ICICI Lombard General Insurance Co. Ltd remains India’s largest non-life insurer by market capitalization—at ₹1 trillion—even as it continues to trail state-owned New India Assurance Co. Ltd in gross premium income. Based on FY25 financials, ICICI Lombard’s market capitalization-to-gross written premium (GWP) ratio stands at nearly 3.5x, compared to less than 1x for New India Assurance.
The Street is rewarding ICICI Lombard for its focus on profitability even as it is losing overall market share with growth rate being much slower than the industry’s in Q1FY26. The company’s profit after tax rose a robust 29% year-on-year to ₹747 crore in Q1FY26.
The headline gross premium income growth in Q1FY26, at less than 1% year-on-year, appears muted, but this is due to a change in the accounting treatment for long-term insurance products, effective October 2024. The new 1/n accounting practice entails spreading the premiums equally over the policy term when the tenure exceeds one year.
For example, if a fire insurance policy has been issued for two years with a total premium of ₹100, only ₹50 is accounted for in the first year and the rest in the second year as ₹100 is divided by n i.e. 2. Earlier, the entire premium was accounted for in the first year.
Based on the earlier accounting treatment, Q1FY26 premium income growth was about 5% to ₹8,054 crore as it gives an idea of like-to-like financials. However, this still lags well behind the industry’s 12.8% growth during the same period.
Combined ratio, which is a total of claims liability and expenses as a percentage of net premium, stood at 102.2% versus 102.3% year-on-year on a like-for-like basis, even after accounting for the Ahmedabad plane crash-related claims. A combined ratio of over 100% indicates that an insurance company is making a loss from its core insurance activity. This is the case with most insurance companies, which makes the function of investment management critical to offset the loss from insurance activity with income from investments and make a profit at an aggregate level.
ICICI Lombard has performed well on the investment side. Investment yield rose 11 basis points to 2.32% (not annualized) on an investment book of ₹55,453 crore, which grew 8.7% year-on-year.
A healthy profit growth, despite subdued premium income, has led the Street to assign ICICI Lombard a generous price-to-earnings multiple of 36x based on FY26 estimates by Yes Securities. But with the stock already trading at a rich valuation, the question is: Is there room for further upside?
Well, the runway for growth in general insurance is big and expanding as lifestyle upgradation takes place. Apart from traditional health insurance policies, general insurance has become a proxy play on changing lifestyles. As more vehicles, consumer durables and expensive mobile phones are being bought, the demand for general insurance also increases, with some of it being mandatory due to government regulations. Further, people are travelling more, which increases the need for travel insurance.
That said, competition remains intense. With 34 non-life insurance companies in the country, pricing pressure is a constant concern. ICICI Lombard management acknowledged on the Q1FY26 earnings call that irrational pricing behaviour continues to resurface intermittently. This may partly explain the modest 7% gain in the stock over the past year.
An increase in motor third party insurance by the regulator could act as a short-term trigger. But over the long term, premium growth will need to accelerate, as agile investment management alone may not suffice to sustain current valuations.
