ICICI Lombard Ltd IPO ICICI Lombard Ltd IPO

ICICI Lombard General Insurance Company Ltd is the largest private-sector non-life insurer in India based on gross direct premium income in fiscal 2017. They offer comprehensive and well-diversified range of products,including motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels. They were founded as a joint venture between ICICI Bank Limited, India’s largest private -sector bank in terms of consolidated total assets with an asset base of ₹ 9.9 trillion at March 31, 2017, and Fairfax Financial Holdings Limited, a Canadian based holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management with US$43.38 billion of total assets at December 31, 2016.

Strengths:

  • Consistent market leadership and demonstrated growth.
  • Diverse product line with multi-channel distribution network.
  • Delivering excellence in customer value.
  • Robust risk selection and management framework.

ICICI Lombard Ltd IPO

Key Highlights:

  • The company has earned premium of Rs 6157.78 crore for year 2016-2017 vs Rs 4826.34 crore in year 2015-16.Shows growth of almost 28% YoY.
  • The company has reported profit after tax of Rs 641.82 Cr and 505.34 Cr for the year 2017 and 2016 respectively.

Risk Factors:

  • Their loss reserves are based on estimates as to future claims liabilities and if they prove inadequate, it could lead to further reserve additions and materially adversely affect their results of operations.
  • Catastrophic events, including natural disasters, could materially increase their liabilities for claims by policyholders, result in losses in their investment portfolios, and have a material adverse effect on their business, financial condition and results of operations.

 

Outlook:

In fiscal 2017, they issued approximately 17.7 million policies and their gross direct premium income was ₹ 107.25 billion, translating into a market share, on a gross direct premium income basis, of 8.4% among all non-life insurers in India and 18.0% among private-sector non-life insurers in India.

For the three months ended June 30, 2017, the company issued approximately 5.2 million policies and their gross direct premium income was ₹ 33.21 billion, translating into a market share, on a gross direct premium income basis, among all non-life insurers in India of 10.0% and among private-sector non-life insurers in India of 20.2%. Their key distribution channels are direct sales, individual agents, bank partners, other corporate agents, brokers, and online, through which they service their individual, corporate and government customers. Their distribution network enables them to reach customers in 618 out of 716 districts across India.

They have a diversified composition of insurance products with motor, health and personal accident, crop/weather, fire, marine, and engineering insurance contributing 42.3%, 18.9%, 20.1%, 6.9%, 3.2% and 2.1%, respectively, of their GDPI in fiscal 2017. For the three months ended June 30, 2017, motor, health and personal accident, crop/weather, fire, marine, and engineering insurance contributed 36.5%, 18.2%, 21.8%, 9.4%, 3.5%, and 2.5% of their GDPI, respectively.

On the performance the company has posted EPS of Rs 14.25 for FY17, at the asking price PE works out to be 46x. In the same period their RoNW stood at 18.44%. NAV Per share as on March 31, 2017 and June 30, 2017 were ₹ 82.57 and ₹ 86.54 respectively. With a book value of Rs 86.54 per share company’s P/BV stood at 7.63x. In the non-life insurance category it will be the first company to get listed on stock exchanges.

Considering the brand, performance and under penetrated industry “subscribe” recommendation can be given for medium to long term investment purpose.


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