Motilal Oswal has reaffirmed a ‘Buy’ rating on ICICI Lombard General Insurance, highlighting a compelling risk-reward dynamic driven by improving underwriting performance, robust premium growth, and healthy solvency metrics. With a price target of Rs 1,750, the research firm sees an upside potential of approximately 17% from current levels.

ICICI Lombard’s Fundamentals Reinforce Long-Term Value

ICICI Lombard, India’s largest private sector general insurer, reported a commendable operating performance in Q4 FY25, navigating through pricing pressure in motor insurance and higher claims in the health segment.

The company posted a net profit of Rs 520 crore, a 17% year-over-year increase, as investment income surged and underwriting efficiency improved. Gross direct premium income (GDPI) for the quarter stood at Rs 6,150 crore, up 17% YoY, outpacing the industry average and underlining ICICI Lombard’s growing market strength.

Underwriting Metrics Witness Progressive Improvement

The insurer’s combined ratio — a critical measure of underwriting profitability — improved to 103.1% in Q4 FY25 from 104.2% in the previous quarter.

This reflects disciplined expense control and favorable claim ratios in motor own damage (OD) and property segments. However, higher frequency of claims in health insurance, driven by increased utilization rates post-pandemic, exerted some pressure on the health vertical.

The loss ratio improved by 50 basis points sequentially, while the expense ratio moderated to 31.5%, down from 32.8% in Q3.

Investment Book Growth Provides Earnings Cushion

ICICI Lombard’s investment income witnessed a robust double-digit growth on the back of rising yields and larger corpus.

The investment assets reached Rs 53,613 crore, up 16% YoY, supported by a conservative asset allocation and strong capital generation. With interest rates staying elevated, the insurer remains well-positioned to benefit from reinvestment of maturing assets into higher-yielding instruments.

This has allowed the company to balance underwriting losses, thereby maintaining consistent profitability.

Valuations and Solvency Remain Strong

Motilal Oswal estimates that ICICI Lombard is trading at 23.7x FY26E EPS and 4.3x FY26E BV, a premium justified by its dominant industry position, underwriting discipline, and high return ratios.

The return on equity (ROE) improved to 19.1% in FY25, with expectations of it rising further to 21.5% by FY26.

The solvency ratio stood at 2.52x, comfortably above the regulatory requirement of 1.5x, indicating a robust capital buffer and strong balance sheet integrity.

Health Segment Continues to be a Growth Driver

Health insurance remains a structural growth area for the company, contributing to 37% of its total GDPI.

Despite higher claims, ICICI Lombard reported a 21% YoY growth in health GDPI, supported by distribution expansion and corporate tie-ups.

The insurer continues to invest in tech-driven health risk assessment tools and wellness initiatives, aimed at lowering future claim ratios and deepening customer engagement.

Strategic Initiatives Bolstering Distribution Reach

ICICI Lombard has made considerable progress in strengthening its multi-channel distribution network.

The company expanded its agency strength and bancassurance partnerships, particularly with ICICI Bank and other large private banks, contributing significantly to premium mobilization.

In addition, its digital channels grew by 20% YoY, as the firm leverages analytics, mobile applications, and direct-to-customer platforms to scale high-margin segments like retail health and motor OD.

Outlook and Investment Thesis

Motilal Oswal anticipates ICICI Lombard will deliver an EPS CAGR of 23% over FY25–27 driven by normalization in loss ratios and higher investment income.

The research house’s bullish stance is supported by a favorable sector outlook, improving macroeconomic conditions, and regulatory stability.

The stock's price target is Rs 1,750, with a recommendation to accumulate on dips, especially given the current market volatility.

Key Financial Forecasts (FY24–FY26)

Stock Levels and Investment Strategy

Based on the technical setup and fundamental triggers:

Support Zone: Rs 1,440 – Rs 1,480

Resistance Levels: Rs 1,690 – Rs 1,750

Buy Zone: Accumulate around Rs 1,500 with a 3–6 month view

Investors looking for a blend of quality, growth, and defensiveness amid market volatility may find ICICI Lombard a compelling proposition.

Bottomline

ICICI Lombard stands out as a resilient, well-managed insurer that is steadily delivering growth while maintaining underwriting discipline. Its superior solvency metrics, strong earnings visibility, and expanding reach in high-growth health insurance segments support its premium valuations. With a clear trajectory toward profitability expansion and sectoral tailwinds in place, the stock appears poised to generate long-term shareholder value.