ICICI Lombard General Insurance Company Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from ICICI Lombard General Insurance Company Limited (ICICIGI) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:14:23] Swarnabha Mukherjee of B&K Securities asked about the sequentially higher retention level during 2Q23 in flow-through from gross written premium to net earned premium. Gopal Balachandran CFO answered that 1Q is typically a period of commercial policy renewals due to which 1Q retention ratio is lower than 2Q23.

• [00:15:17] Swarnabha Mukherjee of B&K Securities asked if there would be any further premium inflows in crop going ahead. Bhargav Dasgupta MD answered that it’s a seasonal mix. Kharif is usually bigger and that business will remain about plus minus 5% of the portfolio. In 2H23, the amount of crop business will be much lower vs. 1H23.

• [00:21:40] Prayesh Jain from Motilal Oswal enquired about the reason for increase of health claim ratios sequentially. Bhargav Dasgupta MD replied that on health the loss ratios for corporate book are at about 99.1% and retail indemnity is at about 64.4%. And the benefit is relatively profitable and is within the acceptable levels of loss number.

• [00:21:48] Prayesh Jain from Motilal Oswal also asked about the implementation of vehicles act and the benefits of it. Bhargav Dasgupta MD answered that there are some early signs but it’s too early to take a call.

• [00:22:07] Prayesh Jain with Motilal Oswal queried about the dip in solvency on a sequential basis. Bhargav Dasgupta MD said the decline in solvency is purely a function of growth rates and the mix of business. In 2Q, generally the portfolio mix is more in favor of retail.

• [00:27:08] Shreya Shivani of CLSA enquired about the cyclicality in ICICIGI’s investment yields between 1Q and 2Q. Gopal Balachandran CFO said that yield on investment is purely a function of interest rate environment seen in the market. On an increasing interest rate environment, the yields will fluctuate between periods. Looking at the overall yield on aggregate, it’s a function of interest accruals and capital gain.

• [00:31:59] Nidhesh from Investec asked about the number on the sales from the ILTakeCare App for 2Q23. Bhargav Dasgupta MD answered that sales started only last year and it’s picking up. That number has grown from 9.8 crores in 1Q23 to 27.4 crores in 2Q23. For Sept. it was about 10 crores.

• [00:32:08] Nidhesh from Investec enquired how the company is driving the strong downloads of ILTakeCare App, if any cost is incurred. Bhargav Dasgupta MD said that today, one driver is that more than 50% of the employees of the company’s corporates have downloaded and used the app. And this percentage has been increasing QonQ. And another driver is putting a lot of effort on the Bancassurance and the agency.

• [00:36:30] Nidhesh of Investec asked about accrual investment deal increasing about 80-90 bp sequentially and if that’s the base yield.  Gopal Balachandran CFO said it’s difficult to comment because it needs to be seen how the interest rate cycle plays out. But if the momentum of interest rate cycle sustains, it will help in overall increase in the yield of the portfolio.

• [00:45:18]  Neeraj Toshniwal from UBS India asked about pressure in motor OD in terms of market share post July. Bhargav Dasgupta MD replied that in OD, ICICIGI is seeing some of the players now rationalize the aggression. However, at the same time there are still few players who are very aggressive. ICICIGI believes it will not sustain.

• [00:47:20] Neeraj Toshniwal with UBS India enquired about the growth expectations for FY23. Bhargav Dasgupta MD answered that the company is optimistic that it will be higher.

• [00:47:50] Avinash Singh of Emkay Global asked about the driver of market share loss in the highly profitable liability line. Bhargav Dasgupta MD answered that ICICIGI’s growth for Q2 is roughly about 36.4%. So the business continues to do well. The market share drop is due to one company’s one product that right now is not there in the market.