ICICI Prudential falls, ICICI Lombard General inches higher ahead of Q3 results. Here's what analysts suggest

Stocks of ICICI group insurance companies ICICI Prudential Life Insurance and ICICI Lombard General Insurance saw mixed moves on Tuesday, as investors awaited the insurers' quarterly numbers due later in the day. 

JPMorgan -- which has a 'neutral' rating on each -- has a target price of Rs 510 for ICICI Prudential -- implying an upside potential of 6.7 per cent in the life insurer. The brokerage has a target price of Rs 1,250 apiece for ICICI Lombard.  

Axis Securities Research Analyst Dnyanada Vaidya expects growth in life insurance companies' new business profit and annual premium-equivalent to remain healthy sequentially in the December quarter on account of a low base.

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The focus on higher margin products such as non-par, protection and annuity products, and their improving share in the product mix is likely to support the value of new business (VNB) margins for life insurers, according to the brokerage.

“We expect ICICI Lombard to report healthy accretion in premium at 19 per cent year on year to Rs 5,695 crore, led by continued healthy auto sales. Investment in the health business is seen starting to deliver a gradual uptick in premium accretion,” said Kajal Gandhi, Research Analyst at ICICI Direct.

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Gandhi also said that the improvement in claim ratio to 69-70 per cent and steady non-claim expense at 32 per cent is expected to lead to an underwriting loss of Rs 243 crore for the company. With a revival in premium growth, the management's commentary on the combined ratio needs to be watched, according to the brokerage.

Abhishek Agarwal, Research Analyst at KRChoksey Research, expects ICICI Prudential’s gross written premium to grow 9.6 per cent on a year-on-year basis and 3.5 per cent sequentially.
"We expect the VNB margin to be around 30.5 per cent driven by a higher share of non-par segment, improving by 380 bps on year,” he said.

The brokerage believes ICICI Prudential will continue to invest in the digital infrastructure to leverage its operating performance, expected to grow by five per cent on year and 8.4 per cent on quarter to Rs 2,49,200 crore.