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Home News ICICI Lombard’s digital push overshadowedby other concerns

ICICI Lombard’s digital push overshadowedby other concerns

 

At its recent 2023 Analyst Meet, ICICI Lombard General Insurance Company Limited demonstrated its ongoing emphasis on digital product innovations and partnerships. It intends to further develop client experience, diminish misrepresentation risk, track down strategically pitching open doors and further develop entrance.

It appears that some of these efforts are paying off. For instance, its medical services application IL TakeCare saw almost 4 million downloads in FY23. In the field of automobile insurance, its Pay As You Drive and other offerings are gaining popularity.

According to management, the technology expenditure would have an impact of 1.5-2 percent on profits and losses. While the tech investment may have a short-term impact on the company’s profitability, it is likely to have a long-term positive impact by driving premium growth. We believe Lombard’s proceeded with venture and information assortment can develop into the guaranteeing channel. For instance, its 25 percent mix of P&C (property and casualty) risk solutions for businesses has increased market share, according to JP Morgan analysts.

The management of ICICI Lombard has predicted a combined ratio of 102% by FY25. A combined ratio greater than one hundred percent indicates that the business is paying out more claims than it is receiving in premiums. The combined ratio of ICICI Lombard in the December quarter was 104.4 percent. “ICICI Lombard continues to report materially better combined ratios than the overall sector (and even the private sector average),” say Emkay Global Financial Services Ltd. analysts. But things are not going well. It is aiming for a combined ratio of 102% by FY25 due to the extremely competitive market, both in terms of pricing and distributor payments (FY23E: approx. 105%),” according to Emkay analysts. He stated that this is slightly less than the nearly 100 percent goal set prior to the pandemic.

In the meantime, the stock has performed poorly recently. Its stock has lost nearly 13% so far in 2023, more than the sector index Nifty Financial Services.

Analysts note that ICICI Lombard stock is still negatively impacted by ICICI Bank’s expected 18% stake reduction by September 2024. The merger of Bharti AXA General Insurance Company and ICICI Lombard accompanied the sale of the stake.

In addition, investors will be waiting for clarification regarding the company’s succession strategy. Jefferies India analysts have maintained their stock’s earnings forecast, but they note that the CEO of the company may be required to retire in May 2024, after 15 years of service. As a result, this is a crucial aspect to consider.

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