In Q4, ICICI Lombard’s PBT rises 7%

Private sector non-life insurer ICICI Lombard reported a 7.27 per cent growth in pre-tax profit in the March quarter (Q4FY20), helped by no losses in the crop insurance business and an improvement in loss ratio across some corporate segments like fire insurance.

At ~371 crore, its pre-tax profit was up from ~345 crore in the same period last financial year (Q4FY19).

The insurer reported a net profit of ~282 crore in Q4FY20 compared to ~228 crore, registering a growth of 23.8 per cent on account of lower tax outgo at

~88.7 crore compared to ~118 crore in the same period previous financial year. However, the company reported an underwriting loss of ~29.42 crore in Q4FY20 — an improvement over Q4FY19’S figure of ~49.70 crore.

It also reported lower underwriting losses for the full year (FY20) at ~105.15 crore compared to ~169.65 crore in FY19. The combined ratio of the company, a measure of profitability for non-life insurers, for the quarter stood at 100.1 per cent compared to 99 per cent in Q4FY19. A combined ratio below 100 means the insurer is making underwriting profits.

The gross premium earned by the company declined 8 per cent in Q4FY20 at ~3,181 crore, from ~3,485 crore, mainly because of a decline in crop insurance business.

The company generally shied away from the crop insurance segment and the management said they will be cautious with the business in FY21 as well. In FY20, the premium earned by the firm saw a decline of 8 per cent to ~13,313 crore from ~14, 488 crore in FY19.

The company made underwriting profits in segments like fire, marine, and group health, while it booked underwriting losses in the motor segment and the retail health segment.

Given that the third-party hikes for FY21 have been put on hold by the insurance regulator because of the covid-19 disruption, the loss ratios in the segment may shoot up in the future if insurers resort to heavy discounting in the own-damage segment.

Also, with social distancing being the new norm, use of private vehicles may see an increase which might result in higher accidents and more claims for the insurers.

In light of the covid-19 situation, the company has provided for impairment of ~119 crore for the quarter and ~120 crore for the full year on investment assets, in line with its policy.

The company has maintained a healthy solvency ratio at 2.17x as of March 31, 2020, as against 2.18x at December 31, 2019. It’s higher than the minimum regulatory requirement of 1.50x. Solvency ratio was 2.24x at March 31, 2019.

It did not declare any dividend as the regulator had instructed the companies to take a conscious call on the payout to conserve capital in light of the current situation.

However, it reported an underwriting loss of ~29.42 cr in Q4FY20 — an improvement over Q4FY19’S figure of ~49.70 cr