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Senior investment analyst

Pallavi Deshpande

Equity Bottom-Up

ICICI Lombard General Insurance Company / Equity Bottom-Up

ICICI Lombard General Insurance Company (ICICIGI IN)

<p>We believe the regulator's proposal to reduce third-party motor insurance premiums for cars below 1000cc by 10% will be an overhang for <a href="https://www.smartkarma.com/entities/25882" target="_blank" data-smartkarma-citation="entities:25882:1">ICICI Lombard General Insurance Company (ICICIGI IN)</a> (Ilom) share price performance and we expect the stock to move lower as underwriting margins in the health and property insurance business come under pressure. We believe India’s crop insurance market is yet to evolve with the issue of delay in the release of subsidies (premiums) by the state governments likely to take longer to be resolved.</p><p>We expect Ilom's non-motor insurance premium growth to be inline with the industry in FY19 as it completes the restructuring of its product portfolio in FY18. We believe valuations at 30x FY2020 earnings do not factor in a regulator keen on increasing motor insurance penetration through lower pricing. Our 2019 and 2020 estimates are below consensus estimates.  </p>

We believe the regulator's proposal to reduce third-party motor insurance premiums for cars below 1000cc by 10% will be an overhang for ICICI Lombard General Insurance Company (ICICIGI IN) (Ilom) share price performance and we expect the stock to move lower as underwriting margins in the health and property insurance business come under pressure. We believe India’s crop insurance market is yet to evolve with the issue of delay in the release of subsidies (premiums) by the state governments likely to take longer to be resolved.We expect Ilom's non-motor insurance premium growth to be inline with the industry in FY19 as it completes the restructuring of its product portfolio in FY18. We believe valuations at 30x FY2020 earnings do not factor in a regulator keen on increasing motor insurance penetration through lower pricing. Our 2019 and 2020 estimates are below consensus estimates.  

ICICI Lombard - Likely Reduction in Third-Party Premiums Plays Spoilsport