, 2020. 1

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service

  • Car Insurance
  • Two Wheeler Insurance
  • Health Insurance
  • ICICI Lombard Complete Health Insurance
    • Health Booster
    • Personal Protect
    • Arogya Sanjeevani Policy, ICICI Lombard
    • Corona Kavach Policy, ICICI Lombard
  • Travel Insurance
    • Single Trip
    • Gold Multi trip
  • Other Insurance
    • Business Insurance
    • Crop Insurance
    • NRI Insurance
    • Cyber Insurance

Business Segments

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Business Overview

ICICI Lombard GIC is the largest private-sector non-life insurer in India based on gross direct premium income in fiscal 2020. The company offer its customers a comprehensive and well-diversified range of products, including Fire, Motor, Health, Travel and Personal Accident, Marine, Engineering and Liability insurance, through multiple distribution channels. 2

For fiscal 2020, the company issued 26.2 million policies and covered 40.9 million lives and its gross direct premium income was Rs 133.13 billion, translating into a market share7 of 7.0% among all non-life insurers in India and 14.6% among multi-line private-sector non-life insurers in India. The company's key distribution channels are direct sales, individual agents, corporate agents - banks, other corporate agents, Motor Insurance Service Providers (MISPs), brokers and digital, through which the company service its individual, corporate and government customers.

CICI Lombard GIC has maintained leadership position among the private sector non-life insurers in India across Motor Own Damage, Health, Fire, Engineering, Liability and Marine segments in fiscal 2020. The company's GDPI market share in Motor Own Damage segment improved to 13.9% in fiscal 2020 from 12.9% in fiscal 2019. The company witnessed accretion in market share across all the commercial lines such as Fire, Engineering, Marine Cargo and Liability.

As of March 31, 2020, the company had `263.27 billion in total investment assets with an investment leverage (net of borrowings) of 4.21x. The company's investment policy is designed with an objective of capital preservation and achieving superior total returns within identified risk parameters. The company's philosophy of generating superior risk adjusted returns along with protection of captital has resulted in an annualised portfolio return of 10.2% . Listed equities made up of 8.0% of its total investment assets, by carrying value, as at March 31, 2020. Since fiscal 2004, its listed equity portfolio has returned an annualised total return of 23.2%, as compared to an annualised return of 13.8% on the benchmark S&P9 NIFTY index.

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Financial Overview

The non-life insurance industry registered growth of 11.7% in fiscal 2020. The industry has grown at a CAGR of approximately 16.7% since fiscal 2001. Despite this, non-life insurance penetration in India continues to be around 0.97% of Gross Domestic Product against world average of 2.78% and given India’s demographic dividend, the sector is poised to reach newer heights in the coming years.

The industry growth is driven by growth in Fire, Motor Third Party, Retail Health and Group Health insurance segments. Fire, Motor Third Party, Retail Health, and Group Health grew by approximately 36.1%, 12.1%, 12.0% and 23.3% in fiscal 2020.

The company's proportion of Crop segment to overall GDPI is negligible for fiscal 2020 which was consistent with its cautious approach in underwriting this underpriced segment. Further the company did not win any new tender in crop business during the year under review. 

The company's NEP increased to Rs 94.04 billion for fiscal 2020 from Rs 83.75 billion for fiscal 2019, an increase of 12.3%. The increase was primarily due to increase in NEP from Motor and Health segments.

The company's NEP from Motor segment increased to Rs 61.20 billion for fiscal 2020 from Rs 50.36 billion for fiscal 2019, an increase of 21.5%. The increase in NEP is primarily due to growth in its GDPI from Motor segment which can be attributed to change in product mix within sub-segments of Motor aided by rate hike in Motor Third Party segment and increased volume of policies.

The company's NEP from Health, Travel12 and Personal Accident insurance increased to Rs 22.62 billion for fiscal 2020 from Rs 19.74 billion for fiscal 2019, an increase of 14.6%. The increase in NEP is primarily due to growth in GDPI in Health insurance segment.

The company's NEP from Marine segment grew to Rs 2.57 billion for fiscal 2020 from Rs 2.37 billion for fiscal 2019, an increase of 8.7%. This growth was largely contributed by Marine Cargo segment.

The company's NEP from Crop/Weather insurance stood at Rs 0.02 billion for fiscal 2020 as compared to Rs 5.68 billion for fiscal 2019. This was consistent with its cautious approach in underwriting this segment.

Operating Profit

Operating profit increased to Rs 15.44 billion for fiscal 2020 from Rs 12.31 billion for fiscal 2019, an increase of 25.4%. Fire insurance contributed 6.2% and 4.7%, Marine insurance contributed 2.3% and (2.9)%, and miscellaneous insurance (including Motor insurance, Health insurance and other lines of insurance) contributed 91.5% and 98.2% of its operating profit for fiscal 2020 and fiscal 2019, respectively. The increase in operating profit is largely driven by improvement in Loss ratios across certain lines of business

Profit

Profit before tax increased to Rs 16.97 billion for fiscal 2020 from Rs 15.98 billion for fiscal 2019, an increase of 6.2%. Profit before tax includes impact of impairment on investment in equity assets provided in fiscal 2020 as per policy.

Profit after tax increased to Rs 11.94 billion for fiscal 2020 from Rs 10.49 billion for fiscal 2019, an increase of 13.8%.

Balance Sheet

Total assets increased to Rs 370.43 billion at March 31, 2020 from Rs 334.03 billion at March 31, 2019, an increase of 10.9%. This increase was primarily due to an increase in total investments assets to Rs 263.27 billion for fiscal 2020 from Rs 222.31 billion for fiscal 2019. This increase in total investments assets was contributed by upfront premium received in the form of advance premium on long term motor policies, higher inflows from efficiency in operations and realised investment incomes. Advances and other assets decreased to Rs 97.00 billion at March 31, 2020 from Rs 100.04 billion at March 31, 2019, a decrease of 3.0%. The outsanding premium (net of provision for doubtful debts) decreased to Rs 17.56 billion at March 31, 2020 from Rs 22.07 billion at March 31, 2019, a decrease of 20.4%. This decrease was mainly on account of reduction in receivables from government on Crop insurance segment. Advance tax paid and taxes deducted at source (net of provision for tax) decreased to Rs 1.37 billion for fiscal 2020 from Rs 1.50 billion for fiscal 2019 primarily due to lower effective tax rate resulting from change in Income Tax Regulations.

Total liabilities increased to Rs 309.09 billion at March 31, 2020 from Rs 280.83 billion at March 31, 2019, an increase of 10.1%. This was primarily due to increase in premiums received in advance of Rs 30.51 billion as at March 31, 2020 from Rs 13.44 billion as at March 31, 2019, on account of long-term motor policies wherein the premium is received upfront and would get recognised in the future years. Further the claim outstanding (gross) increased to Rs 180.07 billion as at March 31, 2020 from Rs 164.26 billion as at March 31, 2019 due to increase in Motor TP claim outstanding (gross).The increase in Motor TP claim outstanding is contributed by increase in Motor TP Gross Written Premium.

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FY2021 Financial Results

Performance for The Year Ended March 31, 2021 3

Gross Direct Premium Income (GDPI) of the Company stood at ₹ 140.03 billion in FY2021 compared to ₹ 133.13 billion in FY2020, growth of 5.2%. This was in line with the industry growth.

Combined ratio stood at 99.8% in FY2021 compared to 100.4% in FY2020.

Profit before tax (PBT) grew by 15.1% to ₹ 19.54 billion in FY2021 from ₹ 16.97 billion in FY2020 whereas PBT grew by 21.4% to ₹ 4.50 billion in Q4 FY2021 as compared to ₹ 3.71 billion in Q4 FY2020.

Profit after tax (PAT) grew by 23.4% to ₹ 14.73 billion in FY2021 compared to ₹ 11.94 billion in FY2020.

The Company paid an interim dividend of ₹ 4.00 per share during the year. The Board of Directors of the Company has proposed final dividend of ₹ 4.00 per share for FY2021. The payment is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company. The overall dividend for FY2021 including proposed final dividend is ₹ 8.00 per share.

Return on Average Equity (ROAE) was 21.7% in FY2021 compared to 20.8% in FY2020.

References

  1. ^ https://www.icicilombard.com/about-us
  2. ^ https://www.icicilombard.com/docs/default-source/financial-information/annualreportfy2020.pdf?sfvrsn=39fd6bc4_7
  3. ^ https://www.icicilombard.com/docs/default-source/financial-information/icici-lombard-press-release-q4fy2021---17-04-2021.pdf?sfvrsn=39fd6bf7_6
Tags: IN:ICICIGI
Created by Asif Farooqui on 2021/05/18 15:09
     

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