ICICI Lombard General Insurance shares crashed 13% on July 16 to hit their lowest level in two years as the insurer posted a 46% drop in quarterly profit as claims rose and its commercial insurance business weakened.

ICICI Lombard General Insurance on Wednesday reported a 46% decline in profit at Rs 403 crore for the first quarter of the current fiscal.

The private sector insurer had earned a profit of Rs 747 crore in the April-June period of FY26.

The fall in profit was due to the impact of the two large losses in fire segment and the judgement of the Supreme Court on the Motor TP portfolio, ICICI Lombard said in a regulatory filing.

Total income rose to Rs 6,813 crore during the June quarter from Rs 6,083 crore a year ago.

At 9:50 am on July 16, the insurer's shares were trading 12% lower at Rs 1,593.3 apiece.

Gross Direct Premium Income was higher at Rs 8,318 crore as against Rs 7,735 crore in the year-ago period, a growth of 7.5%, as against the industry growth of 10.9%.

Investment income declined to Rs 1,174 crore from Rs 1,288 crore in Q1 FY26, it said.

The capital gains (net of impairment on investment assets) moderated to Rs 183 crore as compared to Rs 380 crore in Q1 FY26, it said.

Profit before tax (PBT) fell by 46% to Rs 536 crore during the period compared to Rs 994 crore a year ago.

Solvency ratio remained almost same at 271% as on June 30, 2026 against the minimum regulatory requirement of 150%.

The commercial segment contracted 13.8%, primarily led by heightened competitive intensity in the fire segment, the company said.

The company incurred two large fire insurance losses worth about 630 million rupees. It also took a 1.65 billion rupees charge to strengthen reserves for motor insurance claims following a Supreme Court ruling, without providing further details.

Its claims paid rose nearly 21% to Rs 3,516 crore.

ICICI Lombard's retail health gross premiums rose 69.5% year-on-year. Motor insurance, the company's largest segment, grew 14% during the quarter.

The insurer's combined ratio worsened to 107.2% from 101.2% in the previous quarter, meaning claims and expenses exceeded premium income. A reading below 100% indicates underwriting profitability.

Backed by ICICI Bank, one of India's largest private lenders, ICICI Lombard offers marine, crop and travel insurance, in addition to motor and health coverage.

Motilal Oswal Financial Services said the fall in net profit was 'significant'.

"PAT was hit by weak underwriting performance and lower-than-expected investment income. Excluding the

losses in the fire segment and additional claim reserving in lieu of the Supreme Court verdict in motor TP business, the combined ratio was at 102.3% and PAT at Rs 580 crore," said MOFS.

"We downgrade our rating to Neutral with a TP of INR1,960 (based on 28x FY28E EPS)," the brokerage added.

Visibility on the insurer hiking its tariffs in the motor third-party business, altering its commission sources in the motor segment, and realigning profitability of its motor own-damage segment is bleak, Motilal Oswal said.

Emkay cuts ICICI Lombard target price by 10% to Rs 1,900 but maintained 'add'.

ICICI Lombard Q1 was hit by difficult operating environment, competition, the brokerage said.

Lower-than-expected investment income dragged ICICI Lombard Q1 PAT lower, said Nuvama and trimmed the insurer's FY27 PAT view by 21% and for FY28 by 12%.

Supreme Court recently raised compensation benchmarks in motor accident cases, leading to a Rs 165 crore rupee charge for ICICI Lombard.

JPMorgan said any relief would likely depend on motor third-party premium hikes or stricter implementation of commission regulations.

Jefferies cut its fiscal 2027-29 earnings estimates for the insurer by 5% to 10%, saying higher provisions on new motor third-party policies could keep loss ratios elevated even if future premium increases provide some support.

Citi also lowered its earnings forecasts, citing rising claims costs, competitive pricing and weaker investment income. It warned that pricing pressure and a weakening distribution edge could weigh across the non-life insurance sector.

Nearly nine million shares changed hands in the stock's busiest session in six years.