ICICI Lombard General Insurance shares fell as much as 4% in Wednesday trading despite reporting healthy topline growth, as deteriorating underwriting performance and operational challenges weighed on investor sentiment. The insurer's Q3 results showed mixed performance with strong premium growth overshadowed by widening underwriting losses and multiple one-off impacts.

Financial Performance Overview

The company's Q3 performance highlighted the contrast between robust business growth and profitability pressures:

Underwriting Challenges Intensify

The company's underwriting performance deteriorated meaningfully during the quarter, with the combined ratio worsening to around 104.5% from about 102.7% in the previous year. Underwriting losses widened sharply, driven by an increase in loss ratios across key business lines. The combined ratio above 100% indicates that the company paid out more in claims and expenses than it collected in premiums, highlighting operational headwinds.

Brokerage Views and Outlook

HSBC, maintaining a 'Buy' rating with a price target of ₹2,285, attributed the Q3 profit miss to increased loss ratios and one-off impacts from higher wage costs. The brokerage has cut its FY26 earnings estimates and adjusted FY27-FY28 forecasts to account for the performance miss.

Segment-wise Performance Highlights

CLSA noted that earnings were partly impacted by one-off labour code charges, while underlying growth trends showed gradual improvement. Retail health insurance emerged as the standout segment, posting over 80% growth driven by GST removal benefits and strong traction for the Elevate product. Commercial lines delivered steady performance, while motor insurance growth improved despite competitive intensity continuing to limit profitability. Management indicated readiness to welcome any regulatory decision on commission structures by insurance regulator IRDAI.

ICICI Lombard General Insurance reported mixed financial results for Q3, with net profit declining despite strong revenue growth. The general insurance company's performance reflects the challenging operating environment in the insurance sector.

Financial Performance Overview

The company's Q3 financial metrics present a contrasting picture of growth and profitability challenges:

Revenue Growth Momentum

Despite profitability pressures, ICICI Lombard demonstrated robust revenue growth of 12.7% year-on-year, with total revenue reaching ₹5,685.00 crores compared to ₹5,045.00 crores in the corresponding quarter of the previous year. This growth indicates the company's ability to expand its business volume and market presence in the competitive general insurance landscape.

Profitability and Combined Ratio Analysis

The company's net profit declined to ₹660.00 crores from ₹724.00 crores in the previous year's Q3, representing an 8.8% decrease. This decline coincided with a deterioration in the combined ratio, which increased to 104.5% from 102.7% year-on-year.

The combined ratio is a critical metric for insurance companies, measuring the relationship between claims and expenses against premiums earned. A ratio above 100% indicates that the company is paying out more in claims and expenses than it collects in premiums, suggesting underwriting losses. The increase of 1.8 percentage points to 104.5% reflects higher claims costs or expenses relative to premium income during the quarter.