ICICI Lombard Q1 FY27: Profit Declines 46% On Fire Losses; Shares Crash 15%

ICICI Lombard General Insurance reported a sharp fall in its quarterly earnings, with net profit falling 46% year-on-year to ₹403 crore for the three months ended 30 June 2026.

The result was weighed down by two significant one-off items, a deterioration in the commercial insurance segment and higher overall claims, even as retail health and motor insurance delivered solid growth.

ICICI Lombard General Insurance shares crashed 15% to hit a fresh 52-week low of ₹1,544.40 in early deals on 16 July 2026, after the Q1 performance. At 2:50 PM, the shares are down 10.93% at ₹1616.20.

What Hurt The Performance

Two large fire insurance claims amounting to ₹63 crore hit the quarter, adding approximately one percentage point to the combined ratio. On top of this, a Supreme Court ruling related to the motor third-party portfolio required the company to strengthen claim reserves by ₹165 crore, adding a further 2.8 percentage points to the combined ratio. Together, these two items had a material impact on both profitability and the ratio reading.

The combined ratio worsened to 107.2% from 102.9% a year earlier, indicating that claims and expenses exceeded premium income during the quarter. A combined ratio below 100% signals underwriting profitability. Claims paid rose nearly 21% to ₹3,516 crore during the period.

Commercial Segment Contracts

The commercial insurance segment contracted 13.8% during the quarter, driven largely by heightened competitive intensity in the fire segment.

Analysts had expected the softening because of pricing pressure in this segment, but the size of the decline, combined with significant fire losses, exacerbated the impact on overall performance.

Retail Lines Deliver

Retail health and motor insurance helped offset the decline. Gross direct premium income from retail health rose 69.5% year-on-year, driven by strong demand resulting from income tax reductions. Motor insurance, the company's largest segment, expanded 14% during the quarter, backed by healthy vehicle sales.

Overall gross direct premium income grew 7.5% year-on-year to ₹8,318 crore, though this lagged the general insurance industry's 10.9% growth over the same period. Net premium earned rose 16% at ₹5,950 crore.

Other Financial Metrics

Investment income fell to ₹1,174 crore from ₹1,288 crore a year ago, while net capital gains dropped sharply to ₹183 crore from ₹380 crore. Return on average equity declined to 9.6% from 20.5% a year earlier.

Excluding the two large fire losses and the motor reserve charge, the company said its return on average equity would have stood at 13.6%.

ICICI Lombard Q1 FY27 Results: Kotak Neo Research View

Kotak Neo Research retained its BUY rating on ICICI Lombard but trimmed its fair value to ₹2,050 from ₹2,260 earlier, implying an upside of about 13% over the current market price of ₹1,815. The report said the quarter's earnings missed its own estimates by a wide margin, with net profit coming in roughly 52% below what it had projected.

On the positives, Kotak Neo Research pointed to a pickup in the motor segment, where growth accelerated to 21% in the June quarter from 16% in Q4 FY26 and just 3% in Q3 FY26. Retail health also held up well, expanding 65% - only a shade softer than the 67-85% range seen over the previous two quarters. The report added that it continues to model a 14% premium CAGR for the insurer between FY2026 and FY2029, driven by stronger vehicle sales and continued momentum in retail health.

On the downside, it flagged the Supreme Court ruling on valuing homemakers' unpaid work as a key drag, noting it pushed the claims ratio up 280 bps sequentially to 76.4%, a 336-bps rise from a year earlier. It also cited weakness in the fire business, which contracted 30% during the quarter (though the decline narrowed to 10% in the exit month), along with a one-off fire-segment loss. Investment yield slipped 165 bps to 7.5%, which further weighed on earnings. Given the higher claims assumptions in the motor third-party book, the report said it had lowered its estimates, even as it expects the impact to normalise over the medium term.

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