Shares of ICICI Lombard General Insurance fell nearly 11 percent in early trading on Thursday after the company posted weaker than expected first quarter results, prompting several brokerages to lower their recommendations on the stock.
By 10:16 a.m. IST the shares were down 192.10 rupees at 1,622.50 rupees on the NSE, after touching an intraday low of 1,544.60 rupees.
The decline followed the insurer’s filing that showed a 46 percent year on year fall in standalone net profit after tax to 403 crore rupees for the June quarter, compared with 747 crore rupees a year earlier. Although net premium earned rose 16 percent to 5,950 crore rupees, large underwriting losses weighed on margins.
The combined ratio, a key measure of underwriting profitability, rose to 107.2 percent from 102.9 percent. A figure above 100 percent means claims and expenses exceeded premiums collected.
The company cited two main factors: two major commercial fire claims that produced an unexpected 63 crore rupee impact, and an additional 165 crore rupee provision for motor third party claims following a Supreme Court ruling.
Motilal Oswal downgraded the stock to neutral, citing limited visibility on near term profits amid pricing pressure in motor and commercial lines. Nuvama cut its rating to reduce and lowered its target price to 1,660 rupees, noting competitive pricing in commercial fire insurance.
The solvency ratio stayed at 2.71 times, above the required 1.50 times, providing a buffer against industry challenges.
