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Directors Report of ICICI Lombard General Insurance Company Ltd.
Mar 31, 2025
The Board of Directors are pleased to present the Twenty-Fifth Integrated Annual Report of ICICI Lombard General Insurance Company Limited (âthe Companyâ) along with the Audited Financial Statements for the financial year ended March 31, 2025.
BUSINESS AND OPERATIONS
Industry in FY2025
During the recent time, the insurance industry has undergone various reforms which aims towards improving sector''s efficiency, transparency and inclusivity. The Regulator issued various changes that are favourable for the industry and focused towards increasing penetration, facilitating ease of doing business and ensuring âInsurance for all by 2047â.
The non-life insurance industry reported Gross Direct Premium Income ("GDPI") of =? 3,076.59 billion in FY2025 and has delivered 17 Year Compound Annual Growth Rate ("CAGR") - GDPI (FY2008 to FY2025) of 14.8%. During FY2025, the growth in the Motor segment slowed down due to muted vehicle sales and continued pricing pressure. Further, Health segment continued to be the largest contributor to the general insurance industry product mix, followed by Motor segment. The Commercial lines segment also experienced muted growth during the year, on account of pricing pressure in the Fire segment. [Source: Insurance Regulatory and Development Authority of India ("IRDAI") and General Insurance Council].
The non-life insurance industry delivered a GDPI growth of 6.2% for FY2025 as against growth of 12.8% for FY2024 (Excluding the impact of 1/n accounting norm, the GDPI grew by 8.6% for FY2025). The growth has been lower resulting from muted economic activity and due to introduction of 1/n accounting norm for long term insurance products. The Combined ratio for the industry had increased to 113.2% for 9M FY2025 as against
112.2% for 9M FY2024 [Source: IRDAI, General Insurance Council and Public Disclosure].
The overall market share of private players decreased from 53.5% in FY2024 to 52.9% in FY2025 [Source: IRDAI and General Insurance Council].
Company in FY2025
The Company, in FY2024, embarked its journey towards establishing âOne IL One Teamâ which aimed at being a cohesive organisation where all the diverse teams work together as one to achieve organisational goals thereby harnessing market growth opportunities in a profitable manner. During FY2025, with strategic shift to âOne IL One Teamâ, the Company continued to strengthen its commitment to the highest levels of quality, superior customer experience, best-in-class service management, robust information security and privacy practices.
The Company remained focused on leveraging multi-product, multi-distribution strategy and aimed to achieve profitable growth by harnessing data effectively, embracing digital advancements and introducing new products. The Company continued its journey of driving profitable growth through robust and prudent underwriting practices, generation of cash flows through strong retention of premium and judicious investments of the proceeds coupled with customer centric approach.
The Company after transitioning to cloud, continued to make significant investments on modernization of the technology platforms. Further, Project Orion, business transformation project of the Company, has entailed three pivotal pillars of reimagining processes with a digital-first approach, modernizing technology by shifting away from legacy systems, and enhancing stakeholder experience through superior engagement models. The core transformation journey was initiated with âHealthâ business and progressively extended to other lines of business.
Further, the Company consistently embraces advanced technologies to enhance the customer experience at every step, from onboarding to claims settlement. In FY2025, the Company had issued 37.6 million policies and processed 3.2 million claims whereas in FY2024, the Company had issued 36.2 million policies and processed 2.9 million claims.
During FY2025, on "1/n basis" the Company had registered a growth in GDPI of 8.3% as against industry growth of 6.2%. On ''n'' basis the Company''s GDPI grew by 11.0% for FY2025 as against the industry growth of 8.6%. Excluding Crop and Mass Health segments, GDPI growth of the Company stood at 7.7% for FY2025. The Companyâs focus on driving profitable opportunities has resulted in improvement in the Combined Ratio from 103.3% in FY2024 to 102.8% in FY2025.
The customer-centric approach and efforts towards driving profitable growth, have aided the Company in delivering consistent performance and maintained top rank amongst the 28 private sector non-life insurers in the industry (including standalone health insurers ["SAHI"]). The market share of the Company is 13.3% (GDPI basis) among private sector non-life insurers in India including SAHI, while the overall market share of the Company is 8.7% (GDPI basis) among all non-life insurers in India.
The financial performance for FY2025 vis-a-vis FY2024 is summarised in the following table:
|
in billion) |
|||
|
FY2024 |
FY2025 |
% Change |
|
|
Gross Written Premium |
255.94 |
282.58 |
10.4% |
|
Net Written Premium |
181.66 |
207.61 |
14.3% |
|
Net Earned premium |
168.66 |
198.00 |
17.4% |
|
Net Claims Incurred |
119.39 |
139.87 |
17.2% |
|
Income from Investments* |
36.14 |
42.50 |
17.6% |
|
Profit before tax |
25.55 |
33.21 |
30.0% |
|
Profit after tax |
19.19 |
25.08 |
30.7% |
|
EPS- Basic (^) |
39.03 |
50.74 |
30.0% |
|
EPS- Diluted (^) |
38.78 |
50.25 |
29.6% |
|
Net Worth |
119.60 |
143.03 |
19.6% |
|
Investment Assets |
489.07 |
535.08 |
9.4% |
|
Book Value Per Share (^) |
242.75 |
288.53 |
18.9% |
*In accordance with IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, previous period figure has been regrouped/ reclassified.
With effect from October 1, 2024, Long-term products are accounted on 1/n basis, as mandated by IRDAI. Hence, FY2025 and FY2024, numbers are not comparable with prior periods or prior years.
IRDAI requires insurance companies to maintain a minimum solvency of 1.5 times which is calculated in a manner as specified in the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations 2024, as amended from time to time. As at March 31, 2025, the financial position of the Company remained strong with a solvency ratio of 2.69 times. The solvency ratio of the Company as at March 31, 2024 was 2.62 times.
KEY REGULATORY CHANGES HAVING IMPACT ON FINANCIAL STATEMENT
a. Change in Accounting Norm for Premium on Long Term Policies
During the financial year ended March 31, 2025, IRDAI / the Regulator had revised premium recognition for a Long-Term policy with effect from October 1, 2024. The Gross Written Premium reported for any Financial Year shall be the total Gross Written Premium due for the Long-Term Policy multiplied by â1/nâ, where ânâ is the Policy Duration. Any excess amount collected shall be treated as âPremium Depositâ or Advance Premium.â This approach ensures that premium income is allocated more evenly over the policy period.
In case of motor insurance policies for new cars and new two wheelers (third party liability coverage) issued on or after September 1, 2018, premium received is recognised equally over the policy period at the commencement of risk on 1/n basis where "n" denotes the policy duration. Hence, there was no impact on said line of business in the FY 2025. However, the premiums recognition under long-term health and other lines of business underwent changes basis regulatory changes in current FY 2025, therefore there was impact on the growth of health and other lines of business for the general insurance industry.
The impact of this regulatory change on financial numbers is detailed out in the investor presentation for FY2025 which is hosted on the website of the Company and can be viewed at https://www. icicilombard.com/investor-relations
b. Computation of Solvency
During the year under review, the Regulator had issued IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulation, 2024 read with Master Circular thereon dated May 17, 2024, pursuant to which the solvency ratio of the Company was impacted by ~30 basis points upto Q3-FY2025. Subsequently on January 31, 2025, IRDAI had issued a clarification in methodology for computation of admissible assets for solvency calculation which resulted into improvement in solvency ratio for FY2025. The solvency ratio of the Company at March 31, 2025 was 2.69 times.
During the year, the Company expanded its reach by opening 18 new branches across various locations and relocated 21 branches. The Company reaches its customers through 328 branches in 292 locations as on March 31, 2025. As on March 31, 2025, the Company had 15,123 employees and 140,736 individual agents including Point of Sales (POS) to cater to the needs of customers. The Companyâs diverse and comprehensive product portfolio is made available to the customers through wide distribution network consisting of agents, corporate agents, banks, brokers, and online channels.
The Company strives to enhance its customer experience with a blend of innovative digital platforms and personalised service. To achieve this, the Company leverages Artificial Intelligence (AI), Machine Learning (ML), and Robotic Process Automation (RPA) to streamline operations and enhance claims processing. The Companyâs technology driven approach includes omni-channel claim registration via. bots, WhatsApp, SMS, email, mobile apps, and the Company''s website. Al-powered solutions and virtual inspections further streamline processes, reducing delays while enhancing transparency, efficiency, and customer convenience.
To support the customers and to help them with seamless claim settlement, the Company has a
toll-free contact number, email, and Standard Operating Procedures (SOPs) for guiding customers on various insurance policies along with setting up a dedicated 24/7 help desk to guide customers for faster claims settlement process.
As a result, the average claims settlement time has improved to 5 days for the Motor Own Damage (OD) segment in FY2025 (from 6 days in FY2024), and to 3 days for the Health segment (from 5 days in FY2024). Additionally, 100% of customer grievances were resolved within 15 days.
The Claims Net Promoter Score (NPS) of the Company for Health and Motor segment has improved from 67 in FY2024 to 68 in FY2025.
DETAILS OF MATERIAL CHANGES FROM THE END OF THE FINANCIAL YEAR TILL THE DATE OF THIS REPORT
No material changes and commitments have occurred after the closure of FY2025 till the date of this Report, which would affect the financial position of the Company.
The profit after tax for the financial year ended March 31, 2025 is ^ 25.08 billion. The profit available for appropriation is ^ 73.27 billion after taking into account the balance of profit of ^ 48.19 brought forward from the previous year.
During the year under review, the Company paid ^ 5.50 per equity share as an interim dividend for FY2025 i.e. at the rate of 55.0% of face value of ^ 10 each, aggregating to ^ 2.72 billion. The Board of Directors of the Company, at their Meeting held on April 15, 2025, had recommended a final dividend of ^ 7.0 per equity share i.e. at the rate of 70.0% of face value of ^ 10 each for FY2025, to the Members of the Company for their approval. Dividend will be payable subject to approval of members at the ensuing Annual General Meeting ("AGM") and after deduction of tax at source to those Members whose names appear in the Register of Members as on the Record date.
The dividend pay-out ratio for FY2025 is 24.6% as against 28.2% for FY2024.
In accordance with Regulation 43A of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), the Company has adopted the Dividend Distribution Policy, which is based on the profitability and key financial metrics, capital position and requirements and the regulations pertaining to payment of the Dividend. The Dividend Distribution Policy of the Company is hosted on website of the Company and can be viewed at https://www. icicilombard.com/docs/default-source/policies-of-the-company/dividend-distribution-policy.pdf.
The Company has declared dividend after considering criteria like solvency and liquidity position and profit available for distribution for FY2025 as prescribed under the Dividend Distribution Policy of the Company.
The Authorised Share Capital of the Company as at March 31, 2025 is ^ 5,500,000,000 comprising of 550,000,000 equity shares of face value of ^ 10 each. The issued, subscribed and paid-up share capital of the Company as at March 31, 2025 is ^ 4,957,264,770 comprising of 495,726,477 equity shares of face value of ^ 10 each.
During the year under review, the Company has allotted 3,041,182 equity shares pursuant to exercise of Stock Options by the eligible options holders under the ICICI Lombard-Employees Stock Option Scheme-2005 (âESOSâ). The equity shares allotted under ESOS ranks pari-passu with existing equity shares of the Company.
The Board of Directors of the Company, at their Meeting held on April 18, 2023, based on the recommendation of the Board Nomination and Remuneration Committee, approved and adopted ICICI Lombard - Employees Stock Unit Scheme -2023 (âUnit Schemeâ), subject to the approval of the Members of the Company. Subsequently, Members of the Company at their AGM held on July 6, 2023, approved and adopted the Unit Scheme. During the year under review, no allotment was made under the Unit Scheme.
As on April 1, 2024, the Company has not issued any equity shares with differential voting rights or sweat equity shares during the year under review.
REDEMPTION OF NON-CONVERTIBLE DEBENTURES
As on April 1st, 2024, the Company had outstanding Debentures of ^ 0.35 billion comprising of 10.5%, 350 unsecured, subordinated, fully paid-up, listed, redeemable, non-convertible debentures having a face value of ^ 1,000,000 each ("the Debentures") listed on the wholesale debt market segment of the National Stock Exchange of India Limited. The Company had exercised the call option for redemption of the Debentures on April 1, 2024, in accordance with the terms and conditions as set out in the Information Memorandum, and accordingly sent notices to the Debenture Holder and the Debenture Trustee on the same date. The Debentures were subsequently redeemed on April 30, 2024 (being the Call Option Date), by way of payment of principal and final interest due thereon.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there has been no change in the nature of the business of the Company.
PARTICULARS OF LOANS, GUARANTEES AND INvESTMENTS
The provisions of Section 186(4) of the Companies Act, 2013 (âthe Actâ), requires disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided including the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security. The said provisions are not applicable to the Company, being an insurance company.
SIGNIFICANT AND MATERIAL ORDERS
passed by the regulators OR courts
OR TRIBUNALS IMPACTING THE GOING concern STATUS OF THE cOMpANY AND ITS FUTURE OpERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and future operations of the Company.
The Company believes that a strong, independent and diverse Board leadership is fundamental to the effective implementation of corporate governance. A well-structured and competent Board enhances
decision making, promotes accountability, and ensures sustainable business growth. The significance of Board diversity is recognised by various statutes/regulations i.e. the Insurance Act, 1938, IRDAI (Corporate Governance for Insurers) Regulations, 2024 (âIRDAI CG Regulationsâ) read with Master Circular on Corporate Governance for insurers, 2024 ("Master circular on CG"), the Act and relevant rules made thereunder, SEBI Listing Regulations. The composition of the Board complies with the applicable regulatory requirements and best corporate governance practices.
The Board of the Company is structured to maintain an optimal balance of executive and non-executive directors, fostering a structure that promotes independent oversight, and strategic decision making. As on March 31, 2025, the Board of the Company consists of total nine (9) Directors, out of which six (6) are Non-executive, Independent Directors, two (2) are Non-executive, Nonindependent Directors and one (1) is Managing Director & CEO.
None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(1) or Section 164(2) of the Act. The Company has also obtained a certificate from Dholakia & Associates, Practicing Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by SEBI/ Ministry of Corporate Affairs ("MCA") or any such statutory authority. Further, all the Directors of the Company have confirmed that they fulfill the criteria of âfit and properâ as laid down under IRDAI CG Regulations.
During the financial year ended March 31, 2025, following changes took place in composition of the Board of Directors of the Company:
|
Name of Director |
Change |
With effect from |
|
Rakesh Jha1 (DIN:00042075) |
Appointed as Chairperson of the Company |
June 30, 2024 |
|
Preeti Reddy2 (DIN: 07248280) |
Appointed as Non-executive, Independent Director |
April 17, 2024 |
|
Rajive Kumar3 (DIN: 06620110) |
Appointed as Non-executive, Independent Director |
July 19, 2024 |
|
Name of Director |
Change |
With effect from |
|
Murali Sivaraman4 (DIN: 01461231) |
Re-appointed as Non-executive, Independent Director |
January 17, 2025 |
|
Ashvin Parekh5 (DIN: 06559989) |
Ceased to be |
Closure of |
|
Non-executive, Independent Director |
business hours on April 17, 2024 |
|
|
Lalita D. Gupte6 (DIN: 00043559) |
Ceased to be |
Closure of business |
|
Non-executive, Independent Director |
hours on June 29, 2024 |
|
|
Uday Chitale1 (DIN: 00043268) |
Ceased to be |
Closure of business |
|
Non-executive, Independent Director |
hours on October 20, 2024 |
|
|
Alok Kumar |
Ceased to be Executive Director |
Closure of business |
|
Agarwal8 (DIN: 03434304) |
hours on December 31, 2024 |
in the opinion of the Board, Non-executive, independent Director(s) appointed during the year possess high standards of integrity, expertise, experience and proficiency.
Notes:
1The Board of Directors of the Company, at their Meeting held on April 17, 2024, based on the recommendation of the Board Nomination and Remuneration Committee, have approved the appointment of Rakesh Jha, (DiN: 00042075), Non-executive, Non-independent Director as Chairperson of the Company with effect from June 30, 2024 or date of iRDAi approval, whichever is later. Subsequently, iRDAi, vide its communication dated May 14, 2024 had approved appointment of Rakesh Jha as Chairperson of the Company for a period of 5 years effective from June 30, 2024.
2The Board of Directors of the Company, at their Meeting held on April 17, 2024, based on the recommendation of the Board Nomination and Remuneration Committee, appointed Preeti Reddy (DiN: 07248280) as an Additional Director in the category of Non-executive, independent Director of the Company for a period of five (5) consecutive years effective from April 17, 2024 to April 16, 2029. Subsequently, the Members of the Company at their AGM held on June 25, 2024, approved appointment of Preeti Reddy as Non-executive, independent Director effective from April 17, 2024.
3The Board of Directors of the Company, at their Meeting held on July 19, 2024, based on the recommendation of the Board Nomination and Remuneration Committee, appointed Rajive Kumar (DiN: 06620110) as an Additional Director in the
category of Non-executive, independent Director of the Company for a period of five (5) consecutive years effective from July 19, 2024 to July 18, 2029. Subsequently, the Members of the Company, on September 8, 2024, passed a Special Resolution by way of Postal Ballot to approve appointment of Rajive Kumar as Non-executive, independent Director effective from July 19, 2024.
4The Board of Directors of the Company, at their Meeting held on December 10, 2024, based on the recommendation of Board Nomination and Remuneration Committee, approved reappointment of Murali Sivaraman (DiN: 01461231) as a Non-executive, independent Director of the Company, for a second term of five (5) consecutive years, effective from January 17, 2025 to January
16, 2030, subject to requisite approval of Members. Subsequently, the Members of the Company, on January 12, 2025, passed a Special Resolution by way of Postal Ballot to approve re-appointment of Murali Sivaraman as Non-executive, independent Director effective from January 17, 2025.
5Ashvin Parekh (DiN: 06559989), Non-executive, independent Director of the Company completed his second term and consequently ceased to be a Nonexecutive, independent Director of the Company with effect from the close of business hours on April
17, 2024.
6Lalita D. Gupte (DiN: 00043559), Chairperson, Non-executive, independent Director of the Company had attained the age of 75 years on October 4, 2023. Pursuant to iRDAi (Remuneration of Non-Executive Directors of insurers) Guidelines, 2023 (âRemuneration Guidelines"), the Company had sought an extension from iRDAi to continue as Chairperson of the Company for one more year with effect from the applicability of the Remuneration Guidelines. iRDAi vide its letter dated August 7, 2023, granted extension of time till June 29, 2024 to Lalita D. Gupte to continue as Chairperson of the Board and Non-executive, independent Director of the Company. in accordance with the same, Lalita D. Gupte ceased to be the Chairperson, Nonexecutive, independent Director of the Company from the close of business hours on June 29, 2024. 1
continue on the Board of the insurer. Uday Chitale (DiN: 00043268), Non-executive, independent Director of the Company, attained the age of 75 years on October 20, 2024. Accordingly, Uday Chitale ceased to be Non-executive, independent Director of the Company with effect from the close of business hours on October 20, 2024.
8Alok Kumar Agarwal (DIN: 03434304), Executive Director of the Company, tendered his resignation vide letter dated October 18, 2024, to pursue an external opportunity. Alok Kumar Agarwal officiated his responsibilities as Executive Director till the close of business hours on December 31, 2024.
The Board records its deepest appreciation for the contribution by Ashvin Parekh, Lalita D. Gupte, Uday Chitale and Alok Kumar Agarwal during their tenure on the Board of the Company.
During the year under review, Eight (8) Meetings of the Board of Directors were held. The intervening gap between meetings were not more than 120 days as required under the Act and SEBI Listing Regulations.
The details of the Meetings of the Board and its Committees held during FY2025 along with attendance of Directors/ Committee Members thereat, constitution of the Board including name, qualification, field of specialization/core skills / expertise / competence, Directorship(s) held, etc. and their terms of reference, are provided in the Corporate Governance Report, forming part of this Report.
As required under the Act, SEBI Listing Regulations, and IRDAI CG Regulations, the Board has constituted the following statutory committees:
1. Audit Committee;
2. Board Nomination and Remuneration Committee;
3. Risk Management Committee;
4. Investment Committee;
5. Policyholder Protection, Grievance Redressal and Claims Monitoring Committee;
6. Corporate Social Responsibility & Sustainability Committee;
7. Stakeholders Relationship Committee; and
8. Information Technology Strategy Committee.
During the year under review, the Company has dissolved the Strategy Committee with effect from October 21, 2024.
Details such as composition of the Committee(s), terms of reference, and Meetings held during the year under review for these Committee(s) are disclosed in the Corporate Governance Report, forming part of this Report.
Common Directorships
The Master Circular on CG issued by IRDAI lays down the Framework for appointment of common director under Section 48A of the Insurance Act, 1938. The appointment or continuation of common director representing insurance agent, intermediary or insurance intermediary on the board of insurance company shall be deemed to have been permitted by IRDAI, subject to certain conditions.
As at March 31, 2025, the Company has two (2) Directors, falling within the criteria of common Director prescribed under the Insurance Act, 1938 viz. Rakesh Jha and Sandeep Batra. Further during FY2025, no common director was appointed on the Board of the Company.
The Company is in compliance with the applicable provision of the Insurance Act, 1938 and Master circular on CG.
The Company would file the Annual Compliance Certificate on âAppointment of Common Directorsâ for the financial year ended March 31, 2025, as prescribed under the Master circular on CG, duly certified by the Managing Director & CEO, within the defined timelines.
Declaration of Independence
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) & (7) of the Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) and Regulation 25 of the SEBI Listing Regulations, as amended from time to time. All the Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the applicable provisions of the Employees Code of Conduct of the Company. There has been no change in the circumstances affecting their
status as Independent Directors of the Company. The Company obtains a certificate from a Practicing Company Secretary on an annual basis, verifying the veracity of the declarations received from the Independent Directors of the Company. Based on the declarations and certificate of Practicing Company Secretary, the Board is of the opinion that all the Independent Directors of the Company fulfill the conditions relating to their status as an Independent Director as specified in the Act and SEBI Listing Regulations and are independent of the Management.
Director e-KYC
Pursuant to the provisions of the Companies (Appointment and Qualification of Directors) Rules, 2014, all Directors are required to submit e-Form DIR-3 KYC to the Central Government. In compliance with the said requirement, all Directors of the Company have duly submitted e-Form DIR-3 KYC or DIR-3 KYC-Web, as applicable, within the prescribed timelines.
Retirement by Rotation
In terms of provisions of Section 152 of the Act, Rakesh Jha (DIN: 00042075) would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Rakesh Jha has offered himself for re-appointment. A resolution seeking Members approval for appointment of a Director in place of Rakesh Jha (DIN: 00042075) who retires by rotation and, being eligible, offers himself for reappointment, is forming part of the Twenty-Fifth AGM Notice. Rakesh Jha is not disqualified from being appointed as a Director under Section 164 of the Act.
The profile and particulars of experience, attributes and skills of Rakesh Jha along with details as required have been disclosed in the annexure to the Twenty-Fifth AGM Notice.
PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES, CHAIRPERSON AND INDIvIDuAL DIREcTORs
Pursuant to the provisions of the Act, SEBI Listing Regulations and in accordance with Guidance Note on Board Evaluation issued by SEBI on January 5, 2017, an annual performance evaluation had been carried out of the Board as a whole, its Committees, individual Directors both Executive and Non-
executive including Independent Directors and Chairperson of the Board. The manner in which the evaluation has been carried out and outcome of evaluation, is explained in the Corporate Governance Report forming part of this Report.
KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (KMP) of the Company as on March 31, 2025, are as under:
1. Sanjeev Mantri, Managing Director & CEO
2. Gopal Balachandran, Chief Financial Officer
3. Vikas Mehra, Company Secretary
In accordance with the IRDAI CG Regulations read with IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024, the Company has following Key Management Persons in addition to aforesaid KMPs:
1. Girish Nayak, Chief-Technology & Heath Underwriting & Claims
2. Jerry Jose, Chief-Human Resources
3. Vinod Mahajan, Chief Investment Officer
4. Prasun Sarkar, Appointed Actuary and Chief Actuarial Officer
5. Sandeep Goradia, Chief Corporate Solutions Group, International & Bancassurance
6. Gaurav Arora, Chief Reinsurance, Underwriting & Claims (Property & Casualty)
7. Girish Sehgal, Chief - Customer Experience, Support and Operations*
8. Anand Singhi, Chief - Retail & Government
9. Amit Kushwaha, Head-Legal & Chief Compliance Officer
10. Steve Dsouza, Chief Risk Officer#
* The Board of Directors of the Company, based on the recommendation of the Board Nomination and Remuneration Committee, approved appointment of Girish Sehgal, Chief - Customer Experience, Support and Operations, designated as Key Management Person (âKMPâ) and Senior Management Personnel (âSMPâ) of the Company, with effect from January 21, 2025. Pursuant to the Master circular on CG, the Company had obtained âFit and Proper declarationâ from Girish Sehgal prior to his appointment.
# The Board of Directors of the Company, based on the recommendation of the Board Nomination and Remuneration Committee, approved appointment
of Steve Dsouza as Key Management Person ("KMP") and Senior Management Personnel ("SMP") of the Company with effect from April 18, 2024.
In accordance with IRDAI CG Regulations, Gopal Balachandran holding two Key Management Person positions, namely, Chief Financial Officer and Chief Risk Officer, has ceased to be Chief Risk Officer of the Company, with effect from the close of business hours on April 17, 2024 and would continue to be Chief Financial Officer of the Company.
During the financial year ended March 31, 2025, Vasundhara Bhonsle, Chief-Customer Support and Operations, Key Management Person (KMP) and Senior Management Personnel (SMP) of the Company, tendered her resignation from the Company and officiated her responsibilities till the close of business hours on January 20, 2025.
FRAMEWORK FOR APPOINTMENT OF A DIRECTOR, KEY MANAGERIAL PERSONNEL, KEY MANAGEMENT PERSONS AND SENIOR MANAGEMENT
During the financial year ended March 31, 2025, the Company had renamed the âCriteria for appointment of a Director, Key Managerial Personnel and Officialsâ who may be appointed in senior management" as âFramework for appointment of a Director, Key Managerial Personnel, Key Management Persons and Senior Management" ("the Framework") and amended the criteria for appointment of a Director, Key Managerial Personnel, Key Management Persons and Senior Management to align the same with the IRDAI CG Regulations and the Master circular on CG.
The Framework includes the criteria for determining qualifications, positive attributes and independence of a Director, identification of persons who are qualified to become Directors, Key Managerial Personnel, Key Management Persons and who may be appointed in the Senior Management in accordance with the criteria laid down.
The Framework is hosted on the website of the Company and can be viewed at https://www. icicilombard.com/docs/default-source/policies-of-the-company/criteria-for-appointment-of-a-director-key-managerial-personnel-and-officials-who-may-be-appointed-in-senior-management. pdf .
The Company had renamed the âPolicy on Appointment and Compensation of Employees and Framework for Remuneration to Non-Executive Directorsâ as âCompensation Policyâ in order to reflect its comprehensive coverage related to compensation and benefits for Managing Director & CEO, other Whole-time Directors, Non-executive Directors, Key Management Person (KMP), Senior Management Personnel (SMP) and other employees.
The Compensation Policy lays down guidelines on fixing compensation of employees including KMPs, Whole-time Directors and Non-executive Directors of the Company. The philosophy of the Company on compensation and benefits is based on the ethos of meritocracy and fairness. The twin pillars of performance management and talent management system are closely intertwined with the compensation, benefits and reward mechanism of the Company. While the Company will strive to ensure internal and external equity that are consistent with emerging market trends, its business model and affordability based on business performance sets the overarching boundary conditions. The Compensation Policy is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/ docs/default-source/compensationpoUcy.pdf.
During the year under review, the Company has not accepted any deposits under Section 73 of the Act.
Statutory Auditors
Pursuant to the provisions of Section 139 of the Act, every company is required to appoint a Statutory Auditor for audit of financial statements of company. Further, IRDAI CG Regulations read with Master Circular on CG for Insurers, 2024 requires every insurance company to appoint a minimum of two auditors as Joint Statutory Auditors and shall ensure that there is no conflict of interest in their appointment.
PKF Sridhar & Santhanam LLP, Chartered Accountants (Firm Registration No. 003990S/ S200018) and Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/
N500013) are the Joint Statutory Auditors of the Company.
The Members of the Company in the Twenty-First AGM held on August 10, 2021 had approved reappointment of PKF Sridhar & Santhanam LLP, Chartered Accountants as one of the Joint Statutory Auditors of the Company for a second term of five (5) consecutive years till the conclusion of Twenty-Sixth AGM. Further, the Members of the Company in the Twenty-Third AGM held on July 6, 2023 had approved appointment of Walker Chandiok & Co. LLP, Chartered Accountants for a first term of five (5) consecutive years, to hold office from the conclusion of Twenty-Third AGM till the conclusion of the Twenty-Eighth AGM of the Company.
Pursuant to IRDAI CG Regulations read with Master Circular on CG and the applicable provisions of the Act, the Board of Directors of the Company, based on the recommendation of the Audit Committee had approved and recommended to the Members to approve payment of ^ 16.0 million as remuneration to each of the Joint Statutory Auditors of the Company for statutory audit of financial statements and financial results of the Company for FY2026 including fee for audit of financial statements of International Financial Services Centre Insurance Office (âIIOâ), fees for reviewing the internal financial controls of the Company, issuing certificate on compliance of conditions of Corporate Governance prescribed under the SEBI Listing Regulations and other matters as prescribed under the Auditing Standards.
The resolution seeking Members approval for fixing audit remuneration of PKF Sridhar & Santhanam LLP, Chartered Accountants and Walker Chandiok & Co. LLP, Chartered Accountants, for FY2026 is forming part of Notice of Twenty-Fifth AGM.
Statutory Audit remuneration and other fees
The details of remuneration and other fees paid / payable to PKF Sridhar & Santhanam LLP and Walker Chandiok & Co. LLP, Joint Statutory Auditors of the Company for FY2025 are provided below:
|
in million) |
|
|
Particulars |
Amount |
|
Statutory Audit Fees including Certificate on compliance of conditions of Corporate Governance as prescribed under the SEBI Listing Regulations and Internal control over financial reporting |
31.0 |
|
Tax Audit Fees |
1.8 |
|
Others* |
11.5 |
|
Total |
44.3 |
*Includes ^ 1.5 million towards fees for review of Special Purpose Financial Information for ICICI Bank Limited consolidated financial statements, ^ 5.0 million towards review of Ind AS (Phase I), ^ 1.2 million towards reasonable assurance of Business Responsibility and Sustainability Core for FY2024. Further, ^ 3.8 million is towards other certification fees.
Joint Statutory Auditors'' Report
The Joint Statutory Auditorsâ Report for FY2025 on the financial statements of the Company forms part of this Integrated Annual Report. The Joint Statutory Auditors have expressed their unmodified opinion on the financial statements and their reports do not contain any qualifications, reservations, or adverse remarks.
Secretarial Auditor
Pursuant to provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed Parikh & Associates, Practicing Company Secretaries (Firm Registration No. P1988MH009800) as a secretarial auditor of the Company for carrying out the secretarial audit of the Company for FY2025 and issue annual secretarial compliance report for FY2025. The Secretarial Audit Report forms part of this report as Annexure A. There are no qualifications, reservation or adverse remark or disclaimer made by the Secretarial Auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
The Secretarial Auditor has undertaken an audit for FY2025 for all applicable compliances as per SEBI Listing Regulations and Circular / Guidelines issued thereunder. The Annual Secretarial Compliance Report for FY2025 is will be made available on
the website of the Company at https://www, icicilombard.com/investor-relations and on the websites of the stock exchanges i.e. BSE Limited (BSE) at www.bseindia.com and National Stock Exchange of India Limited (NSE) at www.nseindia. com.
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2024, the secretarial audit is required to be conducted by auditor who shall be peer reviewed company secretary. The amended Regulations also requires listed entities to seek approval of the shareholders of the Company for the appointment / re-appointment of individual secretarial auditor or secretarial auditor firm at their AGM.
The Board of Directors of the Company, at their Meeting held on April 15, 2025, based on the recommendation of the Audit Committee, approved the appointment of same firm i.e. Parikh & Associates, Practicing Company Secretaries (Firm Registration No. P1988MH009800), as Secretarial Auditor of the Company for the term of five (5) consecutive years commencing from the conclusion of 25th AGM till the conclusion of 30th AGM of the Company, subject to approval of Members of the Company at the Twenty-Fifth AGM for conducting Secretarial Audit from FY2026 to FY2030.
The proposal to appoint Parikh and Associates, Practicing Company Secretaries, as secretarial auditor of the Company for the term of five (5) consecutive years commencing from the conclusion of 25th AGM till the conclusion of 30th AGM of the Company, to conduct secretarial audit from FY2026 to FY2030, is being placed before the Members of the Company at the Twenty-Fifth AGM.
The Company has received consent from Parikh & Associates to act as secretarial auditor of the Company and has confirmed that the firm has been Peer Reviewed and Quality Reviewed by the Institute of Company Secretaries of India ("ICSI"), ensuring adherence to professional standards and practices. The Company has also received confirmation from Parikh & Associates that they are not disqualified to be appointed as Secretarial Auditors in terms of applicable provisions and that their appointment as secretarial auditor would be
within the prescribed limits under the Act and Rules made thereunder and SEBI Listing Regulations.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, the Statutory Auditors and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of the Act.
Being an Insurance Company, the Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
COMPLIANCE TO SECRETARIAL STANDARDS
During the year under review, the Company has been in compliance with the applicable Secretarial Standards i.e. SS-1 and SS-2, issued by ICSI, with respect to Meetings of Board and its Committees and General Meetings, respectively. The Company has devised necessary systems to ensure compliance with the applicable provisions of Secretarial Standards.
The statement containing particulars of employees as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure B.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Pursuant to the provisions of the Act, the Integrated Annual Report including Financial Statements are being sent to the Members of the Company excluding the aforesaid statement. Further in terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary of the Company at investors@icicilombard.com.
The Company undertakes various transactions with related parties in the ordinary course of business and had put in place a process for approval of
Related Party Transactions, pursuant to the Policy on Related Party Transactions and Framework on Related Party Transactions approved by the Board of Directors of the Company.
All Related Party Transactions that were entered by the Company, during the year under review, were at an armâs length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Act and the SEBI Listing Regulations.
The Audit Committee has granted omnibus approval to enter into different types of related party transactions which are in ordinary course of business, repetitive in nature and in the interest of the Company. Further, all Related Party Transactions entered were placed before the Audit Committee on a quarterly basis for which the Company had taken omnibus approval from the Audit Committee.
During the year under review, the Company has amended its Policy on Related Party Transactions and Framework on Related Party Transactions in order align the same with the SEBI Listing Regulations.
The Policy on Related Party Transactions is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/policies-of-the-company/rpt-policy fy2Q26.pdf
Particulars of Contracts or Arrangements with Related Parties
Pursuant to the provisions of Regulation 23 of the SEBI Listing Regulations, prior approval of Members is required to be sought by means of an ordinary resolution for related party transactions, which are material, even if such transactions are in the ordinary course of the business of the Company and at an armâs length basis. A transaction with a related party is considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds ^ 1,000 crore or 10% of the annual consolidated turnover as per the last audited financial statements of the listed entity, whichever is lower.
The Company had taken approval from the Members in the Twenty-Third AGM of the Company held on July 6, 2023, for material Related Party Transactions that the Company may enter in FY2025 and which may exceed the threshold of âmaterial related party transactionsâ prescribed under the SEBI Listing Regulations. All the Related Party Transactions entered by the Company in FY2025 were within the limit as approved by the Members, in the ordinary course of business, on an armâs length basis and in accordance with applicable IRDAI prescriptions.
During the year under review, the Company had not entered into any contract / arrangement / transaction with related parties which is required to be reported in Form AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Company had further taken approval from the Members in the Twenty-Fourth AGM of the Company held on June 25, 2024, for material Related Party Transactions that the Company may enter in FY2026 and which may exceed the threshold of âmaterial related party transactionsâ prescribed under the SEBI Listing Regulations. The Company will execute the transactions approved by Members of the Company and in accordance with the IRDAI prescriptions on an armâs length basis and in the ordinary course of business of the Company.
The Company, on a half yearly basis, presents to the Audit Committee status of actual related party transactions vis-a-vis related party transactions amount approved by the Members of the Company.
The resolution seeking approval of Members of the Company for material Related Party Transactions that the Company may enter in FY2027 and which may exceed the threshold of âmaterial related party transactionsâ prescribed under the SEBI Listing Regulations forms part of the Twenty-Fifth AGM Notice.
As required under Regulation 53(f) read with Para A of Schedule V of the SEBI Listing Regulations and Accounting Standard (AS) 18 on Related Party Disclosures, the details of Related Party Transactions entered into by the Company during FY2025 are covered in the Notes to Accounts
forming part of the Financial Statements. The Joint Statutory Auditors of the Company have issued an unmodified opinion on the Financial Statements for FY2025 which includes therein Related Party Transactions and related disclosures thereon.
Pursuant to Section 134(3)(a) of the Act, the Annual Return of the Company prepared as per Section 92(3) of the Act for the financial year ended March 31, 2025, is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/ default-source/shareholdina-pattern/form mat 7-website-upload.pdf In terms of Rules 11 and 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return shall be filed with the Registrar of Companies, within the prescribed timelines.
The Company recognizes that risk is an integral element of insurance business and with a view to mitigate risks, the Company has in place Board approved Risk Management Framework.
A strong risk culture is ensured through embedding the principles of Risk Management Framework in strategy and operations. Accordingly, the Company has developed a risk universe, broadly categorised into six distinct groups, namely, Credit Risk, Market Risk, Underwriting Risk, Strategic Risk, Operational Risk and Environmental, Social and Governance Risk.
As part of the Enterprise Risk Management exercise, critical risks along with the detailed mitigation plans are presented to the Risk Management Committee of the Board on a quarterly basis. The risk mitigation plan(s) is/are monitored regularly by the Company to ensure timely and appropriate execution. The senior management of the Company is responsible for periodic review of the risk management process to ensure that the process initiatives are aligned to the desired objectives. The Chief Risk Officer of the Company is responsible for the implementation and monitoring of the Risk Management Framework.
A statement indicating development and implementation of Risk Management Framework including identification therein, elements of risk,
if any, which may pose significant risk to the Company are given in the Corporate Governance Report forming part of this Report.
DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment and is committed to provide a safe environment for all, which is achieved through well-established robust mechanism for redressal of complaints reported under it.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides protection against sexual harassment of women at workplace and lays down the guidelines and timelines for the prevention and redressal of complaints pertaining to sexual harassment. Accordingly, the Company has in place the guidelines on prevention of Sexual Harassment at Workplace and a formal process for dealing with complaints of sexual harassment, in compliance with aforesaid Act. The Company ensures that all such complaints are resolved within defined timelines The Guideline against Sexual Harassment at Workplace is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/policies-of-the-company/guidelines against sexual harassment il ver22.pdf.
Statement of complaints received during the year is as follows:
|
Sr. No. |
particulars |
No. |
|
a. |
Number of complaints pending as on April 1, 2024 |
2 |
|
b. |
Number of complaints filed during the financial year |
17 |
|
c. |
Number of complaints disposed of during the financial year |
16 |
|
d. |
Number of complaints pending as on March 31, 2025 |
3* |
*Of the 3 complaints pending as on March 31, 2025, 2 were reported in February 2025 and 1 was reported in March 2025 and are currently under investigation.
To build awareness in this area, the Company has been conducting induction/refresher programmes on continuous basis. During the year under review,
the Company has organized online training sessions on the topics of Gender Sensitization and Prevention of Sexual Harassment (âPOSHâ) for its employees. The Company also conducted 194 physical POSH awareness sessions across the Country.
Internal Committee for redressal of complaints:
The Company has constituted an internal Committee for redressal and timely management of sexual harassment complaints. The Internal Committee has minimum 50% women representatives. The Internal Committee has a senior woman leader as the presiding officer of the Committee and one external member who is a subject matter expert in this regard.
The Company is in compliance with the provisions relating to the constitution of an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
unpaid/unclaimed dividend
As per Section 124 and 125 of the Act read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, any dividends that remain unclaimed/unpaid for a period of seven years are liable to be transferred to Investor Education and Protection Fund (âIEPFâ). Further, all the shares in respect of which dividend has remained unclaimed for seven consecutive years or more from the date of transfer to unpaid dividend account shall be transferred to IEPF.
The details of unclaimed dividends and shares transferred to IEPF during FY2025 are as follows:
Members are requested to note that no claims shall lie against the Company in respect of the dividend/ shares transferred to IEPF.
|
Dividend Type |
Amount of unclaimed |
Number |
|
and Year |
dividend (^) |
of shares transferred |
|
1st Interim Dividend FY2018 |
938/- |
- |
|
2nd Interim Dividend FY2018 |
80,620/- |
3709 |
|
total |
81,558/- |
3709 |
The details of outstanding and unclaimed dividends previously declared and paid by the Company along with the due date of transfer to IEPF are covered in the Corporate Governance Report forming part of this Report.
CORPORATE SOCIAL RESPONSIBILITY & SUSTANABILITY
The Corporate Social Responsibility (âCSRâ) & Sustainability initiatives of the Company are deeply committed to enhancing community well-being and driving sustainable development. Being a corporate citizen, the Company is committed to perform its role towards the society at large. In alignment with its vision, the Company always works towards adding value to its stakeholders by going beyond business goals and contributing to the well-being of the community.
The Companyâs CSR & Sustainability activities are largely focused in the areas of road safety, health care, education, environment sustainability, skill development & sustainable livelihoods, creating social awareness and other activities like disaster relief or any other activities as prescribed under Schedule VII of the Act. The CSR & Sustainability activities are implemented either directly by the Company or through ICICI Foundation for Inclusive Growth.
The Company has formulated the Corporate Social Responsibility Policy ("CSR Policy") which sets out the framework guiding the Companyâs CSR & Sustainability activities. The CSR Policy also sets out the rules that need to be adhered to while taking up and implementing CSR & Sustainability activities. The CSR Policy is hosted on the website of the Company and can be viewed at www. icicilombard.com/docs/default-source/policies-of-the-company/csr-policy.pdf.
The Company has duly constituted the Corporate Social Responsibility & Sustainability Committee (âCSR & Sustainability Committeeâ) in accordance with the applicable provisions of the Act and IRDAI CG Regulations. The CSR & Sustainability Committee acts as a governing body that define the scope of CSR activities for the Company and ensure compliance with the CSR Policy.
The Board of Directors of the Company at their
Meeting held on April 17, 2024, based on the recommendation of the CSR & Sustainability Committee, had approved the CSR & Sustainability Plan and expenditure for FY2025. The budgeted CSR expenditure for FY2025 was ^401.4 million, based on the average net profits of the Company made during three immediately preceding three financial years, calculated in accordance with the Act and the applicable IRDAI regulations.
Further, the Board of Directors of the Company at their Meeting held on October 18, 2024, based on the recommendation of CSR & Sustainability Committee had approved modification to the plan for CSR & Sustainability Activities for FY2025.
The Companyâs actual CSR & Sustainability expenditure was ^ 404.2 million for FY2025. There are no unspent funds required to be carried forward to succeeding years.
The Annual Report on CSR activities of the Company for FY2025 forms part of this Report as Annexure C. During FY2025, impact assessment was carried out for Ride to Safety, Caring Hands, Niranjali, Solar Panel installations and Skill development & Sustainable Livelihoods CSR projects in pursuance of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time. The executive summary of Impact Assessment Reports are covered in the Annual Report on CSR Activities.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) REpORT
The Company considers ESG principles integral to its purpose and operations, aiming to benefit the customers, investors, employees, shareholders, communities, and all other stakeholders. Through these efforts, the Company strives to create longterm value for all stakeholders, consistent with our commitment to âBuilding Trust Driving Change Our Promise for Sustainable Growthâ.
During FY2025, the Company had continued to prioritize ESG in its operations and had undertaken various initiatives. On the environment front, Green Procurement Guidelines were rolled out to promote sustainable sourcing, digital visiting cards were adopted to reduce paper usage, and sourcing renewable electricity to reduce overall Greenhouse
Gas (GhG) emissions. The travel policy was updated to reduce GhG emissions associated with business travel.
On Social aspect, the Companyâs female workforce representation rose to 26.0%. Further, 28.6% new female agents were onboarded in FY2025. Employees were empowered through a selflearning module on ESG fundamentals, and training sessions on the Supplier Code of Conduct were conducted for material vendors.
On Governance part, the Company had enhanced its Supplier Code of Conduct to set clear expectations on ethics, sustainability, human rights amongst others. Strengthening due diligence and engaging with suppliers on ESG matters has improved the sustainability of value chain of the Company. The Company had conducted 12 sessions of virtual training for 129 material vendors covering key aspects of ESG. An integral part of strengthening governance, the Company is maintaining open, transparent communication with its stakeholders. This transparency enhances governance practices and supports broader ESG goals, building trust and aligning operations of the Company with sustainable, long term value.
At the Board level, the CSR & Sustainability Committee oversees and monitors ESG initiatives and the Risk Management Committee oversees ESG related risks. At Management level, ESG Steering Committee ensures the overall integration of business activities with ESG objectives.
During FY2025, the Company was assigned ESG rating from various rating agencies and the details of the same are as below:.
|
ESG Rating Agency |
Rating Scale |
ESG Rating/ Score* |
Change |
|
MSCI ESG Rating |
⢠AAA- CCC scale ⢠CCC/B - Laggard ⢠BB/BBB/A - Average ⢠AA/AAA - Leader |
A |
Improved |
|
Sustainalytics ESG Risk Rating |
Five risk levels: ⢠Negligible (0-10), ⢠Low (10-20), ⢠Medium (20-30), ⢠High (30-40) ⢠Severe (40 ) |
21.9 |
Improved |
|
S & P ESG Score |
0-100, with 100 representing best performances |
34 |
Reduced |
|
CRISIL ESG Score |
0-100, where 100 is the highest |
62 |
No change |
|
CDP Score |
⢠A (Leadership) ⢠B (Management) ⢠C (Awareness) ⢠D (Disclosure) ⢠F (Failure to Disclose) |
C |
Improved |
Unsolicited Ratings as available in the public domain as on March 31, 2025.
The Company''s focus from an ESG standpoint is on identifying and addressing material ESG issues. Key focus areas include promoting health and well being, innovation, digitisation, diversity and inclusion, and responsible investments, among others. Additionally, the Company has a comprehensive ESG Policy to guide its initiatives and ensure sustainable practices The ESG Policy is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/ docs/default-source/esg/policy-on-environment-management-2Q22.pdf.
The Company had published its sixth ESG Report which highlights the commitment to environmental sustainability, social responsibility, and strong corporate governance. The Report illustrates actions of the Company in these areas, aims to strength stakeholder trust and focuses on creating long-term value. The ESG Report for FY2025 is hosted on the website of the Company and can be viewed at https://www.icicilombard.com.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Company is required to publish Business Responsibility and Sustainability Report (âBRSRâ) as part of its Annual Report and also undertake reasonable assurance on disclosure related to BRSR Core.
The BRSR maps the sustainability disclosure of the Company against the nine principles of the âNational Guidelines on Responsible Business Conductâ issued by MCA, Government of India. The BRSR Core is a sub-set of the BRSR, consisting of a set of Key Performance Indicators (KPIâs) under 9 ESG attributes.
Accordingly, the BRSR and BRSR Core related
disclosures along with independent practitionerâs assurance report on identified sustainability indicators in BRSR report for FY2025 are hosted on the website of the Company and can be viewed at https://www.icicilombard.com.
The Company has voluntarily adopted the principles and has shifted its corporate reporting journey to Integrated Report as per the International Integrated Reporting Council (âIIRCâ) framework. The Integrated Report encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Companyâs long term perspective. The Companyâs Integrated Report is based on six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social & relationship capital and natural capital.
The Company continues to publish its seventh Integrated Report which forms part of this Annual Report.
The Company had intimated Stock Exchanges vide its letters dated April 1, 2024 and April 30, 2024, regarding exercise of Call Option and timely payment of Principal and Interest on redemption of Debentures of the Company.
Further during the year, ICRA Limited vide letter dated July 11, 2024 withdrew the â[lCRA]AAA (Stable)â rating and CRISIL Rating Limited vide letter dated July 31, 2024 withdrew the "CRISIL AAA/ Stable" rating assigned to the Debentures of the Company. The rating withdrawal was pursuant to the full redemption of Debentures of the Company.
During the year under review, ICRA Limited has reaffirmed Issuer Rating of â[ICRA]AAA (Stable)â to the Company. AM Best has affirmed the Financial Strength Rating of "B (Good)", the Long-Term Issuer Credit Rating of âbbb (Good)" to the Company and the India National Scale Rating of âaaa.IN (Exceptional)â to the Company. The outlook assigned to these Credit Ratings is stable. The Credit Ratings reflect the Companyâs balance sheet strength, which AM Best assesses as very strong
as well as strong operating performance, neutral business profile and appropriate enterprise risk management.
The Company is committed to achieving excellence in its Investor Relations engagement with both International and Domestic investors. To achieve this goal, the Company continuously adopts emerging best practices in Investor Relations and strives to build relationship of mutual understanding and trust with investor/analysts.
The Managing Director & CEO, Chief Financial Officer and other authorised senior management members participate in structured conference calls and periodic investor/analyst interactions including one-on-one/group meeting, investor conferences, and quarterly earnings calls. The transcripts of the quarterly earnings calls, audio recordings, and presentations made are also hosted on the website of the Company and Stock Exchanges where the securities of the Company are listed within the timelines as prescribed under the SEBI Listing Regulations.
The Company ensures that financial and nonfinancial information is available to all the stakeholders by uploading it on the Companyâs website and website of the Stock Exchanges where the securities of the Company are listed. The financial information includes Financial Statements, Press Releases, Investor Presentations, Earnings call transcripts, publication of financial results in the newspapers and Annual Report whereas the nonfinancial information are included as a part of ESG Report, BRSR, BRSR (Core), etc.
EVENTS AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, between the end of the financial year of the Company to which the balance sheet relates and the date of this report.
As per the provisions prescribed by iRDAi, after attaining the age of 75 years, no person shall
Mar 31, 2024
The Board of Directors are pleased to present the Twenty-Fourth Integrated Annual Report of ICICI Lombard General Insurance Company Limited (âthe Company") along with the Audited Financial Statements for the financial year ended March 31, 2024.
BUSINESS OUTLOOK Industry in FY2024
The general insurance industry has undergone significant changes during recent times. The pandemic accelerated the industry''s digital transformation, which has resulted in increased demand for new insurance products and services. During the year, the Insurance Regulatory and Development Authority of India (âIRDAI") introduced several reforms in its endeavour to expand the insurance market and increase insurance penetration.
The Gross Direct Premium Income (âGDPI") of the non-life insurance industry grew from '' 2,569.12 billion in FY2023 to '' 2,897.38 billion in FY2024, a growth of 12.8%. The market share of private players increased from 51.4% in FY2023 to 53.5% in FY2024 [Source: IRDAI and General Insurance Council].
Company in FY2024
The Company continues its journey of profitable growth through robust and prudent underwriting practices, generation of cash flows through strong retention of premium and judicious investments of the proceeds and focus on providing high quality customer service. The Company recognises the responsibility to protect individuals and corporates from various risks and contribute towards the larger goal of nation development. To fulfil this obligation, the Company offers a wide range of general insurance products and continuously introduces innovative products and services that not only enhance market penetration but also helps in managing various risks.
The Company has undertaken various initiatives towards building better digital platforms for claim management for its customers. The adoption of digital solutions has enabled the Company to settle claims remotely and efficiently, resulting in significant time savings and higher customer satisfaction levels. The Company has embraced cutting-edge technologies such as artificial intelligence and machine learning, as well as chat bots, to provide customers with an enhanced
experience at every stage of their journey, from onboarding to claims settlement.
The Company''s GDPI grew from '' 210.25 billion in FY2023 to '' 247.76 billion in FY2024, a growth of 17.8%.
In FY2023, the Company had issued 32.7 million policies and honoured 3.6 million claims, while in FY2024, the Company has issued 36.2 million policies and honoured 2.9 million claims.
The Company continues to lead the private players in the industry and has maintained its position of second largest player within the overall non-life insurance market in India. The market share of the Company is 13.2% (GDPI basis) among private sector non-life insurers in India including standalone health insurers, while the overall market share of the Company is 8.6% (GDPI basis) among all non-life insurers in India.
The financial performance of the Company for FY2024 vis-a-vis FY2023 is summarised in the following table:
|
(Rs. Billion) |
|||
|
Particulars |
FY2023 |
FY2024 |
% change |
|
Gross written premium |
217.72 |
255.94 |
17.6% |
|
Net written premium |
155.40 |
181.66 |
16.9% |
|
Net earned premium |
148.23 |
168.66 |
13.8% |
|
Net claims incurred |
107.26 |
119.39 |
11.3% |
|
Income from investments |
29.63 |
35.26 |
19.0% |
|
Profit before tax |
21.13 |
25.55 |
20.9% |
|
Profit after tax |
17.29 |
19.19 |
11.0% |
|
Earning per share- Basic (?) |
35.21 |
39.03 |
10.8% |
|
Earning per share-Diluted (?) |
35.16 |
38.78 |
10.3% |
|
Net worth |
103.92 |
119.60 |
15.1% |
|
Investment assets |
431.80 |
489.07 |
13.3% |
|
Combined ratio |
104.5% |
103.3% |
1.2% |
MATERIAL EVENT(S) DURING THE YEAR UNDER REVIEW
During the year under review, ICICI Bank Limited had purchased shares of the Company through stock exchange mechanism and consequently, has become the Holding Company of the Company with effect from February 29, 2024.
The profit after tax for the financial year ended March 31, 2024 is '' 19.19 billion. The profit available for appropriation is '' 53.35 billion after taking into account the balance of profit of '' 34.16 billion brought forward from the previous year.
During the year under review, the Company paid '' 5.0 per equity share as an interim dividend for FY2024 i.e. at the rate of 50.0% of face value of '' 10/- each, aggregating to '' 2.46 billion. The Board of Directors of the Company, at their Meeting held on April 17, 2024, have also recommended a final dividend of '' 6.0 per equity share i.e. at the rate of 60.0% of face value of '' 10/- each for FY2024, to the Members of the Company for their approval at the ensuing Annual General Meeting (âAGM").
The dividend pay-out ratio for FY2024 is 28.2% as against 27.0% for FY2023.
In accordance with Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulations"), the Company has adopted the Dividend Distribution Policy, which covers various parameters based on which the Board may recommend or declare dividend. The Dividend Distribution Policy of the Company is hosted on website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/ policies-of-the-company/dividend-distribution-policy.pd,.
The Company has declared dividend based on the solvency margin position and profit available for distribution for FY2024 in accordance with the Dividend Distribution Policy of the Company.
IRDAI requires insurance companies to maintain a minimum solvency of 1.5 times which is calculated in a manner as specified in the Insurance Regulatory and Development Authority of India (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016. The solvency margin position of the Company as at March 31, 2024 is 2.62 times as compared to 2.51 times as at March 31, 2023. The net worth of the Company has increased from Rs. 103.92 billion as at March 31, 2023 to Rs. 119.60 billion as at March 31, 2024.
The Authorised Share Capital of the Company as at March 31, 2024 is '' 5,500,000,000 comprising of 550,000,000 equity shares of face value of '' 10/- each. The issued, subscribed and paid-up share capital of the Company as at March 31, 2024 is '' 4,926,852,950 comprising of 492,685,295 equity shares of face value of '' 10/- each.
During the year under review, the Company has allotted 1,560,192 equity shares pursuant to exercise of Stock Options by the eligible options holders under the ICICI Lombard-Employees Stock Option Scheme-2005 (âESOS"). The equity shares allotted under ESOS ranks pari-passu with existing equity shares of the Company.
The Company has not issued any equity shares with differential voting rights or sweat equity shares during the year under review.
As an integral part of the Scheme of Arrangement between the Company and Bharti AXA General Insurance Company Limited (âBharti AXA"), 10.5%, 350 unsecured, subordinated, fully paid-up, listed, redeemable and non-convertible debentures, each having a face value of '' 1,000,000 issued by Bharti AXA on April 30, 2019 (deemed date of allotment) (âthe Debentures") were transferred in the name of the Company, on the same terms and conditions, upon the Scheme becoming effective i.e. from September 8, 2021.
The aforesaid Debentures were issued with a term of ten (10) years. In terms of the Information Memorandum, the Company had an option to exercise call option at the end of five (5) completed years from the deemed date of allotment and at the end of every year thereafter before the redemption date, subject to the fulfillment of the prescribed terms and conditions.
As on March 31, 2024, the Company had '' 0.35 billion outstanding Debentures comprising of 350 Debentures having a face value of '' 1,000,000 each, listed on the wholesale debt market segment of the National Stock Exchange of India Limited. During the year under review, the Company has paid an annual interest to the Debenture Holder, within the prescribed timelines.
The Company had decided to exercise call option for redemption of the Debentures as per the terms and conditions. The Company had accordingly sent Notice to the Debenture Holder and Debenture Trustee in this regard on April 1, 2024. The Debentures would be redeemed on April 30, 2024 (being call option date), prior to maturity, along with final Interest due thereon. Further to redemption of the Debentures, in full, along with interest due thereon, the Company will have no outstanding borrowings.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there has been no change in the nature of the business of the Company.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The provisions of Section 186(4) of the Companies Act, 2013 (âthe Act"), requires disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided including the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security, are not applicable to the Company, being an insurance company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and future operations of the Company.
BOARD OF DIRECTORS
The Company believes that a strong, independent and diverse Board leadership ensures the deployment of effective corporate governance. The significance of Board diversity is recognised by various statutes/regulations i.e. the Insurance Act, 1938, the Guidelines for Corporate Governance for insurers in India issued by IRDAI (âIRDAI CG Guidelines"), IRDAI (Corporate Governance for Insurers) Regulations, 2024 (âIRDAI CG Regulations"), the Act and relevant rules made thereunder, Listing Regulations and accordingly, composition of the Board of the Company is based on the prescribed regulatory requirements.
The Board of the Company is duly constituted with an optimum balance between Executive and Non-executive Directors for an effective functioning of the Board.
As on March 31, 2024, the Board of the Company consists of total eleven (11) Directors, out of which seven (7) are Non-executive, Independent Directors, two (2) are Non-executive, Non-independent Directors and remaining two (2) are Executive Directors including Managing Director & CEO. The Company''s Board is chaired by a Woman Director, Lalita D. Gupte, Non-executive, Independent Director.
None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(1) or Section 164(2) of the Act. Further, all the Directors of the Company have confirmed that they fulfill the criteria of âfit and proper'' as laid down under IRDAI CG Guidelines and IRDAI CG Regulations.
As per the Insurance Regulatory and Development Authority of India (Remuneration of Non-executive Directors of Insurers)
Guidelines, 2023 dated June 30, 2023 (âthe Remuneration Guidelines") issued by IRDAI, the maximum age limit for Non-executive Director(s) shall be 75 years and after attaining the age of 75 years, no person shall continue on the Board of an insurer.
Lalita D. Gupte, Chairperson, Non-executive, Independent Director of the Company had attained the age of 75 years on October 4, 2023. Pursuant to the Remuneration Guidelines, the Company had sought an extension from IRDAI to continue as Chairperson of the Company for one more year with effect from the applicability of the Remuneration Guidelines. IRDAI vide its letter dated August 7, 2023, granted extension of time till June 29, 2024 to continue Lalita D. Gupte as Chairperson of the Board and Non-executive, Independent Director of the Company.
The Board of Directors of the Company, at their Meeting held on April 17, 2024, basis recommendation of the Board Nomination and Remuneration Committee, have approved the appointment of Rakesh Jha (DIN: 00042075), Non-executive, Non-independent Director as Chairperson of the Company with effect from June 30, 2024 or date of IRDAI approval, whichever is later.
Changes in composition of the Board of Directors of the Company
|
Name of Director |
Change |
With effect from |
|
Bhargav Dasgupta* (DIN: 00047728) |
Ceased to be Managing Director & CEO |
Closure of business hours on November 30, 2023 |
|
Sanjeev MantriA (DIN: 07192264) |
Appointed as Managing Director & CEO |
December 1, 2023 |
|
Antony Jacob# (DIN: 00210724) |
Appointed as Non-executive, Independent Director |
January 1, 2024 |
|
Preeti Reddy@ (DIN: 07248280) |
Appointed as an Additional, Non-executive, Independent Director |
April 17, 2024 |
|
Ashvin Parekh$ (DIN: 06559989) |
Ceased to be Non-executive, Independent Director |
Closure of business hours on April 17, 2024 |
Notes: * Bhargav Dasgupta (DIN: 00047728), vide letter dated September 21, 2023, tendered his resignation, to pursue a career opportunity outside the country.
A Sanjeev Mantri (DIN: 07192264), basis recommendation of the Board Nomination and Remuneration Committee, was appointed as Managing Director & CEO (âMD & CEO") of the Company (former Executive Director) by the Board of Directors at their meeting held on September 24, 2023 for a period of five (5) consecutive years upto November 30, 2028 or date of superannuation, whichever is earlier, subject to approval of the IRDAI and Members of the Company. The Company has received approval from IRDAI for his appointment as MD & CEO of the Company on October 6, 2023. Further, Members of the Company by Postal Ballot approved his appointment as MD & CEO of the Company with effect from December 1, 2023 by way of an Ordinary Resolution, on Friday, November 10, 2023.
# Antony Jacob (DIN: 00210724), basis recommendation of the Board Nomination and Remuneration Committee, was appointed as an Additional Director in the category of Non-executive, Independent Director of the Company by the Board of Directors at their meeting held on December 26, 2023 for a period of five (5) consecutive years upto December 31, 2028. Subsequently, Members of the Company by Postal Ballot approved his appointment as Non-executive, Independent Director with effect from January 1, 2024 by way of a Special Resolution, on Thursday, February 22, 2024.
@ Preeti Reddy (DIN: 07248280), basis recommendation of the Board Nomination and Remuneration Committee, was appointed as an Additional Director in the category of Non-executive, Independent Director of the Company by the Board of Directors at their meeting held on April 17, 2024, for a period of five (5) consecutive years upto April 16, 2029, subject to approval of Members of the Company. The resolution seeking approval of the Members of the Company for her appointment forms part of the Twenty-Fourth AGM Notice.
$ Ashvin Parekh (DIN: 06559989), ceased to be Non-executive, Independent Director of the Company, with effect from the close of business hours on April 17, 2024, upon completion of his second term as an Independent Director of the Company.
In the opinion of the Board, Non-executive, Independent Director(s) appointed during the year possess high standards of integrity, expertise, experience and proficiency.
Meetings of the Board and its Committees, attendance and constitution of various Committees
The Board has constituted various committees, viz. Board Nomination & Remuneration Committee, Audit Committee, Investment Committee, Risk Management Committee, Policyholder Protection Committee, Corporate Social Responsibility & Sustainability Committee, Stakeholders Relationship Committee and Strategy Committee.
During the year under review, the Company has also constituted Information Technology Strategy Committee for oversight on the core Information Technology & Information Security.
During the year under review, ten (10) Meetings of the Board of Directors of the Company were held.
The details of the Meetings of the Board and its Committees held during FY2024, attendance of Directors/ Committee
Members thereat, constitution of the Board and various Committees of the Board including name, qualification, field of specialization/core skills/expertise/competence status of Directorship held, etc. and their terms of reference, are provided in the Corporate Governance Report, forming part of this Report.
Common Directorships
Section 48A of the Insurance Act, 1938 prescribes conditions for appointment/continuation of appointment of common directors between insurance companies and insurance agent, intermediary or insurance intermediaries. As on March 31, 2024, the Company has four (4) Directors, falling within the criteria of common Director viz. Uday Chitale, Ashvin Parekh, Sandeep Batra and Rakesh Jha.
The Company is in compliance with the applicable provision of the Insurance Act, 1938, other circulars and notifications/ clarification issued by IRDAI in connection with the appointment/ continuation of Common Director.
Declaration of Independence
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) & (7) of the Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) and Regulation 25 of the Listing Regulations, as amended from time to time. All the Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the applicable provisions of the Employees Code of Conduct of the Company. There has been no change in the circumstances affecting their status as Independent Directors of the Company.
Retirement by Rotation
In terms of provisions of Section 152 of the Act, Alok Kumar Agarwal, Executive Director (DIN: 03434304) would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Alok Kumar Agarwal has offered himself for re-appointment. A resolution seeking Members approval for appointment of a Director in place of Mr. Alok Kumar Agarwal (DIN: 03434304), who retires by rotation and, being eligible, offers himself for re-appointment, is forming part of the Twenty-Fourth AGM Notice. Alok Kumar Agarwal is not disqualified from being appointed as a Director under Section 164 of the Act.
The profile and particulars of experience, attributes and skills of Alok Kumar Agarwal along with details as required have been disclosed in the annexure to the Twenty-Fourth AGM Notice.
PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES, CHAIRPERSON AND INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Act, Listing Regulations, IRDAI CG Guidelines, IRDAI CG Regulations and in accordance with Guidance Note on Board Evaluation issued by Securities and Exchange Board of India (âSEBI") on January 5, 2017, an annual performance evaluation had been carried out of the Board as a whole, its Committee(s), individual Director(s) both Executive and Non-executive including Independent Director(s) and Chairperson of the Board. The manner in which the evaluation has been carried out and impact of evaluation, is explained in the Corporate Governance Report forming part of this Report.
CRITERIA FOR APPOINTMENT OF DIRECTOR, KEY MANAGERIAL PERSONNEL AND OFFICIALS WHO MAY BE APPOINTED IN SENIOR MANAGEMENT
The Company has a Board approved criteria for appointment of a Director, Key Managerial Personnel and officials who may be appointed in Senior Management (âthe Criteria"). It includes the criteria for determining qualifications, positive attributes and independence of a Director, identification of persons who are qualified to become Directors, Key Managerial Personnel and who may be appointed in the Senior Management in accordance with the criteria laid down. The Criteria is hosted on the website of the Company and can be viewed at https:// www. ici cilombard.com/docs/default-source/policies-of-the-companv/cri teri a-for-appo intment-of-a-di rector-kev-manaaeri al-personnel-and-offi ci als-who-mav-be-appointed-in-senior-manaaement.pd].
KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (âKMP") of the Company as on March 31, 2024, are as under:
1. Sanjeev Mantri, Managing Director & CEOA
2. Alok Kumar Agarwal, Executive Director
3. Gopal Balachandran, Chief Financial Officer & Chief Risk Officer
4. Vikas Mehra, Company Secretary
In accordance with the IRDAI CG Guidelines and IRDAI CG Regulations, the Company has following Key Management Persons in addition to aforesaid KMPs:
1. Girish Nayak, Chief-Technology & Heath Underwriting & Claims
2. Jerry Jose, Chief-Human Resources
3. Vinod Mahajan, Chief Investment Officer
4. Prasun Sarkar, Appointed Actuary and Chief Actuarial Officer
5. Amit Kushwaha, Head-Legal & Chief Compliance Officer
6. Sandeep Goradia, Chief-Corporate Solutions Group
7. Gaurav Arora, Chief - Underwriting & Claims, Property & Casualty
8. Vasundhara Bhonsle, Chief-Customer Support and Operations
9. Anand Singhi, Chief - Retail & Government*
A The Board of Directors at their Meeting held on September 24,
2023, basis the recommendation of the Board Nomination and Remuneration Committee, approved the appointment of Sanjeev Mantri as Managing Director & CEO of the Company, with effect from December 1, 2023.
% The Board of Directors at their Meeting held on February 24, 2024, basis recommendation of the Board Nomination and Remuneration Committee approved the appointment of Anand Singhi, Chief- Retail and Government as a Key Management Person in terms of IRDAI CG Guidelines, with effect from February 24, 2024.
During the year under review, Bhargav Dasgupta ceased to be KMP pursuant to his resignation. Further, Sanjay Datta, Sheena Kapoor, Birendra Mohanty, Bipin Mundada, Nitin Khanna, Vivek Srivastav and Amar Joshi ceased to be Key Management Persons pursuant to their exit from the Company/changes in organization structure.
In accordance with IRDAI CG Regulations, Gopal Balachandran holding two Key Management Person positions, namely, Chief Financial Officer and Chief Risk Officer, has ceased to be Chief Risk Officer of the Company, with effect from the close of business hours on April 17, 2024 and would continue to be Chief Financial Officer of the Company.
The Board of Directors at their Meeting held on April 17,
2024, basis recommendation of the Board Nomination & Remuneration Committee, approved appointment of Steve Dsouza as Chief Risk Officer and a Key Management Person of the Company in terms of IRDAI CG Guidelines and IRDAI CG Regulations, with effect from April 18, 2024. The appointment of Steve Dsouza as Chief Risk Officer was also reviewed by the Risk Management Committee of the Company.
POLICY ON APPOINTMENT AND COMPENSATION OF EMPLOYEES AND FRAMEWORK FOR REMUNERATION TO NON-EXECUTIVE DIRECTORS
The Company has a Board approved Policy on appointment and compensation of employees and framework for remuneration to Non-executive Directors (âthe Policy"). The Policy lay down guidelines on fixing compensation of employees including
KMPs, Senior Management Personnel, Whole-time Directors and Non-executive Directors of the Company. The philosophy of the Company on compensation and benefits is based on the ethos of meritocracy and fairness. While the Company will strive to ensure internal and external equity that are consistent with emerging market trends, its business model and affordability based on business performance sets the overarching boundary conditions. The Policy is hosted on the website of the Company and can be viewed at https://www.icicilombard. com/docs/default-source/policies-of-the-companv/policv-on-appointment-and-compensation-of-employee s-and-framework-for-remuneration-to-non-executive-directors.pdi.
During the year under review, the Company has not accepted any deposits under Section 73 of the Act.
AUDITORS Statutory Auditors
Pursuant to the provisions of Section 139 of Act, every company is required to appoint a Statutory Auditor for audit of financial statements of the Company. Further, IRDAI CG Guidelines and IRDAI CG Regulations requires every insurance company to appoint minimum two auditors as Joint Statutory Auditors.
PKF Sridhar & Santhanam LLP, Chartered Accountants (Firm Registration No. 003990S/S200018) and Walker Chandiok & Co. LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) are the Joint Statutory Auditors of the Company.
The Members of the Company in the Twenty-First AGM held on August 10, 2021, had approved re-appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants as one of the Joint Statutory Auditors of the Company for a second term of five (5) consecutive years till the conclusion of Twenty-Sixth AGM. Further, the Members of the Company in the Twenty-Third-AGM held on July 6, 2023, had approved appointment of Walker Chandiok & Co. LLP, Chartered Accountants for a first term of five (5) consecutive years, to hold office from the conclusion of Twenty-Third AGM till the conclusion of the Twenty-Eighth AGM of the Company.
Pursuant to the IRDAI CG Guidelines and the applicable provisions of the Act, the Board of Directors of the Company, based on the recommendation of the Audit Committee had approved payment of '' 15.5 million as remuneration to each of the Joint Statutory Auditors of the Company for statutory audit of financial statements and financial results of the Company for FY2025 including fee for audit of financial statements of International Financial Services Centre Insurance Office (âMOâ),
fees for reviewing the internal financial controls of the Company, issuing certificate on compliance of conditions of Corporate Governance prescribed under the Listing Regulations and other matters as prescribed under the Auditing Standards.
Also, the resolution seeking Members approval for fixing audit remuneration of PKF Sridhar & Santhanam LLP, Chartered Accountants and Walker Chandiok & Co. LLP, Chartered Accountants, for FY2025 is forming part of Twenty-Fourth AGM Notice.
Statutory Audit remuneration and other fees
The details of remuneration and other fees of PKF Sridhar & Santhanam LLP, Chartered Accountants and Walker Chandiok & Co. LLP, Chartered Accountants, Joint Statutory Auditors of the Company for FY2024 are provided below:
|
( '' in million) |
|
|
Particulars |
Amount |
|
Statutory Audit remuneration including Certificate on compliance of conditions of Corporate Governance as prescribed under the Listing Regulations and internal control over financial reporting |
28.20 |
|
Tax Audit Fees |
1.80 |
|
Others |
8.12* |
|
Total |
38.12 |
*Includes Certification fees and fees for audit of the Special Purpose Interim Financial Statements for the eleven-months period ended February 29, 2024.
Statutory Auditorâs Report
The Joint Statutory Auditors'' Report for FY2024 on the financial statements of the Company forms part of this Integrated Annual Report. The Joint Statutory Auditors have expressed their unmodified opinion on the financial statements and their reports do not contain any qualifications, reservations, adverse remarks, or disclaimers.
Secretarial Auditor
Pursuant to provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Dholakia & Associates LLP, Practicing Company Secretaries (Firm Registration No. P2014MH034700) for conducting the secretarial audit of the Company for FY2024. The Secretarial Audit Report forms part of this report as Annexure A. There are no qualifications, reservation or adverse remark or disclaimer made by the Secretarial Auditor in their report.
The Annual Secretarial Compliance Report for FY2024 will be submitted to the stock exchanges within the prescribed time
and will also be available on the website of the Company at https://www.icicilombard.com/investor-relation. .
The Board of Directors at their Meeting held on April 17, 2024, basis recommendation of the Audit Committee, has approved appointment of M/s. Parikh & Associates, Practicing Company Secretaries (Firm Registration No. P1988MH009800), as the Secretarial Auditor of the Company for conducting Secretarial Audit for FY2025. The Company has received consent from M/s. Parikh & Associates along with their eligibility to act as the Secretarial Auditor of the Company for FY2025.
Reporting of Frauds by Auditors
The Company has adequate mechanism and internal checks to detect frauds due to its nature and size of the business. The Company reports such detected frauds after investigation to the Board Committee(s) along with remedial actions taken, if any. During the year under review, there are no reportable frauds committed in the Company by its officers or employees which are identified by the Joint Statutory Auditors or Secretarial Auditor other than the fraud reportable to the Central Government under section 143(12) of the Act.
Maintenance of Cost Records
Being an Insurance Company, the Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
COMPLIANCE TO SECRETARIAL STANDARDS
During the year under review, the Company has been in compliance with the applicable Secretarial Standards i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, with respect to Meetings of Board and its Committees and General Meetings respectively. The Company has devised necessary systems to ensure compliance with the applicable provisions of Secretarial Standards.
The statement containing particulars of employees as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure B.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Pursuant to the provisions of the Act, the Annual Report including Financial Statements are being sent to the Members of the Company excluding the aforesaid statement. Further in terms of Section
136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary of the Company at investors@icicilombard.com.
The Company undertakes various transactions with related parties in the ordinary course of business pursuant to the Policy on Related Party Transactions and Framework on Related Party Transactions approved by the Board of Directors of the Company.
All Related Party Transactions that were entered by the Company, during the year under review, were at an arm''s length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations.
The Audit Committee has granted omnibus approval to enter into different types of Related Party Transactions which are in ordinary course of business, repetitive in nature and in the interest of the Company. Further, all Related Party Transactions entered by the Company were placed before the Audit Committee on a quarterly basis for which the Company had taken omnibus approval from the Audit Committee.
During the year under review, the Company has amended its Policy on Related Party Transactions to align with the existing clauses in the Policy and Framework on Related Party Transactions in order to recalibrate with Listing Regulations and IRDAI Regulations, as amended from time to time. The Policy on Related Party Transactions is hosted on the website of the Company and can be viewed at https://www.icicilombard. com/docs/default-source/policies-of-the-company/policy-on-related-party-transactions.pd.
Particulars of Contracts or Arrangements with Related Parties
Pursuant to the provisions of Regulation 23 of the Listing Regulations, prior approval of Members is required to be sought by means of an ordinary resolution for related party transactions, which are material, even if such transactions are in the ordinary course of the business of the Company and at an arm''s length basis. A transaction with a related party is considered material if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds '' 1,000 crore or 10% of the annual consolidated turnover as per the last audited financial statements of the listed entity, whichever is lower.
The Company had taken approval from the Members in the Twenty-Second AGM of the Company held on August 5, 2022,
for material Related Party Transactions that the Company may enter in FY2024 and which may exceed the threshold of âmaterial related party transactions" prescribed under the Listing Regulations. All the material Related Party Transactions entered by the Company in FY2024 were within the limit as approved by the Members, in the ordinary course of business and at an arm''s length basis.
During the year under review, the Company had not entered into any contract / arrangement / transaction with related parties which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.
The Company had further taken approval from the Members in the Twenty-Third AGM of the Company held on July 6, 2023, for material Related Party Transactions that the Company may enter in FY2025 and which may exceed the threshold of âmaterial related party transactions" prescribed under the Listing Regulations. All the Related Party Transactions as approved by the Members will be executed at an arm''s length basis and in the ordinary course of business of the Company.
The resolution seeking approval of Members of the Company for material Related Party Transactions that the Company may enter in FY2026 and which may exceed the threshold of âmaterial related party transactions" prescribed under the Listing Regulations forms part of the Twenty-Fourth AGM Notice.
As required under Regulation 53(f) read with Para A of Schedule V of the Listing Regulations and Accounting Standard (AS) 18 on Related Party Disclosures, the details of Related Party Transactions entered into by the Company during FY2024 are covered in the Notes to Accounts forming part of the Financial Statements. The Joint Statutory Auditors of the Company have issued an unmodified opinion on the Financial Statements for FY2024 which includes therein Related Party Transactions and related disclosures thereon.
ANNUAL RETURN
Pursuant to Section 134(3)(a) of the Act, the Annual Return of the Company prepared as per Section 92(3) of the Act for the financial year ended March 31, 2024, is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/ shareholding-pattern/annual-return-form-mgt-7-fyP0P4.pdf. In terms of Rules 11 and 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return shall be filed with the Registrar of Companies, within the prescribed timelines.
RISK MANAGEMENT FRAMEWORK
The Company recognizes that risk is an integral element of insurance business and with a view to mitigate risks, the Company has in place Board approved Risk Management Framework.
A strong risk culture is ensured through embedding the principles of Risk Management Framework in strategy and operations. Accordingly, the Company has developed a risk universe, broadly categorised into six distinct groups, namely, Credit Risk, Market Risk, Underwriting Risk, Strategic Risk, Operational Risk and Environmental, Social and Governance Risk.
As part of the Enterprise Risk Management exercise, critical risks along with the detailed mitigation plans are presented to the Risk Management Committee of the Board on a quarterly basis. The risk mitigation plan/s is/are monitored regularly by the Company to ensure timely and appropriate execution. The senior management of the Company is responsible for periodic review of the risk management process to ensure that the process initiatives are aligned to the desired objectives. The Chief Risk Officer of the Company is responsible for the implementation and monitoring of the Risk Management Framework.
Further insights on the Risk Management Framework have been included as part of the Corporate Governance Report forming part of this Report.
DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment and is committed to provide a safe environment for all, which is achieved through well-established robust mechanism for redressal of complaints reported under it.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, provides protection against sexual harassment of women at workplace and lays down the guidelines and timelines for the prevention and redressal of complaints pertaining to sexual harassment. Accordingly, the Company has in place the guidelines on prevention of Sexual Harassment at Workplace and a formal process for dealing with complaints of sexual harassment, in compliance with aforesaid Act. The Company ensures that all such complaints are resolved within defined timelines.
|
Details of complaints are as follows: |
||
|
Sr. No. |
Particulars |
No. |
|
a. |
Number of complaints pending as on April 1, 2023 |
2 |
|
b. |
Number of complaints filed during the financial year |
12 |
|
c. |
Number of complaints disposed of during the financial year |
12 |
|
d. |
Number of complaints pending as on March 31, 2024 |
2* |
*The two complaints pending as on March 31, 2024 were reported in the month of December 2023 and February 2024, respectively. The complaint received in the month of December 2023 was closed as on the date of this report and the necessary action was also taken. The investigation of other complaint received in the month of February 2024 has also been completed and the necessary action is underway, as on the date of this report.
To build awareness in this area, the Company has been conducting induction/refresher programmes on a continuous basis. During the year under review, the Company has organised online training sessions on the topics of Gender Sensitisation and Prevention of Sexual Harassment (âPOSH") for its employees.
Internal Committee for redressal of complaints:
The Company has constituted a Committee for redressal and timely management of sexual harassment complaints. The Internal Committee has minimum 50% women representatives. The Internal Committee has a senior woman leader as the presiding officer of the Committee and one external member who is a subject matter expert in this regard.
The Company is in compliance with the provisions relating to the constitution of an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
RURAL AND SOCIAL RESPONSIBILITY
As per the Insurance Regulatory and Development Authority of India (Obligations of Insurers to Rural and Social Sectors), Regulations, 2015, the Company has issued 12,131,203 policies in rural areas and covered 5,978,549 lives falling within the norms of social responsibility. The Company has complied with the obligations laid down by IRDAI.
As per Section 124 and 125 of the Act read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, any dividends that remain unclaimed/
unpaid for a period of seven years must be transferred to the Investor Education and Protection Fund (âIEPF"). During the year under review, the Company had transferred '' 350 and '' 720 to IEPF being unclaimed / unpaid dividend for the financial year 2017, in August 2023 and November 2023, respectively. The details of unclaimed dividends previously declared and paid by the Company along with the due date of transfer to IEPF are covered in the Corporate Governance Report forming part of this Report.
CORPORATE SOCIAL RESPONSIBILITY & SUSTANABILITY
Corporate Social Responsibility (âCSR") & Sustainability has been a long-standing commitment of the Company and forms an integral part of its activities. The Company''s CSR & Sustainability activities primarily focuses on areas like health care, road safety, ensuring environment sustainability, education, skill development and sustainable livelihoods. The CSR & Sustainability activities are largely implemented either directly or through ICICI Foundation for Inclusive Growth. The Company has duly constituted the Corporate Social Responsibility & Sustainability Committee (âCSR & Sustainability Committee") in accordance with the provisions of the Act, IRDAI CG Regulations and IRDAI CG Guidelines. The Company has formulated the Corporate Social Responsibility Policy which sets out the framework guiding the Company''s CSR & Sustainability activities. The CSR Policy also sets out the rules that need to be adhered to while taking up and implementing CSR & Sustainability activities. The CSR Policy is hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/ poiicies-of-the-companv/csr-poiicv.pdf.
The Board of Directors of the Company at their Meeting held on July 18, 2023, based on the recommendation of CSR & Sustainability Committee, had approved the CSR & Sustainability plan for FY2024 of '' 365.9 million i.e. 2% of the average net profits of the Company made during three immediately preceding financial years. The Company has chosen specific areas to focus as part of its CSR & Sustainability roadmap. These include health care, road safety, education, environment sustainability and skill development & sustainable livelihoods.
Further, the Board of Directors of the Company, basis the recommendation of CSR & Sustainability Committee had approved modification to the plan for Corporate Social Responsibility and Sustainability Activities for FY2024, through a circular resolution passed on March 28, 2024.
The Company''s actual CSR & Sustainability expenditure was '' 370.4 million for FY2024. There are no unspent funds required to be carried forward to succeeding years.
In accordance with the provisions of the Act, the Chief Financial Officer of the Company has certified that the CSR & Sustainability spent of the Company for FY2024 were utilised for the purpose and in the manner as approved by the Board of Directors of the Company from time to time. The certificate in this regard was also placed before the Board of Directors at their Meeting held on April 17, 2024.
The Annual Report on CSR & Sustainability activities of the Company for FY2024 forms part of this Report as Annexure C. The Company has carried out Impact assessment of its CSR projects i.e. Ride to Safety, Caring Hands, Niranjali, Solar Panel installations and Healthy Villages, in pursuance of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended. The executive summary of Impact Assessment Reports are covered in the Annual Report on CSR & Sustainability Activities.
During the year under review, the Company has maintained credit rating of â[ICRA] AAA(Stable)â assigned by ICRA Limited and âCRISIL AAA/Stableâ assigned by CRISIL Ratings Limited on '' 0.35 billion subordinate debentures of the Company. The ICRA Limited has reaffirmed Issuer Rating of â[ICRA] AAA(Stable)â to the Company.
Further, AM Best has affirmed the Financial Strength Rating of B (Good) and a Long-Term Issuer Credit Rating of âbbb â (Good) to the Company. Concurrently, AM Best has assigned the India National Scale Rating of aaa.IN (Exceptional) to the Company. The outlook assigned to these Credit Ratings (âratings") is stable. The ratings reflect the Company''s balance sheet strength, which AM Best assesses as very strong, as well as strong operating performance, neutral business profile and appropriate enterprise risk management.
BUSINESS RESPONSIBILITY AND SUSTAINBILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Company is required to publish Business Responsibility and Sustainability Report (âBRSRâ) as part of its Integrated Annual Report and also undertake reasonable assurance on disclosure related to BRSR Core .
The BRSR maps the sustainability disclosure of the Company against the nine principles of the âNational Guidelines on Responsible Business Conduct'' issued by the Ministry of Corporate Affairs, Government of India. The BRSR Core is a sub-set of the BRSR, consisting of a set of Key Performance Indicators (KPIs) under 9 ESG attributes.
Accordingly, the BRSR and BRSR Core related disclosures of the Company for FY2024 are hosted on the website of the Company and can be viewed on https://www.icicilombard.com/docs/default-source/esa/ icici-lombard-business-responsibilitv-and-sustainabilitv-reportina-fv2024.pdf.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) REPORT
The Company considers ESG principles integral to its purpose and actions to benefit the customers, investors, employees, shareholders, communities, and all other stakeholders. Through these efforts, the Company strives to create long-term value for all stakeholders.
The CSR & Sustainability Committee is actively involved in overseeing & monitoring ESG initiatives. The Risk Management Committee focuses on the management of ESG risks. At management level, ESG Steering Committee ensures the overall integration of business activities with ESG objectives set by the Board.
The focus of the Company from an ESG standpoint is towards identifying material ESG issues and take initiatives to address these issues. Some of the focus areas of the Company promoting health and wellbeing, innovation, Digitisation, Diversity and Inclusion, Responsible Investments amongst others.
During the year under review, the Company has adopted Environmental, Social and Governance Policy in supersession of existing Policy on Environment Management. Further the Company also rolled out Supplier Code of Conduct in line with the ESG principles.
The ESG Report highlighting organisation-wide ESG initiatives and disclosures made by the Company for FY2024 are hosted on the website of the Company and can be viewed on https://www.icicilombard.com/docs/default-source/esa/ icici-lombard-environmental-social-and-aovernance-fv2024. pdf.
The Company has voluntarily adopted the principles and has shifted its corporate reporting journey to Integrated Report as per the International Integrated Reporting Council (âIIRCâ) framework. The Integrated Report encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company''s long term perspective. The Company''s Integrated Report is based on six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social & relationship capital and natural capital.
The Company continues to publish its sixth Integrated Report which forms part of this Integrated Annual Report.
The Company is committed to achieving excellence in its Investor Relations engagement with both International and Domestic investors. To achieve this goal, the Company continuously adopts emerging best practices in Investor Relations anc strives to build relationship of mutual understanding and trust with investor/analysts.
The Managing Director & CEO, Executive Director, Chiel Financial Officer & Chief Risk Officer and other authorised senior management members participate in structured conference calls and periodic investor/analyst interactions including one-on-one/group meeting, investor conferences, and quarterly earnings calls. The transcripts of the quarterly earnings calls audio recordings, and presentations made are also hosted on the website of the Company and Stock Exchanges where the securities of the Company are listed within the timelines as prescribed under the Listing Regulations.
The Company had also organised an investor/analyst interaction during the year to showcase its Digital initiatives. The focus areas of the above meet included digital ecosystem, digital solutions across the customer lifecycle, holistic risk management solutions and adoption of digital processes across business lines.
The Company ensures that financial and non-financial information is available to all the stakeholders by uploading it on the Company''s website and website of the Stock Exchanges where the securities of the Company are listed. The financial information includes Financial Statements, Press Releases, Investor Presentations, Earnings call transcripts, publication of financial results in the newspapers and Annual Report whereas the non-financial information are included as a part of ESG Report, BRSR and BRSR Core, etc.
EVENTS AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, between the end of the financial year of the Company to which the balance sheet relates and the date of this report.
Mar 31, 2022
APPROPRIATIONS
The profit after tax for the financial year ended March 31, 2022 is '' 12.71 billion. The profit available for appropriation is '' 66.08 billion after taking into account the balance of profit of '' 53.37 billion brought forward from the previous year.
During the year, the Company has paid '' 4 per equity share as an interim dividend for FY2022 aggregating to '' 1.96 billion. The Board of Directors of the Company, at their Meeting held on April 21,2022, had recommended final dividend of '' 5 per equity share i.e. at the rate of 50.0% of face value of '' 10 each for FY2022 to the Members of the Company for their approval.
SCHEME OF ARRANGEMENT
The Board of Directors of the Company at their Meeting held on August 21, 2020 had approved the Scheme of Arrangement among Bharti AXA General Insurance Company Limited ("Bharti AXA") and the Company and their respective shareholders and creditors ("Scheme").
The Scheme was subject to approval of applicable statutory/ regulatory authorities including IRDAI, Competition Commission of India, Stock Exchanges, Securities and Exchange Board of India ("SEBI"), shareholders of the companies involved in the Scheme and Mumbai Bench of Hon''ble National Company Law Tribunal ("NCLT").
ICICI Lombard General Insurance Company Limited
The Board of Directors are pleased to present the Twenty-Second Annual Report on business and operations of ICICI Lombard General Insurance Company Limited ("the Company") along with the Audited Financial Statements for the financial year ended March 31,2022.
The Gross Direct Premium Income ("GDPI") of the non-life insurance industry grew from '' 1,987.15 billion in FY2021 to '' 2,207.72 billion in FY2022, a growth of 11.1%. The market share of private players increased from 49.3% in FY2021 to 49.7% in FY2022 [Source: Insurance Regulatory and Development Authority of India ("IRDAI") and General Insurance ("GI") Council].
The Company continues its journey of growing profitably through robust and prudent underwriting practices, generation of cash flows, through strong retention of premium and judicious investments of the proceeds and focus on high quality customer service. The Company recognises the responsibility to protect individuals and corporates from various risks and contribute towards the larger goal of nation development. Driven by this objective, the Company continuously introduces new products and services which assist in expanding the market and improving processes and systems.
In FY2022, the Company''s GDPI stood at '' 179.77 billion as compared to '' 140.03 billion in FY2021 and excluding crop segment, GDPI of the Company stood at '' 173.11 billion in FY2022 as compared to '' 139.71 billion in FY2021. During the year, the Company has issued 29.3 million policies and settled over 2.3 million claims. The Company has undertaken various initiatives towards building better digital platforms for claim management for Company''s customers which includes Digital surveys through InstaSpect, AI-based and ML-based approval algorithms for health policies and cashless motor claims.
The Company led the private players with a market share of 13.8% (GDPI basis) among private-sector non-life insurers in India including standalone health insurers and overall market share of 8.1% (GDPI basis) among all non-life insurers in India. The Company also attained the highest market share in motor business segment as at March 31, 2022.
During the year, the demerger of non-life insurance business of Bharti AXA General Insurance Company Limited ("Bharti AXA") into the Company was completed pursuant to
the Scheme of Arrangement. Accordingly, the business and financial numbers of the Company for FY2022 are incorporated after giving effect of the Scheme of Arrangement. However, the business and financial numbers of the Company for FY2021 are on standalone basis, hence to that extent are not comparable.
The financial performance of the Company for FY2022 vis-avis FY2021 is summarised in the following table:
|
(? in billion) |
||
|
FY2021 |
FY2022 |
|
|
Gross written premium |
143.20 |
185.62 |
|
Earned premium |
100.14 |
130.32 |
|
Income from Investments |
21.96 |
30.00 |
|
Profit before tax |
19.54 |
16.84 |
|
Profit after tax |
14.73 |
12.71 |
|
Earning Per Share- Basic (?) |
32.41 |
25.91 |
|
Earning Per Share- Diluted (?) |
32.27 |
25.82 |
The Company has received approval from various statutory/ regulatory authorities from time to time in connection with the Scheme. During the year, the Company has received approval sanctioning the Scheme from NCLT vide its order dated May 13, 2021.
Pursuant to the provisions of Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011, as amended from time to time and Clause 10 of the Scheme, the final approval of IRDAI was required for the Scheme after the approval of NCLT and the Scheme shall become effective on such date as may be specified by IRDAI in its final approval.
In this regard, the Company on September 3, 2021, has received a letter from IRDAI granting final approval to the Scheme. Consequent to the approval of IRDAI, the Scheme has become effective from September 8, 2021 with the appointed date being April 1, 2020.
The Company has hosted the information pertaining to Scheme of Arrangement on the website of the Company and can be viewed at https://www.icicilombard.com/investor-relations.
INITIATING INTEGRATION OF NON-LIFE INSURANCE BUSINESS OF BHARTI AXA WITH THE COMPANY
Within the boundaries of the regulatory guidelines, Bharti AXA and the Company started the integration of non-life insurance business of Bharti AXA with the Company. Key integration teams were formed in various areas including business, products, claims, reinsurance, finance, investment, operations, risk, people management and other support functions which involved representations from both the entities. The Company has also engaged post-merger integration (PMI) consultants to oversee the integration processes across all such workstreams.
The integration spanned over multiple stakeholders and following activities were completed on the effective date i.e. September 8, 2021:
1. Transitioned over 16,000 distribution partners with minimal disruption;
2. Onboarded 3,700 hospital network and garages;
3. Smoothly transitioned over 60 newer technology applications including the connectivity, access, security and data aspects;
4. Onboarded over 3,400 employees and staff members, transitioned and rebranded over 140 plus branches of Bharti AXA; and
5. Over 30.5 million communications were sent on the Scheme of Arrangement to customers and partners to ensure uninterrupted business continuity and operational efficiency.
With the efforts put in by core integration teams, on September 8, 2021, non-life insurance business of Bharti AXA demerged into the Company through a smooth transition.
COMPLIANCE TO SECRETARIAL STANDARDS
During the year, the Company has been in compliance with the applicable Secretarial Standards i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, with respect to Meetings of Board and its Committees and General Meetings respectively. The Company has devised necessary systems to ensure compliance with the applicable provisions of Secretarial Standards.
IRDAI requires insurance companies to maintain a minimum solvency of 1.5 times which is calculated in a manner as specified in the Insurance Regulatory and Development Authority of India (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2016. The solvency position of the Company as at March 31,2022 was 2.46 times as compared to 2.90 times as at March 31,2021.
As on March 31, 2022, the net worth of the Company was increased to '' 91.10 billion from '' 74.35 billion as at March 31, 2021.
During the year, the Company has allotted 540,730 equity shares to eligible employees pursuant to ICICI Lombard-Employees Stock Option Scheme-2015 ("ESOS") of the Company. The equity shares allotted under ESOS rank pari-passu with the existing equity shares issued by the Company.
As an integral part of the Scheme, the Authorised Share Capital of the Company was increased to '' 5.50 billion comprising of 550,000,000 equity share of '' 10/- each from '' 4.75 billion comprising of 475,000,000 equity shares of '' 10/- each.
Pursuant to the Scheme becoming effective from September 8, 2021, the Board of Directors of the Company at their Meeting held on September 8, 2021, had inter-alia considered and
approved allotment of 35,756,194 equity shares of face value of '' 10/- each, fully paid up as part of consideration under the Scheme to the existing shareholders of Bharti AXA as on the record date i.e. August 21,2020.
Consequent to the allotment of 35,756,194 equity shares to the shareholders of Bharti AXA, shareholding of ICICI Bank Limited ("ICICI Bank") has reduced from 51.87% to 48.08% of the total issued and paid-up equity share capital of the Company. Accordingly, the Company ceased to be a subsidiary of ICICI Bank with effect from the date of allotment i.e. September 8, 2021. ICICI Bank continues to be the promoter of the Company. As on March 31, 2022, ICICI Bank held 48.04% of the total issued and paid-up equity share capital of the Company.
The issued, subscribed and paid-up equity share capital of the Company as on March 31, 2022 stood at '' 4.91 billion comprising of 490,891,428 equity shares of face value of '' 10 each.
The Company has not issued any equity shares with differential voting rights or sweat equity shares during the year.
NON-CONVERTIBLE DEBENTURES
Pursuant to the approval received from IRDAI vide its letter dated July 7, 2021, the Company had exercised its call option in respect of 4,850, 8.25% unsecured, subordinated, fully paid-up, listed, redeemable and non-convertible Debentures of face value of '' 1,000,000 each and redeemed the debentures at par, aggregating to '' 4.85 billion on July 28, 2021 along with the interest due thereon.
Further as an integral part of the Scheme, the following nonconvertible Debentures issued by Bharti AXA were transferred in the name of the Company on the same terms and conditions upon the Scheme became effective i.e. from September 8, 2021.
1. 350, 10.50%, rated, listed, unsecured, subordinated, fully paid-up, redeemable and non-convertible debentures of face value of '' 1,000,000 each. These non-convertible Debentures are listed on the debt segment of National Stock Exchange of India Limited.
2. 2,200, 8.98%, rated, unlisted, unsecured, subordinated, fully paid-up, redeemable and non-convertible debentures of face value of '' 1,000,000 each.
CHANGE IN THE NATURE OF BUSINESS
During the year, there has been no change in the nature of the business of the Company.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The provisions of Section 186(4) of the Companies Act, 2013 ("the Act"), requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided including the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security, are not applicable to the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and future operations of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Company believes that a strong independent and diverse Board leadership ensures the deployment of effective corporate governance. The significance of Board diversity is recognised by various statutes/regulations i.e. the Insurance Act, 1938 and Regulations framed thereunder, the Act and relevant Rules made thereunder, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and Guidelines for Corporate Governance for insurers in India issued by IRDAI ("IRDAI CG Guidelines") and accordingly, composition of the Board of the Company is based on the prescribed Principles.
The Board of the Company is duly constituted with optimum balance of Executive and Non-executive Directors for an effective functioning of the Board. As on March 31,2022, the Board of the Company consisted of eleven (11) Directors, out of which six (6) are Non-executive, Independent Directors, two (2) are Non-executive, Non-independent Directors and remaining three (3) are Whole-time Directors including Managing Director & Chief Executive Officer. There are two (2) women Directors on the Board of the Company including Lalita D. Gupte, being a Non-executive, Chairperson of the Company.
None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(2)
of the Act. Further, all the Directors of the Company have confirmed that they fulfill the criteria of ''fit and proper'' as laid down under IRDAI CG Guidelines.
All the Independent Directors of the Company have submitted the declaration confirming that they fulfill the criteria of independence as prescribed under the Act and Listing Regulations. There has been no change in circumstances affecting their status as Independent Directors of the Company.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (KMP) of the Company as on March 31, 2022 are as below:
1. Bhargav Dasgupta, Managing Director & CEO
2. Alok Kumar Agarwal, Whole-time Director designated as Executive Director - Wholesale
3. Sanjeev Mantri, Whole-time Director designated as Executive Director - Retail
4. Gopal Balachandran, Chief Financial Officer & Chief Risk Officer
5. Vikas Mehra, Company Secretary
In accordance with IRDAI CG Guidelines, the Company has following Key Management Persons in addition to aforesaid KMPs:
1. Girish Nayak, Chief - Customer Service, Technology and Operations
2. Sanjay Datta, Chief - Underwriting, Reinsurance and Claims
3. Lokanath Kar, Chief - Legal & Compliance Officer*
4. Jerry Jose, Head - Human Resources
5. Vinod Mahajan, Chief - Investment Officer
6. Prasun Sarkar, Appointed Actuary
7. Amit Kushwaha, Chief Compliance Officer#
*Lokanath Kar, Chief - Legal & Compliance Officer of the Company resigned from his position with effect from October 20, 2021 and was relieved from the responsibilities vested upon him with effect from January 31,2022.
#Amit Kushwaha, Vice-President-Legal & Compliance was appointed as Chief Compliance Officer of the Company with effect from February 1,2022 in place of Lokanath Kar.
Meetings of the Board of Directors
During the year, eight (8) Meetings of the Board of Directors of the Company were held including one (1) Board Meeting to discuss business strategies. The maximum gap between two meetings was not more than 120 days. The particulars of the meetings held and attendance of Directors are detailed in the Corporate Governance Report forming part of this Annual Report.
Common Directorships
Section 48A of the Insurance Act, 1938, necessitates an approval of the IRDAI for continuation of common directorships between insurance companies and insurance agent or insurance intermediaries. In view of the same, the Company has following Directors falling within the criteria of common director viz. Uday Chitale, Ashvin Parekh, Vishakha Mulye and Sandeep Batra.
Pursuant to the aforesaid provisions, the Company is in receipt of approval from IRDAI for continuation of directorship of Uday Chitale, Vishakha Mulye and Sandeep Batra on the Board of the Company each having a common directorship with ICICI Bank Limited (being corporate agent of the Company). The Company had also received approval from IRDAI for continuation of directorship of Ashvin Parekh on the Board of the Company having a common directorship with ICICI Securities Limited (corporate agent of the Company).
Independent Directors
As on March 31, 2022, the Board of the Company comprised of eleven (11) Directors out of which six (6) Directors are Independent Directors.
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) & (7) of the Act, the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1 )(b) of the Listing Regulations, as amended from time to time. All the Independent Directors have also confirmed that they have complied with the Code of Independent Directors prescribed in Schedule IV of the Act and Employees Code of Conduct of the Company.
Retirement by rotation
In terms of Section 152 of the Act, Sandeep Batra, Nonexecutive, Non-independent Director (DIN: 03620913) would retire by rotation at the forthcoming Annual General Meeting ("AGM") and being eligible for re-appointment, offers himself for re-appointment. A resolution seeking approval of the Members for his re-appointment is forming part of the AGM Notice.
The Members of the Company at their Eighteenth AGM held on July 12, 2018 had approved re-appointment of Chaturvedi & Co., Chartered Accountants, as one of the Joint Statutory Auditors of the Company, for a second term of five (5) consecutive years till the conclusion of Twenty-Third AGM.
Further, the Members of the Company at their Twenty-First AGM had approved re-appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants as one of the Joint Statutory Auditors for a second term of five (5) consecutive years till conclusion of Twenty-Sixth AGM.
Pursuant to the amendments made to Section 139 of the Act through Companies (Amendment) Act, 2017 effective from May 7, 2018, the requirement of seeking ratification by the Members for the appointment of the Statutory Auditors has been withdrawn. In view of the above, ratification by the Members for continuance of their appointment at this AGM is not being sought.
Chaturvedi & Co., Chartered Accountants and PKF Sridhar & Santhanam LLP have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Joint Statutory Auditors of the Company.
The audit remuneration payable to the Joint Statutory Auditors for FY2022, has been determined by the Board of Directors of the Company at their Meeting held on April 21,2021, based on the recommendation of the Audit Committee and subject to the approval of the Members of the Company. The Members of the Company at their Twenty-First AGM held on August 10, 2021 had approved the payment of audit remuneration to the Joint Statutory Auditors for FY2022.
The demerger and transfer of general insurance business, as envisaged in the Scheme, was made effective from September 8, 2021. From the effective date, the Joint Statutory Auditors were required to conduct statutory audit and other assignments for the combined entity for FY2022. Therefore, the Board of Directors of the Company at their Meeting held on October 21, 2021 had approved revision in the audit remuneration to be paid to the Joint Statutory Auditor for FY2022.
Subsequently, the Members of the Company through Postal Ballot on December 31, 2021 had approved revision in remuneration to be paid to Joint Statutory Auditors of the Company for FY2022. The details of remuneration and other fees paid to the Joint Statutory Auditors is provided below:
Annual performance evaluation of Board and its Committees, Chairperson and Directors:
Pursuant to the provisions of the Act, IRDAI CG Guidelines and Listing Regulations, an annual performance evaluation had been carried out of the Board as a whole, Board constituted Committees, individual Director both Executive and Nonexecutive including Independent Directors and Chairperson of the Board. The Company has in place a Board approved performance evaluation framework which lays down Guidelines for annual performance evaluation of the Board and its Committee(s), Chairperson and individual Directors. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report forming part of this Annual Report.
Criteria for appointment of Director and Key Managerial Personnel
The Company has Board approved Criteria for appointment of a Director, key managerial personnel and officials who may be appointed in senior management ("Criteria for appointment of senior management personnel") and Policy on appointment and compensation of employees and framework for remuneration to Non-executive Directors in compliance with the requirements as prescribed under the Act. The Criteria for appointment of senior management personnel is hosted on the website of the Company and can be viewed at: https://www.icicilombard.com/docs/default-source/policies-of-the-company/criteria-for-appointment-of-a-director-key-managerial-personnel-and-officials-who-may-be-appointed-in-senior-management.pdf
Also, the Policy on appointment and compensation of employees and framework for remuneration to Non-executive Directors is available on the website of the Company and can be viewed at: https://www.icicilombard.com/docs/default-source/policies-of-the-company/policy-on-appointment-and-compensation-of-emp/ovees-and-framework-for-remuneration-to-non-executive-directors.pdf
Deposits
During the year, the Company has not accepted any deposits under Section 73 of the Act.
Statutory Auditors
IRDAI vide its circular dated May 18, 2016, had issued CG Guidelines wherein criteria for appointment of statutory auditors of insurance companies were prescribed which are aligned with the provisions of the Act.
|
('' in million) |
|
|
Particulars |
Amount |
|
Statutory Audit Fees including report on Corporate Governance and Internal control over financial reporting |
29.00 |
|
Tax Audit Fees |
1.60 |
|
Other Certification Fees |
1.67 |
Statutory Audit and other fees paid to Joint Statutory Auditors
Statutory Auditor''s Report
There is no qualification, reservation, adverse remark or disclaimer made by the Joint Statutory Auditors in their report.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Listing Regulations, the Company had appointed Dholakia & Associates LLP, a firm of practicing company secretaries, to conduct the secretarial audit of the Company for FY2022. The Secretarial Audit Report forms part of this report as Annexure A. There are no qualifications, reservation or adverse remark or disclaimer made by the Secretarial Auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
Reporting of Frauds by Auditors
During the year, there were no instances of fraud reported by the Joint Statutory Auditors and Secretarial Auditor under Section 143(12) of the Act to the Audit Committee or the Board of Directors of the Company.
Maintenance of Cost Records
Being an Insurance Company, the Company is not required to maintain cost records as specified by the central government under Section 148(1) of the Act.
Particulars of Employees
The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure B.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Pursuant to the
provisions of the Act, the Annual Report including Financial Statements are being sent to the Members of the Company excluding the aforesaid statement. Further in terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary of the Company at investors@icicilombard.com.
The Company undertakes various transactions with related parties in the ordinary course of business pursuant to the Policy on Related Party Transactions approved by the Board of Directors of the Company.
All Related Party Transactions that were entered into during the year under review were on an arm''s length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations.
All related party transactions were approved by the Audit Committee and are periodically reported. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these transactions cannot be foreseen in advance. Further, all related party transactions entered were placed before the Audit Committee on a quarterly basis for which the Company had taken omnibus approval from the Audit Committee.
The Company has a Board approved Policy on Related Party Transactions, which has been updated as per the amendments introduced in the Listing Regulations and the updated Policy on Related Party Transactions has been hosted on the website of the Company and can be viewed at https://www.icicilombard. com/docs/default-source/policies-of-the-companv/policv-on-related-partv-transactions.pdf
Particulars of Contracts or Arrangements with Related Parties
During the year, all the transactions with related parties were in the ordinary course of business and on arm''s length basis and there were no material contracts or arrangement or transactions entered with related parties. Accordingly, disclosure in Form AOC-2 [pursuant to clause (h) of sub-section (3) of Section 134 of Act and Rule 8(2) of the Companies (Accounts) Rules, 2014] is not applicable.
The above disclosure on material transactions are based on the threshold of ten percent of turnover, as also defined in the Policy on Related Party Transactions of the Company. As per the requirements of the Accounting Standards (AS) - 18 issued
by the Institute of Chartered Accountants of India ("ICAI") on ''Related Party Disclosures'', the details of related party transactions entered into by the Company are covered under Notes forming part of the Financial Statements. Statutory Auditors have issued an unmodified opinion on the Financial Statements which includes therein related party transactions and related disclosures and the same have also been approved by the Audit Committee.
ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return in Form MGT-7 as on March 31, 2022 has been hosted on the website of the Company and can be viewed at: https://www.icicilombard.com/docs/ defau/t-source/shareho/ding-pattern/annual-return-form-no-mgt-072022.pdf
RISK MANAGEMENT FRAMEWORK
A strong risk culture is ensured through embedding the principles of Risk Management Framework in strategy and operations. Accordingly, the Company has developed a risk universe consisting of 29 enterprise-wide risk areas, broadly categorised into six distinct groups, viz. Credit risk, Market Risk, Underwriting Risk, Strategic Risk, Operational Risk and Environmental, Social and Governance Risk.
A statement indicating development and implementation of Risk Management Framework including identification therein of elements of risk, if any, which may pose significant risk to the Company has been given in the Corporate Governance Report forming part of this Annual Report.
UPDATE ON COVID-19
The Company has provided details of Business Continuity Plan and the Crisis Management Strategy of the Company along with assessment of various risks arising out of the COVID-19 pandemic and the corresponding measures to manage the same in the Corporate Governance Report forming part of this Report.
DISCLOSURES AS PER THE SEXUAL HARASSEMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment and is committed to provide a safe environment for all which is achieved through well-established robust mechanism for redressal of complaints reported under it.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides protection against sexual harassment of women at the workplace and lays down the guidelines and timelines for the prevention and redressal of complaints pertaining to sexual harassment. Accordingly, the Company has "Guidelines on Sexual Harassment at Workplace" and a formal process for dealing with complaints of sexual harassment, in compliance with the aforesaid Act. The Company ensures that all such complaints are resolved within defined timelines.
Details of complaints are as follows:
|
Sr. No. |
Particulars |
No. |
|
a. |
Number of complaints pending as on April 1,2021 |
0 |
|
b. |
Number of complaints filed during the financial year |
5 |
|
c. |
Number of complaints disposed of during the financial year |
2 |
|
d. |
Number of complaints pending as on March 31,2022 |
3* |
* Complaints pending as on March 31, 2022 were reported in the month of February and March 2022 and one complaint was closed as on the date of this report whereas two complaints were in the internal Committee''s process as on the date of this Report.
The Company is in compliance with the provisions relating to the constitution of an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Internal Committee for redressal of complaints:
The Company constitutes Internal Committee for redressal and timely management of sexual harassment complaints. The Internal Committee has a minimum of 50% women representatives with a senior woman leader as the presiding officer of the Committee and one external member who is a subject matter expert in this regards.
RURAL AND SOCIAL RESPONSIBILITY
As per Insurance Regulatory and Development Authority of India (Obligations of Insurers to Rural and Social Sectors), Regulations, 2015, the Company has issued 6,211,360 policies in rural areas and covered 5,588,214 lives falling within the norms of social responsibility. The Company has complied with the obligations laid down by IRDAI.
DIVIDEND AND DIVIDEND DISTRIBUTION POLICY
The operations of the Company have resulted in a profit after tax of '' 12.71 billion for the current year as compared to a profit after tax of '' 14.73 billion for the previous year.
Considering the stable capital, solvency and liquidity positions of the Company, the Board of Directors of the Company at their Meeting held on October 21,2021 declared and paid an interim dividend of '' 4 per equity share i.e. at the rate of 40% of face value of '' 10 each for FY2022.
The Board of Directors of the Company, at their Meeting held on April 21, 2022, had recommended a final dividend of '' 5 per equity share for FY2022 to the Members for their approval. The total dividend paid in FY2022 was '' 8 per share (i.e. '' 4 paid as an interim dividend for FY2022 and '' 4 paid as a final dividend for FY2021).
In terms of Regulation 43A of Listing Regulations, the Dividend Distribution Policy of the Company has been hosted on website of the Company and can be viewed at: https:// www.icicilombard.com/docs/default-source/policies-of-the-comDanv/dividend-distribution-Dolicv.Ddf
Pursuant to Section 124 and 125 of the Act read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, there were no amounts eligible to be transferred to the Investor Education and Protection Fund in FY2022. Accordingly, the Company was not required to transfer any unpaid / unclaimed dividend amount to the Investor Education and Protection Fund in FY2022.
CORPORATE SOCIAL RESPONSIBILITY
The Company has duly constituted Corporate Social Responsibility Committee ("the Committee") in accordance with the provisions of the Act and CG Guidelines. The Company has formulated the Corporate Social Responsibility Policy ("the Policy") which sets out the framework guiding the Company''s Corporate Social Responsibility ("CSR") activities. The Policy also sets out the rules that need to be adhered to while taking up and implementing CSR activities. The Policy is hosted on the website of the Company and can be viewed at www.icicilombard.com.
During the year, the terms of reference of the Committee were suitably amended to ensure that the Committee oversee and monitors Sustainability activities including Environment,
Social & Governance ("ESG") and Business Responsibility and Sustainability initiatives undertaken by the Company, disclosures related to the above initiatives, review performance thereon and advice on related matters. In order to give effect to this enhanced scope, the nomenclature of the Committee was also changed to Corporate Social Responsibility and Sustainability Committee. The Corporate Social Responsibility and Sustainability Committee comprised of four (4) Members with majority being Non-executive, Independent Directors of the Company.
During the year, the Company was required to contribute CSR expenditure of '' 339.0 million i.e. 2% of the Average Net Profits of the Company made during three immediately preceding financial years. The total amount spent for the Financial Year was '' 342.5 million wherein the actual CSR expenditure for FY2022 was '' 312.8 million and '' 29.7 million was transferred to unspent CSR bank account.
Owing to the exceptional situation in the nation on account of Covid-19 pandemic, the utilisation of the funds earmarked for the ongoing project of ICICI Foundation of Skill Development Programme has been lower than budgeted. Further, in accordance with the provisions of Section 135 of the Act and Rules made thereunder, '' 29.7 million pertaining to ongoing project of ICICI Foundation of Skill Development Programme was transferred to the Unspent CSR bank account.
The Annual Report on CSR activities of the Company on FY2022 along with the summary of impact assessment report is given in Annexure C to this Report.
During the year, the Company has maintained credit rating of "[ICRA] AAA(Stable)" by ICRA Limited and "CRISIL AAA/Stable" by Crisil Ratings Limited on '' 4.85 billion non-convertible debentures issued by the Company. The ICRA Limited has assigned the long-term Issuer Rating of "[ICRA] AAA" to the Company.
Pursuant to the exercise of call option by the Company on '' 4.85 billion non-convertible debentures the credit rating of "[ICRA]AAA(Stable)" assigned by ICRA Limited and "[CRISIL AAA/(Stable)]" assigned by Crisil Ratings Limited to the Company was withdrawn.
Further, ICRA Limited and Crisil Ratings Limited has assigned credit rating of [ICRA]AAA(stable) and [CRISIL AAA/(Stable)] respectively on '' 2.55 billion subordinated debentures transferred to the Company from Bharti AXA on the existing terms and conditions, as an integral part of the Scheme effective from September 8, 2021.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Company is required to publish Business Responsibility Report (BRR) as part of its Annual Report. Further SEBI, vide its Circular dated May 10, 2021, has mandated top 1000 listed companies (by market capitalisation) to adopt Business Responsibility and Sustainability Report ("BRSR") in place of the existing BRR. The disclosure under the BRSR format is voluntary for FY2022 and shall be mandatory from FY2023 onwards. The Company has adopted the BRSR in FY2022 on voluntary basis to promote company-wide sustainability and remain committed to enhance reporting and disclosures in the coming years. Accordingly, the BRSR describing various initiatives taken by the Company has been hosted on the website of the Company and can be viewed at https://www. icicilombard.com/docs/default-source/esa/icici-lombard-business-responsibilitv-and-sustainabilitv-reportina-fv2022. pdf
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
The Company''s approach towards Environmental, Social and Governance ("ESG") is underpinned by a strong focus on fulfilling promises responsibly and sustainably so as to benefit the society, employees, shareholders, communities, and all other stakeholders. The Company is revisiting every facet of the organisation to put in place processes, systems and teams to measure, manage and improve across ESG parameters. Accordingly, the Company has published its ESG Report highlighting efforts made by the Company to build a sustainable business model comprehensively. The ESG Report of the Company has also been hosted on the website of the Company and can be viewed at https://www.icicilombard. com/docs/default-source/esa/esg-reDort-2022.Ddf
The SEBI vide its Circular dated February 6, 2017 had recommended the top 500 listed entities to voluntarily adopt Integrated Report as per principles prescribed by the International Integrated Reporting Council.
The Company has voluntarily adopted the principles and has prepared its fourth Integrated Report for FY2022 which forms part of this Annual Report.
The Company continuously strives for excellence in its Investor Relations engagement with International and Domestic investors. It believes in adopting the emerging best practices in Investor Relations and building a relationship of mutual understanding with investor/analysts.
The Managing Director & CEO, Executive Directors, Chief Financial Officer & Chief Risk Officer and other Senior Management members participate in structured conference calls and periodic investor/analyst interactions including one-on-one meeting, investor conferences and quarterly earning calls. During the year, the Company conducted 186 meetings with Indian and overseas investors and analysts (excluding quarterly earnings calls).
The Company ensures that financial information including Financial Statements, Press Releases, Investor Presentations, Earning call transcripts and Annual Report, etc., is available to all the stakeholders. Accordingly, the Company uploads all the financial information on the website of the Company i.e. www.icicilombard.com.
EVENTS AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, between the end of the financial year of the Company to which the balance sheet relates and the date of this report.
Mar 31, 2021
Your Directors have pleasure in presenting the Companyâs Twenty First Annual Report on business and operations along with the audited financial statements for the financial year ended March 31, 2021.
The Gross Direct Premium Income (âGDPIâ) of the industry grew from ? 1,893.02 billion in FY2020 to ? 1,987.35 billion in FY2021, a growth of 5.2%. The Companyâs GDPI increased from ? 133.13 billion in FY2020 to ? 140.03 billion in FY2021, a growth of 5.2%. The Company led the private players (including standalone health insurers) in the general insurance sector with a market share of 14.3% and had an overall industry market share of 7.0%. The Company is the 4th largest player in the general insurance sector at March 31, 2021 (Source: IRDAI and GI Council Report).
The financial performance of the Company for FY2021 vis-a-vis FY2020 is summarised in the following table:
|
(? billion) |
||
|
Particulars |
FY2020 |
FY2021 |
|
Gross written premium |
135.92 |
143.20 |
|
Earned premium |
94.04 |
100.14 |
|
Income from Investments |
18.47 n |
21.96 |
|
Profit before tax |
16.97 |
19.54 |
|
Profit after tax |
11.94 r |
14.73 |
|
EPS- Basic (?) | |
26.27 |
32.41 |
|
EPS- Diluted (?) |
26.19 |
32.27 |
The profit after tax for the year ended March 31, 2021 is ? 14.73 billion. The profit available for appropriation is ? 55.18 billion after taking into account the balance of profit of ? 40.45 billion brought forward from the previous year.
The Insurance Regulatory and Development Authority of India ("IRDAI") had vide its circular dated April 24, 2020 urged insurers to take a conscious call to refrain from dividend pay-outs from profits pertaining to the financial year ending March 31, 2020, till further instructions. Consequently, the Board after due consideration of IRDAI circular dated April 24, 2020 did not propose any final dividend for the financial year ended March 31, 2020.
Further, IRDAI vide its circular dated February 25, 2021 had withdrawn the applicability of aforesaid circular dated April 24, 2020 with immediate effect and requested insurer to take conscious call in the matter of declaring dividends for FY2021 considering the capital, solvency and liquidity positions of the Company.
In view of IRDAI circular dated February 25, 2021, the Company had declared and paid ? 4.00 per equity share as an interim dividend for FY2021 aggregating to ? 1.82 billion.
The Board of Directors of the Company at their meeting held on April 17, 2021 had recommended a final dividend of ? 4.00 per equity share for FY2021 to the Members of the Company for their approval.
SCHEME OF ARRANGEMENT WITH BHARTI AXA GENERAL INSURANCE COMPANY LIMITED
The Board of Directors of the Company at their meeting held on August 21, 2020 had approved the scheme of arrangement amongst Bharti AXA General Insurance Company Limited (âBharti AXAâ) and the Company and their respective shareholders and creditors ("the Scheme"). The Scheme provides, inter alia for the demerger of the general insurance business of Bharti AXA into the Company as a going concern with effect from the Appointed date i.e. April 1, 2020 and as consideration for the demerger, the Company will issue 35,756,194 equity shares of the Company to the shareholders of the Bharti AXA as on record date i.e. August 21, 2020, once the Scheme becomes effective.
The Scheme is subject to, inter alia, applicable statutory and regulatory approvals including from IRDAI, Competition Commission of India, Stock Exchanges, Securities and Exchange Board of India ("SEBI"), members of the companies involved in the Scheme and Mumbai Bench of Honâble National Company Law Tribunal (âNCLTâ) and will take effect once the final approval is received from IRDAI in accordance with the Insurance Act, 1938 read with the Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business)
Regulations, 2011.
During the year, the Company has received approval from (a) Competition Commission of India; (b) an inprinciple approval from IRDAI under Section 35 to 37 of the Insurance Act, 1938 read with Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business)
Regulations, 2011; (c) Observation letters issued by BSE
* Sanjeev Mantri (DIN: 07192264) was re-appointed as a Whole-time Director, designated as Executive
Limited ("BSE") and National Stock Exchange of India Limited ("NSE"), enabling the Company to file the draft Scheme with NCLT. Further, NCLT vide its order dated December 18, 2020 had, inter alia directed the Company to convene the meeting of its equity shareholders to consider and approve the Scheme. The equity shareholders of the Company at its meeting held on February 23, 2021 had approved the Scheme.
Subsequently, the Company and Bharti AXA had filed an application under Sections 230-232 and other applicable provisions of the Companies Act, 2013 ("the Act") before the NCLT for sanctioning of the Scheme. NCLT vide its order dated May 13, 2021 had sanctioned the Scheme. Pursuant to the provisions of Regulation 8 of Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011, the Scheme is also required to be approved by IRDAI and will be effective from the date specified by IRDAI in its final approval. The final approval of IRDAI is awaited as on the date of this Report.
During FY2021, the Company is in compliance with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board, Committees and General Meetings. The same has also been confirmed by the Secretarial Auditor of the Company. The Company has also devised necessary systems to ensure compliance with the provisions.
The issued and paid-up equity share capital of the Company as on March 31, 2021 is ? 4.54 billion. The net worth of the Company increased from ? 61.34 billion at March 31, 2020 to ? 74.35 billion at March 31, 2021. The solvency position of the Company at March 31, 2021 was 2.90 times as against minimum of 1.50 times prescribed by IRDAI.
As at March 31, 2021, the Companyâs outstanding NonConvertible Debentures (NCDs) stood at ? 4.85 billion consisting of 4,850 Unsecured, Subordinated, Fully Paid-up, Listed, Redeemable, Non-convertible Debentures of the face value of ? 1,000,000 each, with an interest rate of 8.25% per annum. The NCDs are listed on the wholesale debt market segment of BSE and NSE.
The Company has been regular in its payment obligations towards NCDs.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The provisions of Section 186(4) of the Act requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security is not applicable to the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and future operations of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of the Company as at March 31, 2021 consist of eleven (11) Directors, out of which six (6) are Nonexecutive, Independent Directors, two (2) are Nonexecutive, Non-independent Directors and remaining three (3) are Whole-time Directors including Managing Director & Chief Executive Officer. Lalita D. Gupte is a Non-executive, Chairperson of the Company.
None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(2) of the Act. Further, all the Directors of the Company have confirmed that they fulfill the criteria of âfit and properâ as laid down under Guidelines for Corporate Governance for insurers in India issued by IRDAI ("IRDAI CG Guidelines").
Re-appointment of Board of Directors during the year are as follows:
|
Name of Director |
Appointment / |
With effect from |
|
Resignation |
||
|
Sanjeev Mantri* |
Re-appointment |
May 2, 2020 |
|
Alok Kumar Agarwal5 |
Re-appointment |
January 19, 2021 |
Director- Retail of the Company for a period of five (5) years upto May 1, 2025.
$ Alok Kumar Agarwal (DIN: 03434304) was reappointed as a Whole-time Director, designated as Executive Director-Wholesale of the Company for a period of five (5) years or till the date of his retirement, whichever is earlier.
Further, the Board of Directors at their meeting held on January 19, 2021, approved re-appointment of following Non-executive, Independent Directors of the Company:
|
Name of Director |
Appointment / |
With effect from |
|
Resignation |
||
|
Uday Chitale1 |
Re-appointment |
April 19, 2021 |
|
Suresh Kumar2 |
Re-appointment |
June 1,2021 |
|
Ved Prakash Chaturvedi3 |
Re-appointment |
July 13, 2021 |
1 Re-appointment of Uday Chitale (DIN: 00494479) as Non-executive, Independent Director of the Company for a second term of 5 (five) consecutive years upto April 18, 2026.
2 Re-appointment of Suresh Kumar (DIN: 00494479) as Non-executive, Independent Director of the Company for a second term of 5 (five) consecutive years upto May 31, 2026.
3 Re-appointment of Ved Prakash Chaturvedi (DIN: 00030839) as Non-executive, Independent Director of the Company for a second term of 5 (five) consecutive years upto July 12, 2026.
The aforesaid re-appointments were subsequently approved by the Members of the Company on April 9, 2021 by special resolution passed through Postal Ballot.
In the opinion of the Board, Uday Chitale, Suresh Kumar and Ved Prakash Chaturvedi has necessary integrity, expertise and experience (including proficiency) required for re-appointment as an Independent Director of the Company.
The Members of the Company approved appointment of Murali Sivaraman (DIN: 01461231) as a Non-executive, Independent Director for a period of five (5) consecutive years with effect from January 17, 2020 upto January 16, 2025 in 20th Annual General Meeting ("AGM") held on August 13, 2020.
Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel ("KMP") of the Company as on March 31, 2021 are as below:
|
1.Bhargav Dasgupta |
Managing Director & CEO |
|
2.Alok Kumar Agarwal |
Whole-time Director designated as Executive Director - Wholesale |
|
3.Sanjeev Mantri |
Whole-time Director designated as Executive Director - Retail |
|
4.Gopal Balachandran |
Chief Financial Officer & Chief Risk Officer |
|
5.Vikas Mehra |
Company Secretary |
In accordance with IRDAI CG Guidelines, the Company has following Key Management Persons other than afore-mentioned KMPs:
|
1.Girish Nayak |
Chief - Service, Operations and Technology |
|
2.Sanjay Datta |
Chief - Underwriting, Reinsurance and Claims |
|
3.Lokanath Kar |
Chief - Legal & Compliance Officer |
|
4.Jerry Jose |
Head - Human Resources |
|
5.Vinod Mahajan |
Chief - Investment Officer |
|
6.Prasun Sarkar |
Appointed Actuary |
Section 48A of the Insurance Act, 1938, necessitates an approval of IRDAI for continuation of common directorships between insurance companies and insurance agent or insurance intermediaries. In view of the same, the Company has four Directors falling within the criteria of Common Directorship viz. Uday Chitale, Ashvin Parekh, Sandeep Batra and Vishakha Mulye.
Pursuant to the aforesaid provisions, the Company has made an application to IRDAI seeking continuation of directorships of Uday Chitale (due to his re-appointment for a second term of five (5) consecutive years as Nonexecutive, Independent Director of the Company) having common directorship with ICICI Bank Limited (being corporate agent of the Company). The approval from IRDAI is awaited. The Company had already received
approval from IRDAI for continuation of appointment of Ashvin Parekh as common Director on the Board of ICICI Securities Limited and for Sandeep Batra and Vishakha Mulye as common Directors on the Board of ICICI Bank Limited.
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) & (7) of the Act, the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended from time to time and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ). All the Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Companyâs Employees Code of Conduct.
In terms of Section 152 of the Act, Vishakha Mulye, Nonexecutive, Non-independent Director (DIN: 00203578) would retire by rotation at the forthcoming AGM and being eligible for re-appointment, she has offered herself for re-appointment. A resolution seeking Membersâ approval for her re-appointment forms part of the AGM Notice.
Performance Evaluation of Directors, Chairperson, Board and its Committees
Pursuant to the provisions of the Act, IRDAI CG Guidelines and Listing Regulations, an annual performance evaluation had been carried out of Board as a whole and that of its Committees and of its individual Directors both Executive and Non-executive including Independent Directors and of its Chairperson. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Criteria for appointment of Director and Key Managerial Personnel
The Company has Board approved criteria for appointment of a Director, Key Managerial Personnel and Officials who may be appointed in senior management (âCriteria for appointment of senior management personnel") in compliance with the requirements prescribed. The Criteria for appointment of senior management personnel is hosted on the website of the Company and can be viewed at
https://www.icicilombard.com/docs/default-
source/policies-of-the-company/criteria-for-appointment-
of-a-director-key-managerial-personnel-and-officials-
who-may-be-appointed-in-senior-management.pdf
The Company has also in place the Policy on appointment and compensation of employees and framework for remuneration to Non-executive Directors of the Company and the same is available on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default source/shareholding-pattern/remuneration-policy-of-icici-lombard.pdf
During the year under review, the Company has not accepted any deposits under Section 73 of the Act.
IRDAI vide its circular dated May 18, 2016, had issued Corporate Governance Guidelines wherein criteria for appointment of statutory auditors of insurance companies were prescribed which are aligned with the provisions of the Act.
The Members of the Company at its Eighteenth AGM held on July 12, 2018 had approved re-appointment of Chaturvedi & Co., Chartered Accountants, as the Joint Statutory Auditors of the Company for a second term of five (5) years till the conclusion of Twenty-third AGM. The Members of the Company at the same AGM also approved re-appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants as the Joint Statutory Auditors of the Company till conclusion of twenty-first AGM i.e. for a balance three (3) years out of first term of five (5) years.
Their appointment was subject to ratification by the Members at every subsequent AGM held after the AGM held on July 12, 2018. Pursuant to the amendments made to Section 139 of the Act by the Companies (Amendment) Act, 2017 effective from May 7, 2018, the requirement of seeking ratification by the Members for the appointment of the Statutory Auditors has been withdrawn. In view of the above, ratification by the Members for continuance of their appointment at this AGM is not being sought.
The present term of office of PKF Sridhar & Santhanam
LLP, Chartered Accountants, one of Joint Statutory Auditors of the Company, expires at the conclusion of this AGM, however they are eligible for re-appointment. The re-appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants, as approved by the Board of Directors of the Company based on the recommendation of the Audit Committee is proposed for a second term of five (5) consecutive years i.e. from the conclusion of the Twenty First AGM upto the conclusion of the Twenty Sixth AGM.
PKF Sridhar & Santhanam LLP, Chartered Accountants, have confirmed their eligibility under Section 141 of the Act and the rules framed thereunder and IRDAI CG Guidelines, for re-appointment as one of the Joint Statutory Auditors of the Company. A resolution seeking Membersâ approval for their re-appointment as one of the Joint Statutory Auditors of the Company, forms part of the AGM Notice. Also a resolution seeking approval of the Members for the remuneration proposed to be paid for FY2022, to the Joint Statutory Auditors of the Company, forms part of the AGM Notice.
Chaturvedi & Co., Chartered Accountants, have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Joint Statutory Auditors of the Company.
The remuneration payable to the Joint Statutory Auditors for FY2021, has been determined by the Board of Directors of the Company in their meeting held on May 2, 2020, based on the recommendation of the Audit Committee of the Company. During FY2021, the Company has paid ? 10.7 million each plus
reimbursement of all out-of-pocket expenses and applicable tax(es) thereon to the Joint Statutory Auditors of the Company, for statutory audit including issuance of report on Corporate Governance and Internal control over financial reporting. The Company has also paid tax audit fees of ? 1.5 million to PKF Sridhar & Santhanam LLP for FY2021.
The Board of Directors of the Company in their meeting held on August 21, 2020, based on the recommendation of Audit Committee have approved availing of additional services in the form of certifications from Joint Statutory Auditors of the Company. Further, the Board of Directors based on the recommendation of Audit Committee on February 9, 2021 have approved availing of additional services from Joint Statutory Auditors of the Company for the purpose of audit of financial statements for FY2021 of Demerged Undertaking as defined in the Scheme (upon the Scheme becoming effective) at a remuneration
of ? 3.5 million each plus reimbursement of all out-ofpocket expenses and applicable tax(es) thereon.
The details of other fees paid to Joint Statutory Auditors of the Company are disclosed under Note No. 5.2.23 of the Notes to Financial Statements for FY2021.
There is no qualification, reservation, adverse remark or disclaimer made by the Joint Statutory Auditors in their report.
Pursuant to provisions of Section 204 of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Listing Regulations, the Company had appointed Dholakia & Associates LLP, a firm of practising company secretaries, to conduct the secretarial audit of the Company for FY2021. The Secretarial Audit Report forms part of this report as Annexure A. There are no qualifications, reservation or adverse remark or disclaimer made by the secretarial auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
Reporting of Frauds by Auditors
During the year under review, there were no instances of fraud reported by the statutory auditors and secretarial auditor under Section 143(12) of the Act to the Audit Committee or the Board of Directors of the Company.
Being an Insurance Company, the Company is not required to maintain cost records as specified by the central government under Section 148(1) of the Act.
The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, forms part of this report as Annexure B.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 forms part of this report. Pursuant to the provisions of Section 136 of the Act, the Directorsâ Report is being sent to the Members of the Company excluding the aforesaid statement. Any
Member interested in obtaining a copy of the statement may write to the Company Secretary at the registered office of the Company.
The Company undertakes various transactions with related parties in the ordinary course of business pursuant to the Policy on Related Party Transactions approved by the Board of Directors of the Company.
The transactions entered into by the Company with related parties during FY2021, were in the ordinary course of business and on an armâs length basis as defined under the Act. The details of related party transactions are disclosed under Note No. 5.2.12 of the Notes to Financial Statements for FY2021.
All related party transactions are placed before the Audit Committee on a quarterly basis. The Policy on dealing with related party transactions has been hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/policies-of-the-company/policy-on-related-party-transactions.pdf
Particulars of Contracts or Arrangements with Related Parties
All the transactions with related parties were in the ordinary course of business and on armâs length basis and there were no material contracts or arrangement or transactions entered with related parties during FY2021 and accordingly disclosure in Form AOC-2 [pursuant to clause (h) of sub-section (3) of Section 134 of Act and Rule 8(2) of the Companies (Accounts) Rules, 2014] is not applicable.
The above disclosure on material transactions are based on the threshold of ten percent of turnover, as defined in the Policy on Related Party Transaction of the Company. Related party transactions are benchmarked for armâs length & approved by the Audit Committee. Joint Statutory Auditors have issued an unmodified opinion on the Financial Statements which includes therein related party transactions and related disclosures and the same have also been approved by the Audit Committee.
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return in Form MGT-7 as on March 31, 2021 has been hosted on the website of the Company and can be viewed at
https://www.icicilombard.com/docs/default-
source/financial-information/anualreportfy2021.pdf
A statement indicating development and implementation of Risk Management Framework including identification therein of elements of risk, if any, which may pose significant risk to the Company forms part of this Annual Report.
The Company has provided details of Business Continuity Plan and the Crisis Management Strategy of the Company along with assessment of various risks arising out of the COVID-19 pandemic and the corresponding measures to manage the same in this Annual Report.
DISCLOSURES AS PER THE SEXUAL HARASSEMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has a Guidelines against Sexual Harassment at workplace and a formal process for dealing with complaints of harassment or discrimination. The said Guidelines is in line with relevant Act passed by Parliament in 2013. The Company through its Guidelines ensures that all such complaints are resolved within defined timelines.
Details of complaints are as follows:
|
Sr. No. |
Particulars |
No. |
|
a. |
Number of complaints pending as on April 1,2020 |
0 |
|
b. |
Number of complaints filed during the financial year |
2 |
|
c. |
Number of complaints disposed of during the financial year |
2 |
|
d. |
Number of complaints pending as on March 31,2021 |
0 |
The Company is in compliance with the provisions relating to the constitution of an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
RURAL AND SOCIAL RESPONSIBILITY
As per the IRDAI (Obligations of Insurers to Rural and Social Sectors) Regulations, 2015, the Company has issued 3,354,542 policies in rural areas and covered 4,798,812 lives falling within the norms of social responsibility. The Company has complied with the obligations laid down by IRDAI.
DIVIDEND AND DIVIDEND DISTRIBUTION POLICY
The operations have resulted in a profit after tax of ? 14.73 billion for the current year as compared to a profit after tax of ? 11.94 billion for the previous year.
IRDAI vide its circular dated April 24, 2020 stipulated that, in view of the emerging market conditions and to conserve capital with the insurance companies in the interest of Policyholders and of the economy at large, has urged insurers to refrain from dividend pay-out from profits pertaining to the financial year ended March 31, 2020 till further instructions.
Further, IRDAI vide its circular dated February 25, 2021 had withdrawn the applicability of aforesaid circular dated April 24, 2020 with immediate effect and requested insurer to take cautious call in the matter of declaring dividends for FY2021 considering the Company''s capital, solvency and liquidity positions.
In view of the aforesaid IRDAI Circular dated February 25, 2021 and considering the stable capital, solvency and liquidity positions of the Company, the Board of Directors of the Company declared and paid an interim dividend of ? 4.00 per equity share for FY2021 as against an interim dividend declared and paid of ? 3.50 per equity share for FY2020.
The Board of Directors of the Company at their meeting held on April 17, 2021 had recommended a final dividend of ? 4.00 per equity share for FY2021 to the Members for their approval.
In terms of Regulation 43A of Listing Regulations, the Dividend Distribution Policy of the Company has been hosted on website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/policies-of-the-company/dividend-distribution-policy.pdf
Pursuant to Section 124 & 125 of the Act read with the Investor Education and Protection Fund (Accounting
Audit, Transfer and Refund) Rules, 2016, there were no amounts eligible to be transferred to the Investor Fducation and Protection Fund. Accordingly, the Company was not required to transfer any unpaid / unclaimed dividend amount to the Investor Fducation and Protection Fund in FY2021.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted Corporate Social Responsibility (âCSRâ) Committee in accordance with the provisions of the Act. The CSR Committee was constituted comprising of Members of the Board of Directors of the Company. The Committee presently consists of four (4) Directors with majority being Nonexecutive, Independent Directors. The CSR Policy of the Company and initiatives taken by the Company on CSR during the year are in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended. The Annual Report on CSR Activities of the Company for FY2021 along with the summary of impact assessment reports is given in Annexure C to this report.
During the year, the Company has maintained credit rating of âICRA AAA/Stableâ by ICRA Limited and âCRISIL AAA/Stableâ by Crisil Limited for Subordinate Debt raised by the Company. This is the highest rating regarding safety and timely servicing of financial obligations.
Further during the year, SFBI vide its circular amended SFBI (Credit Rating Agencies) Regulations, 1999, which stated that a credit rating agency cannot offer claims paying ability rating services. In view of the same, ICRA Limited has withdrawn the âiAAAâ rating assigned to the claims paying ability of the Company.
BUSINESS RESPONSIBILITY REPORT
In accordance with the Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report (BRR) has been hosted on the website of the Company and can be viewed at https://www.icicilombard.com/docs/default-source/esg/business-responsibility-reporting-2021.pdf Any Member interested in obtaining a copy of the BRR may write to the Company Secretary at the registered office of the Company.
INTEGRATED REPORT AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
SEBI vide its Circular dated February 6, 2017 had recommended the top 500 listed entities to voluntarily adopt Integrated Report as per principles prescribed by the International Integrated Reporting Council.
The Company has voluntarily adopted the principles and has prepared its third Integrated Report for FY2021 which forms part of this Annual Report.
The Company as a responsible corporate citizen, is committed to environmental sustainability. The Company has adopted a Policy on Environment Management. The same has been hosted on the website of the Company and can be viewed at
Further, the Company has hosted its Environmental, Social and Governance Report (âESG Reportâ) for FY2021 on its website and can be viewed at https://www.icicilombard.com/docs/default-source/esg/se-intimation-esg-report-2021.pdf
The Company continuously strives for excellence in its Investor Relations engagement with International and Domestic investors. It believes in adopting the emerging
best practices in Investor Relations and building a relationship of mutual understanding with investor/analysts.
The Managing Director & CEO, Executive Directors, Chief Financial Officer & Chief Risk Officer and other Senior Management members of the Company participate in structured conference calls and periodic investor/analyst interactions including one-on-one meeting, investor conferences and quarterly earning calls. The Company conducted 220 meetings through digital mode with Indian and overseas investors and analysts (excluding quarterly earnings calls) during the financial year.
The Company ensures that financial information of the Company is available to all the stakeholders by uploading it on the Companyâs website. The financial information includes Financial Statements, Press Releases, Investor Presentations, Earning call transcripts and Annual Report, etc.
MATERIAL EVENTS OCCURRED AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, between the end of the financial year of the Company to which the balance sheet relates and the date of this report.
Mar 31, 2019
Directors'' Report
To the Members,
Your Directors have pleasure in presenting the Nineteenth Annual Report of ICICI Lombard General Insurance Company Limited ("the Companyâ) along with the audited financial statements for the year ended March 31, 2019.
INDUSTRY OVERVIEW
The gross direct premium income ("GDPI") of the industry grew from Rs.1,506.62 billion in FY2018 to Rs.1,701.12 billion in FY2019, a growth of 12.9% (Source: IRDAI). The Company''s GDPI increased from Rs.123.57 billion in FY2018 to Rs.144.88 billion in FY2019, a growth of 17.2%. The Company led the private players (including standalone health insurers) in the general insurance sector with a market share of 15.6% and had an overall industry market share of 8.5%. The Company is the 4th largest player in the general insurance sector at March 31, 2019 and continued to lead the private players in General Insurance Sector.
FINANCIAL HIGHLIGHTS
The financial performance for FY2019 is summarised in the following table:
(Rs. billion)
|
FY2018 |
FY2019 |
|
|
Gross written premium |
126.00 |
147.89 |
|
Earned premium |
69.12 |
83.75 |
|
Income from investments |
14.82 |
17.55 |
|
Profit before tax |
11.96 |
15.98 |
|
Profit after tax |
8.62 |
10.49 |
|
EPS- Basic (?) |
19.01 |
23.11 |
|
EPS- Diluted (?) |
18.99 |
23.06 |
APPROPRIATIONS
The profit after tax for the year ended March 31, 2019 is Rs.10.49 billion. The profit available for appropriation is Rs.35.26 billion after taking into account the balance of profit of Rs.24.77 billion brought forward from the previous year. The Company had declared and paid Rs.2.50 per equity share as a final dividend for FY2018 and interim dividend for FY2019 respectively aggregating to Rs.2.74 billion including dividend distribution tax. The Board of Directors at its meeting held on April 18, 2019 had recommended a final dividend of Rs.3.50 per equity share for FY2019 to the shareholders'' for their approval.
SECRETARIAL STANDARDS
During FY2019, the Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board and General Meetings. The same has also been confirmed by the Secretarial Auditor of the Company. The Company has devised proper systems to ensure compliance with its provisions and is in compliance with the same.
CAPITAL
The total capital invested by shareholders till March 31, 2019 including share premium was Rs.20.24 billion. The net worth of the Company increased from Rs.45.41 billion at March 31, 2018 to ? 53.20 billion at March 31, 2019. The solvency position of the Company at March 31, 2019 was 2.24 times as against minimum of 1.50 times prescribed by IRDAI.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The provisions of Section 186(4) of the Companies Act, 2013 ("CA2013") requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security are not applicable to the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and future operations of the Company.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company at March 31, 2019 consisted of eleven (11) Directors, out of which six (6) are Non-executive, Independent Directors, two (2) are Non-executive, Non-independent Directors and three (3) are Whole-time Directors. Lalita D. Gupte was designated as Non-executive, Chairperson of the Company by the Board of Directors at its meeting held on October 20, 2018. None of the Directors of the Company are disqualified from being appointed as Directors as specified in Section 164(2) of the CA2013 and Rule 14(1) of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
All the Directors of the Company have confirmed that they meet the criteria of ''fit and proper'' as laid down under Corporate Governance Guidelines of Insurance Regulatory and Development Authority of India (''IRDAI'').
Changes in composition of the Board of Directors during the year are as follows:
|
Name of Director |
Resignation/Cessation |
With effect from |
|
Vishal Mahadevia Non-executive, Independent Director |
Appointment |
April 25, 2018 |
|
N. S. Kannan Non- executive, Non-independent Director |
Resigned due to appointment as MD & CEO of ICICI Prudential Life Insurance Company Limited |
June 19, 2018 |
|
Sandeep Bakhshi Non- executive, Non-independent Director |
Appointment |
June 26, 2018 |
|
Chanda Kochhar Non-executive, Non-independent Director |
Resigned due to early retirement from ICICI Bank Limited |
October 5, 2018 |
|
Sandeep Bakhshi Non-executive, Non-independent Director |
Resigned due to appointment as MD & CEO of ICICI Bank Limited |
October 5, 2018 |
|
Sandeep Batra* Non-executive, Non-independent Director |
Appointment |
October 17, 2018 |
|
Vishakha Mulye* Non-executive, Non-independent Director |
Appointment |
October 17, 2018 |
*Vishakha Mulye and Sandeep Batra were appointed as Additional Directors in the category of "Non-executive, Non-independent" w.e.f. October 17, 2018. The resolutions seeking shareholders'' approval for their appointment forms a part of the Notice.
Further, the Board of Directors at its meeting held on January 18, 2019 approved the following:
1. Re-appointment of Bhargav Dasgupta as Managing Director & CEO of the Company for a period of five (5) years, effective from May 1, 2019.
2. Re-appointment of Ashvin Parekh as Nonexecutive, Independent Director of the Company for a second term of five (5) consecutive years, effective from April 18, 2019.
The above re-appointments were approved by the Members of the Company on March 7, 2019 by an Ordinary and Special resolution respectively through Postal Ballot. Subsequently, IRDAI vide its letter dated April 15, 2019 had approved the re-appointment of Bhargav Dasgupta, as Managing Director & CEO of the Company for a period of five (5) years, effective from May 1, 2019.
Pursuant to the provisions of Section 203 of the CA2013, the Key Managerial Personnel ("KMP") of the Company as on March 31, 2019 are as follows:
1. Bhargav Dasgupta, Managing Director & CEO
2. Alok Kumar Agarwal, Executive Director- Wholesale
3. Sanjeev Mantri, Executive Director-Retail
4. Gopal Balachandran, Chief Financial Officer
5. Vikas Mehra, Company Secretary
Further, in accordance with Corporate Governance Guidelines issued by IRDAI the Company has eleven (11) Key Management Persons including above mentioned KMPs.
Common Directorships
Section 48A of the Insurance Act, 1938, necessitates an approval from the IRDAI for continuation of common directorships between insurance companies and insurance intermediaries. Pursuant to the provisions, the Company had made an application to the IRDAI seeking continuation of directorships of Ashvin Parekh, having common directorship with ICICI Securities Limited (being corporate agent of the Company) and Vishakha Mulye & Uday Chitale, having common directorships with ICICI Bank Limited (being corporate agent of the Company) vide its letter dated November 19, 2018, which was approved by the IRDAI on March 26, 2019.
Further, a similar application was made to the IRDAI for Vishal Mahadevia, common directorship with IDFC First Bank Limited (being corporate agent of the Company) & Ashvin Parekh (due to his re-appointment for a second term with the Company) vide letter dated February 25, 2019 and March 15, 2019 respectively. The approval from IRDAI is awaited as on the date of this report.
Independent Directors
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the CA2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("Listing Regulations").
Retirement by rotation
In terms of Section 152 of the CA2013, Sanjeev Mantri would retire by rotation at the forthcoming Annual General Meeting ("AGM") and is eligible for re-appointment. Sanjeev Mantri has offered himself for re-appointment.
Performance Evaluation of the Board, Committees and Directors
Pursuant to the provisions of the CA2013, Guidelines for insurance companies issued by IRDAI and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance as a whole and that of its statutory committees and of its Directors both Executive and Non-executive including Independent Directors and of its Chairperson. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
DEPOSITS
During the year under review, the Company has not accepted any deposits under Section 73 of the CA2013.
AUDITORS
Statutory Auditors
IRDAI vide its circular dated May 18, 2016, had issued Corporate Governance Guidelines ("CG guidelines") wherein criteria for appointment of statutory auditors for insurance companies had been stated. Pursuant to the CG guidelines, the provisions of appointment of auditors are aligned with the provisions of the CA2013.
The Members of the Company in the Eighteenth AGM held on July 12, 2018 had approved re-appointment of M/s. Chaturvedi & Co., Chartered Accountants as the Joint Statutory Auditors of the Company for a second term of five (5) years till the conclusion of Twenty-third AGM. The Members of the Company in the same AGM also approved re-appointment of M/s. PKF Sridhar & Santhanam LLP, Chartered Accountants as the Joint Statutory Auditors of the Company till conclusion of twenty-first AGM i.e. for balance three (3) years out of first term of five (5) years.
Their appointment was subject to ratification by the Members at every subsequent AGM held after the AGM held on July 12, 2018. Pursuant to the amendments made to Section 139 of the CA2013 by the Companies (Amendment) Act, 2017 effective from May 7, 2018, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn.
In view of the above, ratification by the Members for continuance of their appointment at this AGM is not being sought. The Joint Statutory Auditors have given a confirmation to the effect that they are eligible to continue with their appointment and that they have not been disqualified in any manner from continuing as Joint Statutory Auditors of the Company. The remuneration payable to the Joint Statutory Auditors for FY2020, has been determined by the Board of Directors of the Company in its meeting held on April 18, 2019 based on the recommendation of the Audit Committee of the Company.
Statutory Audit and other Fees paid to Joint Statutory Auditors
During FY2019, the total fees for the statutory audit and other services rendered by the Joint Statutory Auditors are given below:
(Rs. Million)
|
Particulars |
Amount |
|
Joint Statutory Audit Fees |
18.00 |
|
Tax Audit |
1.30 |
|
Other Certification Fees |
0.88 |
Auditor''s Report
There is no qualification, reservation, adverse remark or disclaimer made by the auditors in their report.
Secretarial Auditors
Pursuant to provisions of Section 204 of the CA2013, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Listing Regulations, the Company had appointed M/s. Dholakia & Associate LLP, a firm of practising company secretaries, to conduct the secretarial audit of the Company for FY2019. The Secretarial Audit Report is annexed herewith as Annexure A. There are no qualification, reservation or adverse remark or disclaimer made by the secretarial auditor in their report save and except disclaimer made by them in discharge of their professional obligation.
PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under Section 197 of CA2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report as Annexure B.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. Pursuant to the provisions of Section 136 of the CA2013 the Directors'' Report is being sent to the shareholders of the Company excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the registered office of the Company.
RELATED PARTY TRANSACTIONS
The Company undertakes various transactions with related parties in the ordinary course of business. The Company has a Board approved Policy on Related Party Transactions.
The transactions entered into by the Company with related parties were in the ordinary course of the business and in all material aspects, on an arm''s length basis as defined under the CA2013. The details of related party transactions are disclosed under Note No. 5.2.12 of the Notes to Financial Statements for FY2019.
All materially significant related party transactions are placed before the Audit Committee on a quarterly basis. The Policy on dealing with related party transactions has been hosted on the website and can be viewed athttps:// www.icicilombard.com/docs/default-source/shareholding-pattern/policy-on-related-party-transactions.pdf
Particulars of Contracts or Arrangements with Related Parties
All the transactions with related parties are in the ordinary course of business and on arm''s length basis and there are no ''material'' contracts or arrangement or transactions with related parties and thus disclosure in Form AOC-2 [Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014] is not required.
Related Party Transactions are benchmarked for arm''s length & approved by Audit Committee. Statutory auditors have issued an unmodified opinion on the Financial Statements which includes these related party transactions and related disclosures. The above disclosures on ''material'' transactions are based on the threshold of 10 percent of turnover, as also defined in the Related Party Transactions Policy of the Company.
EXTRACT OF ANNUAL RETURN
Pursuant to prescribed provisions of CA2013 and rules framed thereunder extract of annual return in Form MGT-9, is annexed as Annexure C to this report and the same has been hosted on the website of the Company and can be viewed athttps://www.icicilombard.com/ docs/default-source/shareholding-pattern/extract-of-annual-report-in-form-mgt-9.pdf
RISK MANAGEMENT FRAMEWORK
A statement indicating development and implementation of risk management policy including identification therein of elements of risk, if any, which may pose significant risk to the Company has been given in the Corporate Governance Report.
DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has a Policy against Sexual Harassment and a formal process for dealing with complaints of harassment or discrimination. The said Policy is in line with relevant Act passed by Parliament in 2013. The Company through its Policy ensures that all such complaints are resolved within defined timelines.
Details of complaints are as follows:
|
Sr. No. |
Particular |
No. |
|
a. |
Number of complaints filed during the financial year |
11 |
|
b. |
Number of complaints disposed of during the financial year |
9 |
|
c. |
Number of complaints pending as on end of the financial year |
2 |
RURAL AND SOCIAL RESPONSIBILITY
The Company had issued 761,664 policies in rural areas and covered 10,408,643 lives falling within the norms of rural and social responsibility, as prescribed by IRDAI.
DIVIDEND AND DIVIDEND POLICY
The operations have resulted in a profit after tax of Rs. 10.49 billion as compared to a profit after tax of Rs.8.62 billion for the previous year. The Board had approved payment of interim dividend of Rs.2.50 per equity share for FY2019 at its meeting held on October 20, 2018. Further, the Board at its Meeting held on April 18, 2019, has recommended a final dividend of Rs.3.50 per equity share to the shareholders'' for their approval at the forthcoming AGM of the Company.
In terms of Regulation 43A of Listing Regulations the Dividend Policy of the Company has been hosted on the Company''s website and can be viewed at, https://www. icicilombard.com/docs/default-source/ shareholding-pattern/dividend-policy8c0003ff45fd68ff8a0df0055e698361.pdf
UNPAID/UNCLAIMED DIVIDEND
Pursuant to Section 124 & 125 of CA2013 read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company had transferred Rs.1,296 of unpaid/unclaimed dividend to the Investor Education and Protection Fund in FY2019.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted Corporate Social Responsibility (CSR) Committee in accordance with the provisions of the CA2013. The CSR Committee was constituted comprising of members of the Board of Directors of the Company. The Committee presently consists of 3 Directors with majority being Independent Directors. The CSR policy of the Company and initiatives taken by the Company on CSR during the year are in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as given in Annexure D to this report.
CREDIT RATING
During the year, the Company has maintained credit rating of "ICRA AAA/Stableâ, issued by ICRA Limited and "Crisil AAA/Stableâ issued by Crisil Limited for Subordinate Debt raised by the Company. This is the highest rating regarding safety and timely servicing of financial obligations.
Further, the Company maintained its credit rating of "iAAAâ awarded by ICRA Limited for Claims paying ability by the Company. This indicates that the Company has highest claims paying ability and has a fundamentally strong position.
BUSINESS RESPONSIBILITY REPORTING
In accordance with the Listing Regulations, the Business Responsibility Report (BRR) has been hosted on the Company''s website and can be viewed athttps://www. icicilombard.com/docs/default-source/shareholding-pattern/business-responsibility-report8c0003ff45fd68ff 8a0df0055e7720e6.pdf. Any member interested in obtaining a copy of the BRR may write to the Company Secretary at the registered office of the Company.
INTEGRATED REPORTING
The SEBI vide its Circular dated February 6, 2017 had recommended the top 500 listed entities to voluntarily prepare their Annual Report adopting the principles of Integrated Reporting prescribed by the International Integrated Reporting Council.
The Company has voluntarily adopted the principles and has prepared its first Integrated Report FY2019 which forms part of this Annual Report.
INVESTOR RELATIONS
The Company continuously strives for excellence in its Investor Relations engagement with International and Domestic investors. It believes in adopting the emerging best practices in Investor Relations and building a relationship of mutual understanding with investor/ analysts.
The Managing Director & CEO, Executive Directors, Chief Financial Officer and other Senior Management members participate in structured conference calls and periodic investor/analyst interactions including one-on-one meeting, investor conferences & quarterly earnings calls. The Company conducted 300 meetings with Indian and overseas investors and analysts (excluding quarterly earnings calls) during the financial year.
The Company ensures that financial information of the Company is available to all the stakeholders by uploading it at the Company''s website. The financial information includes Financial Statement, Press Release, Investor Presentation, Earnings call transcript and Annual Report.
EVENTS AFTER BALANCE SHEET DATE
There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this report.
CORPORATE GOVERNANCE REPORT PHILOSOPHY ON CORPORATE GOVERNANCE
The Company is fully committed to follow sound Corporate Governance practices and uphold the highest business standards in conducting business. The Company continues to focus on building trust with shareholders, policyholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance viz. integrity, equity, transparency, fairness, sound disclosure practices, accountability and commitment to values.
The Company''s governance framework encompasses not only regulatory and legal requirements but also several voluntary practices aimed at maximizing shareholders'' value legally, ethically and on a sustainable basis.
The Company''s Corporate Governance architecture has been strengthened through various Policies and Codes adopted by the Company.
The Corporate Governance philosophy of the Company establishes that the Board''s independence is essential to bring objectivity and transparency in the Management and in the dealings of the Company.
WHISTLE BLOWER POLICY
The Company is committed to high standards of conduct for its employees. The Company has in place Whistle Blower Policy ("the Policy"), to provide a formal mechanism to its employees for communicating instances of breach of any statute, actual or suspected fraud on the accounting policies and procedures adopted for any area or item, acts resulting in financial loss or loss of reputation, leakage of information in the nature of Unpublished Price Sensitive Information (UPSI), misuse of office, suspected/actual fraud and criminal offences. The Policy provides for a mechanism to report such concerns to the Chairman of the Audit Committee through specified channels. The framework of the Policy strives to foster responsible and secure whistle blowing. In terms of the Policy of the Company, no employee of the Company has been denied access to the Audit Committee of the Board.
The Whistle Blower Mechanism is reviewed by the Audit Committee of the Board regularly.
The Policy has also been hosted on the website of the Company and can be viewed athttps://www. icicilombard.com/docs/default-source/shareholding-pattern/whistle-blower-policy.pdf
CODE OF CONDUCT AS PRESCRIBED UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROHIBITION OF INSIDER TRADING) REGULATIONS, 2015
In accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company had formulated a "Code of Conduct to regulate, monitor and report trading in equity shares and debt securities by its Employees and Other Connected Persons" ("the Code"). Pursuant to SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Company had amended the Code and also renamed the Code as "Code of Conduct to regulate, monitor and report trading in equity shares and debt securities by its Directors, Designated Employees and Immediate Relatives". The amended Code is applicable to Promoters, Member of Promoter''s Group, all Directors and such Designated Employees who are expected to have access to unpublished price sensitive information relating to the Company w.e.f. April 1, 2019. The Company has also amended ''Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information'' which is hosted on the website of the Company and can be viewed athttps://www. icicilombard.com/docs/default-source/shareholding-pattern/code-for-fair-disclosure.pdf
CODE OF CONDUCT
The Company is committed to conduct its business with highest standards of compliance and ethical conduct. The Company has in place a Code of Conduct ("the Code") to summarize the standards of business conduct that must guide the actions of the employees (including all Directors) at all times. The Code aims at observing highest standard of integrity, honesty, fairness and ethical conduct while working for the Company as well as while representing the Company.
The Code has been hosted on the website of the Company and can be viewed athttps://www. icicilombard.com/docs/default-source/shareholding-pattern/code-of-conduct.pdf
Pursuant to Listing Regulations, a confirmation from the Managing Director & CEO regarding compliance with the Code by all the Directors and Members of Senior Management forms part of this report.
CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE
Pursuant to Regulation 34(3) read with Schedule V of Listing Regulations, Certificate from the Statutory Auditors on compliance with the conditions of Corporate Governance as stipulated in the Listing Regulations is annexed as Annexure E to this report.
CEO/CFO CERTIFICATION
Pursuant to Regulation 17(8) of the Listing Regulations, Certification by the Managing Director & CEO and the Chief Financial Officer of the Company on the Financial Statements and the Internal Financial Controls for financial reporting for the year ended March 31, 2019 has been obtained.
MANAGEMENT STRUCTURE
The Company has a multi-tier management structure, comprising the Board of Directors at the apex followed by employees at the top management, senior management, middle management and junior management positions to ensure that:
i) Strategic supervision is provided by the Board;
ii) Control and implementation of Company''s strategy is achieved effectively;
iii) Operational management remains focused on implementation;
iv) Information regarding the Company''s operations and financial performance is made available to stakeholders;
v) Delegation of decision making with accountability is achieved;
vi) Financial and operating control and integrity are maintained at an optimal level;
vii) Risk is suitably evaluated and dealt with;
viii) Compliance with applicable acts and regulations is achieved;
ix) Corporate culture that recognizes and rewards adherence to ethical standards is developed.
This multi-tier management structure, besides ensuring greater management accountability and credibility, facilitates increased autonomy of businesses, performance discipline and development of business leaders, leading to enhanced public confidence.
ADOPTION OF MANDATORY AND NONMANDATORY REQUIREMENTS
The Company has complied with all mandatory requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub regulation 2 of Regulation 46 and some of the non-mandatory requirements pertaining to Corporate Governance stipulated under the Listing Regulations.
The Company has adopted following non-mandatory requirements:
1. Separate post of Chairperson and Chief Executive officer
The listed entity may appoint separate persons to the post of Chairperson and Managing Director or Chief Executive officer.
2. Reporting of Internal auditor
The Internal auditor may report directly to the audit committee
WEB LINK WHERE POLICY FOR DETERMINING MATERIAL SUBSIDIARIES IS DISCLOSED
This is not applicable to the Company, as the Company doesn''t have any subsidiary Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the CA2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption do not apply to the Company. The Company has, however, used information technology extensively in its operations.
During FY2019, expenditures in foreign currencies amounted to Rs.3.14 billion and earnings in foreign currencies amounted to Rs.2.41 billion.
EMPLOYEE STOCK OPTION SCHEME
In FY2006, the Company had instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Lombard to participate in its future growth and financial success. As per ESOS, the maximum number of options granted to any employee/ Director in a year shall not, except with the approval of the Board, exceed 0.10% of the Company''s issued equity shares at the time of grant and the aggregate of all such options (net of forfeited/lapsed) is limited to 5% of the Company''s issued equity shares on the date of the grant.
The Board at its Meeting held on January 14, 2015 and the Members at the Extra-Ordinary General Meeting held on March 4, 2015 had approved the amendment in the Employee Stock Option Scheme, 2005 to extend the exercise period by three more years in respect of options granted in the years 2005, 2006 and 2007.
Options granted in the years 2005, 2006, 2007, 2008 and 2010 vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options granted for the year 2009 vest in a graded manner over a five year period with no vesting in the first year and 20%, 20%, 30% and 30% of the grant vesting each year in subsequent four years. Options granted for the year 2011 vest in a gradual manner over a two-year period, with 40% and 60% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options can be exercised within a period of 13 years in respect of options granted in 2005, 2006 and 2007. Option other than those years can be exercised over a period of 10 years from the date of grant or five years from the date of vesting.
Post listing of the Company, revised Employee Stock options scheme has been approved by the Members of the Company and new Option were granted to the eligible employees under normal and special grant in year 2018. Options granted under normal grant for the year 2018 & 2019 will vest in a graded manner over a three year period with 30%, 30% and 40%. Options granted under Special grant will have a lock-in period of 36 months from the date of grant with 50% of the options vesting on July 31, 2021 and the remaining 50% vesting on July 31, 2022. Exercise Period for both the grants of year 2018 would commence from the date of vesting and will expire on completion of five years from the date of vesting of stock options.
The details as required under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 is hosted on the website of the Company and can be viewed athttps://www.icicilombard.com/docs/default-source/shareholding-pattern/disclosure-under-sebi-(sbeb)-regulations-2014-as-on-march-31-2019.pdf
FIT AND PROPER CRITERIA FOR INVESTORS AND CONTINUOUS MONITORING REQUIREMENT
The IRDAI guidelines for Listed Indian Insurance Companies prescribes the following:
1. Self-certification of "Fit and proper personâ criteria by a person holding/intending to acquire equity shares of 1% or more of paid-up equity share capital.
2. Prior permission of IRDAI for holding shares beyond 5% of the paid-up equity share capital.
Further information on detailed procedure and format for self-certification is hosted on the Company''s website and can be viewed athttps://www.icicilombard.com/ docs/default-source/shareholding-pattern/fit_and_ proper_criteria8c0003ff45fd68ff8a0df0055e6983cf.pdf.
IMPLEMENTATION STRATEGY ON IND AS
IRDAI vide the circular dated March 1, 2016 had advised all Insurers to follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the IRDAI. Insurance Companies are required to comply with Ind AS for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the period ending March 31, 2019.
In compliance with the regulatory requirements, the Company has constituted a Steering Committee headed by Sanjeev Mantri, Executive Director to oversee the implementation of Ind AS. The scope of the Steering Committee includes evaluating the impact on the following areas:
(a) Ind AS technical requirements
(b) Systems and processes
(c) Business impact
(d) People
(e) Project management
The Steering Committee oversees the implementation of Ind AS and the Audit Committee is updated on a quarterly basis. Further, the Authority vide its circular no. IRDA/F&A/CIR/ACTS/146/06/2017 dated June 28, 2017 deferred the implementation of Ind AS in the Insurance Sector in India for a period of two years and the effective period of implementation of Ind AS in insurance sector was deferred to FY2021. However the requirement of submitting proforma Ind AS financial statement on a quarterly basis continue to be governed as directed vide circular dated December 30, 2016.
Exposure draft on Ind AS 117 - Insurance contract (Internationally IFRS 17) has been issued and is expected to replace present notified Ind AS 104 -Insurance contract. A working committee group was constituted by the IRDAI and basis the recommendation of the committee, the authority has issued a revised draft proforma Ind AS financial statement incorporating changes as per Ind AS 117. Meanwhile IASB (International Accounting Standard Board) has proposed deferral in the adoption of IFRS 17 and IFRS 9 to January 1, 2022.
The Company is continuing to submit the proforma Ind AS financial statement as per previously communicated circular dated December 30, 2016.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
In line with the ''Green Initiative'', the Company has effected electronic delivery of Notice of AGM and Annual Report to those Members whose e-mail IDs were registered with the respective Depository Participants and downloaded from the depositories viz. National Securities Depository Limited/Central Depository Services (India) Limited. The CA2013 and the underlying rules as well as Regulation 36 of the Listing Regulations, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the Green Initiative.
In order to support the cause, we have been regularly requesting members to register/update their e-mail ids with their Depository Participants so as to enable the Company to send various communication through electronic mode. We believe and endorse the ''Green Initiative'' as it would not only rationalise the use of paper but also ensure prompt communication, avoid loss in transit and have reference value of the communication.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with the requirements of Section 134(3) (c) of the CA2013, the Board of Directors confirms that:
1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.
2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. They have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the IRDAI (Preparation of Financial Statements and Auditor''s Report of Insurance Companies) Regulations, 2002 and provisions of the CA2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
4. They have prepared the annual accounts on a going concern basis;
5. They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and;
6. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTS
The Company is grateful to the IRDAI, Government of India, Reserve Bank of India, Securities and Exchange Board of India for their continued cooperation, support and guidance. The Company wishes to thank its investors, rating agencies depositories, Registrar & Share transfer agent & Stock Exchanges for their support.
The Company would like to express its gratitude for the continued support and guidance received from ICICI Bank and their group companies.
The Company would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative have made the organisation''s growth and success possible and continue to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
Lalita D. Gupte
April 18, 2019 Chairperson
Mumbai DIN: 00043559
Mar 31, 2018
To the Members,
The Directors have pleasure in presenting the Eighteenth Annual Report of ICICI Lombard General Insurance Company Limited (ICICI Lombard/the Company) along with the audited financial statements for the year ended March 31, 2018 (FY 2018).
INDUSTRY OVERVIEW
The gross direct premium income (GDPI) of the industry grew from Rs.1,282.13 billion in FY2017 to Rs.1,507.05 billion in FY2018, a growth of 17.5%. ICICI Lombardâs GDPI increased from Rs.107.25 billion in FY2017 to Rs.123.57 billion in FY2018, a growth of 15.2%. ICICI Lombard led the private sector players in the general insurance sector with a market share of 16.8% and had an overall industry market share of 8.2%. ICICI Lombard has now become the 4th largest player overall in the general insurance sector at March 31, 2018.
FINANCIAL HIGHLIGHTS
The financial performance for FY2018 is summarised in the following table:
(Rs. billion)
|
FY2017 |
FY2018 |
|
|
Gross written premium |
109.60 |
126.00 |
|
Earned premium (net) |
61.64 |
69.12 |
|
Income from Investments |
12.83 |
14.82 |
|
Profit before tax |
9.10 |
11.96 |
|
Profit after tax |
7.02 |
8.62 |
|
EPS-Basic |
15.66 |
19.01 |
|
EPS-Diluted |
15.58 |
18.99 |
APPROPRIATIONS
The profit after tax for the year ended March 31, 2018 is Rs.8.62 billion. The profit available for appropriation is Rs.25.69 billion after taking into account the balance of profit of Rs.17.07 billion brought forward from the previous year. The Board had approved payment of interim dividend of Rs.1.50 per equity share during the year. The Board of Directors at its meeting held on April 25, 2018 has further recommended a final dividend of Rs.2.50 per equity share to the shareholdersâ subject to their approval.
SECRETARIAL STANDARDS
During FY2018, the Company was in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to Board and General Meetings.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The provisions of Section 186(4) of the Companies Act, 2013 (the Act) requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security are proposed to be utilised by the recipient of the loan or guarantee or security are not applicable to the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of future operations of the Company.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
The Board of Directors of ICICI Lombard as on March 31, 2018 consisted of ten Directors, out of which five are independent Directors, two are non-executive non-independent Directors and three are whole-time Directors.
All the Directors of the Company have given declarations that they meet the criteria of âfit and properâ as laid down under Corporate Governance Guidelines of IRDAI.
|
Name of Director |
Resignation/Cessation |
With effect from |
|
R. Athappan Non-Executive, Nominee of Fairfax Financial Holdings Limited |
Cessation |
June 8, 2017 |
|
Chandran Ratnaswami Non-Executive, Nominee of Fairfax Financial Holdings Limited |
Cessation |
July 2, 2017 |
|
S Mukherji Non-Executive, Nominee of ICICI Bank Limited |
Cessation |
July 3, 2017 |
|
Vijay Chandok Non-Executive, Nominee of ICICI Bank Limited |
Cessation |
July 3, 2017 |
The Board at its Meeting held on April 25, 2018 appointed Vishal Mahadevia as an Additional Director of the Company in the category of non-executive independent with effect from April 25, 2018 subject to shareholdersâ approval. The appointment is accordingly proposed to the shareholdersâ for their approval.
Independent Directors
All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and âfit and properâ declaration as laid down under Corporate Governance Guidelines of IRDAI.
Retirement of Director by Rotation
In accordance with the provisions of Section 152 of the Companies Act, 2013, and the Articles of Association of the Company, N. S. Kannan, being non-executive non-independent Director of the Company, would retire by rotation at the forthcoming AGM and is eligible for re-appointment. N. S. Kannan has offered himself for re-appointment.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and guidelines for insurance companies issued by Insurance Regulatory and Development Authority of India (IRDAI), the Board has carried out an annual performance evaluation of its own performance as a whole and that of its statutory committees and that of its individual directors both executive and non-executive including independent Directors and the Chairperson. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Deposits
During the year under review, ICICI Lombard has not accepted any deposits from the public.
Listing of Equity Shares
During FY2018, ICICI Lombard completed its Initial Public Offer (âIPOâ) by way of an offer for sale of 86,247,187 equity shares of face value Rs.10 each of the Company, by the selling shareholders ICICI Bank Limited and FAL Corporation.
The shares of the Company were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on September 27, 2017.
AUDITORS
Statutory Auditors
IRDAI vide circular dated May 18, 2016, had issued Corporate Governance Guidelines (CG guidelines) wherein criteria for appointment of statutory auditors of insurance companies had been stated.
The present term of office of the joint statutory auditors of the Company, namely, Chaturvedi & Co., Chartered Accountants and PKF Sridhar & Santhanam LLP Chartered Accountants expires at the conclusion of the ensuing Annual General Meeting (AGM); however both the audit firms are eligible for re-appointment. Chaturvedi & Co., Chartered Accountants, has completed its first term of five years and PKF Sridhar & Santhanam LLP Chartered Accountants, has completed two years out of their first term of five years as on March 31, 2018.
The re-appointment of Chaturvedi & Co., Chartered Accountants, as recommended by the Audit Committee and approved by the Board, is proposed for a second term of five years i.e. from the conclusion of the Eighteenth AGM upto the conclusion of the Twenty-third AGM subject to ratification by the Members every year. The appointment of PKF Sridhar & Santhanam LLP Chartered Accountants is proposed for a period of three years i.e. from the conclusion of the Eighteenth AGM till the conclusion of the Twenty-first AGM subject to ratification by the Members every year.
Chaturvedi & Co. and PKF Sridhar & Santhanam have confirmed their eligibility under Section 141 of the Act and the rules framed thereunder for re-appointment as Auditors of the Company.
The appointment is accordingly proposed in the Notice of the forthcoming AGM vide item no. 4.
Auditorâs Report
There is no qualification, reservation, adverse remark or disclaimer made by the auditors in their report.
Secretarial Auditors
Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Dholakia & Associates LLP, a firm of practising company secretaries, to conduct the secretarial audit of the Company for FY2018. The Secretarial Audit Report is annexed herewith as Annexure A. There are no qualifications, reservation, adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as âAnnexure Bâ to the Directorsâ Report.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of the provisions of Section 136 of the Companies Act, 2013 the Directorsâ Report is being sent to the shareholders of ICICI Lombard excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the registered office of the Company.
RELATED PARTY TRANSACTIONS
ICICI Lombard undertakes various transactions with related parties in the ordinary course of business. ICICI Lombard has a Board-approved Policy on Related Party Transactions.
The transactions between the Company and its related parties, during the year ended March 31, 2018 were in the ordinary course of business and based on the principles of armâs length basis. The details of related party transactions are disclosed under Note No. 5.2.12 of the Notes to Financial Statements for FY2018.
All materially significant related party transactions are placed before the Audit Committee on a quarterly basis. The policy on dealing with related party transactions has been hosted on the website and can be viewed at https://www.icicilombard.com/docs/default-source/ default-document-library/policy-on-related-party-transactions.pdf
EXTRACT OF ANNUAL RETURN
Extract of Annual Return pursuant to the prescribed provisions of Companies Act, 2013, and the rules framed thereunder is furnished in Form MGT-9, annexed as âAnnexure Câ to this report.
RISK MANAGEMENT FRAMEWORK
A statement indicating development and implementation of risk management policy including identification therein of elements of risk, if any, which may pose significant risk to the Company has been given in the Corporate Governance Report.
DISCLOSURES AS PER THE SEXUAL HARASSEMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
ICICI Lombard has a policy against sexual harassment and a formal process for dealing with complaints of harassment or discrimination. The said policy is in line with relevant Act passed by Parliament in 2013. ICICI Lombard through its policy ensures that all such complaints are resolved within defined timelines. Seven cases were reported and were disposed off.
RURAL AND SOCIAL RESPONSIBILITY
ICICI Lombard issued more than 565,000 policies in rural areas and covered more than 17,500,000 lives falling within the norms of social responsibility, as prescribed by IRDAI.
CAPITAL
The total capital invested till March 31, 2018 including share premium, was Rs.20.21 billion. The net worth of ICICI Lombard increased from Rs.37.25 billion at March 31, 2017 to Rs.45.41 billion at March 31, 2018. The solvency position of ICICI Lombard at March 31, 2018 was 2.05 times as against minimum of 1.50 times prescribed by IRDAI.
DIVIDEND AND DIVIDEND DISTRIBUTION POLICY
The operations have resulted in a profit after tax of Rs.8.62 billion as compared to a profit after tax of Rs.7.02 billion for the previous year. The Board had approved payment of interim dividend of Rs.0.75 per equity share for the first quarter of the FY2018 by way of circular resolution on June 23, 2017 and second interim dividend of Rs.0.75 per equity share, for the second quarter of the FY2018 at its Meeting held on October 17, 2017. Further, the Board at its Meeting held on April 25, 2018, has recommended a final dividend of Rs.2.50 per equity share to the shareholdersâ for their approval.
In terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) the Dividend Distribution Policy of the Company has been hosted on the Companyâs website and can be viewed at, https://www.icicilombard.com/docs/default-source/ Policy-Wordings-product-Brochure/dividend-policy.pdf
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted Corporate Social Responsibility (CSR) Committee in accordance with the provisions of the Companies Act, 2013. The CSR Committee was constituted comprising of members of the board of directors of the Company consisting of three directors including independent Directors. The CSR policy of the Company and the details about the development of the CSR policy and initiatives taken by the Company on CSR during the year are in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as given in Annexure D to this report.
CREDIT RATING
During the year, ICICI Lombard has maintained credit rating of âAAAâ by ICRA and âCrisil AAA/Stableâ by Crisil for subordinate debt raised by the Company. This is the highest rating regarding safety and timely servicing of financial obligations.
Further, the Company maintained its credit rating of âiAAAâ awarded by ICRA for claims paying ability by the Company. This indicates that the Company has highest claims paying ability and has a fundamentally strong position.
I. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption do not apply to ICICI Lombard. ICICI Lombard has, however, used information technology extensively in its operations.
During FY2018, expenditures in foreign currencies amounted to Rs.4.05 billion and earnings in foreign currencies amounted to Rs.1.98 billion.
II. Employee Stock Option Scheme
In FY2006, ICICI Lombard had instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Lombard to participate in its future growth and financial success. As per ESOS, the maximum number of options granted to any employee/Director in a year shall not, except with the approval of the Board, exceed 0.10% of ICICI Lombardâs issued equity shares at the time of grant and the aggregate of all such options (net of forfeited/lapsed) is limited to 5% of ICICI Lombardâs issued equity shares on the date of the grant.
The Board at its Meeting held on January 14, 2015 and the Shareholders at the Extra-Ordinary General Meeting held on March 4, 2015 had approved an amendment in the Employee Stock Option Scheme, 2005 to extend the exercise period by three more years in respect of options granted in the years 2005, 2006 and 2007.
Options granted in the years 2005, 2006, 2007, 2008 and 2010 vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options granted the year 2009 vest in over a five year period with no vesting in the first year and 20%, 20%, 30% and 30% of the grant vesting each year in the subsequent four years. Options granted for the year 2011 vest over a two-year period, with 40% and 60% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options can be exercised within a period of 13 years in respect of options granted in 2005, 2006 and 2007. Option other than those years can be exercised over a period of 10 years from the date of grant or five years from the date of vesting.
Particulars of options granted by ICICI Lombard up to March 31, 2018 are given below:
|
Options granted |
23,572,260 |
|
Options vested |
18,204,108 |
|
Options exercised |
14,163,448 |
|
Number of shares allotted pursuant to exercise of options |
2,797,618 |
|
Options forfeited/lapsed |
8,913,672 |
|
Extinguishment or modification of options* |
Nil |
|
Amount realised by exercise of options (?) |
356,974,940 |
|
Total number of options in force |
495,140 |
* The exercise period for stock options granted between 2005 to 2007 has been modified from tenth anniversary to thirteenth anniversary.
III. Fit and Proper criteria for investors and continuous monitoring requirement
The IRDAI guidelines for Listed Indian Insurance Companies prescribes the following:
1. Self-certification of âFit and proper personâ criteria by a person holding/intending to acquire equity shares of 1% or more of paid-up equity share capital.
2. Prior permission of IRDAI for holding shares beyond 5% of the paid-up equity share capital.
Further information on detailed procedure and format for self-certification is hosted on the Companyâs website
IV. Implementation Strategy on Ind-As
IRDAI vide the circular dated March 1, 2016 had advised all Insurers to follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the IRDAI. Insurance Companies are required to comply with Ind AS for financial statements for accounting periods beginning from April 1, 2017 onwards, with comparatives for the period ending March 31, 2018.
In compliance with the regulatory requirements, the Company has constituted a Steering Committee headed by Sanjeev Mantri, Executive Director to oversee the implementation of Ind AS. The scope of the Steering Committee includes evaluating the impact on the following areas:
(a) Ind AS technical requirements
(b) Systems and processes
(c) Business impact
(d) People
(e) Project management
The Steering Committee oversees the implementation of Ind AS and the Audit Committee is updated on a quarterly basis. Further, in compliance with the above Circular, the Company has also submitted the proforma Ind AS financial statements for the nine months ended December 31, 2017 to IRDAI.
V. DIRECTORSâ RESPONSIBILITY STATEMENT
Directors confirm that:
1. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;
3. they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the IRDAI (Preparation of Financial Statements and Auditorâs Report of Insurance Companies) Regulations, 2002 and provisions of the Companies Act, 2013 for safeguarding the assets of ICICI Lombard and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively and;
6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
VI. ACKNOWLEDGEMENTS
ICICI Lombard is grateful to the Insurance Regulatory and Development Authority of India, Government of India, Reserve Bank of India and Securities and Exchange Board of India for their continued cooperation, support and guidance. ICICI Lombard wishes to thank its investors, rating agencies depositories, Registrar & Share Transfer Agent & Stock Exchanges for their support.
ICICI Lombard would like to express its gratitude for the continued support and guidance received from ICICI Bank and its group companies.
ICICI Lombard would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative have made the organisationâs growth and success possible and continue to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
Chanda Kochhar
June 6, 2018 Chairperson
Mumbai DIN: 00043617
Mar 31, 2017
Directors'' Report
To the Members,
The Directors have pleasure in presenting the Seventeenth Annual Report of ICICI Lombard General Insurance Company Limited (ICICI Lombard/the Company) along with the audited financial statements for the year ended March 31, 2017.
Industry Overview
The gross direct premium (GDPI) of the industry grew from '' 963.77 billion in FY2016 to '' 1,275.75 billion in FY2017*, a growth of 32.3%. ICICI Lombard''s GDPI increased from '' 80.91 billion in FY2016 to '' 107.25 billion in FY2017, a growth of 32.6%. ICICI Lombard led the private players in the general insurance sector with a market share of 18% and had an overall industry market share of 8.4%. The Government of India had introduced a new flagship scheme namely Pradhan Mantri Fasal Bima Yojana (PMFBY) from Kharif 2016 which resulted in significant growth in crop insurance business.
Financial Highlights
The financial performance for FY2017 is summarized in the following table:
(Rs, billion)
|
FY 2016 |
FY 2017 |
|
|
Gross written premium |
82.96 |
109.60 |
|
Earned premium |
48.22 |
61.64 |
|
Income from Investments |
11.57 |
12.83 |
|
Profit before tax |
7.08 |
9.10 |
|
Profit after tax |
5.07 |
7.02 |
Appropriations
The profit after tax for the year ended March 31, 2017 is Rs, 7.02 billion. The profit available for appropriation is Rs, 18.96 billion after taking into account the balance of profit of Rs, 11.94 billion brought forward from the previous year. The Directors are pleased to recommend aggregate interim dividends declared and paid during the year of Rs, 1.57 billion (Rs, 1.89 billion including dividend distribution tax) as final dividend for the year.
Particulars of Loans, Guarantees or Investments
The provisions of Section 186(4) of the Companies Act, 2013 requiring disclosure in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security is not applicable to the Company.
Significant and Material Orders Passed by the Regulators or Courts or Tribunals Impacting the Going Concern Status of the Company and its Future Operations
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of future operations of the Company.
Directors and Other Key Managerial Personnel
The Board of Directors of ICICI Lombard at March 31, 2017 consisted of fourteen Directors, out of which five are Independent Directors, six are Non-executive Nominee Directors and three are Wholetime Directors.
Independent Directors
At the Annual General Meeting (AGM) held on July 1,
2016, the members of the Company had appointed Uday Chitale as a Non-executive Independent Director of the Company for a term of five years effective from April 19, 2016 and Suresh Kumar as a Non-executive Independent Director of the Company for a term of five years effective from June 1, 2016.
At the Extra-Ordinary General Meeting (EGM) held on August 24, 2016 the members of the Company had appointed Ved Prakash Chaturvedi as Non-executive Independent Director of the Company for a term of five years effective July 13, 2016. Further, at the EGM held on November 10, 2016, the members of the Company had appointed Mrs. Lalita D. Gupte as Non-executive Independent Director of the Company for a term of five years effective from October 18, 2016.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and ''fit and proper'' declaration as laid down under Corporate Governance Guidelines of IRDAI.
Retirement by Rotation
In accordance with the provisions of the Companies Act, 2013, and the Articles of Association of the Company, S. Mukherji and Chandran Ratnaswami, being Nonexecutive Nominee Directors of the Company, would retire by rotation at the forthcoming AGM and are eligible for re-appointment. Both the directors have offered themselves for re-appointment.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Guidelines for insurance companies issued by IRDAI, the Board has carried out an annual performance evaluation of its own performance as a whole and that of its statutory committees and that of its individual directors both Executive and Non-executive including Independent Directors and of its Chairperson. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Auditors
Statutory Auditors
Insurance Regulatory and Development Authority of India (IRDAI) vide circular dated May 18, 2016, had issued Corporate Governance Guidelines (CG guidelines) wherein criteria for appointment of statutory auditors of insurance companies had been stated. Pursuant to the CG guidelines, the provisions of appointment of auditors are aligned with the provisions of Companies Act, 2013 (CA2013).
The present term of office of the joint statutory auditors of the Company, namely, Chaturvedi & Co., Chartered Accountants and PKF Sridhar & Santhanam LLP, Chartered Accountants expires at the conclusion of the ensuing Annual General Meeting (AGM), however both the audit firms are eligible for re-appointment. Chaturvedi & Co., Chartered Accountants, has completed its term of four (4) years out of their first term of five years and PKF Sridhar & Santhanam LLP, Chartered Accountants, has completed its term of one (1) year out of their first term of five years as on March 31, 2017.
The appointment of Chaturvedi & Co., Chartered Accountants, is proposed for a period of one year i.e. from the conclusion of Seventeenth AGM upto the conclusion of Eighteenth AGM. The appointment of PKF Sridhar & Santhanam LLP, Chartered Accountants is proposed for a period of four years i.e. from the conclusion of Seventeenth AGM till the conclusion of Twenty First AGM subject to ratification by the Members every year.
The Auditors have confirmed their eligibility under Section 141 of the Act and the Rules framed there under for the re-appointment of Auditors of the Company.
The appointment is accordingly proposed in the Notice of the forthcoming AGM vide item no. 5.
Secretarial Auditors
Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Dholakia & Associates LLP, a firm of practicing company secretaries, to conduct the secretarial audit of the Company for FY2017. The Secretarial Audit Report confirms that ICICI Lombard has complied with all the applicable provisions of various laws as mentioned in the audit report.
The Secretarial Audit Report is annexed herewith as "Annexure Aâ.
Particulars of Employees
The statement containing particulars of employees as required under Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as "Annexure B" to the Directors'' Report.
The statement containing particulars of employees as required under Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of the provisions of Section 136 of the Companies Act, 2013 the Directors'' Report is being sent to the shareholders of ICICI Lombard excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the registered office of the Company.
Related Party Transactions
ICICI Lombard undertakes various transactions with related parties in the ordinary course of business. ICICI Lombard has a Board approved Policy on Related Party Transactions.
The transactions between the Company and its related parties, during the year ended March 31, 2017 were in the ordinary course of business and based on the principles of arm''s length basis. The details of related party transactions are disclosed under Note No. 5.2.13 of the Notes to Financial Statements for FY2017.
All materially significant related party transactions are placed before the Audit Committee on a quarterly basis.
Extract of Annual Return
The extract of Annual Return pursuant to the prescribed provisions of Companies Act, 2013, and the rules framed there under, is furnished in Form MGT-9, annexed as "Annexure C" to this report.
Risk Management Framework
A statement indicating development and implementation of risk management policy including identification therein of elements of risk, if any, which may pose significant risk to the Company has been given in the Corporate Governance Report.
Disclosures as per the Sexual Harassement of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has a policy against Sexual Harassment and a formal process for dealing with complaints of harassment or discrimination. The said policy is in line with relevant Act passed by Parliament in 2013. The Company through its policy ensures that all such complaints are resolved within defined timelines. During FY2017, 8 cases were reported and were disposed off.
Rural and Social Responsibility
ICICI Lombard issued more than 565,000 policies in rural areas and covered more than 17,500,000 lives falling within the norms of social responsibility, as prescribed by IRDAI.
Capital
The total capital invested by shareholders till March 31, 2017 including share premium, was Rs, 19.85 billion. The net worth of ICICI Lombard increased from Rs, 31.76 billion at March 31, 2016 to Rs, 37.25 billion at March 31, 2017. The solvency position of ICICI Lombard at March 31, 2017 was 2.10 times as against minimum of 1.50 times prescribed by IRDAI.
Credit Rating
During the year, the Company was awarded credit rating of "AAA" by ICRA and "Crisil AAA/Stable" by Crisil for Subordinate Debt raised by the Company. This is the highest rating regarding safety and timely servicing of financial obligations.
Further, the Company maintained its credit rating of "iAAA" awarded by ICRA for Claims paying ability by the Company. This indicates that the Company has highest claims paying ability and has a fundamentally strong position.
Corporate Governance Report
I. Philosophy of Corporate Governance
ICICI Lombard is fully committed to follow sound corporate governance practices and uphold the highest business standards in conducting business. The Company continues to focus on building trust with shareholders, policyholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance viz. integrity, equity, transparency, fairness, sound disclosure practices, accountability and commitment to values. It also aims to increase and sustain its corporate value through growth and innovation.
The Company''s governance framework encompasses not only regulatory and legal requirements but also several voluntary practices aimed at maximising shareholders'' value legally, ethically and on a sustainable basis.
Whistle Blower Policy
ICICI Lombard has formulated a Whistle Blower Policy (Policy) which is designed to provide its employees, a channel for communicating instances of breach in the code of conduct, legal violation, actual or suspected fraud and on the accounting policies and procedures adopted for any area or item. The framework of the Policy strives to foster responsible and secure whistle blowing. This mechanism has been communicated to the employees and posted on ICICI Lombard''s intranet and an extract of the same has been posted on the website of ICICI Lombard.
Code of Conduct as prescribed under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
In accordance with the requirements of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, ICICI Lombard has instituted a code of conduct to regulate, monitor and report trading in debt securities by its employees and other connected persons.
Management Structure
The Company has a multi-tier management structure, comprising the Board of Directors at the apex followed by employees at the top management, senior management, middle management and junior management positions to ensure that:
- Strategic supervision is provided by the Board;
- Control and implementation of Company''s strategy is achieved effectively;
- Operational management remains focused on implementation;
- Information regarding the Company''s operations and financial performance is made available to stakeholders;
- Delegation of decision making with accountability is achieved;
- Financial and operating control and integrity are maintained at an optimal level;
- Risk is suitably evaluated and dealt with;
- Compliance with applicable acts and regulations is achieved;
- Corporate culture that recognizes and rewards adherence to ethical standards is developed.
This multi-tier management structure, besides ensuring greater management accountability and credibility, facilitates increased autonomy of businesses, performance discipline and development of business leaders, leading to enhanced public confidence.
Board of Directors
ICICI Lombard has a broad-based Board of Directors, constituted in compliance with provisions of the Companies Act, 2013, Corporate Governance Guidelines prescribed for insurance companies by IRDAI and in accordance with good governance practices. At March 31, 2017, the Company''s Board of Directors consisted of fourteen members. Out of the fourteen members of the Board, four are nominated by ICICI Bank Limited, two are nominated by Fairfax Financial Holdings Limited, five are Independent Directors and three are Whole time Directors including the Managing Director & CEO. Except the Whole time Directors, all other Directors, including the Chairperson of the Board, are Non-executive Directors. There is a clear segregation of responsibility and authority between the Chairperson and the Whole time Directors. The Board functions either as an entity per se, or through various Committees constituted to oversee specific operational areas. There is an appropriate mix of Executive, Non-executive and Independent Directors to maintain the professionalism and independence of the Board. The Independent Directors are eminent personalities with significant expertise in the fields of accountancy, banking, finance, law, strategy, insurance and economics. None of the Directors are related to any other Director or employee of the Company.
J. V Prasad, Appointed Actuary of the Company is a permanent invitee to the Board Meeting.
Composition of the Board of Directors
|
Name of the Director |
Category |
Qualification |
Field of Specialisation |
|
Chanda Kochhar (DIN: 00043617) |
Chairperson, Non- Executive, Nominee of ICICI Bank |
B.A, MBA, I.C.W.A., MMS (Finance) |
Banking & finance. |
|
R. Athappan (DIN: 00915847) |
Non- Executive, Nominee of Fairfax |
B.E. (Electrical), A.I.I.I. |
Insurance. |
|
Vijay Chandok (DIN: 01545262) |
Non- Executive, Nominee of ICICI Bank |
MMS, Bachelor in Technology |
Banking & finance. |
|
Ved Prakash Chaturvedi (DIN: 00030839) w.e.f July 13, 2016 |
Non-Executive, Independent |
B.E., MBA - IIM Bangalore |
Finance & investment. |
|
Uday Chitale (DIN: 00043268) w.e.f. April 19, 2016 |
Non-Executive, Independent |
C.A. |
Banking & insurance. |
|
Lalita D. Gupte (DIN: 00043559) w.e.f. October 18, 2016 |
Non-Executive, Independent |
BA (Eco. Hons.), MMS - Master of Management Studies |
Banking & insurance. |
|
N. S. Kannan (DIN:00066009) |
Non- Executive, Nominee of ICICI Bank |
B.E. (Hon), PGDM, IIM, Bangalore, CFA |
Banking & finance. |
|
Suresh Kumar (DIN: 00494479) w.e.f June 1, 2016 |
Non-Executive, Independent |
B. Com (Hons.) Post Graduation - Investment Management Programme, Stanford University and London School of Business Advance Management - Columbia Business School |
Banking & finance. |
|
S. Mukherji (DIN:00057492) |
Non- Executive, Nominee of ICICI Bank |
B.A. (Eco.), M.Sc Economics (London School of Economics), MMS |
Banking & finance. |
|
Ashvin Parekh (DIN:06559989) |
Non- Executive, Independent |
FC.A |
Business strategy, Corporate planning, business transformation across various industries. |
|
Chandran Ratnaswami (DIN:00109215) |
Non- Executive, Nominee of Fairfax |
B.E. (Civil), MBA. |
Investment & insurance. |
|
Bhargav Dasgupta (DIN:00047728) |
Managing Director & CEO |
PGDM, IIM Bangalore, B.E. (Mechanical) |
Banking & insurance. |
|
Alok Kumar Agarwal (DIN:03434304) |
Executive Director |
B.E. (Chemical) PGDM, IIM Calcutta |
Banking & insurance. |
|
Sanjeev Mantri (DIN: 07192264) |
Executive Director |
FC.A, I.C.W.A. |
Banking & insurance. |
The Board meets at regular intervals to discuss and decide on business policy and strategy apart from other board businesses. The Board met five times in the year under review on April 19, 2016, July 13, 2016, October 18, 2016, January 19, 2017 and February 20, 2017. The Chairman of respective Committees briefs the Board regarding key matters deliberated during the Committee Meetings. The attendance record of the Directors is set out in the following table:
|
Name of the Director |
Number of Board Meetings attended during the year |
|
Chanda Kochhar |
5/5 |
|
R. Athappan |
2/5 |
|
Vijay Chandok |
5/5 |
|
Ved Prakash Chaturvedi (w.e.f. July 13, 2016) |
3/5 |
|
Uday Chitale (w.e.f. April 19, 2016) |
4/5 |
|
Dileep Choksi (upto July 1, 2016) |
1/5 |
|
Lalita D. Gupte (w.e.f. October 18, 2016) |
2/5 |
|
Suresh Kumar (w.e.f. June 1, 2016) |
4/5 |
|
N. S. Kannan |
5/5 |
|
S. Mukherji |
5/5 |
|
Ashvin Parekh |
5/5 |
|
Chandran Ratnaswami |
2/5 |
|
Bhargav Dasgupta |
5/5 |
|
Alok Kumar Agarwal |
5/5 |
|
Sanjeev Mantri |
5/5 |
|
Name of the Appointed Actuary |
Number of Board Meetings attended during the year |
|
J. V. Prasad |
5/5 |
Board Committees (''the Committees'')
The Board has constituted following Committees:
(i) Board Nomination and Remuneration Committee
(ii) Investment Committee
(iii) Audit Committee
(iv) Risk Management Committee
(v) Policyholder Protection Committee
(vi) Corporate Social Responsibility Committee
In addition to above, the Board has also constituted Bank Operation Committee, Share Transfer & Investor Grievance Redressal Committee and Debenture Committee comprising Non-executive Director, Whole time Directors and Executives of the Company. The terms of reference of the Committees of the Board are determined by the Board from time to time. Minutes of the Committee Meetings are placed before the Board for its information. The Chairman of the respective Committees briefs the Board on deliberations taken place at the Committee Meetings in relation to important discussions, nothings and approvals. The role and composition of these Committees, along with the number of meetings held during FY2017 and the attendance of the members are provided below:
(i) Board Nomination and Remuneration Committee Terms of reference
The functions of this Committee include identification of persons who are qualified to become directors and who may be appointed as senior management, formulation of criteria for determining qualifications, positive attributes, independence, recommendations of their appointments to the Board, framing an evaluation framework for the evaluation of the performance of the whole time/ independent Directors and the Board, its Committees and Chairperson of the Board, formulation of Remuneration Policy to include recommendation of remuneration for directors, key managerial personnel and senior management, approval of the policy for and quantum of bonus/long term performance pay and other benefits payable to the employees and Whole time Directors of the Company, framing of guidelines for the Employees Stock Options Scheme and recommendation of the grant of stock options to the employees, whole time Directors, KMPs and senior management of the Company and recommending the re-constitution of Board constituted committee.
Composition
In terms of the provisions of Companies Act, 2013, the Board Nomination and Remuneration Committee (the Committee) comprises of five Non-executive Directors, three of whom are Independent Directors. The Committee was chaired by Uday Chitale, a Non-executive Independent Director of the Company.
The composition of the Committee is given below along with the attendance of the members. The Committee met four times in the year under review on April 19, 2016, July 13, 2016, October 18, 2016 and January 19, 2017.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
Dileep Choksi, Chairman, Non-executive Independent Director (upto April 19, 2016) |
1/4 |
|
Uday Chitale, Chairman, Non-executive Independent Director (w.e.f. April 19, 2016) |
3/4 |
|
Chanda Kochhar, Non-executive Director |
4/4 |
|
Chandran Ratnaswami, Non-executive Director |
1/4 |
|
Lalita D. Gupte, Non-executive Independent Director (w.e.f. January 19, 2017) |
|
|
Ashvin Parekh, Non-executive Independent Director |
4/4 |
The Board of Directors at its Meeting held on April 19, 2016 and January 19, 2017 had re-constituted the Board Nomination and Remuneration Committee pursuant to which Uday Chitale was appointed as Chairman and Mrs. Lalita D. Gupte was appointed as Member of the Committee, respectively.
(ii) Investment Committee Terms of reference
The functions of the Committee include overseeing the implementation of the investment policy approved by the Board from time to time, reviewing the said policy, periodically updating the Board on investment activities of the Company, reviewing the investment strategies adopted from time to time and giving suitable directions as needed in the best interests of the Company, reviewing the broker policy and making suitable amendments from time to time and reviewing counter party/intermediary exposure norms.
In addition to the above the Committee also supervises the asset allocation strategy to ensure financial liquidity, security and diversification through liquidity contingency plan and asset liability management policy. The Committee also oversees the assessment, measurement and accounting for other than temporary impairment in investments in accordance with the policy adopted by the Company and reviews the broker empanelment/de-empanelment on an annual basis.
Composition
The Investment Committee (the Committee) comprises of two Non-executive Directors, one Executive Director, the Appointed Actuary of the Company, the Chief-Investments and the Chief Financial Officer. The Committee was chaired by Chandran Ratnaswami, a Non-executive Nominee Director of the Company.
The composition of the Committee is given below along with the attendance of the members. The Committee met four times in the year under review on April 18, 2016, July 13, 2016, October 17, 2016 and January 19, 2017.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
Chandran Ratnaswami, Chairman |
1/4 |
|
N. S. Kannan, Non-executive Director |
4/4 |
|
Bhargav Dasgupta, Managing Director & CEO |
4/4 |
|
J. V Prasad, Appointed Actuary |
4/4 |
|
S. Gopalakrishnan, Chief- Investments |
4/4 |
|
Gopal Balachandran, Chief Financial Officer |
3/4 |
The meetings of the Committee held on April 18, 2016, October 17, 2016 and January 19, 2017, were chaired by N. S. Kannan in absence of Chandran Ratnaswami, Chairman of the Committee.
(iii) Audit Committee Terms of reference
The functions of the Committee include overseeing the Company''s financial reporting process under Indian GAAP/Ind AS, US GAAP and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible, recommending the appointment/removal of external auditor(s), fixation of audit fee and payment for any other services, review of the quarterly and annual financial statements before submission to the Board including management report and solvency margin position, review and monitor the auditor''s independence and performance, effectiveness of audit process, reviewing with the management, external auditors and internal auditors, evaluation of internal control systems, discussion with external auditors before the audit commences, the nature and scope of audit as well as post-audit discussion to ascertain any area of concern, reviewing the adequacy of internal audit function, reporting structure coverage and frequency of internal audit, discussion with internal auditors, any significant findings and follow up there on, reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature, review of functioning of Whistle Blower Policy and reporting the matter to the Board, review of compliance, show cause/inspection and audit reports, review the Company''s financial and risk management policies and looking into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, approval or any subsequent modification of transactions of the Company with related parties, scrutiny of inter-corporate loans and investments, valuation of undertakings or assets of the Company, wherever it is necessary, monitoring the end use of funds raised through public offers and related matters, review of policy on appointment of Insurance agents, setting up of processes to address all concerns relating to adequacy of checks and control mechanisms, to monitor and report to the Board on any significant compliance breaches, to recommend appointment and remuneration, performance and oversight of the work of the auditors, recommend appropriate policy to the Board as may be prescribed by IRDAI from time to time and review of Ind-AS implementation.
Composition
The Audit Committee (the Committee) comprises of four Non-executive Directors, three of whom are Independent Directors. The Chief Financial Officer and the Chief Risk Officer, Internal Auditor, the Head of Group Internal Audit, Statutory Auditors and their representatives, Compliance Officer and other officials at senior management level are invitees to the Audit Committee. The Committee was chaired by Ashvin Parekh, a non executive Independent Director of the Company.
The composition of the Committee is given below along with the attendance of the members. The Committee met five times in the year under review on April 18, 2016, July 1, 2016, July 12, 2016, October 17, 2016 and January 18, 2017.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
Dileep Choksi, Chairman, Non-executive Independent Director (upto April 19, 2016) |
1/5 |
|
Ashvin Parekh, Non-executive Independent Director (Chairman w.e.f. April 19, 2016) |
5/5 |
|
Uday Chitale, Non-executive Independent Director (w.e.f. April 19, 2016) |
4/5 |
|
S. Mukherji, Non-executive Director |
5/5 |
|
Lalita D. Gupte, Non-executive Independent Director (w.e.f. January 19, 2017) |
The Board of Directors at its Meeting held on April 19, 2016 and January 19, 2017, had re-constituted the Audit Committee pursuant to which Ashvin Parekh was appointed as Chairman and Mrs. Lalita D. Gupte was appointed as Member of the Committee, respectively.
(iv) Risk Management Committee Terms of reference
The functions of the Committee include assisting the Board in effective operation of the risk management programme by performing specialized analysis and quality reviews, maintaining a group-wide and aggregated view on the risk profile of the insurer in addition to the solo and individual risk profile, reporting to the Board details on the risk exposures, the actions taken to manage the exposures and advising the Board with regard to risk management decisions in relation to strategic and operational matters, review of outsourcing guidelines, review of status update on deviation cases under framework on IIB rates, review the Company''s risk - reward performance to align with overall policy objectives, periodical review of the solvency position of the Company, review regular updates on business continuity, review the Company''s risk management and operational risk related policies/frameworks including fraud monitoring policy & framework and anti-fraud policy & framework, review and recommend appropriate policy to the Board as may be prescribed by IRDAI from time to time.
Composition
The Risk Management Committee (the Committee) has been formed in accordance with the Corporate Governance Guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI). It comprises of six Non-executive Directors out of which three are Independent Directors, two are Nominee Directors and one Executive Director of the Company. The Chief Financial Officer and Chief Risk Officer and other officials at senior management level are invitees to the Committee Meetings. The Committee was chaired by S. Mukherji, a Non-executive Nominee Director.
The composition of the Committee is given below along with the attendance of the members. The Committee met four times in the year under review on April 18, 2016, July 12, 2016, October 18, 2016 and January 18, 2017.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
S. Mukherji, Chairman |
4/4 |
|
R. Athappan, Non-executive Director |
1/4 |
|
Uday Chitale, Non-executive Independent Director (w.e.f. July 13, 2016) |
2/4 |
|
Suresh Kumar, Non-executive Independent Director (w.e.f. July 13, 2016) |
2/4 |
|
Ashvin Parekh, Non-executive Independent Director |
4/4 |
|
Bhargav Dasgupta, Managing Director & CEO |
4/4 |
The Board of Directors at its Meeting held on July 13, 2016, had re-constituted the Risk Management Committee pursuant to which Uday Chitale and Suresh Kumar were appointed as Members of the Committee.
(v) Policyholder Protection Committee Terms of reference
The functions of the Committee include putting in place proper procedures and effective mechanism to address complaints and grievances of policyholders including mis-selling by intermediaries, ensuring compliance with the statutory requirements as laid down in the regulatory framework, reviewing the mechanism at periodic intervals, ensuring adequacy of "material information" to the policyholders to comply with the requirements laid down by the Authority both at the point of sale and at periodic intervals, providing details of Insurance Ombudsman to the policyholders, monitoring of payment of dues to the policyholders and disclosure of unclaimed amount thereof, reviewing regulatory reports to be submitted to various authorities, reviewing the standard operating procedures for treating the customer fairly, reviewing the framework for awards given by Insurance Ombudsman/ Consumer Forums, customer
complaints, identifying market conduct issues and advising the management appropriately about rectifying systemic issues, if any, reviewing all the awards given by Insurance Ombudsman/ Consumer Forums remaining unimplemented for more than three (3) months with reasons therefore and report the same to the Board for initiating remedial action, where necessary, reviewing claim report including status of outstanding claims with ageing of outstanding claims and reviewing repudiated claims with analysis of reasons.
Composition
The Policyholder Protection Committee (the Committee) has been formed in accordance with the Corporate Governance Guidelines issued by IRDAI. It comprises of four Non-executive Directors and one Executive Director. The Committee was chaired by Ashvin Parekh, a non executive Independent Director of the Company.
The composition of the Committee is given below along with the attendance of the members. The Committee met four times in the year under review on April 18, 2016, July 12, 2016, October 17, 2016 and January 18, 2017.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
Ashvin Parekh, Chairman, Non-executive Independent Director |
4/4 |
|
Ved Prakash Chaturvedi, Non-executive Independent Director (w.e.f. July 13, 2016) |
2/4 |
|
S. Mukherji, Non-executive Director |
3/4 |
|
Chandran Ratnaswami, Non-executive Director |
- |
|
Bhargav Dasgupta, Managing Director & CEO |
4/4 |
The Board of Directors at its Meeting held on July 13, 2016, had re-constituted the Policyholder Protection Committee pursuant to which Ved Prakash Chaturvedi was appointed as Member of the Committee.
(vi) Corporate Social Responsibility Committee Terms of reference
The functions of the Committee include review of corporate social responsibility (CSR) initiatives undertaken by the ICICI Lombard, formulation and recommendation to the Board of a CSR Policy indicating the activities to be undertaken by the ICICI Lombard and recommendation of the amount of the expenditure to be incurred on such activities, review and recommend the annual CSR plan to the Board, making recommendations to the Board with respect to the CSR initiatives, monitor the CSR activities, implementation and compliance with the CSR Policy and to review and implement, if required, any other matter related to CSR initiatives as recommended/suggested by Companies Act.
Composition
The Corporate Social Responsibility Committee (the Committee) has been formed in accordance with the provisions of the Companies Act, 2013. It comprises of four Non-executive Directors and one Executive Director. The Committee was chaired by Uday Chitale w.e.f. April 19, 2016.
The composition of the Committee is given below along with the attendance of the members. The Committee met two times in the year under review on April 19, 2016 and July 12, 2016.
Attendance record of the Members:
|
Name of Member |
Number of Meetings attended |
|
Dileep Choksi, Chairman, Non-executive Independent Director (upto April 19, 2016) |
1/2 |
|
Uday Chitale, Chairman, Non-executive Independent Director (w.e.f. April 19, 2016) |
1/2 |
|
Ved Prakash Chaturvedi, Non-executive Independent Director (w.e.f. July 13, 2016) |
|
|
S. Mukherji, Non-executive Director |
2/2 |
|
R. Athappan, Non-executive Director |
1/2 |
|
Bhargav Dasgupta, Managing Director & CEO |
2/2 |
The Board of Directors at its Meeting held on April
19, 2016 had re-constituted the Corporate Social Responsibility Committee pursuant to which Uday Chitale was appointed Chairman and Member of the Committee in place of Dileep Choksi and in its meeting held on July 13, 2016, Ved Prakash Chaturvedi was appointed as a Member of the Committee.
II. Policy on Directors'' Appointment and Remuneration
The Company with the approval of its Board Nomination and Remuneration Committee (Committee) has put in place a policy on Director''s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director as well as a policy on Board Diversity.
The Board at its Meeting held on January 14, 2010 had approved adoption of Policy on appointment and compensation of employees (including Whole time Directors, KMPs and senior management). The sitting fee payable to Independent Directors (other than Nominee Directors) as prescribed under the Companies Act, 2013 for attending Board and Committee Meetings was approved by the Board at its Meeting held on April 18,
2014. Further the Company at the Board Meeting held on March 31, 2015 approved the criteria for appointment of a Director, key managerial personnel and senior management. The Compensation Guidelines forming part of the Policy on appointment and compensation of employees was approved by the Board Nomination and Remuneration Committee at its Meeting held on October 18, 2016.
The remuneration payable to independent Directors is governed by the provisions of the Companies Act and related rules to the extent applicable and IRDAI guidelines issued in this regard. The remuneration for the independent directors would be sitting fee for attending each meeting of the Committee/Board as approved by the Board from time to time within the limits as provided under the Companies Act and related rules. IRDAI vide its guidelines dated August 5, 2016 has permitted payment of profit related commission up to Rs, 1,000,000/- per annum for Non executive Directors, effective from October 1, 2016. The Board at its Meeting held on October 18, 2016 approved the payment of profit related commission up to Rs, 750,000/per annum to Non executive independent directors of the Company in line with Group framework applicable to subsidiary Companies of ICICI Bank Limited, which was approved by the members in the EGM held on November 10, 2016.
All the non-executive/independent Directors would be entitled to reimbursement of expenses for attending Board/Committee Meetings, official visits and participation in various forums on behalf of the Board.
III. Independent Directors Meeting
The code of conduct for Independent Directors prescribed vide Schedule IV of the Companies Act, 2013, provides for an evaluation mechanism for the Board/Chairperson/Non-executive Directors/Whole time Directors which would need to be done at a separate Meeting of Independent Directors, without the attendance of Non-independent Directors and members of management.
Independent Directors of the Company met on April 18, 2017 for FY2018 without the presence of Executive Directors, Non-executive Directors and management personnel to discuss the framework for evaluation of Directors. They also have a separate Meeting every quarter with the Non-executive Chairperson, without any of the Executive Directors being present, to discuss issues and concerns, if any.
IV. Evaluation Mechanism
Pursuant to the provisions of the Companies Act, 2013, and Guidelines for insurance companies issued by IRDAI, the Board shall carry out evaluation of every Director''s performance. The Companies Act, 2013 had also prescribed the code of conduct (the Code) for Independent Directors which provided that the Independent Directors shall meet at least once in a year to review the performance of Non-independent Directors and the Board as a whole and the Chairperson of the Company. The Code also mentioned that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated.
The Company with the approval of its Board Nomination and Remuneration Committee has put in place an evaluation framework for evaluation of the Board, Directors and Chairperson. The Board also carries out an evaluation of the working of its Audit Committee, Board Nomination & Remuneration Committee, Risk Management Committee, Investment Committee, Policyholder Protection Committee and Corporate Social Responsibility Committee.
The evaluation of the Committees is based on the assessment of the compliance with the terms of reference of the Committees. The evaluations for the Directors and the Board were done through circulation of three questionnaires, one for the Directors, one for chairperson and one for the Board which assessed the performance of the Board on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees including assessing the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The evaluation criteria for the Directors were based on their participation, contribution and offering guidance to and understanding of the areas which are relevant to them in their capacity as members of the Board.
V. Details of Managerial Remuneration for FY2017:
(i) Whole time Directors:
The Board based on the recommendation of the Board Nomination and Remuneration Committee approved revision in the remuneration, performance bonus and long term performance pay payable to the Whole time Directors. In terms of provisions of Insurance Amendment Act, 2015, prior approval of IRDAI is obtained to effect the remuneration of Whole time Directors.
|
Names of the Director |
Sitting fees (in Rs,) |
Commission* (in Rs,) |
|
Dileep Choksi |
180,000 |
- |
|
Ved Prakash Chaturvedi |
340,000 |
375,000 |
|
Uday Chitale |
600,000 |
375,000 |
|
Lalita D. Gupte |
200,000 |
340,726 |
|
Suresh Kumar |
440,000 |
375,000 |
|
Ashvin Parekh |
860,000 |
375,000 |
* Commission for FY2017 will be paid in FY2018.
The details of remuneration of Whole time Directors'' are as under:
(Rs, in 000''s)
|
Particulars |
FY2016 |
FY2017 |
|
Salaries and allowances |
107,652 |
117,541 |
|
Contribution to provident fund |
3,668 |
4,279 |
|
Perquisites including perquisites, tax on ESOP''s |
608 |
36,525 |
Provisions towards gratuity, leave accrued and long term performance pay are determined actuarially on an overall basis and accordingly have not been considered for the above disclosure.
(ii) Non-executive Independent Directors:
Non-executive Independent Directors are appointed for their professional expertise in their individual capacity as professionals. Non-executive Independent Directors do not have any material pecuniary relationship with the Company other than the sitting fees and profit related commission payable to them.
The details of sitting fees and commission paid to Nonexecutive Independent Directors during FY2017 are as follows:
(iii) Non-executive Nominee Directors:
Non-executive Nominee Directors were not paid any sitting fees and profit related commission during FY2017.
VI. Compensation Policy and Practices
(i) Qualitative Disclosures
a) Information relating to the design and structure of remuneration processes
1. Key features and objectives of remuneration policy
The Company has under the guidance of the Board and the Board Nomination and Remuneration Committee (BNRC), followed compensation practices intended to drive meritocracy and fairness. The twin pillars of performance management and talent management system are closely intertwined with the compensation, benefits and reward mechanism of the Company. While the Company will strive to ensure internal and external equity that are consistent with emerging market trends, its business model and affordability based on business performance sets the overarching boundary conditions. This approach has been incorporated in the Compensation Policy, the key elements of which are given below:
O Effective governance of compensation:
The BNRC has oversight over compensation. The Committee defines Key Performance Indicators (KPIs) for Whole time Directors and the organizational performance norms for bonus based on the financial and strategic plan approved by the Board. The KPIs include both quantitative and qualitative aspects. The BNRC assesses organizational performance as well as the individual performance for WTDs. Based on its assessment, it makes recommendations to the Board regarding compensation for WTDs and bonus for employees, including senior management and key management personnel.
O Alignment of compensation philosophy with prudent risk taking:
The Company seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed bonus. Compensation is sought to be aligned to both financial and non-financial indicators of performance including aspects like risk management and customer service. In addition, being group company of ICICI Bank, the Company has an employee stock option scheme aimed at aligning compensation to long term performance through stock option grants and deferred cash that vest over a period of time to senior management and WTDs. Compensation to staff in financial and risk control functions is independent of the business areas they oversee and depends on their performance assessment.
2. Whether the Remuneration Committee reviewed the firm''s remuneration policy during the past year, and if so, an overview of any changes that were made
The Company''s Remuneration Policy was reviewed by the BNRC and the Board on October 18, 2016. As per Guidelines received from IRDAI, the Board, in consultation with BNRC, formulated and adopted a comprehensive remuneration policy for the nonexecutive Directors and Managing Director/Chief Executive Officer/Wholetime Directors. Pursuant to the guidelines, the Remuneration Policy was modified by the BNRC and the Board at its Meeting held on October 18, 2016.
3. Discussion of how the Company ensures that risk and compliance employees are remunerated independently of the businesses they oversee
The compensation of staff engaged in control functions like risk and compliance depends on their performance, which is based on achievement of the key results of their respective functions. Their goal sheets do not include any business targets.
b) Description of the ways in which current and future risks are taken into account in the remuneration processes
1. Overview of the key risks that the Company takes into account when implementing remuneration measures
The Board approves the risk framework for the Company and the business activities of the Company are undertaken within this framework to achieve the financial plan. The risk framework includes the Company''s risk appetite, limits framework and policies and procedures governing various types of risk. KPIs of WTDs, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as Combined Ratio. The BNRC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board.
2. Overview of the nature and type of key measures used to take account of these risks, including risk difficult to measure
The annual performance targets and performance evaluation incorporate both qualitative and quantitative aspects including combined ratio, reserving and refinement/improvement of the risk management framework.
3. Discussion of the ways in which these measures affect remuneration
Every year, the financial plan/targets are formulated in conjunction with a risk framework with limit structures for various areas of risk/lines of business, within which the Company operates to achieve the financial plan. To ensure effective alignment of compensation with prudent risk taking, the BNRC takes into account adherence to the risk framework in conjunction with which the financial plan/targets have been formulated. KPIs of WTDs, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the combined ratio and reserving. The BNRC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board.
4. Discussion of how the nature and type of these measures have changed over the past year and reasons for the changes, as well as the impact of changes on remuneration
The nature and type of these measures have not changed over the past year and hence, there is no impact on remuneration.
c) Description of the ways in which the Company seeks to link performance during a performance measurement period with levels of remuneration
1. Overview of main performance metrics for the Company, top level business lines and individuals
The main performance metrics include business growth, market share, profits, strategic goals for future, risk metrics (such as combined ratio), compliance with regulatory norms, refinement of risk management processes and customer service. The specific metrics and weight ages for various metrics vary with the role and level of the individual.
2. Discussion of how amounts of individual remuneration are linked to the Company-wide and individual performance
The BNRC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board regarding the level of performance bonus for employees and the performance assessment of WTDs. The performance assessment of individual employees is undertaken based on achievements vis-a-vis their goal sheets, which incorporate the various aspects/ metrics described earlier.
3. Discussion of the measures the Company will in general implement to adjust remuneration in the event that performance metrics are weak, including the Company''s criteria for determining ''weak'' performance metrics
The Company''s Compensation Policy outlines the measures the Company will implement in the event of a reasonable evidence of deterioration in financial performance. Should such an event occur in the manner outlined in the policy, the BNRC may decide to apply malus/clawback on none, part or all of the unvested deferred variable compensation.
VII. Internal Control
(ii) Quantitative Disclosures (WTD, CEO/MD)
The following table sets forth, for the period indicated, the details of quantitative disclosure for remuneration of Whole time Directors.
|
Particulars |
At March 31, 2017 |
|
Number of MD/CEO/WTDs having received a variable remuneration award during the financial year. |
3 |
|
Number and total amount of sign-on awards made during th e financial year |
Nil |
|
Details of guaranteed bonus, if any, paid as joining / sign on bonus. |
Nil |
|
Breakdown of amount of remuneration awards for the financial year ('' in million) |
|
|
Fixed1 |
78.42 |
|
Variable |
26.71 |
|
Deferred |
19.66 |
|
Non-deferred |
Nil |
|
Share-linked instruments2 |
980,450 |
|
Total amount of outstanding deferred remuneration |
|
|
Cash ('' in million) |
2.17 |
|
Shares (nos.) |
- |
|
Shares-linked instruments2 |
34,36,700 |
|
Other forms |
Nil |
1. Fixed pay includes basic salary, supplementary allowances, superannuation, contribution to provident fund and gratuity fund by the Company.
2. Share-linked instruments are options granted by ICICI Bank under ICICI Bank ESOS scheme.
ICICI Lombard has adopted the following Frameworks in accordance with the requirements laid down under Corporate Governance Guidelines.
(i) Internal Audit Framework
ICICI Lombard has established an internal audit framework with a risk based approach. The internal audit covers auditing of processes as well as transactions.
ICICI Lombard has designed its internal control framework to provide reasonable assurance to ensure compliance with internal policies and procedures, regulatory matters and to safeguard reliability of the financial reporting and its disclosures. An annual risk-based internal audit plan is drawn up on the basis of risk profiling of the businesses/departments of the Company which is approved by the Audit Committee. The Board/Committee considers that the internal control framework is appropriate to the business.
Internal Audit Department''s key audit findings, recommendations and compliance status of the previous key audit findings are reported to the Audit Committee. The Audit Committee actively monitors the implementation of its recommendations. The Chairman of the Audit Committee briefs the Board on deliberations taken place at the Audit Committee Meeting in relation to the key audit findings.
In accordance with IRDAI directives, the Company carries out a concurrent audit of investment operations through a Chartered Accountant firm and reports the findings to the Audit Committee.
(ii) Internal Controls over Financial Reporting
The Company has in place adequate internal financial controls commensurate with size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.
(iii) Risk Management Framework
The objective of the Risk Management Framework (the Framework) of the Company is to ensure that various risks are identified, measured, mitigated and that policies, procedures and standards are established to address these risks for systemic response and adherence.
The Company has identified enterprise wide risks, which are categorized under 5 broad groups namely Credit Risk, Market Risk, Underwriting Risk, Operational Risk and Strategic Risk. The broad structure of the Framework is as follows:
O Risk identification, assessment and mitigation process;
O Risk management and oversight structure; and
O Risk monitoring and reporting mechanism.
As part of the Enterprises Risk Management exercise, critical risks along with the detailed mitigation plan are presented to the Risk Management Committee on a quarterly basis. The risk mitigation plans are monitored regularly by the Company to ensure their timely and appropriate execution. The Company further measures each of its risk items against a set of predefined tolerance levels. These levels and the subsequent tolerance scores are classified as high, medium and low risk respectively. The risks are further monitored on a quarterly basis by using a heat map based on probability and severity. A Risk Register is maintained to capture inventory of risks that the Company is exposed to along with mitigation and corrective action plans. The Risk Management Committee is updated on the progress on a quarterly basis.
VIII. General Information:
(i) Annual General Meetings
The details of the Annual General Meetings held in the last three years are given below:
|
Annual General Meeting |
Day, Date |
Time |
Venue |
|
Fourteenth AGM Fifteenth AGM Sixteenth AGM |
Friday, June 20, 2014 |
11.00 a.m. |
ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai 400 025 |
|
Thursday, June 25, 2015 |
11.00 a.m. |
||
|
Friday, July 1, 2016 |
11.00 a.m. |
The senior management of the Company is responsible for periodic review of the risk management process to ensure that the process initiatives are aligned to the desired objectives. The Internal Audit Department is responsible for review of risk management process within the Company and for the review of self-assessments of risk management activities. Further, compliance testing is done on a periodic basis and the Risk Management Committee is kept appraised of the outcome of the same.
The Company''s Reinsurance Program defines the retention limit for various classes of products. Further, the Company has in place a risk retention reinsurance philosophy, which defines the product-wise retention limits on a per-risk basis as well as a retention limit on a per-event basis. The Underwriting Policy defines product-wise approval limits for various underwriters. The Investment Policy lays down the asset allocation strategy to ensure financial liquidity, security and diversification. The Company also has in place a Capital Adequacy and Liquidity Management Framework and an Asset Liability Management Policy. These policies ensure maintenance of adequate level of capital at all times to meet diverse risk related to market and operations. The Operational Risk Policy defines the tolerance limits and lays down the framework for monitoring, supervision, reporting and management of operational risks of the Company.
Stress testing is conducted to identify and quantify the overall impact of different stress scenarios on the Company''s financial position. These tests do not predict what will happen, but are useful for examining what might happen.
The Risks Management Framework of the Company is overseen by the Risk Management Committee of the Board. The Company has a Chief Risk Officer who is responsible for the implementation and monitoring of the framework.
(ii) Extraordinary General Meeting (EGM)
ICICI Lombard had conducted three Extraordinary General Meetings (EGM) on August 24, 2016, November
10, 2016 and February 20, 2017. EGM on August 24, 2016 was conducted to amend the Articles of Association of the Company in order to align the same with the provisions of the Companies Act, 2013 and approve the appointment of Ved Prakash Chaturvedi as a director of the Company in the category of Nonexecutive Independent.
EGM on November 10, 2016, was conducted to approve the appointment of Mrs. Lalita D. Gupte as a director of the Company in the category of Non-executive Independent, to approve payment of profit related commission to Non-executive Independent Directors of the Company (except nominee directors) and to approve perquisites to Executive Directors of the Company.
EGM on February 20, 2017, was conducted for issuance of subordinated debt.
In all the above EGMs special resolutions were passed by requisite majority and other ordinary resolutions were passed unanimously.
(iii) History of Dividends declared during last seven years
|
Financial year |
Dividend type |
Percentage |
|
2016-17 |
Final Dividend |
35% |
|
2015-16 |
Final Dividend |
30% |
|
2014-15 |
Final Dividend |
20% |
|
2013-14 |
- |
- |
|
2012-13 |
- |
- |
|
2011-12 |
- |
- |
|
2010-11 |
Final Dividend |
14% |
(iv) Details of the orders passed by the Regulators/ Courts/Tribunals during the year
The Company in its ordinary course of business receives order from Regulators/Courts/Tribunals. There are no significant material orders passed by the Regulators/ Courts/Tribunals which would impact the going concern status of the Company and its future operations.
(v) Means of Communication
The Company''s website www.icicilombard.com serves as a key awareness platform for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive information on business segment and financial performance of the Company. The Company periodically publishes its financial performance in print media and also hosts the same on its website.
In accordance with IRDAI circular no. IRDA/F&I/ CIR/F&A/012/01/2010 dated January 28, 2010 and as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Reuirements) Regulations, 2015 half-yearly financial results of the Company were published in two prominent daily newspapers. The quarterly, half-yearly and annual financial information are available on the website of the Company. Additionally, the Annual Reports of the Company are also available on the website.
(vi) Corporate Identity Number (CIN)
The Corporate Identity Number (CIN), allotted by Ministry of Corporate Affairs, Government of India is U67200MH2000PLC129408, and the Company registration number is 11-129408.
(vii) Registrar and Transfer Agents
The Registrar and Transfer Agent of the Company is 3i Infotech Limited for Equity Shares & Link Intime India Private Limited for Non-convertible Debentures issued by the Company. Investor services related queries/requests/ complaints may be directed at the address as under:
3i Infotech Limited Link Intime India Private Limited
International Infotech Park C-13, Pannalal Silk Mills Compound,
Tower 5, 3rd Floor L. B. S. Marg, Bhandup (West),
Vashi Railway Station Complex Mumbai 400 078
Vashi, Navi Mumbai 400 703 Maharashtra, India
Maharashtra, India Tel No. : 91-22-2596 3838
Tel No. : 91-22-6792 8000 Fax No. : 91-22-2594 6979
Fax No. : 91-22-6792 8099__
(viii) Correspondence Address
Correspondence relating to the financial performance of the Company may be addressed to:
Gopal Balachandran/Vikas Mehra
ICICI Lombard General Insurance Company Limited
414, Veer Savarkar Marg, Prabhadevi
Mumbai 400 025
Tel No. : 91-22-6196 1100
Fax No. : 91-22-6196 1323
Peninsula Business Park, Tower B,
15 and 16 Floor, Lower Parel, Mumbai - 400013.
Tel No. : 91-22-6196 1100 Fax No. : 91-22-6196 1323
(ix) Listing on Stock Exchanges
The Company had raised '' 4,850.0 million by issue of 4,850 listed, unsecured, subordinated, redeemable, non-convertible debentures (NCDs) of face value of '' 1,000,000 each, on July 28, 2016, constituting 25% of paid up capital and securities premium.
Currently, the Non-convertible Debentures issued by the Company are listed at:
The unsecured, subordinated, redeemable, nonconvertible debentures of the Company were listed on August 4, 2016, after obtaining all the necessary statutory approvals. The Company is now listed in wholesale Debt market segment, so provisions of SEBI (LODR) Regulations 2015, applicable to debt listed companies are now applicable to the Company and strict compliance of all the applicable provisions are observed by the Company.
(x) Debenture Trustees
Axis Trustee Services Limited 2nd Floor, Wadia International Center,
Pandurang Budhkar Marg,
Worli, Mumbai 400 025
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption do not apply to ICICI Lombard. ICICI Lombard has, however, used information technology extensively in its operations.
During FY2017, expenditures in foreign currencies amounted to '' 3.61 billion and earnings in foreign currencies amounted to '' 2.05 billion.
Corporate Social Responsibility (CSR)
The Company has constituted Corporate Social Responsibility (CSR) Committee in accordance with the provisions of the Companies Act, 2013. The CSR Committee was constituted comprising by the Board of Directors of the Company consisting of five directors including Independent Directors. The CSR policy of the Company and the details about the development of the CSR Policy and initiatives taken by the Company on CSR during the year are in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, in Annexure D to this report provides the requisite details.
Deposits
During the year under review, ICICI Lombard has not accepted any deposits from the public.
Employee Stock Option Scheme
In FY2006, ICICI Lombard had instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Lombard to participate in its future growth and financial success. As per ESOS, the maximum number of options granted to any employee/ Director in a year shall not, except with the approval of the Board, exceed 0.10% of ICICI Lombard''s issued equity shares at the time of grant and the aggregate of all such options (net of forfeited/lapsed) is limited to 5% of ICICI Lombard''s issued equity shares on the date of the grant.
The Board at its Meeting held on January 14, 2015 and the Members at the Extra-Ordinary General Meeting held on March 4, 2015 had approved the amendment in the Employee Stock Option Scheme, 2005 to extend the exercise period by three more years in respect of options granted in the years 2005, 2006 and 2007. The said extension will provide additional years to the employees to exercise their options and in the event of the Company getting listed during this period, the employees will automatically have the liquidity option. In absence of such extension, the options will start lapsing from April 2015 which will be detrimental to the interests of the employees.
Options granted in the years 2005, 2006, 2007, 2008 and 2010 vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options granted for the year 2009 vest in a graded manner over a five year period with no vesting in the first year and 20%, 20%, 30% and 30% of the grant vesting each year in subsequent four years. Options granted for the year 2011 vest in a gradual manner over a two-year period, with 40% and 60% of the grants vesting each year, commencing not earlier than 12 months from the date of grant. Options can be exercised within a period of 13 years in respect of options granted in 2005, 2006 and 2007. Option other than those years can be exercised over a period of 10 years from the date of grant or five years from the date of vesting.
Particulars of options granted by ICICI Lombard up to March 31, 2017 are given below:
|
Options granted |
23,572,260 |
|
Options vested |
18,204,108 |
|
Options exercised |
11,499,514 |
|
Number of shares allotted pursuant to exercise of options |
11,364,830 |
|
Options forfeited/lapsed |
8,892,422 |
|
Extinguishment or modification of options* |
Nil |
|
Amount realised by exercise of options (?) |
787,607,120 |
|
Total number of options in force |
3,180,324 |
*The exercise period for stock options granted between 2005 to 2007 has been modified from tenth anniversary to thirteenth anniversary.
Implementation Strategy on Ind-As
IRDAI vide the circular dated March 1, 2016 had advised all Insurers to follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the IRDAI. Insurance Companies are required to comply with Ind AS for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the period ending March 31, 2018.
In compliance with the regulatory requirements, the Company has constituted a Steering Committee headed by Mr. Sanjeev Mantri, Executive Director to oversee the implementation of Ind AS. The scope of the Steering Committee includes evaluating the impact on the following areas:
(a) Ind AS technical requirements
(b) Systems and processes
(c) Business impact
(d) People
(e) Project management
The Steering Committee oversees the implementation of Ind AS and the Audit Committee is updated on a quarterly basis. Further, in compliance with the above Circular, the Company has also submitted the proforma Ind AS financial statements for the nine months ended December 31, 2016 to IRDAI.
Directors'' Responsibility Statement
Directors confirm that:
1. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
2. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
3. they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the IRDAI (Preparation of Financial Statements and Auditor''s Report of Insurance Companies) Regulations, 2002 and provisions of the Companies Act, 2013 for safeguarding the assets of ICICI Lombard and for preventing and detecting fraud and other irregularities;
4. they have prepared the annual accounts on a going concern basis;
5. they have laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively and;
6. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Acknowledgements
ICICI Lombard is grateful to the Insurance Regulatory and Development Authority of India, Government of India, Reserve Bank of India, Securities and Exchange Board of India for their continued co-operation, support and guidance. ICICI Lombard wishes to thank its investors, rating agencies and stock exchanges for their support.
ICICI Lombard would like to express its gratitude for the continued support and guidance received from ICICI Bank, Fairfax Financial Holdings Limited and their group companies.
ICICI Lombard would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative have made the organizationâs growth and success possible and continue to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
Chanda Kochhar
April 18, 2017 Chairperson
Mar 31, 2008
The Directors have pleasure in presenting the Eighth Annual Report of
ICICI Lombard General Insurance Company Limited (ÂICICI LombardÂ) with
the audited statement of accounts for the financial year ended March
31, 2008.
INDUSTRY OVERVIEW
The gross written premium of the industry for the year ended March 31,
2008 was Rs. 281.31 billion compared to Rs. 249.75 billion for the year
ended March 31, 2007, leading a growth of 13%. The market share of
private sector insurance companies for the corresponding period
increased from 35% in fiscal 2007 to 40% in fiscal 2008. ICICI Lombard
was the private player with a market share of 31% in the private sector
and an overall private sector market share of 12%.
FINANCIAL HIGHLIGHTS
Fiscal 2007 Fiscal 2008
Number of policies sold 3,136,478 3,526,961
(Rs. in million)
Gross written premium - Direct 30,034.5 33,444.2
Earned premium 10,666.5 15,671.9
Profit before tax 801.2 1,302.2
Profit after tax 683.6 1,028.7
APPROPRIATIONS
The profit after tax for the year ended March 31, 2008 is Rs.1,028.7
million. The profit available for appropriation is Rs. 1,710.3 million
after taking into account the balance of Rs. 681.6 million brought
forward from the previous year. The Board has declared three interim
dividends aggregating to 16%, reflecting sound financial performance
during the fiscal year and has appropriated the disposable profit as
follows:
(Rs. in million)
Fiscal 2007 Fiscal 2008
Dividend for the year (interim)
- On equity shares 438.4 591.1
Dividend distribution tax 61.5 100.5
Transfer to General Reserve 34.2 86.3
Leaving balance to be carried
forward to the next year 681.6 932.4
Your Directors have not recommended any
final dividend for the year.
OPERATIONAL REVIEW
Company Performance
The general insurance industry has witnessed complete de-tariffing of
price effective November 1, 2007 for all products except motor third
party. The transition to total tariff free regime has impacted market
growth, whereby the industry witnessed downward pressure on the pricing
of fire, engineering and motor products and upward trend in the pricing
of health and marine products. ICICI Lombard has responded to these
changes in the market by following a balanced approach in terms of
increased focus on enhancing quality and maintaining its combined
ratio. ICICI LombardÂs approach in terms of right clientele and risk
based pricing led to a marginal growth in the fire and engineering
portfolio. Further, ICICI LombardÂs focus on the non subsidized
approach led to substantial growth in the health and marine portfolio.
ICICI Lombard expects that the impact of de-tariffing would moderate in
the near future.
Another major development during the year was the constitution of the
Indian Motor Third Party Insurance Pool (IMTPIP) effective April 1,
2007 for covering third party risks for commercial vehicles. The IMTPIP
is a multilateral reinsurance arrangement, in which all general
insurance companies are compulsorily required to participate. The
IMTPIP is administered by the General Insurance Corporation of India
("GIC").
During fiscal 2008, ICICI Lombard has achieved a gross written premium
of Rs. 33,444.2 million (excluding share of premium from motor third
party pool) compared to Rs. 30,034.5 million for fiscal 2007 - a growth
of 11%. ICICI LombardÂs approach on risk based pricing and focus on
combined ratio resulted in an increase in profit after tax from Rs.
683.6 million during fiscal 2007 to Rs. 1,028.7 million in fiscal 2008,
a growth of 50.5%. During fiscal 2008, the number of policies sold
increased to 3,526,961 compared to 3,136,478 in fiscal 2007, a growth
of about 12%.
Information Technology
In the de-tariffed regime and with increased competition, profitability
is driven by risk- based pricing. Applications like the ÂSector
Intelligence System and ÂPhysical Risk Rating System have been built
to provide specific inputs to the underwriting team to equip them with
relevant information for risk management and underwriting. The data
warehouse and business intelligence solutions have further strengthened
the analytics and forecasting capabilities. ICICI Lombard has recently
installed an actuarial software which will be useful in risk based
pricing and claims reserving.
With the rapid increase in the distribution network to remote
locations, the Point-of- Sale (ILPOS) application has reduced the
dependency on internet connectivity. These applications allow policies
to be issued in the offline mode which are syncronized with the central
services. Further, ICICI LombardÂs virtual presence has improved
nationwide, with the ÂDial-a-Policy solution, which provides access to
the customer through a single toll free number. For servicing
customers, web-chat has also proven to be an efficient platform. ICICI
Lombard will continue to explore various other technological solutions
to augment its distribution network. ICICI Lombard is investing in new
age technology platforms like Mobile Telephony, IPTV etc, to further
build upon its leadership in providing innovative solutions to
customers and agents.
ICICI Lombard has built robust systems for improving its servicing
capabilities. The core policy administration system has been tested for
its scalability. The Customer Relationship Management (CRM) tool with a
single screen view of the customers transactions enhances the
servicing capabilities. The workflow system (ITS) enables end-to-end
tracking of applications, ensuring quality service to the customers.
The claims management system for various products facilitates prompt
claim servicing in an efficient manner.
Customer Service
The past year has witnessed some high value claims in the industry.
ICICI Lombard has levereged its customer service teams coupled with
loss minimization teams to service/minimize/mitigate all such losses.
ICICI Lombard has been able to match the rapid penetration of its
distribution channels with significant geographical reach in claims
servicing abilities, which extend to a number of international markets.
Processes for timely servicing of customers at international locations
with tie-up with surveyors and ability to make payments at such
locations are firmly in place.
ICICI Lombard remains committed to setting higher standards in terms of
response time and providing immediate relief to the insured. It handled
812,096 claims during fiscal 2008.
Underwriting
The transition to a regime of complete price de-tariffing has led to
multiple challenges for industry players with a paradigm shift in the
approach to underwriting. Setting up systems and processes to adapt to
the revised approach to underwriting, building up and retention of the
underwriting talent pool, educating the front-end staff in the nuances
of pricing and implementation of analytical tools for periodic
portfolio review have been the key focus areas in the last financial
year.
In order to build a distinctive expertise in customers servicing, ICICI
Lombard has formed a focused Health and Accident Insurance team. This
will provide a unified and seamless approach to the health and accident
portfolio, inclusive of retail, group and mass health business.
Underwriting of motor line will become sophisticated with the
introduction of more rating factors to aid further classification of
risk segments and appropriate pricing.
Reinsurance
ICICI Lombard reinsurance program is formulated in line with the
guidelines of the Insurance Regulatory and Development Authority
(IRDA), which aim at adequate risk coverage and optimum retention of
premium within the country. ICICI Lombard has further augmented the
fire, engineering and marine cargo insurance capacity keeping in mind
the increased growth potential of the portfolio in the country. In
order to mitigate the risk of a single large loss or catastrophe
affecting retentions, ICICI Lombard continues to take excess of loss
and catastrophe protection with a catastrophe cover limit to protect
itself for a 1-in-500 year catastrophe event, based on exposure
modeling by international agencies.
Capital
In order to meet the solvency requirements, ICICI Lombard raised
private placements, aggregating to Rs. 0.99 billion including a premium
of Rs. 0.83 billion, which was subscribed by its promoters - ICICI Bank
Limited and Fairfax Financial Holdings Limited.
Registration
The certificate of registration of ICICI Lombard has been renewed by
the Insurance Regulatory and Development Authority for the year
2008-09.
Employees
The employee base has grown to meet resource requirements in line with
growth in business. The number of employees increased from 4,770 in
fiscal 2007 to 5,570 in fiscal 2008. Over 95% of the employees are
professionally qualified.
To achieve strong growth, ICICI Lombard further strengthened its human
resource processes to enable staffing at all levels. ICICI Lombard
believes that its value systems have been the largest contributor to
its growth over the years. This has allowed ICICI Lombard an
opportunity to recruit experienced people from diverse industries.
Further, with a widening distribution network, employees are being
recruited more for smaller towns than urban cities. ICICI Lombard
believes that a deep non-metro presence will be the driver of its
competitive advantage in the years ahead.
ICICI Lombard has focused on upgrading the skills of its employees.
Towards this, a company wide training initiative ÂDeeksha has been
launched. The senior management has also gone through various
leadership management programs. Further, training in processes,
products as well as customer service is imparted by specialists at
various locations to ensure consistent customer experience across all
delivery channels.
Social Responsibility
ICICI Lombard issued more than 400,000 policies in rural areas,
amounting to over 12% of total policies issued by it during the year
under review and covered over 4.5 million lives under various health
insurance schemes across the country. It also covered more than 100,000
lives falling within the norms of social business.
PUBLIC DEPOSITS
During the year under review, ICICI Lombard has not accepted any
deposit from the public.
DIRECTORS
The Board, at its meeting held on November 28, 2007, appointed M. K.
Sharma and Vishakha Mulye as additional Directors of the Company. In
terms of Section 260 of the Companies Act, 1956, M. K. Sharma and
Vishakha Mulye hold office as additional Directors upto the date of the
forthcoming Annual General Meeting of the Company but are eligible for
appointment.
Further, the Board, at its meeting held on November 28, 2007, approved
the appointment of Vishakha Mulye as wholetime Director (designated as
Executive Director) for a period of five years from November 28, 2007
till November 27, 2012. The appointment was subsequently approved by
the Members and IRDA.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of ICICI Lombard, Kalpana Morparia, Dileep Choksi and H.
N. Sinor will retire at the forthcoming Annual General Meeting and,
being eligible, offer themselves for re- appointment.
AUDITORS
The Joint Statutory Auditors, Lodha & Co., Chartered Accountants and N.
M. Raiji & Co. Chartered Accountants, will retire at the ensuing Annual
General Meeting. Lodha & Co. will complete their tenure of five years
as statutory auditor of ICICI Lombard at the conclusion of the ensuing
Annual General Meeting. As per the IRDA guidelines for appointment of
statutory auditors of insurance companies, an audit firm, which
completes a tenure of five years, should not accept statutory audit
assignment of that insurance company for the next two years. Therefore
Lodha & Co.are not eligible for re-appointment. The Audit Committee and
the Board of Directors have placed on record their sincere appreciation
of the professional services rendered by Lodha & Co. as statutory
auditors.
On the basis of the recommendation of the Audit Committee, the Board,
at its meeting held on April 24, 2008, proposed the appointment of PKF
Sridhar & Santhanam, Chartered Accountants (in place of Lodha & Co.,
Chartered Accountants) and N. M. Raiji & Co., Chartered Accountants,
as Joint Statutory Auditors to audit the accounts of ICICI Lombard for
the financial year ending March 31, 2009. You are requested to consider
their appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During fiscal 2008 expenditure in foreign currencies amounted to
Rs.1,609.8 million and earnings in foreign currencies amounted to
Rs.1,434.4 million.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the names and other particulars of the employees are set
out in the Annexure to the Directors Report.
Since ICICI Lombard does not own any manufacturing facility, the
disclosure of information on other matters required to be disclosed in
terms of Section 217 (1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable and hence not given.
AUDIT COMMITTEE
The Audit Committee consists of four Directors - S. Mukherji, James
Dowd, Dileep Choksi and H. N. Sinor and is chaired by S. Mukherji.
There were four meetings of the Committee during the year. The
functions of the Committee include reviewing the quarterly and annual
financial statements, internal control systems and significant
accounting policies of ICICI Lombard and discussing the audit findings
and recommendations of the internal and statutory auditors of ICICI
Lombard.
EMPLOYEE STOCK OPTION SCHEME
In fiscal 2006, ICICI Lombard instituted an Employee Stock Option
Scheme (ESOS) to enable the employees and directors of ICICI Lombard to
participate in its future growth and financial success. As per the
ESOS, the maximum number of options granted to any employee/director in
a year shall not, except with the approval of the Board, exceed 0.10%
of ICICI LombardÂs issued equity shares at the time of grant and the
aggregate of all such options is limited to 5% of ICICI LombardÂs
issued equity shares on the date of the grant.
Options granted vest in a graded manner over a four-year period, with
20%, 20%, 30% and 30% of the grants vesting each year, commencing not
earlier than 12 months from the date of grant. Options can be exercised
within 10 years from the date of grant or five years from the date of
vesting, whichever is later.
On the basis of recommendation of the Board Governance Committee, the
Board at its meeting held on April 24, 2008 approved a grant of 5.05
million options for fiscal 2008 to eligible employees (including
300,000 options granted to Sandeep Bakhshi, Managing Director & CEO and
275,000 options granted to Vishakha Mulye, Executive Director). Each
option confers on the employee a right to apply for one equity share of
face value of Rs. 10 at Rs. 200.
Particulars of options granted by ICICI Lombard upto March 31, 2008 are
given below:
Options granted* 14,238,560
Options vested 3,136,624
Options exercised 857,772
Number of shares allotted pursuant to exercise of options 857,772
Options forfeited/lapsed 1,002,532
Extinguishment or modification of options -
Amount realised by exercise of options (Rs.) 30,207,020
Total number of options in force 12,378,256
* includes 1,012,500 options granted to Sandeep Bakhshi, Managing
Director & CEO.
DIRECTORSÂ RESPONSIBILITY STATEMENT
The Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
2. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
ICICI Lombard at the end of the financial year and of the profit or
loss of ICICI Lombard for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of ICICI Lombard and
for preventing and detecting fraud and other irregularities; and
4. they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
ICICI Lombard is grateful to the Insurance Regulatory and Development
Authority, Tariff Advisory Committee, Reserve Bank of India, General
Insurance Council and other regulatory authorities for their support
and advice. The Directors also place on record their sincere thanks for
the support and cooperation extended by the Policy holders, Reinsurers,
Bancassurance partners, Insurance Agents, Brokers and other
intermediaries.
ICICI Lombard would like to express its gratitude for the unstinted
support and guidance received from ICICI Bank and its group companies
and Fairfax Financial Holdings Limited.
The Directors would also like to place on record their appreciation for
the commitment and team effort shown by the employees of ICICI Lombard.
For and on behalf of the Board
K. V. KAMATH
Mumbai, May 29, 2008 Chairman
Mar 31, 2007
The Directors have pleasure in presenting the Seventh Annual Report of
ICICI Lombard General Insurance Company Limited (ÂICICI LombardÂ) with
the audited statement of accounts for the financial year ended March
31, 2007.
INDUSTRY OVERVIEW
The gross written premium of the industry for the eleven months ended
February 28, 2007 was Rs. 226.69 billion compared to Rs.183.24 billion
in the corresponding period of the previous year, showing a growth of
24%. The market share of private sector insurance companies for the
corresponding period grew from 27% to 35%. ICICI Lombard led the
private players with a market share of 35% in the private sector and an
overall industry market share of 12%.
FINANCIAL HIGHLIGHTS
Fiscal 2006 Fiscal 2007
Number of policies sold 1,461,039 3,136,478
(Rs. in million)
Gross written premium 15,919.9 30,034.5
Earned premium 5,276.8 10,666.5
Profit before tax 545.3 801.2
Profit after tax 503.1 683.6
APPROPRIATIONS
The profit after tax for the year ended March 31, 2007 is Rs. 683.6
million. The profit available for appropriation is Rs. 1,215.6 million
after taking into account the balance of profit of Rs. 532.0 million
brought forward from the previous year. The Board has declared three
interim dividends aggregating 15% reflecting the sound financial
performance during the fiscal and has appropriated the disposable
profit as follows:
(Rs. in million)
Fiscal 2006 Fiscal 2007
Dividend for the year (interim)
- On equity shares 232.5 438.4
Dividend distribution tax 32.6 61.5
Transfer to General Reserve 34.2
Leaving balance to be carried forward to
the next year 532.0 681.5
Your Directors have not recommended any final dividend for the year.
OPERATIONAL REVIEW
Company Performance
ICICI LombardÂs gross written premium increased to Rs. 30,034.5 million
in fiscal 2007, a growth of 89% over the previous year. The profit
after tax increased from Rs. 503.1 million during fiscal 2006 to Rs.
683.6 million in fiscal 2007 while the number of policies sold
increased from 1,461,039 to 3,136,478 respectively, growing by around
115%.
Information Technology
Technology continues to provide the backbone for rapid growth and is a
source of sustainable competitive advantage for ICICI Lombard. Over the
last few years, ICICI Lombard has strengthened its servicing
capabilities across all distribution channels. A web based policy
administration system has been implemented for retail products which
provides scalability, flexibility and ease of use. Point-of-Sale (POS)
solutions that allow transactions even in the off line mode were
developed and deployed, thereby reducing the dependency on internet
connectivity and enhancing the reach of the organisation.
ICICI Lombard has strengthened its Customer Relationship Management
(CRM) tool for obtaining a single screen view of a customerÂs
transaction and interaction history resulting in enhanced customer
servicing capabilities. An Enterprise Application Integration
initiative has also been undertaken enabling seamless and real time
access to information.
The implementation of an image based work flow system enables seamless
transaction processing capabilities across various functions and
geographies. This helps in creating a paperless work environment
giving cost advantage and faster processing capabilities.
ICICI Lombard is focused on developing innovative solutions to deliver
value added products and services to its customers. A project has been
undertaken to introduce the concept of Pay-per-Mile in Motor Insurance
that tracks the usage of the customerÂs vehicle using GPS and GPRS
technology and enables premium calculation based on actual usage. A
work flow based Claims Processing System integrated with multiple
policy administration systems will allow ICICI Lombard to provide
single point claims service to its customers. Data warehousing and
business intelligence solutions will enhance the analytics and
forecasting capabilities for improved underwriting and risk management
resulting in better profitability.
Customer Service
The year gone by witnessed natural catastrophes like the floods in
Surat and parts of Rajasthan. ICICI Lombard has built on the experience
of similar events as in the Mumbai floods in 2005 and is geared to
respond to such catastrophes quickly and efficiently. Key processes
such as disaster recovery for business continuity and rapid deployment
of surveyors which are critical in such scenarios are firmly in place.
ICICI Lombard has set higher standards in terms of response time and
providing immediate relief to the insured when it is most required.
ICICI Lombard has set-up a Service Council, comprising senior officials
towards its endeavor to set service excellence standards that will
stand the rigors of international competition and scrutiny. This
initiative spearheads efforts to convert learning into practical action
so as to consistently provide exceptional service to customers. The
Service Council constantly reviews service requests and grievances
being received by the Company for continuous product and process
improvement and also acts as a point of escalation for customers who
are not satisfied with the resolution of their request from a service
channel.
ICICI Lombard is committed to offer best and prompt service to its
valued customers. It handled 642,777 claims during fiscal 2007. Claim
disposal ratio went up from 95% during fiscal 2006 to 96% in fiscal
2007 with the corresponding average claim settlement time improving
from 25 days to 22 days.
Underwriting
During the last financial year the industry crossed a historical
milestone in terms of price de-regulation with the advent of
detariffing. The transition to a tariff free regime has led to the
creation of a third party motor pool covering third party liability
claims in Motor Insurance. The industry premiums would be pooled
together with the claim costs and expenses being shared by each insurer
in proportion to their total market share.
In an environment characterised by flexible pricing, Insurance
companies have taken necessary measures to move to a risk based pricing
approach. Increased focus on objective evaluation of the quality of
risks through risk inspections and using the same as an input for
underwriting will lead to an improvement in risk selection as well as
accuracy in risk based pricing.
Micro insurance is one of the key focus areas for ICICI Lombard and
there is a constant endeavor to penetrate this market with relevant and
cost-effective solutions. Some of the key initiatives undertaken in
this area include leveraging of locally available channels for
distribution; use of technology enabled delivery models such as
smartcards, handhelds and mini deposit machines for collection of
premium as well as storage of information. Development of bundled
products for this segment will receive additional focus in the coming
year to ensure cost effective reach coupled with customer convenience.
Reinsurance
The reinsurance program of ICICI Lombard is formulated in line with the
guidelines laid down by the Insurance Regulatory and Development
Authority (IRDA), which aims at adequate risk coverage and optimum
retention of premium within the country. ICICI Lombard has successfully
completed its reinsurance placements for the year 2007-08. ICICI
Lombard has increased its gross retentions across property classes this
year in line with the increase in its net-worth and thus helped in
augmenting the property capacity. In order to mitigate the risk of a
single large loss or catastrophe affecting retentions, ICICI Lombard
continues to take excess of loss and catastrophe protection with a
catastrophe cover limit to protect itself for a 1-in-500 year
catastrophe event.
Capital
During the year, capital was raised through private placements
aggregating to Rs. 5.5 billion (including a premium of Rs. 4.4 billion,
which was subscribed by the promoters - ICICI Bank Limited and Fairfax
Financial Holdings Limited.
IRDA has revised the guidelines in connection with computation of
solvency margin vide circular 045/IRDA/F&A/Mar-06 dated March 31, 2006
which is applicable from fiscal 2007. As per the revised guidelines,
ICICI Lombard was in compliance with the solvency margin requirement as
at March 31, 2007.
Employees
The employee base has grown significantly to meet resource requirements
in line with the growth in business. The number of employees increased
from 2,283 in fiscal 2006 to 4,770 in fiscal 2007. Over 95% of the
employees are professionally qualified.
Continuous training in products and services is critical to ensure
quality of customer service and ICICI Lombard has put in place
technology-driven e-learning modules to promote anytime anywhere
learning. Further training in processes, products as well as customer
service is imparted by specialists at various locations to ensure
consistent customer experience across all delivery channels.
Social Responsibility
ICICI Lombard issued more than 4,50,000 policies in rural areas,
amounting to over 14% of total policies issued by it during the year
and covered over 5.5 million lives under various health insurance
schemes across the country. It also covered more than 1,00,000 lives
falling within the norms of social business.
PUBLIC DEPOSITS
During the year under review, ICICI Lombard has not accepted any
deposit from the public.
DIRECTORS
The Board at its Meeting held on April 24, 2006 had approved the
re-appointment of Sandeep Bakhshi, Managing Director & CEO, for a
period of five years from March 19, 2007 till March 18, 2012. The
appointment was subsequently approved by the Members and the IRDA.
Consequent upon retirement of Lalita D. Gupte, as Joint Managing
Director of ICICI Bank Limited, with effect from November 1, 2006, she
resigned from the Board of ICICI Lombard. The Board placed on record
its deep appreciation for the invaluable contribution of Lalita D.
Gupte for conceiving and conceptualising the growth path for ICICI
Lombard and wished her the best of health and happiness for future.
Further, V.Vaidyanathan has been nominated as Director by ICICI Bank
Limited in place of Lalita D Gupte.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of ICICI Lombard, S.Mukherji, B. V. Bhargava and
Chandran Ratnaswami, would retire at the ensuing Annual General Meeting
and, being eligible, offer themselves for re-appointment.
AUDITORS
The Joint Statutory Auditors, Lodha & Co. and N.M. Raiji & Co.,
Chartered Accountants, Mumbai, will retire at the ensuing Annual
General Meeting. As recommended by the Audit Committee, the Board, at
its Meeting held on April 21, 2007, has proposed the re-appointment of
Lodha & Co. and N.M. Raiji & Co., Chartered Accountants, Mumbai, as
Joint Statutory Auditors to audit the accounts of ICICI Lombard for the
financial year ending March 31, 2008. You are requested to consider
their appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During fiscal 2007 expenditure in foreign currencies amounted to
Rs.1,322.5 million and earnings in foreign currencies amounted to
Rs.1,101.5 million.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the names and other particulars of the employees are set
out in the Annexure to the Directors Report.
Since ICICI Lombard does not own any manufacturing facility, the
disclosure of information on other matters required to be disclosed in
terms of Section 217 (1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable and hence not given.
AUDIT COMMITTEE
The Audit Committee consists of four Directors - S. Mukherji, James
Dowd, Dileep Choksi and H.N. Sinor and is chaired by S. Mukherji.
EMPLOYEE STOCK OPTION SCHEME
In fiscal 2006, ICICI Lombard instituted an Employee Stock Option
Scheme (ESOS) to enable the employees and directors of ICICI Lombard
and its holding company to participate in the future growth and
financial success of ICICI Lombard. As per the ESOS, the maximum number
of options granted to any employee / director in a year shall not,
except with the approval of the Board, exceed 0.10% of ICICI LombardÂs
issued equity shares at the time of grant and the aggregate of all such
options is limited to 5% of ICICI LombardÂs issued equity shares on the
date of the grant.
Options granted vest in a graded manner over a four-year period, with
20%, 20%, 30% and 30% of the grants vesting each year, commencing not
earlier than 12 months from the date of grant. Options can be exercised
within 10 years from the date of grant or five years from the date of
vesting, whichever is later.
On the basis of recommendation of the Board Governance Committee, the
Board at its Meeting held on April 21, 2007 approved a grant of 5.63
million options for fiscal 2007 to eligible employees and the Managing
Director. Each option confers on the employee a right to apply for one
equity share of face value of Rs. 10 at Rs. 50.
Particulars of options granted by ICICI Lombard are given below:
Options granted * 14,238,560
Options vested 2,806,604
Options exercised 707,532
Number of shares allotted pursuant to
exercise of options 707,532
Options forfeited / lapsed 515,252
Extinguishment or modification of options -
Amount realised by exercise of options (Rs.) 24,763,620
Total number of options in force 13,015,776
* includes 1,012,500 options granted to Sandeep Bakhshi, Managing
Director & CEO.
DIRECTORSÂ RESPONSIBILITY STATEMENT
The Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
2. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
ICICI Lombard at the end of the financial year and of the profit or
loss of ICICI Lombard for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of ICICI Lombard and
for preventing and detecting fraud and other irregularities; and
4. they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
ICICI Lombard is grateful to the Insurance Regulatory and Development
Authority, Tariff Advisory Committee, Reserve Bank of India, General
Insurance Council and other regulatory authorities for their support
and advice.
ICICI Lombard would like to express its gratitude for the unstinted
support and guidance received from ICICI Bank and its group companies
and Fairfax Financial Holdings Limited.
The Directors would also like to place on record their appreciation for
the commitment and team effort shown by the employees of ICICI Lombard.
For and on behalf of the Board
K. V. KAMATH
Mumbai, April 21, 2007 Chairman
Mar 31, 2006
The Directors have pleasure in presenting the Sixth Annual Report of
ICICI Lombard General Insurance Company Limited (ÂICICI LombardÂ) with
the audited statement of accounts for the financial year ended March
31, 2006.
INDUSTRY OVERVIEW
The Gross premium of the industry for the year ended March 31, 2006 was
Rs.203.78 billion compared to Rs.175.30 billion in the previous year,
showing a growth of around 16%. The market share of private sector
insurance companies has grown to 27% compared to 20% in fiscal 2005.
Among private players, ICICI Lombard is leading with a market share of
29.3% in the private sector and an overall market share of 7.8%.
FINANCIAL HIGHLIGHTS
Rs. in million
Fiscal 2005 Fiscal 2006
Number of policies sold 607,926 1,461,039
Gross written premium 8,851.7 15,919.9
Earned premium 2,156.1 5,276.8
Profit before tax 538.7 545.3
Profit after tax 483.5 503.1
APPROPRIATIONS
The profit after tax for the year ended March 31, 2006 was
Rs.503.1million. After taking into account the balance of brought
forward profit of Rs.294.0 million, the profit available for
appropriation is Rs.797.1 million. Reflecting the sound financial
performance, the Board declared two interim dividends of 5% each in the
months of June 2005 and March 2006 and have appropriated the disposable
profit as follows:
Rs. in million
Fiscal 2005 Fiscal 2006
Dividend for the year (interim)
- On equity shares 220.0 232.5
Dividend Distribution Tax 28.8 32.6
Leaving Balance to be carried
forward to the next year 294.0 532.0
Your Directors have not recommended any final dividend for the year.
OPERATIONAL REVIEW
Company Performance
The gross written premium of ICICI Lombard increased by 80% to
Rs.15,919.9 million in fiscal 2006. The profit after tax has increased
to Rs.503.1 million, as against Rs.483.5 million during fiscal 2005.
ICICI Lombard sold 1,461,039 policies during fiscal 2006, registering a
growth of 140% over the 607,926 policies sold during fiscal 2005.
Information Technology
Technology continues to contribute towards the strategic growth of the
organisation in terms of enabling business transactions and help manage
scale and efficiency. The web based policy administration system
supports issuance of pre-underwritten products by external
intermediaries over the internet infrastructure. It has helped extend
the distribution backbone to partners across multiple channels through
the internet.
ICICI Lombard has undertaken multiple initiatives to strengthen the
technology infrastructure and systems to provide sharp edge in its
business. The new policy administration system, currently under
implementation, is a web-based system that is built around robust
technology platform and also has a product configurator which reduces
time-to-market for product launching. This will enable ICICI Lombard to
achieve objectives of scalability, flexibility, security, ease of use
along with reduction in time-to-market.
ICICI Lombard has undertaken Enterprise Application Integration (EAI)
project involving implementation of tools to integrate applications,
processes and data seamlessly, enabling an enterprise to be transformed
into a seamless Virtual Enterprise. This particular initiative will
allow technology to address immediate business problems as well as help
adapt to rapidly changing business conditions.
The future technology roadmap includes implementation of best-of-breed
technologies as well as best practices like single customer view,
enterprise portal, enterprise reporting, data-warehousing etc. to lay
the groundwork for agile and flexible IT systems that can provide
competitive advantage in the years ahead.
Customer Service
Customer satisfaction is the key to long-term organisational success.
ICICI Lombard is committed to offer best and prompt service to its
valued customers. It has settled 243,951 claims during the fiscal 2006
with a claim disposal ratio of about 95% as against 94% during the
fiscal 2005. The average claim settlement time has remained at 25 days.
Fiscal 2006 witnessed many catastrophic events, both major and minor,
like Mumbai floods, Jammu & Kashmir earthquake, Gujarat floods,
Bangalore rains etc. In those moments of need, ICICI Lombard created
rapid action teams of surveyors and customer service people for
on-the-spot claim settlement in order to provide immediate relief to
the sufferers. With focused efforts, it was able to handle and settle
most of these claims in record response time.
Social Responsibility
ICICI Lombard has issued more than 2,00,000 policies in rural areas,
amounting to over 15% of total policies issued by it during the year
under review. It also covered more than 20,000 lives falling within
the norms of social business.
Reinsurance
The reinsurance program of ICICI Lombard is formulated in line with the
guidelines laid down by Insurance Regulatory and Development Authority
(IRDA), which aims at optimum retention of premium within the country
and adequate risk coverage. ICICI Lombard has successfully completed
its reinsurance placements for the year 2006- 07. In order to mitigate
the risk of single large loss and/or catastrophe, affecting its
retentions, ICICI Lombard has also taken adequate excess of loss and
catastrophe protection.
Employees
Employees are the most valuable assets of ICICI Lombard. The number of
employees of ICICI Lombard has increased from 1249 in fiscal 2005 to
2283 in fiscal 2006. Over 95% of the employees of ICICI Lombard are
professionally qualified. Special emphasis has been laid on training
and development in order to update the knowledge and skills of staff.
Outlook
IRDA has initiated the step of taking the general insurance industry to
a tariff free regime. A roadmap for the same has been provided by IRDA
vide circular, dated September 23, 2005. As per the roadmap, tariffs
for all classes of business would be discontinued from December 31,
2006 onwards. This move should help establish a robust risk based
underwriting mechanism. In view of the ensuing de-tariffing, there
would be price rationalisation and risk based pricing in the Indian
non-life insurance industry whereby the customer would get the benefit
of increased competition and wider coverage at competitive rates. The
market practices, which were till recently taken care of by the
tariffs, would have to be evolved by the industry to ensure the health
of the industry as a whole. The pricing models of insurers would
continuously evolve based on its own experience, the industry
experience and the global best practices. This would lead to a more
mature insurance market in the long term.
IRDA has framed the Micro Insurance Regulations for the provision of
Micro insurance products to low income groups and has allowed packaging
of both life and non life products to increase the insurance
penetration in this segment by optimising the cost. In view of the
same, ICICI Lombard is focusing on insurance of such identified groups
through various initiatives with Central/State Government, NGOs, Self
Help Groups, Micro Finance Institutions etc.
Capital
In order to enhance the risk retention capacity and to maintain healthy
solvency ratio, ICICI Lombard made a rights issue of 25 million shares
of Rs.10 each at a premium of Rs.30 per share, aggregating to
Rs.1,000.0 million in March 2006, which was fully subscribed by the
shareholders. The paid-up capital of ICICI Lombard as on March 31, 2006
was Rs.2,450.0 million, the highest amongst private sector general
insurance companies.
IRDA has revised the guidelines in connection with computation of
solvency margin vide circular 045/IRDA/F&A/Mar-06 dated March 31, 2006.
As the circular was made effective retrospectively from April 1, 2005,
the solvency margin of ICICI Lombard at March 31, 2006 was lower than
the stipulated 1.5 times. As such the statutory auditors made a remark
in their report for not complying with the solvency margin requirement.
However, based on the representations made by various insurance
companies, IRDA has, vide circulars 002/IRDA/F&A/Apr-06 dated April 21,
2006 and 008/IRDA/F&A/May-06 dated May 17, 2006, communicated that
certain instructions contained in the circular dated March 31, 2006
will be applicable from FY2007 onwards. Accordingly, ICICI Lombard was
in compliance with the solvency margin requirement at March 31, 2006.
PUBLIC DEPOSITS
During the year under review, ICICI Lombard has not accepted any
deposit from the public.
DIRECTORS
The Board has approved the re-appointment of Sandeep Bakhshi, Managing
Director & CEO, on the expiry of his current term, i.e. from March 19,
2007 till March 18, 2012. The appointment is subject to the approval of
the members and IRDA.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of ICICI Lombard, H.N. Sinor, James Dowd and R.
Athappan, would retire at the forthcoming Annual General Meeting and,
being eligible, offer themselves for re-appointment.
AUDITORS
The Joint Statutory Auditors, BSR & Co. and Lodha & Co., Chartered
Accountants, will retire at the ensuing Annual General Meeting. BSR &
Co. would complete their tenure of five years as statutory auditor of
ICICI Lombard at the conclusion of the ensuing Annual General Meeting.
As per the IRDA guidelines for appointment of statutory auditors of
insurance companies, an audit firm, which completes a tenure of five
years, in respect of an insurance company, should not accept statutory
audit assignment of that insurance company in the next two years. In
view of the above, as recommended by the Audit Committee, the Board, at
its Meeting held on April 24, 2006, has proposed the appointment of
N.M. Raiji & Company, Chartered Accountants and Lodha & Co., Chartered
Accountants, as Joint Statutory Auditors to audit the accounts of ICICI
Lombard for the financial year ending March 31, 2007. You are requested
to consider their appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During fiscal 2006 expenditure in foreign currencies amounted to
Rs.1,221.1 million and earnings in foreign currencies amounted to
Rs.1,124.2 million.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975,
as amended, the names and other particulars of the employees are set
out in the Annexure to the Directors Report.
Since ICICI Lombard does not own any manufacturing facility, the
disclosure of information on other matters required to be disclosed in
terms of Section 217 (1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable and hence not given.
AUDIT COMMITTEE
H.N. Sinor was inducted on the Audit Committee effective October 11,
2005. The Audit Committee consists of four Directors - S. Mukherji,
James Dowd, Dileep Choksi and H.N. Sinor and is chaired by S. Mukherji.
EMPLOYEE STOCK OPTION SCHEME
In fiscal 2006, ICICI Lombard instituted an Employee Stock Option
Scheme (ESOS) to enable the employees and directors of ICICI Lombard
and its holding company to participate in the future growth and
financial success of the Company. As per the ESOS, the maximum number
of options granted to any employee / director in a year shall not,
except with the approval of the Board, exceed 0.10% of ICICI LombardÂs
issued equity shares at the time of grant, and the aggregate of all
such options is limited to 5% of ICICI LombardÂs issued equity shares
on the date of the grant.
Options granted vest in a graded manner over a four-year period, with
20%, 20%, 30% and 30% of the grants vesting each year, commencing not
earlier than 12 months from the date of grant. Options can be exercised
within 10 years from the date of grant or five years from the date of
vesting, whichever is later.
On the basis of recommendation of the Board Governance Committee, the
Board at its Meetings held on April 26, 2005 and April 24, 2006
approved a grant of 4.31 million options for fiscal 2005 and 4.30
million options for fiscal 2006 respectively to eligible employees and
the Managing Director. Each option confers on the employee a right to
apply for one equity share of face value of Rs.10 at Rs.35 for fiscal
2005 and at Rs.40 for fiscal 2006 respectively.
Particulars of options granted by ICICI Lombard up to May 19, 2006 are
given below:
Options granted 8,613,560
Options vested 1,034,502
Options exercised 546,040
Number of shares allotted
pursuant to exercise of options -
Options forfeited / lapsed 244,800
Extinguishment or
modification of options -
Amount realized by
exercise of options (Rs.) 19,111,400
Total number of options in force 7,822,720
- includes 5,62,500 options granted to Sandeep Bakhshi, Managing
Director & CEO.
DIRECTORSÂ RESPONSIBILITY STATEMENT
The Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
2. they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
ICICI Lombard at the end of the financial year and of the profit or
loss of ICICI Lombard for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of ICICI Lombard and
for preventing and detecting fraud and other irregularities; and
4. they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
ICICI Lombard is grateful to the Insurance Regulatory and Development
Authority, Tariff Advisory Committee, Reserve Bank of India and other
regulatory authorities for their support and advice.
ICICI Lombard would like to express its gratitude for the unstinted
support and guidance received from ICICI Bank and its group companies
and Fairfax Financial Holdings Limited.
The Directors would also like to place on record their appreciation for
the commitment and team effort shown by the employees of ICICI Lombard.
For and on behalf of the Board
K. V. KAMATH
Mumbai, May 19, 2006 Chairman
Mar 31, 2005
The Directors have pleasure in presenting the Fifth Annual Report of
ICICI Lombard General Insurance Company Limited ("ICICI Lombard") with
the audited statement of accounts for the financial year ended March
31, 2005
INDUSTRY OVERVIEW
The Gross premium of the industry for the eleven months ended February
28, 2005, was Rs.163.75 billion compared to Rs.143.06 billion in the
corresponding period of the previous year, showing a growth of 14.5%.
The market share of private sector insurance companies has grown by 38%
to 19.7% compared to 14.2% in fiscal 2004. Among private sector
players, ICICI Lombard is the leader with a market share of 25.5% in
the private sector and an overall market share of 5.02%.
FINANCIAL HIGHLIGHTS
Fiscal 2004 Fiscal 2005
Number of policies sold 249,531 607,926
(Rs. in million)
Gross written premium 4,912.2 8,851.7
Earned premium 790.8 2,156.1
Profit before tax 422.4 538.7
Profit after tax 317.8 483.5
APPROPRIATIONS
The profit after tax for the year ended March 31, 2005 was Rs. 483.5
million. After taking into account the balance of brought forward
profit of Rs. 59.3 million, the profit available for appropriation is
Rs. 542.8 million. Reflecting the sound financial performance, the
Board declared two interim dividends of 5% each in the months of
September 2004 and March 2005 and have appropriated the disposable
profit as follows:
(Rs. in million)
Fiscal 2004 Fiscal 2005
Dividend for the year (interim)
- On equity shares 176.1 220.0
Dividend Distribution tax 22.6 28.8
Leaving balance to be carried
forward to the next year 59.3 294.0
Your Directors have not recommended any
final dividend for the year.
OPERATIONAL REVIEW
Company Performance
The gross written premium of ICICI Lombard increased by 80% to Rs.
8,851.7 million in fiscal 2005. The profit after tax has grown by 52%
to Rs. 483.5 million, as against Rs. 317.8 million during fiscal 2004.
ICICI Lombard sold 607,926 policies during fiscal 2005, registering a
growth of 143% over the 249,531 policies sol d during fiscal 2004.
Information Technology
Technology forms the backbone of ICICI LombardÂs business and its
investment in this area has helped it respond in the shortest possible
time to any situation from a simple insurance query to on-the-spot
policy issuance. ICICI Lombard is selling insurance policies online.
ICICI Lombard offers the facility of Online Manager, a web- based
interface that enables its customers and intermediaries to
independently process insurance transactions . Significant investments
in front-end as well as back- end systems have provided ICICI Lombard
with a sharp edge over its competitors.
Customer Service
Customer satisfaction is the key to long-term org anisational success.
ICICI Lombard is committed to offer best and prompt service to its
valued customers. ICICI Lombard has settled 84,970 claims during the
fiscal 2005 with a claim disposal ratio of about 94% as against 89%
during the fiscal 2004. The average claim reduced to 25 days from 26
days in
Reinsurance
The reinsurance programme of ICICI Lombard is formulated in line with
the guidelines laid down by Insurance Regulatory and Development
Authority (IRDA), which aims at optimum retention of premium within the
country and adequate risk coverage. ICICI Lombard has successfully
completed its reinsurance placements for the year 2005-06. In order to
mitigate the risk of single large loss and/or catastrophe, affecting
its retentions, ICICI Lombard has also taken excess of loss and
catastrophe protection.
Employees
Employees are the most valuable assets of ICICI Lombard . The number of
employees of ICICI Lombard has increased from 560 in fiscal 2004 to
1,249 in fiscal 2005. Over 95% of the employees of ICICI Lombard are
professionally qualified. Special emphasis has been laid on training
and development in order to up date the knowledge and skills of staff.
Outlook
The industry has started moving towards complete de-tariffed regime. To
P.hi,n with, IRDA has de-tariffed marine hull insurance business
effective April 01 , 2005. Tn,s move should help establish a robust
risk based underwriting mechanism. With further de- tariffincy , there
will be intense competition in all the business segments. Brokers and
Agency will play an important role in further penetration of insurance
business.
Capital
The paid-up capital of ICICI Lombard as on March 31, 2005 was Rs.
2,200.0 million, the highest amongst private sector general insurance
companies. The solvency ratio of ICICI Lombard is within the limits
prescribed.
PUBLIC DEPOSITS
During the year under review, ICICI Lombard has not accepted any
deposit from public.
DIRECTORS
In terms of the provisions of the Articles of Association of ICICI
Lombard, Kalpana Morparla, S. Mukherji and Dileep Choksi, would retire
at the ensuing Annual General Meeting and, being eligible, offer
themselves for
AUDITORS
The Joint Auditors, BSR & Co. (formerly Bharat S. Raut & Co.) and Lodha
& Co., Chartered Accountants, will retire at the ensulnd Annual General
Meeting . As recommended by the Audit Committee, the Board, at its
Meeting held on April 26, 2005, has proposed the appointment of BSR &
Co., and Lodha & Co., Chartered Accountants, as Joint Auditors to audit
the accounts of ICICI Lombard for the financial year ending March 31,
2006. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During fiscal 2005, expenditure in foreign currencies amounted to Rs. 1
,345 .6 million and earnings in foreign currencies amounted to Rs.
788.0 million.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 21 7 (2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees) Rules,
1975, as amended, the names and other particulars of the employees are
set out in the annexure to the Directors Report.
Since ICICI Lombard does not own any manufacturing facility, the
disclosure of information on other matters required to be disclosed in
terms of Section 217 (1) (e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988, are not applicable and hence not given.
AUDIT COMMITTEE
The Audit Committee consists of three Directors - S. Mukherji, James
Dowd and Dileep Choksi and is chaired by S. Mukherji.
DIRECTORSÂ RESPONSIBILITY STATEMENT
The Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
2. they have selected such accounting estimates policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of ICICI Lombard at the end of the financial year and of the profit or
loss of ICICI Lombard for that period;
3. they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of ICICI Lombard and
for preventing and detecting fraud and other irregularities; and
4. they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
ICICI Lombard is grateful to the Insurance Regulatory and Development
Authority, Tariff Advisory Committee, Reserve Bank of India and other
regulatory authorities for their support and advice.
ICICI Lombard would like to express its gratitude for the unstinted
support and guidance received from ICICI Bank and its group companies
and Fairfax Financial Holdings Limited.
The Directors would also like to place on record their appreciation for
the commitment and team effort shown by the employees of ICICI Lombard.
For and on behalf of the Board
K. V KAMATH
Mumbai, April 26, 2005 Chairman
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