ICICI Lombard General Insurance: Q1FY27 results: TP reserve shock and fire losses drag Q1 earnings

Research evidence excerpt

ICICI Lombard General Insurance: Q1FY27 results: TP reserve shock and fire losses drag Q1 earnings

46% YoY to Rs4.0bn (49% lower vs. UBSe) and combined ratio (COR) deteriorating 03/27E 63.64 53.92 -15 63.40

426bps YoY to 107.2%. Adjusted PAT stood at Rs5.75bn, down 23% YoY, excluding the 03/28E 73.49 68.54 -7 73.30

Motor TP reserve strengthening and impact from two large fire losses with adjusted COR

at 102.3% (vs. UBSe of 102.5%). The key driver was a Rs1.65bn Motor TP reserve Neeraj Toshniwal

strengthening following the Supreme Court judgment on homemaker compensation, Analyst

neeraj.toshniwal@ubs.comcoupled with Rs0.63bn of large fire losses. Management indicated that the Supreme

+91-22-6155 6058

Court judgment could increase industry Motor TP loss ratios by 12-15%, although it

refrained from quantifying the steady-state impact on ICICI Lombard. The company

expects industry interventions and tariff hikes, but visibility remains limited and timing

uncertain. At the same time, commercial lines continue to face severe pricing pressure,

with fire premiums declining sharply across the industry. While management remains

optimistic on eventual market correction, near-term earnings visibility appears weaker

given TP uncertainty, elevated claims trends and ongoing competitive intensity.

Lower investment income adds to lower profitability

Investment income moderated on lower treasury gains. Investment income declined

9.0% YoY despite improvement in portfolio metrics, as treasury gains were at Rs1.83bn

vs. Rs3.8bn in Q1FY26. This more than offset the benefit of a higher portfolio YTM of

7.58% (vs. 7.46% in Q4FY26) and longer duration of 5.53 years (vs. 5.13 years).

Valuation: Neutral rating and with revised price target to Rs1,930 (from Rs2,135)