Mounting Crop Losses Hit ICICI Lombard’s Premium Growth In March Quarter
Higher claims in the crop insurance segment curtailed ICICI Lombard General Insurance Company Ltd.’s net earned premium for the quarter ended March.
Net earned premium rose 14 percent to Rs 1,817 crore as compared with the corresponding quarter last year, the insurer said in its filings with the stock exchanges. This number would have been at least 5 percentage points higher if the crop insurance segment’s losses did not exceed its earned premium, Gopal Balachandran, chief financial officer at the company told BloombergQuint.
The incurred claims ratio for the crop segment stood at 135 percent indicating that it paid a claim worth Rs 135 for every Rs 100 premium earned, the company said in its investor presentation. The segment contributed 19 percent of the insurer’s product portfolio as of March 2018. For the fiscal year ended March 31, the insurer paid claims worth Rs 736 crore versus a net earned premium of Rs 545 crore.
The full extent of claims for the kharif season was realised in this quarter, Bhargav Dasgupta, chief executive officer and managing director of ICICI Lombard said in an interview. The crop business losses led to an increase in the company’s combined ratio and a reduction in its solvency margin, he added.
- Combined ratio increased by 240 basis points to 99.5 percent year-on-year.
- Underwriting losses rose 171 percent to Rs 19 crore during the same period.
- The solvency margin fell to 205 percent from 210 percent.
- Gross domestic premium income rose 9.8 percent to Rs 2,926 crore.
- Return on equity dropped to 19.1 percent from 19.7 percent last year.
- Profit after tax rose 18 percent to Rs 212 crore.
- Net investment income rose 58 percent to Rs 241 crore.