Mumbai: Shares of ICICI Lombard General Insurance tumbled nearly 15 percent on Thursday after the insurer reported weaker-than-expected earnings for the June quarter. Investors reacted negatively to a sharp decline in profit, driven by higher claims, additional reserve provisions and adverse underwriting performance.
The stock dropped as much as 14.86 percent to a fresh 52-week low of Rs 1,544.40 on the BSE during morning trade. By 11:35 am, it had recovered slightly to Rs 1,614.30, but was still down around 11 percent from its previous close of Rs 1,814.
Profit Drops
ICICI Lombard reported a net profit of Rs 403.17 crore for the April-June quarter of FY27, down 46 percent from Rs 747.08 crore recorded in the same period last year.
The decline was mainly due to higher insurance claims and a Rs 165-crore reserve provision created for its motor third-party (Motor TP) portfolio.
Claims Hit Margins
The insurer also faced two major fire-related claims worth Rs 63 crore during the quarter. These losses increased the company's combined ratio by one percentage point.
Another setback came from a recent Supreme Court judgment, which had an adverse impact of 2.8 percentage points on the combined ratio.
As a result, the combined ratio, a key indicator of underwriting profitability, rose to 107.2 percent in the June quarter from 102.9 percent a year earlier. A higher combined ratio generally indicates greater underwriting pressure.
Management Outlook
Despite the weak quarter, the management said the elevated fire-related losses are not expected to continue.
The company also maintained a positive long-term outlook for its health insurance business, highlighting that retail health insurance continues to grow faster than the group health segment.
Brokerage Downgrade
Following the disappointing results, Motilal Oswal Financial Services downgraded the stock to 'Neutral' from 'Buy', citing pressure on profitability and underwriting performance.
The downgrade added to investor concerns, leading to heavy selling in the stock.
Stock Performance
ICICI Lombard has remained under pressure over the past year. The stock has declined nearly 20 percent in the last 12 months and has fallen more than 10 percent over the past six months.
The latest quarterly performance has further weighed on investor sentiment, with the sharp fall reflecting concerns over near-term earnings and margin pressures.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. Investors should conduct independent research.
