ICICI Lombard General Insurance Q4 net profit up 23.8%

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Private general insurer ICICI Lombard General Insurance posted a 23.8 percent year-on-year (YoY) rise in its March quarter (Q4) net profit at Rs 281.93 crore due to a reduction in underwriting losses.

The underwriting loss reduced to Rs 29.42 crore in Q4FY20 as compared to Rs 49.70 crore in the year-ago period.

Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance said that the reduction in underwriting losses was due to a conscious call to not write crop business and also due to pricing improvements in segments like fire insurance.

He added that the company will continue to stay conscious as far as the crop insurance segment is concerned.

As far as Coronavirus (COVID-19) is concerned, Dasgupta said that it is not a balance sheet risk right now since health insurance penetration is low.

"Losses could rise in unoccupied properties since there is nobody looking after the premises. When businesses restart, claims may come up," he added.

ICICI Lombard took an impairment hit of Rs 120 crore in Q4. The mark-to-market losses in the equity book is Rs 550 crore at end of March 31, 2020. However, the overall net investment income rose by 33.6 percent YoY to Rs 418.37 crore in Q4FY20.

Gross direct premium income (GDPI) of the company stood at Rs 3,181 crore for Q4 compared to Rs 3,485 crore a year ago. Excluding crop insurance, GDPI rose by 2.9 percent YoY to Rs 3,244 crore.

All business segments except retail health and motor insurance posted an underwriting profit for Q4.

Dasgupta said that motor insurance segment losses were higher due to the pricing competition in the own-damage segment. Underwriting loss in the motor segment stood at Rs 95.45 crore for Q4FY20 compared to loss of Rs 155.48 crore in the year-ago period.

The combined ratio stood at 100.1 percent in Q4FY20 compared to 99 percent in Q4. A combined ratio below 100 percent indicates that an insurer is posting underwriting profits.

The Return on Average Equity (ROAE) was 20.8 percent in FY20 compared to 21.3 percent in FY19. ROAE was 18.8 percent in Q4FY20 compared to 17.5 percent in Q4FY19.

ICICI Lombard's solvency ratio was 217 percent at March 31, 2020 as against the minimum regulatory requirement of 150 percent.

For the full year (FY20), the insurer's GDPI saw an 8.1 percent YoY decline to Rs 13,313 crore. Excluding the crop segment, ICICI Lombard's GDPI rose by 10.5 percent YoY to Rs 13,302 crore.