ICICI Lombard General Insurance shares crashed 10.5% to settle at ₹1,623 on the BSE following the company's disappointing Q1FY27 results, with profit falling 46% year-on-year to ₹403.17 crore despite strong premium growth. The stock tumbled as much as 15% to hit a fresh 52-week low of ₹1,544.40 during intraday trading before recovering slightly, marking the second-steepest fall since listing after the stock's steepest-ever decline of 17.7% during the Covid-19 pandemic in March 2020. According to Business Standard, the company lost nearly ₹9,500 crore in market capitalisation during the session. The dramatic sell-off reflects investor concerns over the company's weaker-than-expected performance and deteriorating underwriting metrics, with the stock trading 13.7% lower by 9:43 am while the benchmark index was up 0.12%, highlighting the severity of the stock's underperformance.
ICICI Lombard's underwriting performance in Q1 FY27 was its worst since the Covid-19 Delta wave affected Q1 FY22, with the combined ratio expanding to 107.2% from 102.9% in the previous year. As per Emkay Global analysts, with a reported claims ratio of 76.4% and a combined ratio of 107.2%, ICICI Lombard's underwriting performance was its worst since the Covid-19 Delta wave affected Q1 FY22. The deterioration was primarily driven by two large fire losses amounting to ₹63 crore, which impacted the combined ratio by 1 percentage point, and a Supreme Court judgment had an additional impact of 2.8 percentage points on the combined ratio. Additionally, the insurer assessed claim reserves of ₹165 crore following a Supreme Court judgment on June 11, 2026 regarding compensation for unpaid domestic work under the Motor Vehicles Act. In the absence of a motor third-party tariff hike and amid intense competition driving pricing declines in the fire segment, the quarter was significantly impacted by these one-off items and lower-than-expected investment income.
Multiple brokerages have downgraded ICICI Lombard General Insurance following its disappointing Q1FY27 results, with HSBC downgrading to 'hold' from 'buy' and cutting the price target to ₹1,880 from ₹2,200. Haitong International also downgraded to 'neutral' from 'outperform' with a target of ₹1,880 from ₹2,120. IIFL Institutional Equities downgraded to 'Add' from 'Buy' with a target of ₹2,350 from ₹1,830, while Motilal Oswal downgraded to 'neutral' from 'buy' with a target of ₹1,960 from ₹2,210. Emkay also cut its target price by 10% to ₹1,900, while maintaining its 'Add' rating, describing the June-quarter performance as impacted by a difficult operating environment and intense competition. Nuvama downgraded its rating to 'Reduce' and slashed its target price by more than 29% to ₹1,660 apiece, implying a downside potential of more than 8.5% over the stock's previous closing price. Citi maintained its 'sell' rating with a target of ₹1,755, warning of structural challenges in the multi-line non-life insurance space. Morgan Stanley maintained its equal-weight rating with a target price of ₹1,920, describing the quarter as weak and noting downside risk to earnings estimates. Macquarie maintained its outperform rating with a target price of ₹2,430, believing conservative reserve creation offers protection despite multiple headwinds converging during the quarter.
ICICI Lombard's retail health business delivered a standout performance with gross direct premium income (GDPI) from retail health under its flagship Elevate product surging 69.5% year-on-year to ₹718 crore in Q1FY27, comfortably outpacing the industry's 31.6% growth. However, the company's overall GDPI growth was muted at 7.5% y-o-y to ₹8,318 crore, thanks to a steep 32% drop in fire insurance premium to ₹997 crore. According to the latest financial results, the primary driver of profit decline was the recognition of claim reserves amounting to ₹165 crore following a Supreme Court judgment on June 11, 2026 regarding compensation for unpaid domestic work under the Motor Vehicles Act. Excluding the impact of this judgment and two large losses in the Fire segment, the company stated that its Profit After Tax (PAT) would have de-grown by 23.0% to ₹5.75 billion, with a Combined Ratio (CoR) of 102.3% and Return on Average Equity (RoAE) of 13.6%. The insurer's net premium underwritten increased 16% to ₹5,950 crore from the previous year, while Gross Direct Premium Income (GDPI) grew 7.5% to ₹8,318 crore compared to ₹7,735 crore in Q1FY26. However, net profit of ₹403 crore fell short of the analyst consensus estimate of ₹767 crore due to weak underwriting results.
ICICI Lombard shares crashed 10.5% to settle at ₹1,623 following the disappointing Q1 results, reflecting investor concerns over the company's deteriorating underwriting metrics and profitability. The stock tumbled as much as 15% to hit a fresh 52-week low of ₹1,544.40 on the BSE during intraday trading before recovering slightly, marking the second-steepest fall since listing after the stock's steepest-ever decline of 17.7% during the Covid-19 pandemic in March 2020. Sneha Podar, vice-president (research) at Motilal Oswal, noted that looking ahead, management's ability to improve profitability will depend on measures such as an increase in the tariff for motor TP or adjusting commission payouts in the overall motor business. In its report, Motilal Oswal cut its net profit estimates for the insurer by 14% and 11% for FY27 and FY28, respectively, and increased its combined ratio estimates by 80 basis points and 20 basis points considering the quarterly claims performance. HDFC Securities noted that the insurer continues to witness market share erosion in most of its core businesses (motor and commercial), though the company gained 26 basis points of market share in the group health business. Macquarie Research believes ICICI Lombard has the wherewithal to manage the Supreme Court judgment impact through conservative reserve buffers, with potential relief from a potential motor third-party tariff hike.
