Rising cost mutes ICICI Lombard Q3 profit at Rs 318 cr

Rising operational cost and the adjustments arising from the merger of Bharti Axa coupled with an overall increase in the loss ratios have capped bottomline of ICICI Lombard General Insurance at a lower band, booking Rs 318 crore in net income for December quarter 2021-22.

This was marginally up from Rs 314 crore net income logged in the year-ago period.

The company on Wednesday said results are not strictly comparable as the numbers being reported now are that of the combined entity after the completion of the merger of Bharti Axa General Insurance during the early days of the quarter, but effective from April 2021.

Bhargav Dasgupta, managing director and CEO of the company, told PTI that the profit was crimped by the rising cost pressure from marketing expenses as a section of the industry has been going aggressive on this front whittling the higher gains from investment income, which rose from Rs 568 crore a year ago to Rs 689 crore and much lower claims from the pandemic and floods, which will flow in during the fourth quarter.

Its overall loss ratio deteriorated to 69.6 per cent in the quarter from 65.9 per cent, led by 94.3 per cent in crop (as they provided prospectively from claims to come after the harvest season), which improved from 112.5 per cent a year ago and engineering which had the second worst loss ratio at 79.9 per cent, massively up from 37.6 per cent, 75.1 per cent in health, and 71.8 per cent in the motor book.

Gopal Balachandran, the chief financial officer, said claims from hospitalisation due to COVID infections has been very minimal during the quarter, compared to last two quarters when its loss stood at over Rs 500 crore taking the total payout during the first nine months of the fiscal year at Rs 530 crore.

On the operational revenue front, gross direct premium income or GDPI grew to Rs 4,699 crore in the quarter from Rs 4,034 crore year-on-year. Excluding the crop segment, GDPI stood at Rs 4,626 crore, up from Rs 4,034 crore.

The combined ratio, the key profitability metric of an insurer, improved to 104.5 per cent in Q3 as against 97.9 per cent in Q3FY21 with Bharti's ratio at a much higher 120 per cent, Balachandran said.

During the quarter, it booked Rs 131 crore in capital gains as against Rs 108 crore in Q3FY21.

The combined ratio is the money that a general insurer makes from each policy sold after all incurred claims, along with management expenses which includes reinsurance commission on a net written premium.

The company gave lower return on each share during the quarter which fell to 14.6 per cent from 17.6 per cent. Yet, it maintained high solvency ratio of 245 per cent as against 249 per cent in September 2021 and 290 per cent in March 2021, much higher than the regulatory requirement of 150 per cent.

Its stock lost 1.3 per cent to Rs 1425.50 on the BSE whose benchmark bled 108 basis points on global selling.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)