Listed insurer ICICI Lombard General Insurance Company (ICICI Lombard) is predicted to boost its underwriting threat choice by way of the adoption of know-how and analytics, stated AM Best.

However, persistent market competitors should still pose challenges to its technical margins.

Ratings affirmed

AM Best affirmed ICICI Lombard’s Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good). Concurrently, AM Best assigned the India National Scale Rating (NSR) of ‘aaa. IN’ (Exceptional) to ICICI Lombard. The outlook of those credit score scores is steady.

The scores mirror ICICI Lombard’s steadiness sheet energy, which AM Best assessed as very sturdy, in addition to its sturdy working efficiency, impartial enterprise profile and acceptable enterprise threat administration.

Balance sheet energy

ICICI Lombard’s steadiness sheet energy is underpinned by its risk-adjusted capitalisation, which is predicted to stay on the strongest degree over the medium time period, as measured by Best’s Capital Adequacy Ratio (BCAR).

The firm’s strong regulatory solvency place is supported by sturdy inside capital era, with shareholders’ fairness having exhibited a five-year common compound annual development price of 15%, as calculated by AM Best (fiscal years 2019-2023).

In addition, AM Best considered the corporate as having sturdy monetary flexibility as demonstrated by its capital elevating actions.

An offsetting steadiness sheet energy issue remained ICICI Lombard’s moderate-risk funding portfolio, which incorporates vital publicity to equities and fixed-income securities which can be non-rated on a world ranking scale.

Operating efficiency

AM Best considered ICICI Lombard’s working efficiency as sturdy, with a five-year common return-on-equity ratio of 18.2%, as calculated (fiscal years 2019-2023). Overall working outcomes are strong, albeit reliant on funding earnings (together with capital features) to offset underwriting losses. Although the corporate’s five-year common mixed ratio was 104.8%, it persistently outperformed the home common insurance coverage market in India. Underwriting efficiency improved in FY2023 (fiscal yr ended 31 March 2023), primarily pushed by a discount in COVID-19 claims from the well being enterprise and there was additional enchancment within the first 9 months of FY2024.

Business profile

ICICI Lombard is the second-largest non-life common insurer in India, with an total market share of 8.2% based mostly on FY2023’s gross home premium earnings. The firm’s underwriting portfolio is well-diversified by traces of enterprise and distribution channels with a geographical focus in India.