ICICILombard 1QFY25
ICICILombard 1QFY25
ICICILombard 1QFY25
: MUM/SEC/113-7/2025
To,
The Manager The Manager
Listing Department Listing Department
BSE Limited National Stock Exchange of India Limited
Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor, Plot C/1
Dalal Street G Block, Bandra Kurla Complex,
Mumbai – 400 001 Mumbai – 400 051
Dear Sir/Madam,
This is further to our letter dated July 9, 2024 and July 19, 2024, please note that the
Company had hosted earnings conference call with investor(s) and analyst(s) on
Friday, July 19, 2024 to discuss the performance of the Company for the quarter ended
June 30, 2024.
In this regard, please find attached transcript of earnings conference call with
investor(s) and analyst(s) for the quarter ended June 30, 2024.
The above information will also be made available on the Company's website at
www.icicilombard.com.
Thanking you.
Yours Sincerely,
Vikas Mehra
Company Secretary
Encl. As above
Management:
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Moderator: Good evening, ladies and gentlemen. A very warm welcome to ICICI
Lombard General Insurance Company Limited's Q1 FY2025 Earnings
Conference Call.
Please note that any statements or comments made in today’s call that
may look like forward looking statements are based on information
presently available to the management and do not constitute an
indication of any future performance as future involves risks and
uncertainties which could cause results to differ materially from the
current views being expressed.
I now hand the conference over to Mr. Sanjeev Mantri – MD and CEO
– ICICI Lombard General Insurance Limited. Thank you, and over to
you, sir.
Sanjeev Mantri: Thank you. Good evening to each one of you. Thank you for joining the
Earnings Conference Call of ICICI Lombard General Insurance
Company Limited for Q1 FY2025.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Now talking about the auto industry, during the quarter, we have seen
decent growth in the wholesale numbers as reported by SIAM with
private car growing at 3.0%, two-wheeler at 20.4% and CV at 7.8%.
This entails approximately 1 million private cars, 5.0 million two-
wheelers and 0.4 million CV’s being sold during the quarter. However,
the retail numbers as reported by FADA has seen muted growth for
private car at 2.5%, two-wheelers at 12.6% and CV at 6.0% for Q1
FY2025.
Despite relatively lower retail sales during the quarter1, we expect the
onset of the festive season in the coming months to augur well for auto
industry.
1
FADA
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Overall, the combined ratio of the industry was at 112% for FY2024 as
against 115.8% for FY2023. For motor, the combined ratio was 118.5%
for FY2024 as against 121.1% for FY2023. While there seems to be
some improvement in the overall combined ratio, with no motor TP rate
hike and the Motor combined ratio for the industry continues to remain
under pressure.
The company's GDPI grew at 20.4% during Q1 FY2025 which has been
higher than the industry growth of 13.3% during the same period.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
For the first couple of months during the quarter, Retail Health
business grew lower than our expectation. However, with the
launch of a new health insurance solution, growth reached 14.4%
in the month of June. Overall, the retail business grew at 12.6% in
Q1 FY2025 compared to the industry growth of 19.0%.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
During the quarter, with lower credit disbursement growth of our Key
Relationship Partners, our BANCA business grew by 7.5%. However,
ICICI Group distribution grew by 31.4% for Q1 FY2025 due to strategic
focus on branch banking business. When it comes to our relationships
across distribution, we continue to deep-mine our existing relationships
by creating new value streams and at the same time, focus on
expanding relationships by staying invested in this channel.
Our one-stop solution for all insurance and wellness needs, the ‘IL
TakeCare’ app, has surpassed 10.0 million user downloads till date. We
registered a premium of ₹ 504.5 Mn for the quarter.
During our previous call, we spoke about “One IL One Team” vision. As
a part of this initiative, we continue to drive synergies whether in terms
of One IL One Digital, One IL One Agency, or One IL One Call Center.
Our collective efforts focus on the organization's goals has created
tailwinds, which are driving superior growth in the recent months. We
will continue to consistently leverage the power of One IL One Team
through efficient systems and processes driven by our teams.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
I will now request Gopal to take you through the financial numbers for the
recently concluded quarter.
Gopal Balachandran: Thanks, Sanjeev, and good evening to each one of you. I will now give you
a brief overview of the financial performance of the recently concluded
quarter. The results have been uploaded on our stock exchanges and you
will be able to see the same getting reflected on our website as well. You
can access it as we walk you through the performance numbers.
The Gross Direct Premium Income (GDPI) of the company was at ₹ 76.88
billion for Q1 FY2025, as against ₹ 63.87 billion in Q1 FY2024. This was a
growth of 20.4%, which was higher than the industry growth of 13.3%.
Excluding Crop and Mass health, GDPI growth of the company was at
19.7%. Again, higher than the industry growth of 14.8% in Q1 FY2025.
Our GDPI growth during the quarter was primarily driven by growth in the
preferred segments. The overall GDPI of our property and casualty
segment grew by 9.7% at ₹ 25.08 billion in Q1 FY2025, as against ₹ 22.86
billion in Q1 FY2024.
On the retail side of the business, GDPI of the motor segment was at ₹
23.69 billion in Q1 FY2025, as against ₹ 18.75 billion in Q1 FY2024, again
registering a growth of 26.3%.
Our combined ratio was 102.3% for Q1 FY2025, as against 103.8% for Q1
FY2024.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Consequently, Profit After Tax (PAT) also grew about a similar number
at 48.7% at ₹ 5.80 billion in Q1 FY2025 as against ₹ 3.9 billion in Q1
FY2024.
Moderator: Thank you very much. We will now begin the question-and-answer
session. Our first question is from the line of Shreya Shivani from CLSA.
Please go ahead.
Shreya Shivani: Sir, I basically have a question on the Motor Segment where you guys
have delivered quite well, particularly in the first two months of this
quarter. Some color, if you can give about, I know you have said that
more growth came from old vehicles than new vehicles. I am not sure if
I got that right, if you can help me with that.
Second, the thing with the motor segment is that the motor TP book has
seen quite a strong growth. OD is the fastest for you, but TP growth was
also very strong given that competition in this segment has been de-
growing. Also, the loss ratio or the reserving triangle for a lot of
competition for FY2024 saw a bit of worsening. So, is there any
dramatic shift in the industry dynamics or the competitive landscape or
any color that you can give to us about the motor segment? And
whether we can sustain this 20% -25% plus growth rate in the motor
segment, that will be useful.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Sanjeev Mantri: Thanks, Shreya. Yes, clearly, not couple of months, I think the full
quarter, the team has been able to do pretty well as far as motor
segment is concerned. But look, we always maintained a very steady
line that being a multi-line, multi-product company, in that sense, we will
go where we believe there is value.
With respect to the new and old, new sales per se, as I said, the FADA
number has given a very muted number, but overall supply has
increased and that should hold good in the ensuing quarter when you
have festive season coming in.
For us, again, from deep mining, we were able to do a much better job
on getting the old book. So you are right. Our new grew at around 16%,
17%, but the old book has grown at almost 33%. So, that's what has
given value for us as a company.
Gopal Balachandran: Yeah, I will just add on to say that, the good news is there seems to be
semblance playing out in motor as a segment. Which is what we put out
also as a part of the opening remarks, to say that directionally, the
combined ratio for the industry looks to be going down almost by about
3% or 4% when you look at it on a full year basis. This is obviously a
trend that we will watch for even for the subsequent quarters.
And linked to this is your last question that you asked in terms of what
has been the loss experience, or let's say the loss ratios for the industry,
vis-a-vis what has worked out for us. Honestly, I am sure each
companies will have their own approaches to write risks in the way they
would want to source, and the outcome is more a reflection of the
thought processes that they would have had taken in their respective
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
So, that's largely the loss ratio band that we have been kind of largely
working with. And at this point of time, given the point that Sanjeev
made in terms of our ability to go after micro segmentation and doing
the right risk selection, we believe, we are pretty much poised to stay
around those loss ratio bands. But obviously, it's all a function of what
business mix that we write at the end of the day.
Shreya Shivani: And sir, just last one comment. Are you guys seeing any benefit from
the Motor Vehicle Act, in sense of are you seeing faster claim
intimation? Is there some change in the industry dynamics from that
perspective?
Sanjeev Mantri: No, actually, Shreya, it's early days, but we do see overall on a
sequential basis claim intimation on faster note than what it used to be,
but can we be conclusive about it as yet? No, but overall early signs are
positive in the direction that augurs well for the industry, not only us.
Moderator: Thank you. The next question is from the line of Madhukar Ladha from
Nuvama Wealth Management. Please go ahead.
Madhukar Ladha: So, a couple of things. First, you know, I know it's early days, but maybe
you can talk a little bit about the health product, what's the kind of
numbers that you are seeing and what are you sort of building in your
mind as a target for this year? And second, you have done very well on
the investment income side. So, I am not sure whether you gave this
number out or not, but what is the capital gain amount and if you can
split the investment income in capital gains and normal gains? And then
in the opening remarks, you had mentioned about the numbers for
private car, two-wheeler and CV. If you could just repeat the CV
number, what is it for the industry and what is it for us? So, those would
be my questions.
Sanjeev Mantri: Madhukar, thanks for your question. I will speak on the health product
and then I will ask Gopal to share with you the details of investment
income as well as the private car and two-wheeler . Again, it's been a
thoughtful process for us. We have been talking on health more from
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
the retail health side in a very big way. As a team we have launched
this product ‘Elevate’. Supremely excited in terms of the way it has been
received by the market across channels and partners at this point of
time.
Number wise probably we will wait till it comes to the end of the quarter
2. As you rightly said in your question itself, early days, but what I can
tell all of you on the call is that, the way it has been received in terms of
multiple industry first covers that we have put across, we do see a
significant traction. And as a team, all of us are very excited as to where
it can take us in the health segment and yes, this should be one of the
typical steps to make our journey more concrete. So, as I said in couple
of calls, that our efforts on health at many times have not reflected the
output. Hopefully, we are seeking through this some convergence on
that as an entity is all I can say. Now I will hand it over to Gopal to take
the other two questions of yours
Gopal Balachandran: So, maybe I will go in the reverse sequence. I will take the third one,
which is relatively easier. We put that as a part of the opening remarks.
Just to kind of reiterate, the mix between overall motor on private car,
two-wheeler and CV, that mix is at 51.5% is private car, 26% is two-
wheelers and the CV mix is 22.5%. To your other question on the
investment.
Madhukar Ladha: Sorry, Gopal. Gopal, I wanted the number of new CV growth was for
the industry and what is it for ICICI Lombard?
Gopal Balachandran: So SIAM numbers for private car, two-wheeler and CV for this quarter,
private car growth was 3%, two-wheeler is at 20.4% and CV is at 7.8%.
Gopal Balachandran: For us new CV growth is at about 20%. Now coming back to your
second question on terms of what is the split between the overall
investment income, we called that out as a part of the opening
transcript. See the capital gain numbers for this quarter is at ₹ 2.84
billion. This number in quarter 1 of last year was ₹ 1.23 billion.
Moderator: Thank you. The next question is from the line of Sanketh Godha from
Avendus Spark. Please go ahead.
Sanketh Godha: My first question is on the reasons that led to the significant
improvement or decent improvement in the Opex ratio, because if I look
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
And the second question what I had is that when you do long term what
you launched in private cars and the two wheelers, just wanted to
understand from accounting point of view, it is recognized on cash
basis, or it is 1/n for other than the new TP what you write for 3 years
and 5 years?
And lastly, my question is on, you said that non-ICICI Bank has seen a
growth issue, which is even reflected in personal accident cover growth,
which is declined year-on-year for the quarter. So, is it because the
major bank channels like HDFC or Axis have slowed down our
business? And how do you think it to play out going ahead? Yeah, these
are my questions.
Sanjeev Mantri: So, I think, thanks, Sanketh. With respect to the Opex part that you are
referring to, definitely, configuration of the portfolio has played a role.
There is no doubt about it. The growth of old has definitely helped us in
overall averaging of cost.
So, you are absolutely right. And besides this, even the growth in GHI
which comes on a relatively lower Opex which we have grown as a
business at almost 31.1% has played a role. Some bit of crop business
also has got booked on an incremental basis, but I wouldn't say that
that has changed the Opex. It is largely driven by the nature of business
in which it has got done.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Gopal Balachandran: And on the second question, Sanketh, pretty much similar to the same
prescription. As you rightly mentioned, whatever is true for the new
private car or new two-wheeler prescription, the same prescription is
what we are following with respect to the long-term motor offering that
we do for the rest of the businesses as well.
Sanketh Godha: Just on the Opex part, I just wanted to, see, I understand the ratio
improvement is because of little more GHI and crop, but absolute
decline in the cost is the point I was more focused on, that it declined
by 7.5% to 8%. So, is it largely attributed to the fact that your retail health
growth was lower and old component has increased in the motor? Just
wanted to understand, if that is a strategy going ahead, then we can
see such an improvement in the Opex ratio.
Gopal Balachandran: Yeah. So, Sanketh again this is something that keeps coming to us
every quarter, right, in terms of where is the directional movement on
the overall expense number I would again keep reiterating the fact that
end of the day as an institution, what I think everyone should be largely
watching out for is the combined ratio outcome. Because again, rightly
mentioned by you, businesses obviously get impacted by different mix,
different growth levels within a particular segment and each of them
have obviously its own nuances and dynamics with respect to the
overall cost of acquisition.
And again, the point that we made within that segment, the growth has
also largely stemmed from what Sanjeev mentioned. The old growth in
motor has been 33% plus. So, obviously as the older portfolio grows
faster, the relative cost of acquisition relatively is lower. And that's
something that we keep monitoring.
If you ask us what will be the directional trend that this expense ratios
will take, the only thing that we would call out to say is at all points of
time - we stand committed to staying within that threshold of 30%. Very
difficult to pull out and say what will we finally end the number with. The
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
So, hence lots of moving parts. Very difficult to call out a particular thing
to say what has led to the overall efficiency in the expense numbers.
Moderator: Sorry to interrupt. Mr. Godha, may we request you return to the question
queue for follow-up questions as there are several other participants
waiting for that. Thank you so much. We will take the next question from
the line of Aditi Joshi from J.P. Morgan. Please go ahead.
Aditi Joshi: So, I have three questions. Sir, can you please help us understand on
the Group Health side, what are the competitive dynamics you are
seeing, and also in terms of pricing trend that was observed and your
outlook as in going forward in the coming quarters, how do you see the
health insurance pricing both in the retail segment as well as in the
group segment, that is the employer-employee?
And then just the third question is on the, in the underwriting profit
segment-wise there was a significant improvement in miscellaneous
group and corporate. So, can you please suggest what this precisely
is?
Gopal Balachandran: So, Aditi, I will go in the same sequence. Let me start with corporate
health. Again, pretty much similar to what Sanjeev explained on the
motor side. As a thought process, I think when markets have been quite
aggressive, we have obviously tried to take a guarded stance, but
continued to stay invested in our distribution/ servicing capabilities.
So, obviously, now the fact that let's say pricing discipline is happening
on corporate health, that obviously is giving us an opportunity, which is
why as a segment, I think we have been able to outgrow the market at
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
On the retail, I think obviously one keeps looking for what is the quality
of the book that we want to write. I think we stay to the loss ratio
thresholds that we have generally spoken about, which has been
around 70% numbers on the retail health. I think that loss ratio band is
something that we would obviously want to stay focused on and the fact
that we have been able to launch this new health insurance solution will
obviously aid in terms of the loss ratio outcomes that we are expecting
for the rest of the year as well. And obviously, we continue to monitor
the portfolio in terms of its development. We believe, we are fairly priced
for the risk features that we have launched as a part of this solution. But
as I said, at the end of the day, we would obviously want to see that
particular segment operating in that loss ratio range of about 70%.
Now obviously, if this trend line continues and within that motor has
seen almost again a 3% to 4% improvement from an overall industry
standpoint. If this trend line was to further continue for the rest of the
year, I think we believe that we should be able to kind of stick to our Q4
combined ratio thought process that we have of about 101.5%. I think
we should be able to get to that trajectory by the end of the year. So,
that's in response to the second one.
The last one, I will keep saying that an absolute underwriting outcome
in itself may not mean much, particularly when you look at it in a
quarterly context because as we know that whenever you end up doing
relatively higher growth, this could be across any segment, the relative
cost of acquisition comes and hits you upfront. But all that we can say
for sure is hence to keep looking at the combined ratio numbers
The good news is as I said the fact that we have been able to write a
risk portfolio which is to our underwriting outcome, and hence to that
extent the combined ratio trajectory for the company as a whole has
been in line with what we would want to see ourselves at.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Aditi Joshi: Just a clarification. What categories come under the miscellaneous in
this disclosure, please?
Gopal Balachandran: So anything which is not covered by the rest of the segments for which
there is a separate disclosure that is put out, all of them come as a part
of the miscellaneous segment.
Gopal Balachandran: Yeah, so all those separate segments that have been specifically put
out in terms of regulatory prescriptions have been put out separately.
Anything which is not there as a part of those separately laid out
requirement, they will all form a part of miscellaneous. That is correct.
Moderator: Thank you. The next question is from the line of Prayesh Jain from
Motilal Oswal. Please go ahead.
Prayesh Jain: Sir, on the health ratio, loss ratio front, there is an increase from 78.7%
to 83.6%. What is this really reflective of, are there any adverse trends
that we have seen in the quarter and how should we think about this?
That would be my first one.
Second is on the motor strategy, wherein you have spoken about the
older vehicles' growth has been stronger. Generally, you know, OEM
channel has been our strength and that generally drives our growth in
the new vehicle business. So, what's differently we have done to grow
the older vehicle channel? It's digital where we have become more
competitive or it's through the agents' channel. How has this kind of
come across and whether that's sustainable?
And lastly, on the motor TP price hike, with this kind of loss ratio
trending, do we really envisage a price hike coming this year or even
for that matter, if it sustains anytime soon, what is price hike we should
work with? Those would be my three questions.
Sanjeev Mantri: Thanks, Prayesh, for your question. On the health side, in particular,
where we see relatively increased loss ratio, I think Gopal in a way also
spoke about it as to where we expect it to be around. There are two
segments, which is retail health and then the other part is the group
health.
But that being said, there is no denial of the fact that we have seen a
relative increase in frequency which has impacted the loss ratio overall.
Also, from what we are aware of, it has been at the industry level. And
it is something which is witnessed across is what we are understanding.
Whether this trend will be secular and will be there, quarter 2 typically
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
has an elevated loss ratio because of the monsoon that comes in. There
are vector borne diseases, which can have an impact over on this.
But for us, since we have also launched the product, which is expected
to do well, I think the mix should also play out over coming quarters to
help us in rebalancing our book and we remain committed to the overall
health as a segment and more so on the retail health, which we want to
continue to invest and grow. So, that's the first part as far as health is
concerned.
On motor per se as a strategy where it stands new and old, so it's not
that the new part, which we have shared the numbers also has not done
well for us, we have done well on the new side, but it is the growth of
old which has also significantly exceeded new. Both sections have done
well, but definitely old has grown at double the rate of what new has
grown as far as the company and that has helped us rebalancing it.
Agency also has done well and other channels also from wherever we
are able to source motor like broking channel has done well.
On motor TP hike, the last part that you have spoken about, look, I
mean, this is something which comes under the regulatory requirement.
We continue to pursue because at the industry level, there is still a need
in some segments to see an increase and maybe there are some
segments where there can be a decrease also on third party to overall
rebalance the book. And it is not only for growth. It is also for us as an
entity, if that pricing factor comes in since it is regulated, it will help us
to further expand our market. That's what it is Prayesh from our side.
Prayesh Jain: Just clarification on motor part. So, have we, you know, like in the last
6 to 9 months got more competitive in terms of pricing or what has been
the change in the approach of ours which has, one, obviously, the
industry trends have been feasible, but even from our side, what
changes we have done with respect to pricing? Does that play a role?
Sanjeev Mantri: Yes, obviously, there is an element of pricing, but we have continued to
be in a similar journey to be very honest. Others have, who were far
more aggressive, recalibrated it and that gain also has accrued to us. It
is not that we have gone dramatically on the price cut side. We have
stayed moderate in the zone, which is what we have always been
talking to each one of you. It's just that the others who were being far
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
more aggressive in the market have gone ahead and taken some more
of control in terms of numbers
Another piece which is there is the PPN network that we have started
leveraging very extensively and today, we would be on the agency and
direct side, we have got almost 70% of our claims which are being
processed at the PPN network, which is the preferred partner network
that we have. That drives significant efficiency also for us overall and
helps us in the motor profitability.
Moderator: Thank you. The next question is from the line of Nidhesh from Investec.
Please go ahead.
Sanjeev Mantri: So, pricing obviously is a function of our own modeling that we have
done and clearly I would say that we are aware of what we are doing.
Further details in terms of what is the rejection and all, I mean, honestly,
we would not like to share that. But yes, the business is, since there is
a decent pull, besides we launching this product, it does give us the
leeway of underwriting what we believe will make sense and the ones
which will not, we wouldn't.
So, it's at a simple level. And if you see the construct of the product
which is very important, if you all have not seen it, you must go through
it. It's a very modular product where the features are available as Add-
on. So, it's up to the customer whether they want to pick it up and all.
So, there is a risk pricing element that has got created which otherwise
was not the case. So, it was one shoe fit all kind of a product which will
say that this is what's available. But in this you go through a modular
model. They say that this is the core which you will get, and there are
features, if they suit your requirement, you must opt for it. So, it avoids
mis-selling and at the same time, it allows us to price the risk
appropriately.
Moderator: Thank you. The next question is from the line of Neeraj Toshniwal from
UBS Securities. Please go ahead.
Neeraj Toshniwal: So, three questions. First is on the duration of the book and the things
which worked well. Second is on the retentions have been given are
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
fewer and are lower. So, commissions should have been a little lower.
Is it the motor of the mix which has come up and driving the higher
commissions as in last Q1? And third is more towards today’s incident
of the global IT outage. Wanted to understand any cyber insurance,
from the cyber insurance risk perspective, are we seeing any impact or
how should we work the things about it? Though the portfolio might be
little small, but just wanted some thoughts here.
Gopal Balachandran: Maybe I will take the last one first. So, I think, obviously too early to call
out because it's like a cyclone happening and can we kind of estimate
what will be the impact of losses that has hit our book. So, obviously, it
will take a while for us, if at all there is any impact so far as claims is
concerned. But again, just going back to the underwriting discipline,
what we have tried to do from an underwriting standpoint is obviously
to write and risk select books which we think will be within our
underwriting appetite.
And hence, end of the day, whatever underwriting we do, we are in the
business of paying claims. And therefore to that extent, if there is
genuinely a claim, and obviously to that extent, we will honor those
commitments. But too early to call out, but obviously maybe in the
subsequent quarter, we will be able to give you a much better update in
terms of where we are consequent to this outage that one would have
possibly seen.
To your first point, in terms of what is the duration of the book, the
duration of the book currently is at about 5.48 years This is something
if you recollect, I think we have been obviously taking advantage of the
higher interest rate regime over the last couple of years. And that again
augurs very well in terms of the portfolio interest accruals and we are
well-positioned to capitalize the opportunity depending on how the
interest rate cycles move in the market.
So, that's what we keep doing. It's not just in this period. I think even
over years, when we have seen periods of high interest rate regime,
during those times, we have obviously tried to go long. And as possibly
the cycle of interest rate starts to reverse, we have been able to see the
benefit of maybe higher realization getting accrued towards in terms of
capital gains and obviously till that time, higher interest accruals. So,
that's the response to the duration of the portfolio.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
To call out one over the other honestly for us may not be the right thing
because that's the inherent nature of the business that we are in. We
are a multi-product, multi-distribution set-up, we source different type of
businesses and therefore each business mix will have an outcome
which will be very different. So, hence, again just to reiterate, we stand
committed to the trajectory of the declining combined ratio that we have
spoken about and at the end of the year, assuming the market
continues to show improved trajectory, we stand committed to see a
combined ratio which is Q4 FY2025 exit of about 101.5%.
Moderator: Thank you. The next question is from the line of Avinash Singh from
Emkay Global. Please go ahead.
Avinash Singh: Couple of questions. The first one, if you can help again on motor where
you explained that share of old had gone up. How it has panned out in
various distribution channels, I mean, agents, or is it gaining share from
other peers at the OEM dealer point or is it something to do with the
new corporate broker or online broker tie up you have done? That's one.
Second is, I mean, if I look at the motor third party loss ratio of 69% for
the quarter, is it just based on this quarter or is there some support
coming? Because if I see the industry, you are the only one who has in
motor TP for FY2022 or FY2023, you have not taken any kind of a year
TP ratio so far. So, is the 69% now getting some support from this
quarter only? And if you can give some kind of idea that how, if, I mean,
in the Ind AS, when reserve discounting is allowed, how the 69% would
typically look?
Gopal Balachandran: Maybe I will take the second one and maybe I will respond to the couple
of questions on TP loss ratios and maybe the related impact on the Ind
AS front. Let me start with the reverse order. Ind AS for us is work in
progress. And as I have been saying, even in the earlier calls, we will
come back to the market at an appropriate time to talk about what
exactly will be the relative impact when we transition to the Ind AS from
a discounting of reserve standpoint.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
On the third party loss ratio, Avinash, I think again, which is why one
called out at the beginning to say what is the range that one is
comfortable with in terms of the third party loss ratio outcomes. But
having said that, I think you are absolutely right. Does it make sense to
look at the number more on a quarterly basis is something that we again
keep talking about. I think, ideally all of you understand this far better.
Particularly on third party, this is a segment which you have to look at
numbers over long term. Hence, the range is something that we have
talked about, and that's what we will possibly end up doing in terms of
the mix of the business that we write within private car, two-wheeler and
commercial vehicles. And that's what we keep revisiting. Forget about
the numbers that we put out on a quarterly basis to all of you, internally
for us, it's on an everyday basis in terms of the way how we risk select
portfolios between private car, two-wheeler and commercial vehicles.
So, hence, I think the range, just to reiterate, on third party, what we
would be comfortable is within the range of 65% to 70%. And obviously,
the experiences on third party book has to be looked at over longer
cycles.
Sanjeev Mantri: Also, on the motor in terms of the old part, as I mentioned in the previous
question that was asked, our growth has been across channels. Clearly,
there is no way the old can grow at double the rate of new if we don't
have better retention coming from our dealer network. So, that also has
played out. And that being said, even the agency as well as the website
and broking business has contributed. But it is not something which is
that one of the few which has delivered. It's been overall a very, very
comprehensive, well-thought plan.
Moderator: Thank you. We take our next question from the line of Supratim Datta
from Ambit. Please go ahead.
Supratim Datta: My first question is on the recent IRDAI change with respect to
commissions for long-term motor policies. Now, the commission limit
has been done away with. So, just wanted to know your observation
that how do you see this playing out in the industry and what impact
could this have? That would be the first one.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
The second one is, when I look at the quarterly numbers, there appears
to be a provision release of around ₹ 355 million. Now there was a lower
kind of provision release last year in the first quarter as well. Just
wanted to understand why does this keep happening in the first quarter
and is there something that we need to be cognizant of going forward?
That would be my second question.
Gopal Balachandran: So maybe I will go in the same sequence. On the IRDAI recent
guidelines on accounting for long term, I think at this point of time, we
would not want to put out specifically in terms of what the impact could
be. Primarily because at this stage, as you all know, the regulator has
rightly put forth the implementation of this to be deferred for a couple of
quarters and in the interim obviously industry and the regulator will work
to see what finally and in which shape and form does this guideline
eventually translate into. So honestly, maybe at that point of time, once
we have a finality to the way how this will get played out, is when we
will call out in terms of what impact could it have on the overall book.
To your second point, Supratim, if I got you correct, this ₹ 355 million
provision, are you referring it in the context of any specific line item?
Gopal Balachandran: Understood. All right. So, which is what I was just wanting to try to
understand. So, obviously, that's again a function of what does one see.
We do have our own impairment policies, which is more internal, that
we have put in place. And that obviously gets assessed on a time to
time basis. What effectively happens is in case if we find that a particular
value of a stock has reached a price which we believe is right, then to
that extent, obviously we take calls in terms of making an exit and
whenever we take calls to exit maybe that particular stock, at that point
of time, this is more an accounting reflection.
As in at that point of time, one would see a reversal of the provision for
impairment happening in the quarter in which the call to exit the stock
would have been taken, and correspondingly there would be an element
of capital gain, as one would have possibly seen given the fact that we
have seen the value of the stock reaching a price at which we are
comfortable to take that call.
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
To your point on the last one, which is with respect to the health
insurance segment in terms of what profile of customers that we want
to underwrite obviously is across bands. I guess, again, if you look at
the entry age of this particular health insurance solutions that we have,
that's again something that we have been able to kind of expand. I think
it starts from 18 and it goes on to whichever age limit that one would
want to kind of get in as a part of the portfolio underwriting.
So, therefore, the endeavor for us is not that we would want to pick and
choose any particular category of customers. Our endeavor is, I think
again what Sanjeev mentioned, I think the good part of the solution is
what we want to create as an offering is something that will be more
unique and personal to an individual and hence to that extent, whatever
is the right health insurance solution for that customer or that individual
is what we would want to recommend as a part of the solution. That's
the profile of customers that one would want to write and that could cut
across various age groups, that could cut across various geographies,
that could cut across various limits of sum insured expectations
because each customer will have its own expectations. So, that's what
I would leave it with.
And finally, just on the loss ratios front, I think, again, as we have
spoken, quarterly numbers again may not be largely reflective of what
the portfolio experience of the overall book will be. Again, just to
reiterate, the corporate health or the group health book is something
that we would see on a full year basis at a loss ratio range anywhere
between 94% to 95%. That's the range that we have spoken about even
in the past and retail health indemnity again we have spoken about a
loss ratio of about 70%.
Sanjeev Mantri: Just one last one on, obviously the target which we want to have is
healthy lives. It's very difficult and I can share with you quickly, if you
only write younger population, the persistency drops because they have
a tendency to move away if they have some other expenses to incur.
So, it's a healthy mix of young as well as relatively older population, is
the mix that we have. The idea is to overall source as much as possible
healthy lives. That is the criteria that it works on. Each one of it comes
with its own set of challenges.
Supratim Datta: That's absolutely fair, Sanjeev. Just one clarification. So, you have
called out that the relative increase in claim frequency within the health
insurance portfolio. Now was that at a retail level or a group health
level?
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ICICI Lombard General Insurance Co. Ltd. July 19, 2024
Sanjeev Mantri: So see, I tell you. It's important to understand whether we write group
or we write retail, the unit when it comes to report sickness is an
individual customer, the mode of writing is of no consequence. So the
elevated frequency would come at a category level, you know, whether
it is individual or group. I hope you are able to understand. It's always
the category that we are seeing more people falling sick. Which manner
they will come, whether they will come from group or retail is part of the
process of how the product of health insurance has been picked up by
them.
Moderator: Thank you. Ladies and gentlemen, we would take that as a last question
for today. I would now like to hand the conference over to Mr. Sanjeev
Mantri for closing comments.
Sanjeev Mantri: Great. I think thank you so much for joining in and wish you all a great
quarter 2 and look forward to connecting with you individually as and
when you are visiting our offices. All the best.
Safe Harbor: Except for the historical information contained herein, statements in this
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impact of changes in capital, solvency or accounting standards, tax and
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ICICI Bank and we undertake no obligation to update forward-looking
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