ICICIGI

Prioritises Profitability Over Growth, Valuation Premium Holds

reported a mixed Q3FY26, with net profit down 9% YoY due to higher claims and wage-code related expenses. Yet, business growth rebounded sharply, aided by GST rationalisation and a stellar performance in retail health insurance, which grew 86% YoY, far outpacing industry growth. The insurer’s focus on profitability and product mix shift toward health insurance continues to support its premium valuation despite modest growth in other segments. Financial Performance - Net profit fell 9% YoY in Q3FY26. - One-off ₹55 crore wage-code expense impacted profitability. - GDPI grew 13.3% YoY, above industry growth of 11.5%, driven by retail health. - 9M FY26 GDPI up 3.6% YoY, lagging industry’s 8.7% due to weak H1. Segmental Trends - Retail health insurance: 86% YoY growth vs industry’s 34%, market share up to 4.5% from 3.2%. - Motor insurance: Market leadership at 10.7% share, but subdued growth due to pricing pressure and competition. - Other segments lagged industry growth, highlighting reliance on health insurance momentum. Combined Ratio and Underwriting - Combined ratio remained above 100%, leading to underwriting loss offset by investment income. - Industry combined ratio worsened to 119.2% in H1FY26; ICICI Lombard outperformed at 104.1%. - Consistent underwriting strength underscores superior risk selection and discipline. Strategic Focus on Profitability - Prioritising profitability over growth, especially in motor insurance where industry combined ratio hit 128.5%. - Shift toward retail health policies (loss ratio ~65–70%) vs group health (~94–95%). - Distribution expansion via retail health agency managers yielding results. Valuation and Outlook - Trades at 5.8x book value (Dec ’25), supported by superior profitability. - ROE declined in Q3FY26 but product mix shift offers room for improvement. - Long runway in retail health (market share 4.5% vs Star Health’s 30%+).