Icici Lombard General Insurance Co. Ltd. · NSE:ICICIGI
Icici Lombard General Insurance — Investor Presentation (September 2020)
45 slides from Icici Lombard General Insurance's investor presentation, Sep 12, 2020
Slide 1: Stock exchange disclosure cover letter
Ref. No.: MUM/SEC/141-09/2021 September 12, 2020 To, The Manager The Manager Listing Department Listing Department BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor, Plot C/1 Dalal Street G Block, Bandra Kurla Complex, Mumbai-400001 Mumbai-40005
Slide 2: Corporate Presentation
icici €Lombard Corporate Presentation
Slide 3: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 4: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 5: India Non-life Insurance Market - Large Addressable Market
India Non - life Insurance Market - Large Addressable Market Massive growth opportunity in non-life premiums Significantly underpenetrated Premium as a % of GDP (CY19) (US$) 8.51 4.95 2.67 2.31 2.31 2.01 1.78 0.97 0.94 0.58 India: US$ EAPAC*: US$ World: US$ 26.64 billion 342.02 billion 3376.33 billi
Slide 6: Industry has witnessed steady growth
Industry has witnessed steady growth ` billion Industry CAGR 11.7% 55.8% IL CAGR 54.7% (8.1%) 1,893.02 Private player market share 1,694.48 17.2% 14.4% 16.6% 73.3%* 36.6% 0.1% 294.98 100.87 FY2001 FY2008 FY2019 FY2020 Non-Tariff era Industry GDPI Tariff era 12 years CAGR : Industry - 16.8%; IL - 12.
Slide 7: Industry business overview
Industry business overview Industry Product Mix 7% 6% 19% 14% 3% 16% 17% Others 0% 6% 10% 2% 2% Crop 7% 8% 13% 21% Marine 20% 30% 30% Fire 9% 16% Health, Travel* & 12% PA 22% 23% Motor TP 29% 28% Motor OD 16% 14% FY2001 FY2008 FY2019 FY2020 * Basis IRDAI circular dated May 20, 2019, Travel included
Slide 8: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 9: ICICI Lombard - Strategy
ICICI Lombard - Strategy Diversified Product Mix Excellence in Customer service and Technology Robust Risk Framework Financial Performance & Sustained Value Creation 8
Slide 10: ICICI Lombard - Strategy
ICICI Lombard - Strategy Diversified Product Mix Excellence in Customer service and Technology Robust Risk Framework Financial Performance & Sustained Value Creation 9
Slide 11: Diversified Product Mix
Diversified Product Mix IL Product Mix Rank amongst Private Sector Multi- Product insurance (GDPI basis) Line of 8% 8% FY2018 FY2019 FY2020 13% 14% Business 0% 4% 0% Others 7% 17% 12% Motor OD #1 #1 #1 13% 3% Crop 40% 7% 25% Marine Motor TP #1 #1 #2 28% 20% Fire Health and PA #1 #1 #1 10% 23% Health
Slide 12: Comprehensive Product Portfolio - Motor
Comprehensive Product Portfolio - Motor ` billion Motor GDPI Mix 73.8% 76.5% 79.5% 66.4% Type Q12020 Q12021 22.4% 5.7% 14.1% -22.4% Private car 55.4% 59.2% Motor Two Wheeler 27.3% 26.0% Commercial Vehicle 17.3% 14.8% 34.08 30.16 36.89 30.99 Loss cost driven micro-segmentation resulting in 8.17 6.6
Slide 13: Comprehensive Product Portfolio - Health, Travel & PA
Comprehensive Product Portfolio – Health, Travel & PA ` billion Health, Travel* & PA GDPI Mix 73.5% 69.9% 68.0% 75.5% Health, Travel* Type Q12020 Q12021 19.9% 12.2% 12.5% -12.2% & PA Individual 19.5% 20.1% Group – Others 32.6% 10.8% 29.69 33.32 Group Employer-Employee 47.9% 69.1% 9.07 7.97 Mass 0.0%
Slide 14: Comprehensive Product Portfolio - P&C
Comprehensive Product Portfolio – P&C ` billion Accretion of market share in commercial lines 67.3% 57.4% 66.9% 74.5% Property & Casualty (P&C) Market Share Property & Casualty* 20.4% 28.0% 20.5% Product Q12020 Q12021 16.9% Fire 11.0% 11.4% Engineering 13.5% 13.9% 31.83 26.44 Marine Cargo 14.8% 18
Slide 15: ICICI Lombard - Strategy
ICICI Lombard - Strategy Diversified Product Mix Excellence in Customer service and Technology Robust Risk Framework Financial Performance & Sustained Value Creation 14
Slide 16: Digital Initiatives
Digital Initiatives Service Excellence Automation & Scale Policy Issuance Next Gen Solutions Policies sourced - 26.2 mn Cloud deployment 96.5% issued electronically Big Data & Customer experience management AI and ML Solutions Claims & Servicing 31.0%* cash less authorization Claims honored - 1.8 mn
Slide 17: ICICI Lombard - Strategy
ICICI Lombard - Strategy Diversified Product Mix Excellence in Customer service and Technology Robust Risk Framework Financial Performance & Sustained Value Creation 16
Slide 18: Robust Risk Framework
Robust Risk Framework Underwriting Reinsurance Predictive ultimate loss model to improve risk selection Spread of risk across panel of quality re-insurers Diversified exposure across geographies and products Conservative level of catastrophe (CAT) protection Historically lower proportion o
Slide 19: ICICI Lombard - Strategy
ICICI Lombard - Strategy Diversified Product Mix Excellence in Customer service and Technology Robust Risk Framework Financial Performance & Sustainable Value Creation 18
Slide 20: Financial performance
Financial performance ` billion Combined ratio (%)* Return on average Equity (ROAE) (%) 25.1% 23.0% 21.3% 20.8% 100.4% 100.4% 99.7% 98.8% FY2019 FY2020 Q12020 Q12021 FY2019 FY2020 Q12020 Q12021 Profit before Tax (PBT) Growth Profit after Tax (PAT) Growth 21.8% 13.8% 7.1% 28.5% 33.6% 6.2% 7.2% 11.7%
Slide 21: Sustainable value creation (1/2)
` billion Sustainable value creation (1/2) GDPI Policies issued (million) 133.13 26.2 Industry CAGR : 16.8% Industry CAGR : 10.2%* 33.07 3.5 FY2008 FY2020 FY2008 FY2020 Profit After Tax Headcount productivity (₹ million) Industry CAGR : minus 12.2%* 11.94 12.5 2.3 1.03 FY2008 FY2020 FY2008 FY2020
Slide 22: Sustainable value creation (2/2)
` billion Sustainable value creation (2/2) 1 Investment Book Investment leverage Investment Income 2 Nifty Equity return 6.2% 2.21x 4.21x Annualised portfolio return 10.2% Annualised equity return 15.9% 2 18.47 263.27 Industry CAGR : 19.4%* 23.74 2.19 FY2008 FY2020 FY2008 FY2020 Investment portfol
Slide 23: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 24: Proposed Transaction & Rationale
Proposed Transaction & Rationale ICICI Lombard and Bharti AXA General Insurance have entered into definitive agreements wherein the general insurance business of Bharti AXA GI would be demerged into ICICI Lombard 1 2 3 Strategic Business Synergy 23
Slide 25: Fast growing quality franchise of meaningful scale
Fast growing quality franchise of meaningful scale GDPI (₹ bn) Product Mix (FY2020) Distribution Mix (FY2020) 7.4% 7.1% 8.8% 31.34 5.3% 5.6% 22.58 19.7% 34.4% 26.4% 17.54 13.14 27.8% 45.9% 11.6% Fire Motor TP Ind agents CA - Banks FY2017 FY2018 FY2019 FY2020 Motor OD Health CA - Others Brokers Crop
Slide 26: Consolidation of market position and distribution franchise
Consolidation of market position and distribution franchise Basis FY2020 figures Combined Bharti AXA GI ICICI Lombard Entity(1) GDPI (Market share) ₹ 31.34 bn (1.7%) ₹ 133.13 bn (7.0%) ₹ 164.47 bn (8.7%) Ranking (basis GDPI) #17 #5 #3 Motor GDPI (Market share) ₹ 14.87 bn (2.2%) ₹ 67.88 bn (9.8%) ₹ 8
Slide 27: Value creation through revenue synergies
Value creation through revenue synergies Bharti AXA GI ICICI Lombard GI • Partnerships with large retail lending • Experience of partnering with large Significant Banca platforms (private banks & NBFCs) private banks such as ICICI Bank runway for tie-ups • Current focus on motor insurance; • Deeper
Slide 28: Key Financial Metrics
Key Financial Metrics Basis FY2020 figures Combined Bharti AXA GI ICICI Lombard Entity(1) GDPI ₹ 31.34 bn ₹ 133.13 bn ₹ 164.47 bn Investment Book ₹ 47.65 bn ₹ 263.27 bn ₹ 310.92 bn Loss Ratio 78.3% 72.8% 73.7% Opex + Comm. Ratio 42.1% 27.6% 30.1% Combined Operating Ratio 120.4% 100.4% 103.8% Signifi
Slide 29: Transaction Structure
Transaction Structure • On August 21, 2020, the boards of ICICI Lombard and Bharti AXA GI have approved demerger of Non-Life Insurance business of Bharti Bharti AXA GI (along with all assets and AXA GI liabilities forming part thereof) into ICICI ICICI Lombard GI Lombard Business • Shareholders of B
Slide 30: Next steps
Next steps Date of Announcement 21 August 2020 Regulatory NCLT Filings & Board Filings & Filings & Share Approval Approvals Approval Issuance • Valuation / Swap • In-Principle IRDAI • Filing of scheme • Final IRDAI approval Ratio approval • NCLT approval; and ROC Filing • Approval of • SEBI and Stoc
Slide 31: List of Advisors
List of Advisors Category Area Advisor Advisors M&A Ernst & Young LLP (EY) Legal AZB & Partners (AZB) Tax Ernst & Young LLP (EY) Due Diligence Actuarial Willis Towers Watson Actuarial Advisory LLP (WTW) Financial & Tax Deloitte Touche Tohmatsu India LLP (Deloitte) Valuers CA Firm MSKA & Associates M
Slide 32: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 33: Safeguarding environment
Safeguarding environment An overarching Policy on Environment Management Becoming Reduce, Reuse, Saving on Protecting the energy efficient and Recycle water environment • Adapting methods to • Incorporating processes • Engaging in rainwater • Switching to bio-degradable conserve energy and that prom
Slide 34: Contributing the Social Way
Contributing the Social Way Enabling community Addressing Creating value for awareness and customer needs employees development • Providing best-in-class • Hiring from diverse skill sets • Aiming at community well-being experience with healthcare, road safety and • Building capabilities in knowledge
Slide 35: Strong Governance
Strong Governance Robust Structure Code of conduct Data privacy • Conducting business with highest • Detecting, preventing, mitigating • Optimum mix of Executive/Non- standards of compliance and cyber security issues Executive Directors as per Policy on Board Diversity ethics • Enforcing leading pra
Slide 36: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 37: Response to COVID-19 - Customers and Distribution
COVID 19 Response to COVID-19 Continuous communication with customers through emails, tele-calling, SMS and Social Media Platforms undertaken to reassure Renewal of motor & health policies Customers Claims servicing through e-mails, scan documents etc. Dedicated product- Covid-19 benefit cov
Slide 38: Response to COVID-19 - Employees and Community
COVID 19 Response to COVID-19 Work from Home enabled to ensure safety and well-being of our employees across the organization, well before the lockdown Accelerated our efforts towards upskilling our employees. Leveraged technology to provide Employees e-learning programs, self-consumption videos
Slide 39: Thank you
9 ICICI ELombard Thank you
Slide 40: Loss Ratio
Loss Ratio Particulars FY2019 FY2020 Q12020 Q12021 Motor OD 59.2% 68.9% 68.2% 62.9% Motor TP 90.8% 84.4% 90.9% 70.2% Health,Travel* & PA 73.5% 69.9% 68.0% 75.5% Fire 83.2% 64.0% 87.6% 94.0% Marine 84.0% 65.3% 58.8% 83.2% Engineering 37.1% 40.7% 58.0% 75.1% Other 55.2% 51.8% 63.5% 49.3% Crop 106.5% 1
Slide 41: Abbreviations
Abbreviations: AI - Artificial Intelligence IoT – Internet of Things AY – Accident Year IRDAI – Insurance Regulatory and Development Authority of India CAGR – Compounded Annual Growth Rate LoB – Line of Business CY – Calendar Year ML- Machine Learning EAPAC – Emerging Asia Pacific Markets NOC- No Ob
Slide 42: Impact of catastrophic events: Historical snapshot
Impact of catastrophic events : Historical snapshot ₹ billion Economic Insured Our Share of Catastrophic Event Year Losses losses* Insured losses Cyclone Amphan* 2020 1,000.00 15.00 5.9% Maharashtra, Gujarat, Karnataka, Kerala & other 2019 709.70** 20.00 3.5% states Floods Cyclone Fani 2019 120.00 1
Slide 43: Reserving Triangle Disclosure – Total
1 Reserving Triangle Disclosure – Total ` billion Incurred Losses and Allocated Expenses (Ultimate Movement) As at March 31, 2020 Prior AY 11 AY 12 AY 13 AY 14 AY 15 AY 16 AY 17 AY 18 AY 19 AY 20 End of First Year 54.99 20.66 22.53 27.97 35.96 34.16 39.13 49.49 52.41 65.27 72.72 One year later 55.11
Slide 44: Reserving Triangle Disclosure – IMTPIP
Reserving Triangle Disclosure – IMTPIP ` billion Incurred Losses and Allocated Expenses (Ultimate Movement) As at March 31, 2020 AY 08 AY 09 AY 10 AY 11 AY 12 AY 13 End of First Year 2.71 One year later 3.85 2.72 Two years later 4.49 3.85 2.73 Three years later 5.81 4.49 3.98 2.73 Four years later 6
Slide 45: Safe harbor
Safe harbor: Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will' , 'would' , ‘indicating’ , ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These fo
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