Icici Lombard General Insurance Co. Ltd. · NSE:ICICIGI
Icici Lombard General Insurance — Investor Presentation (November 2020)
45 slides from Icici Lombard General Insurance's investor presentation, Nov 10, 2020
Slide 1: Stock exchange disclosure cover letter
Ref. No.: MUM/SEC/195-09/2021 November 10, 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-400051
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 ^ 55.8% IL CAGR 1,893.02 Private Player Market Share ** 1.4% 16.8% 0.8% 48.6% 47.2% 12.3% 955.28 968.32 16.6% 73.3%* 36.6% 0.1% 294.98 100.87 FY2001 FY2008 FY2020 H12020 H12021 Non-Tariff era Industry GDPI Tariff era Source: IRDAI and GI C
Slide 7: Industry business overview
Industry business overview Industry Product Mix 6% 6% 19% 14% Others 3% 17% 19% 0% 6% 10% 2% 2% Crop 13% 8% 12% Marine 21% 20% 30% Fire 9% 32% 12% 16% Health, Travel & PA 23% Motor TP 18% 29% 28% Motor OD 14% 11% FY2001 FY2008 FY2020 H12021 6
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 Rank amongst Private Sector Multi- IL Product Mix Product insurance (GDPI basis) Others 13% 8% 10% Line of Business FY2019 FY2020 H12021 14% 0% 0% 4% 3%0% Crop 0% 7% 12% Motor OD #1 #1 #1 19% 13% Marine 40% Motor TP #1 #2 #1 25% Fire 25% 28% Health, Travel Health, Travel & PA
Slide 12: Comprehensive Product Portfolio - Motor
Comprehensive Product Portfolio - Motor ` billion Motor GDPI Mix 73.8% 76.5% 79.3% 63.2% Type H12020 H12021 22.4% 5.7% 12.5% -6.6% Private car 55.0% 57.9% Two Wheeler 29.3% 26.4% Motor Commercial Vehicle 15.7% 15.7% 34.08 30.16 36.89 30.99 15.90 13.54 14.57 12.94 Loss cost driven micro-segmentatio
Slide 13: Comprehensive Product Portfolio - Health, Travel & PA
Comprehensive Product Portfolio – Health, Travel & PA ` billion 73.5% 69.9% 69.6% 78.8% Health, Travel & PA GDPI Mix 19.9% 12.2% 11.3% -5.5% Health, Travel & PA Type H12020 H12021 Individual 22.0% 23.4% 33.32 29.69 Group – Others 37.0% 19.6% 16.88 15.95 Group Employer-Employee 41.0% 57.0% FY2019 FY2
Slide 14: Comprehensive Product Portfolio - P&C
Comprehensive Product Portfolio – P&C ` billion Market share in commercial lines 67.3% 57.4% 59.5% 72.5% Property & Casualty (P&C) Market Share Property & Casualty 16.9% 20.4% 28.9% -100.0% Product H12020 H12021 Fire 9.9% 10.9% Engineering 12.1% 12.9% 26.44 31.83 Marine Cargo 14.9% 16.5% 17.54 Lia
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 Opportunities
Digital Opportunities Service Excellence Policy Issuance Claims & Servicing Headcount Productivity 8.2 Mn Policies sourced 0.6 Mn Claims honored 15.3% CAGR* 63.1% in September 2020, Employee hackathon 97.5% issued electronically Motor OD claims through (96.5% in FY2020) InstaSpect (24.5% in March 20
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: Risk Management
Risk Management 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 of loss
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) (% ) 24.7% 24.9% 21.3% 22.0% 22.3% 20.8% 102.6% 101.5% 100.4% 99.7% 99.8% 98.8% FY2019 FY2020 Q22020 Q22021 H12020 H12021 FY2019 FY2020 Q22020 Q22021 H12020 H12021 Profit before Tax (PBT) Growth Profit after Tax (PA
Slide 21: Sustainable value creation (1/2)
Sustainable value creation (1/2) ` billion 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)
Sustainable value creation (2/2) ` billion 1 Investment Book Investment leverage Investment Income Nifty Equity return 6.2% 2.21x 4.21x Annualised portfolio return 10.2% 2 Annualised equity return 15.9% 2 18.47 Industry CAGR : 19.4%* 263.27 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 platforms (private banks & NBFCs) private banks such as ICICI Bank Significant Banca • Deeper geographical footprint runway for tie-ups • Current foc
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% 72.9% 73.7% Opex + Comm. Ratio 42.1% 27.5% 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: Update - Scheme of Arrangement
Update- Scheme of Arrangement Regulatory Filings & Approvals 1 Filed an ‘Application for in-principle’ approval to IRDAI on August 26, 2020 2 Communication received from IRDAI, to approach other Regulatory agencies such as CCI, RBI and SEBI to seek necessary approval while in-principle approval unde
Slide 31: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 32: 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 33: 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 34: 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 35: Agenda
Agenda • Industry Overview • Company Strategy • Scheme of Arrangement • ESG Initiatives • Response to Covid-19
Slide 36: Update - COVID-19
Update - COVID-19 COVID 19 Continuous communication with customers through emails, tele-calling, SMS and Social Media Platforms undertaken to reassure Renewal of motor & health policies Claims servicing through e-mails, scan documents etc. Customers ILTakeCare with ‘tele-consult’ feature in
Slide 37: Update - COVID-19
Update - COVID-19 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 e-learning programs, self-consumption videos & virtual li
Slide 38: Update - COVID-19
Update - COVID-19 COVID 19 New products to offer effective health insurance coverage in COVID-19 pandemic era The regulator has proactively announced several noteworthy measures, including relaxations and regulations promoting ease of doing business: Regulator / On claims payment - simplified
Slide 39: Thank you
9 ICICI ELombard Thank you
Slide 40: Loss Ratio
Loss Ratio Particulars FY2019 FY2020 Q22020 Q22021 H12020 H12021 Motor OD 59.2% 68.9% 71.8% 58.9% 70.0% 60.8% Motor TP 90.8% 84.4% 86.4% 61.6% 88.6% 65.8% Health,Travel & PA 73.5% 69.9% 71.0% 81.9% 69.6% 78.8% Crop 106.5% 110.6% 111.6% 111.3% 111.6% 111.2% Fire 83.2% 64.0% 75.6% 77.2% 80.8% 84.5% Ma
Slide 41: Abbreviations
Abbreviations: AI - Artificial Intelligence IRDAI – Insurance Regulatory and Development Authority of India AY – Accident Year ML- Machine Learning BSE – Bombay Stock Exchange NBFC- Non Banking Financial Company CAGR – Compounded Annual Growth Rate NEP – Net Earned Premium CCI – Competition Commissi
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 4.9% 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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