ICICI Lombard hits highest level since listing; up 14% in September

Shares of ICICI Lombard General Insurance Company were up 4% to Rs 909 per share on the BSE in intra-day trade, extending its 10% rally in past five trading days in an otherwise weak market. The stock of the country’s largest private sector general insurer was trading at its highest level since listing on September 28, 2017.

In past 11 trading days, ICICI Lombard has outperformed the market by surging 21%, as compared to 0.64% decline in the S&P BSE Sensex. It was up 38% against its issue price of Rs 611 per share.

The Insurance Regulatory and Development Authority of India (IRDAI) instructed insurers to begin selling ‘long-term’ motor third-party (TP) policies from September 1 onwards.

IRDA has mandated upfront 3-year/5-year motor TP insurance for cars/2- wheelers at the time of new purchase. Apart from the relatively minuscule 2-wheeler subsegment (<75cc), annualized premiums are in a 10-12% band of earlier annual pricing. This and the cash-before-cover nature of business ensures that ICICI Lombard’s float will move up to 5x from 4x net worth over the next few years, according to an analyst.

“The long-term motor TP policy is significant positive development in terms of increasing persistency, which will help in reducing loss ratios and increase float income. The float income is expected to be ROE accretive. The full impact will be visible only from next year (FY20E),” analysts at Emkay Global Financial Services said in an invent update.

Motor Insurance contributed to 39.4% of the overall general insurance premium while Motor Own Damage premium contributed to 17.5% of the industry GDPI in FY2018. As such, the segment continued to remain the most critical segment in the non-life insurance sector. ICICI Lombard holds 11.6% market share in the Motor Own Damage segment, the company said in an annual report.

At 01:20 pm; ICICI Lombard was trading 3.6% higher at Rs 904 on the BSE. In comparison, the S&P BSE Sensex was down 0.98% at 38,014 points. The trading volumes on the counter more than doubled with a combined 1.68 million equity shares changed hands on the NSE and BSE so far.

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