ICICI Lombard Q4 profit rises 22.6% even as underwriting losses mount

India’s largest private general insurer, ICICI Lombard General Insurance posted a 22.6 percent year-on-year (YoY) rise in its March quarter (Q4) net profit at Rs 345.68 crore on the back of gains from its investment book.

The insurer recorded underwriting losses worth Rs 91.2 crore which were offset by Rs 419 crore net earnings made by the insurer through its investments. The impact of covid-19 on its health insurance book led to a combined ratio of 101.8% in the quarter.

The combined ratio is a measure of insurer profitability, calculated simply by taking the sum of claim-related losses and general business costs and then dividing that sum by the earned premiums over the period. A combined ratio of over 100% reflects underwriting losses.

“For us and the insurance industry we had seen covid-19 claims intimated first peak during the September and October period last year. Since February we saw claims spike again and have significantly increased since March,” said Bhargav Dasgupta, the chief executive ICICI Lombard.

“There has definitely been an impact due to coronavirus pandemic. Unlike other industries we haven’t received much support, and the industry is yet to price in these losses. It’s our responsibility to honor all claims and we have done that proactively,” Dasgupta added.

As reported by ET last week, the general insurance industry has now registered 9,80,000 covid-19 claims worth over Rs 14,000 crore, Dasgupta said, adding that ICICI Lombard’s share in the number of covid-19 health claims intimated is around 5 percent.

In the quarter, the general insurer accrued gross direct premium income (GDPI) of Rs 3,478 crore for Q4, registering a growth of 9.4 percent YoY. The return on average equity (ROAE) was 21.7 percent in FY21 compared to 20.8 percent in FY20.

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Solvency ratio was 290% in Q4 of FY21 as against 276% in Q3 and 217% in Q4 of FY20. Insurance Regulatory and Development Authority (IRDAI) mandates a minimum solvency requirement of 1.50.

Dasgupta said that the general insurer’s acquisition of Bharti AXA General Insurance is pending National Company Law Tribunal (NCLT) approval following which it’ll seek a final clearance from IRDAI.

Among the business segments all major business portfolios such as motor, health and marine saw the insurer register underwriting losses in Q4. While the motor underwriting loss stood at Rs 207.97 crore, marine underwriting loss came at Rs 10.18 crore.

Meanwhile, health (retail) underwriting loss was at Rs 8.77 crore and health (corporate) underwriting loss at Rs 23.4 crore. The overall loss ratio for health stood at 78% for FY21 compared to 70 percent a year ago.



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