ICICI Lombard General Insurance Company Ltd:Annual Report 2023-24 Analysis

ICICI Lombard General Insurance Company Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: ICICI Lombard General Insurance Company Ltd. was established in 2001 as a joint venture between ICICI Bank Limited and Fairfax Financial Holdings Limited. It was one of the first private sector general insurance companies in India.

Headquarters Location and Global Presence: The company’s headquarters are located in Mumbai, India. While primarily focused on the Indian market, it leverages the global expertise and resources of its parent company, Fairfax Financial Holdings.

Company Vision and Mission: (Specifics on the company’s explicit vision and mission statements are needed for a complete answer).

Key Milestones in Their Growth Journey:

• 2001: Inception as a joint venture between ICICI Bank and Fairfax Financial Holdings.
• 2017: Successful IPO (Initial Public Offering) and listing on Indian stock exchanges.
• Growth through strategic partnerships and acquisitions.
• Expansion of product portfolio and distribution network.

Stock Exchange Listing Details and Market Capitalization: ICICI Lombard is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The stock code is ICICIGI. Market capitalization varies based on market conditions.

Recent Financial Performance Highlights: (Specifics on the company’s recent financial performance highlights are needed for a complete answer).

Management Team and Leadership Structure: (Specifics on the company’s management team and leadership structure are needed for a complete answer).

Notable Awards or Recognitions: (Specifics on the company’s notable awards or recognitions are needed for a complete answer).

Their Products #

Complete Product Portfolio with Categories:

• Motor Insurance: Covers private car, two-wheeler, and commercial vehicle insurance.
• Health Insurance: Offers individual, family floater, and group health insurance policies.
• Travel Insurance: Includes domestic and international travel insurance plans.
• Home Insurance: Protects homes and their contents against various perils.
• Rural Insurance: Provides coverage for agriculture, livestock, and other rural risks.
• Corporate Insurance: Offers a wide range of commercial insurance products, including property, marine, engineering, liability, and employee benefits.
• Other Specialty Products: Such as cyber insurance, event insurance, and surety bonds.

Flagship or Signature Product Lines: (Specifics on the company’s flagship or signature product lines are needed for a complete answer).

Key Technological Innovations or Patents: (Specifics on the company’s key technological innovations or patents are needed for a complete answer).

Quality Certifications and Standards: (Specifics on the company’s quality certifications and standards are needed for a complete answer).

Unique Selling Propositions or Technological Advantages: (Specifics on the company’s unique selling propositions or technological advantages are needed for a complete answer).

Recent Product Launches or R&D Initiatives: (Specifics on the company’s recent product launches or R&D initiatives are needed for a complete answer).

Primary Customers #

Target Industries and Sectors:

• Automobile
• Healthcare
• Travel and Tourism
• Real Estate
• Agriculture
• Manufacturing
• Financial Services

Geographic Markets (Domestic vs. International): Predominantly focused on the domestic Indian market.

Major Client Segments (agricultural, industrial, residential, etc.):

• Individuals
• Families
• Small and Medium Enterprises (SMEs)
• Large Corporations
• Rural Communities

Distribution Network and Sales Channels:

• Direct Sales (online and offline)
• Insurance Brokers
• Corporate Agents
• Bank Partnerships
• Point of Sale Persons (POSPs)

Major Competitors #

Direct Competitors in India and Globally:

• HDFC Ergo General Insurance Company
• Bajaj Allianz General Insurance Company
• New India Assurance
• United India Insurance
• Oriental Insurance Company
• SBI General Insurance Company
• Reliance General Insurance

Comparative Market Share Analysis: (Specifics on the company’s comparative market share analysis are needed for a complete answer).

Competitive Advantages and Disadvantages: (Specifics on the company’s competitive advantages and disadvantages are needed for a complete answer).

How They Differentiate From Competitors: (Specifics on how the company differentiates itself from competitors are needed for a complete answer).

Industry Challenges and Opportunities: (Specifics on the company’s industry challenges and opportunities are needed for a complete answer).

Market Positioning Strategy: (Specifics on the company’s market positioning strategy are needed for a complete answer).

Future Outlook #

Expansion Plans or Growth Strategy: (Specifics on the company’s expansion plans or growth strategy are needed for a complete answer).

Upcoming Products or Innovations: (Specifics on the company’s upcoming products or innovations are needed for a complete answer).

Sustainability Initiatives or ESG Commitments: (Specifics on the company’s sustainability initiatives or ESG commitments are needed for a complete answer).

Industry Trends Affecting Their Business:

• Increasing awareness of insurance products.
• Growing demand for customized insurance solutions.
• Technological advancements in insurance (Insurtech).
• Regulatory changes and compliance requirements.
• Impact of climate change and natural disasters.

Long-Term Vision and Strategic Goals: (Specifics on the company’s long-term vision and strategic goals are needed for a complete answer).

Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

Gross Direct Premium Income (GDPI) Growth #

The Company’s GDPI growth was 17.8% in FY2024, exceeding the industry average of 12.8%. The 16-year CAGR stands at 13.4% (FY2008 - FY2024).

Profit After Tax (PAT) Growth #

PAT grew by 11.0% in FY2024, reaching ₹19.19 billion. Excluding the impact of a tax provision reversal in FY2023, PAT grew by 19.8% in FY2024.

Combined Ratio #

The combined ratio improved to 103.3% in FY2024 from 104.5% in FY2023. Excluding CAT losses, the combined ratio was 102.5% in FY2024.

Investment Assets #

Total assets grew by 14.9%; total investment assets increased from ₹431.80 billion in FY2023 to ₹489.07 billion in FY2024.

Solvency Ratio #

Maintained a solvency ratio of 2.62x as of March 31, 2024, exceeding the regulatory requirement of 1.50x.

Return on Average Equity (ROAE) #

The company posted a ROAE of 17.2% for FY2024.

Net Earned Premium (NEP) #

Increased by 13.8%, to 168.66 billion for FY2024.

Net Worth #

Increased to ₹119.60 billion as at March 31, 2024, from ₹103.92 billion.

Investment Yield #

Realized return of 7.98% on the company’s investment portfolio.

Business Segment Performance #

Motor Insurance #

Became the number one motor insurer in the country, with a market share of 10.5% (GDPI basis) and a growth of 12.3% in FY2024. The segment’s loss ratio improved to 65.2% in FY2024 from 72.4% in FY2023. Motor TP loss ratio improved to 66.8% in FY2024 from 72.2%.

Health Insurance #

Remained the fastest-growing segment, with a 29.1% growth in FY2024. Market share in the Health segment increased from 5.7% in FY2023 to 6.1% in FY2024. The Retail Health segment registered a growth of 20.0%. The loss ratio remained relatively stable at 81.4%.

Commercial Lines #

Gained market share in Fire, Marine Cargo, Engineering, and Liability. Maintained leadership in Marine Cargo and Liability, and is the second-largest in Fire and Engineering. Specific growth rates were: Fire (10.3%), Marine Cargo (4.3%), and Engineering (35.9%). The liability segment grew by 11.8%.

Crop/Weather Insurance #

The Loss Ratio increased from 80.1% to 88.4% from FY23 to FY24.

Major Strategic Initiatives and Their Progress #

Digitalization #

The IL TakeCare App surpassed 9.3 million downloads. Project Orion was initiated for core business and technology transformation, focusing on process reimagining, technology modernization, and enhanced stakeholder experience.

Omni-Channel Customer Experience #

Digital assets and touchpoints such as IL TakeCare App and Website are being consolidated, to unify experiences across multiple digital channels.

Amplify Platform #

Deployed for a consolidated view across major cities to enhance business synergies.

One IL One Agency #

Streamlines the data and communication processes for agents, facilitating better customer service.

Anywhere Cashless #

Introduced this feature, enabling policyholders access to cashless healthcare at any hospital.

Risk Landscape Changes #

Expense of Management (EOM) Norms #

The introduction of EOM norms by IRDAI is a key regulatory change, providing flexibility in managing expenses.

Reinsurance Rates #

FY2023, experienced rate hardening in reinsurance terms, while recent treaty renewals have been more benign.

ESG Initiatives and Metrics #

Environmental #

Branch area covered in LED lighting is at 98.4%, and 27% of energy requirements were met through renewable energy.

Social #

Impacted over 2.0 million lives through CSR programs with a total CSR spend of ₹370.4 million.

Governance #

Maintained a diverse Board with a strong focus on independent oversight.

Management Outlook #

Growth Strategy #

Continued focus on profitable growth through leveraging multi-channel distribution, expanding into Tier 3 & 4 cities, and enhancing digital capabilities.

Technology Adoption #

Focus on AI, ML, and IoT to improve operational efficiency, customer service, and risk management.

Regulatory Compliance #

Adaptation to regulatory reforms, including the Expense of Management (EOM) norms, is ongoing, with a strategic alignment to the IRDAI’s vision of “Insurance for All by 2047”.

Detailed Analysis #

Balance Sheet Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity #

(₹ in 000’s)

Significant Changes in Major Line Items (>10% YoY) #

• Total Investments: Increased by 13.3% YoY in FY24, driven by higher premium income and investment income.
• Advances and Other Assets: Increased by 20.2% YoY, primarily due to a rise in outstanding premiums and government receivables.
• Current Liabilities :Increased by 12.8%
• Provisions: Increased by 14.8%
• Fair Value Change Account (Policyholder & Shareholder Funds): Increased significantly YoY due to improvements in the market value of the equity portfolio.
• Reserves and Surplus: Increased by 15.8% YoY, reflecting improved profitability.

Working Capital Trends #

• Company’s Current Liabilities are growing YOY and the same are higher than Current Assets.

Asset Quality Metrics #

• Investment Portfolio Quality: 93.9% of the debt portfolio is invested in sovereign or AAA-rated securities as of March 31, 2024.
• Non-Performing Assets (NPAs): The Company reported zero instances of default on its debt portfolio since inception.
• Impairment of Assets During the year ending March 31,2024, impairment on equity assets ammounted to ‘1.47 billion.

Debt Structure and Maturity Profile #

• Debentures: The Company had ‘350 million in outstanding, unsecured, subordinated, fully paid-up, listed, redeemable, non-convertible debentures as on March 31, 2024.
• Debt-Equity Ratio: 0.003x as of March 31, 2024, indicating very low leverage.
• Call Option Executed. The Company has opted to call back all outstanding Debentures on April 30,2024.

Off-Balance Sheet Items #

• Contingent Liabilities: Stood at ‘5,543.53 million as of March 31, 2024, primarily related to disputed statutory demands.

Operating Performance: ICICI Lombard General Insurance Company Limited Analysis #

Revenue Breakdown #

• Overall GDPI Growth: 17.8% (FY2024: ₹247.76 billion vs. FY2023: ₹210.25 billion).
• Net Earned Premium Growth: 13.8%
• Segment-wise Growth (GDPI, FY2024 vs. FY2023):
  • Fire: 10.3%
  • Marine Cargo: 4.3%
  • Motor: 12.3%
  • Health travel and PA: 29.1%
• Geography: All business is underwritten in India. The Company has an Insurance Office (IIO) at IFSC -Gift City (Ahmedabad) branch registered under IFSCA.

Cost Structure Analysis #

• Claims Incurred (Net): Increased by 11.3% (FY2024: ₹119.39 billion vs. FY2023: ₹107.26 billion).
• Commission Paid (Net): Increased significantly by 554% (FY2024 : ₹30.89 billion vs FY2023: ₹4.72 billion).
• Operating Expenses: Decreased by 37.6% (FY2024: ₹28.18 billion vs. FY2023: ₹45.15 billion).

Margin Analysis #

• Combined Ratio: Improved to 103.3% in FY2024 from 104.5% in FY2023.
• Operating Profit Ratio: 11% (decreased, FY2023: 16%)
• Net Earnings Ratio: Decreased to 11% from 12%
• Operating Profit: Decreased by 20.0% (FY2024: ₹19.06 billion vs. FY2023: ₹23.82 billion).
• Profit After Tax (PAT): Increased by 11.0% (FY2024: ₹19.19 billion vs. FY2023: ₹17.29 billion). Excluding the impact of reversal of tax provision in Q2 FY2023, PAT Growth 19.8%.

Operating Leverage #

• Investment Leverage (Net of Borrowings): 4.09x as of March 31, 2024.

Non-Recurring Items #

• One off transaction in Motor during Q4 FY23
• Reversal of a tax provision during Q2 FY23.

EPS Analysis #

• Basic EPS: Increased to ₹39.03 in FY2024 from ₹35.21 in FY2023.
• Diluted EPS: Increased to ₹38.78 in FY2024 from ₹35.16 in FY2023.

Cash Management #

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF) #

Increased to ₹24.07 billion in FY2024 from ₹22.90 billion in FY2023. This rise is attributed to premium received from policyholders including advance premium, partially offset by increased claims, commission, and operating expenses.

Investing Cash Flow (ICF) #

Showed a higher outflow of ₹(19.21) billion in FY2024 compared to ₹(16.85) billion in FY2023, reflecting increased investments.

Financing Cash Flow (FCF) #

Decreased to ₹(3.55) billion for FY2024 from ₹(6.95) billion for FY2023.

Working Capital Management Efficiency #

• Outstanding premiums (net of provision for doubtful debts) increased to ₹6.92 billion as of March 31, 2024, from ₹6.10 billion as of March 31, 2023, a growth of 13.4%, primarily attributed to Government receivables pertaining to Crop segment.
• Premiums received in advance increased marginally, driven by long-term motor policies.

Dividend and Share Buyback Trends #

• Interim dividend of ₹5.0 per share was paid in FY2024.
• A final dividend of ₹6.0 per share was recommended for FY2024, subject to shareholder approval.
• The dividend payout ratio for FY2024 is 28.2%, as against 27.0% for FY2023.

Debt Service Coverage #

• The Company has 350,000 thousand outstanding of unsecured, subordinated, fully paid-up, listed, redeemable and non-convertible debentures, each having a face value of ₹1,000,000.
• On April 1, 2024, the Company exercised Call Option to redeem. The Debentures were redeemed on April 30, 2024, prior to maturity, along with final Interest due thereon.
• The company will have no outstanding borrowings, post redemption of debentures.

Liquidity Position and Cash Conversion Cycle #

• Liquid Assets to Liabilities Ratio was 9%.
• Cash and Bank Balances increased to ₹3.35 billion as of March 31, 2024.
• The company has implemented a cash conversion cycle.

Financial Analysis: Key Performance Indicators #

Profitability Ratios (3-Year Trends) #

Return on Average Equity (RoAE) #

• FY2024: 17.2%
• FY2023: 16.6%
• FY2022: 13.95%

Net Profit Margin #

• FY2024: 9.7%
• FY2023: 9.6%
• FY2022: 10.09%

Operating Profit Ratio #

• FY24: 11%
• FY23: 16%
• FY22: 13.9%

Liquidity Metrics #

Current Ratio #

• FY2024: 9% (Liquid Assets to Liabilities Ratio)
• FY2023: 11% (Liquid Assets to Liabilities Ratio)

Efficiency Ratios #

Asset Turnover #

• FY2024: 0.39
• FY2023: 0.38

Leverage Metrics #

Debt/Equity Ratio #

• FY2024: 0.003
• FY2023: 0.003

Industry Comparisons #

• GDPI Growth Rate: 17.8% (vs. Industry Average of 12.8%)
• Market Share: Gained

ICICI Lombard Financial Analysis: FY2024 #

Revenue and Profitability #

• Overall:
  • GDPI grew by 17.8% to ₹247.76 billion.
  • Net Written Premium (NWP) increased by 16.9%.
  • Net Earned Premium (NEP) grew by 13.8%.
  • Profit Before Tax (PBT) increased by 20.9%.
  • Profit After Tax (PAT) grew by 11.0% (19.8% excluding the impact of reversal of tax provision in Q2 FY2023)
  • Combined Ratio improved to 103.3% from 104.5% in FY2023.

Segment Performance #

• Motor:
  • GDPI grew by 12.3%.
  • NEP increased by 3.7%.
  • Loss ratio improved to 65.2% from 72.4%.
• Health, Travel & PA:
  • GDPI in Health Segment grew fastest at 29%.
  • Retail Health Segment shows 20% growth.
  • Loss ratio improved to 81.4% from 81.5%.
• Commercial Business:
  • Fire segment grew by 10.3%.
  • Marine Cargo grew by 4.3%.
  • Engineering segment GDPI grew by 35.9%
  • Liability Segment GDPI grew by 11.8%.
• Crop/weather: NEP is 3.53 Billion.
• Marine others: Net premium is 5.23 Billion.

Market Share and Competitive Position #

• Maintained position as the largest private sector non-life insurer and second-largest overall.
• Overall market share (GDPI basis): 8.6%.
• Private sector market share (including SAHI): 13.2%.
• Market Share in Motor Segment is 10.5%
• Gained market share in Fire, Motor, Marine Cargo, Engineering, and Liability segments.
• Industry-leading position in Marine Cargo and Liability.
• Became Industry leader in Motor segment for FY2024.
• Second-largest player in Fire and Engineering.
• Health segment market share increased from 5.7% in FY2023 to 6.1% in FY2024.

Key Products/Services Performance #

• Motor: Largest contributor, with strong capabilities across distribution, underwriting, claims servicing, and actuarial practices. Diversified approach across private cars, two-wheelers, and commercial vehicles.
• Health: Fastest-growing segment, driven by Group Health (31.6% growth) and Retail Health (20% growth). Introduced “Max Protect Health Insurance”.
• Corporate Solutions: Offered value-added services and leveraged technology and risk management expertise.
• SME: The Company had 16,000+ unique customers through the website.

Geographic Distribution and Market Penetration #

• Expanding network of virtual offices and 128,411 agents.
• Continued focus on expanding presence in Tier 3 and Tier 4 cities.
• No break up of revenues is presented by geography.

Operational Efficiency Metrics #

• Claims Settlement: InstaSpect feature for quicker and hassle-free claims.
• Customer Service: “Anywhere Cashless” feature for health insurance, improved Claims Net Promoter Score (NPS) to 67.
• Digitalization:
  • 99.3% of policies issued electronically.
  • IL TakeCare App: ~9.3 million downloads, ~3.68 billion premium sourced.
  • Adoption of AI/ML, “Cloud Calling” for customer communication.
• The First Call Resolution Rate increased to 83.74%

Growth Initiatives and Challenges #

• Growth Initiatives:

  • “One IL One Team” philosophy: Focus on cross-functional collaboration.
  • “Amplify” platform: Consolidated view across major cities for integrated engagement.
  • “One IL One Agency”: Streamlining data and communication for agents.
  • “One IL One Digital”: Omni-channel customer experience.
  • “One IL One Call Center”: Replicating best practices to improve customer support.
  • Project Orion: Core business and technology transformation project.
  • Expansion in Tier 3 & 4 cities.
  • Strengthening of Bancassurance and Key Relationship Group (KRG) channels.
  • New-age fintech partnerships.
  • Focus on Electric Vehicles segment in Motor Insurance.
  • CSR initiatives like “Ride to Safety” and “Caring Hands.”

• Challenges:

  • Low insurance penetration in India.
  • Exposure to natural catastrophes.
  • Intense competition in the industry.
  • Cyber security risks.
  • Evolving regulatory landscape.
  • Fluctuations in economic growth and consumer demand.
  • Expense of Management.
  • Profitability Pressure.
  • Reinsurance rates. *Overall Capex on Technology Infrastructure:’ 9.45 Billion

Risk Framework #

Strategic Risks #

• Severity: High. Strategic risks, including reputational risks, are material due to the focus on long-term value creation.
• Likelihood: Medium. The company actively monitors the external environment and considers changing macro factors.
• Trend: Increasing due to changing consumer preferences.
• Mitigation Strategies: Diversified product portfolio, multi-channel distribution, focus on digital transformation, and ESG integration. Investment in new technologies including Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IoT).
• Control Effectiveness: Moderately Effective. Demonstrated by market leadership in multiple segments and proactive adoption of technology.
• Potential Financial Impact: Loss of market share, reduced profitability. Market share was 8.6% in FY24, with a 16-year GDPI CAGR of 13.4%.

Operational Risks #

• Severity: Medium. Operational risks include fraud prevention and cybersecurity, and potential process inefficiencies.
• Likelihood: Medium. The company faces inherent operational risks in the insurance business.
• Trend: Stable. Continuous monitoring of risks, with a risk universe of 29 enterprise-wide areas.
• Mitigation Strategies: Implementation of Operational Risk Management Policy, Business Continuity Management Policy, fraud prevention measures, and cybersecurity controls (ISO 27001, ISO 27017 compliant, 24/7 Security Operations Centre). Adoption of cloud security, streamlining of claim handling processes, and increasing automation.
• Control Effectiveness: Effective. Supported by the implementation of ISO standards and regular risk assessments.
• Potential Financial Impact: Operational losses, regulatory penalties, and reputational damage. No specific quantitive data provided in report.

Financial Risks #

• Severity: Medium. Involves credit, market, and underwriting risks.
• Likelihood: Low to Medium. Managed through prudent risk selection, reinsurance, and investment management.
• Trend: Stable. Consistent solvency ratio and strong investment returns.
• Mitigation Strategies: Tighter internal exposure norms than regulatory limits. 93.9% of the debt portfolio is in sovereign or AAA-rated securities. Disciplined underwriting and reserving practices.
• Control Effectiveness: Highly Effective. No defaults on debt portfolio since inception. Solvency ratio of 2.62x as at March 31, 2024, exceeding regulatory requirement of 1.50x.
• Potential Financial Impact: Investment losses, credit defaults. Investment assets of ₹489.07 billion as at March 31, 2024. 16-year PAT CAGR is 20.1%. Return on Average Equity (RoAE) was 17.2% for FY24. Combined Ratio was 103.3% for FY2024.

Compliance/Regulatory Risks #

• Severity: Medium to High. Changes in regulations, non-compliance with IRDAI guidelines, and tax-related disputes.
• Likelihood: Medium. Regulatory changes are frequent in the insurance industry.
• Trend: Increasing, with ongoing regulatory reforms from IRDAI, including Expense of Management norms, de-notification of tariff wordings, and Bima Trinity.
• Mitigation Strategies: Compliance Monitoring Framework, dedicated Compliance Officer, regular reporting to the Audit Committee, and Board, engagement with regulatory bodies.
• Control Effectiveness: Moderately Effective. No significant penalties or strictures imposed during the review period.
• Potential Financial Impact: Financial penalties, reputational damage, and business restrictions. Disputed tax demands of ’ 5.54 billion are reported.

Emerging Risks #

• Severity: Medium to High. Digital disruption, evolving customer needs, increasing climate change-related risks, and cyber threats.
• Likelihood: Medium to High. Increased adoption of digital technologies and changing demographics.
• Trend: Increasing. Driven by global trends and regulatory emphasis.
• Mitigation Strategies: Investment in technology (e.g., cloud migration, AI/ML adoption), Project Orion for core business transformation, and continuous monitoring of emerging risks, including climate risk management framework, ESG risk as a distinct risk category.
• Control Effectiveness: Developing. Efforts are ongoing to enhance capabilities.
• Potential Financial Impact: Operational disruptions, increased claims, loss of market share, and investment losses. Capital Expenditure (CAPEX) on technology infrastructure of ’ 9.45 billion.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• The company is aligned with IRDAI’s vision of ‘Insurance for All by 2047’, indicating a long-term strategic focus on market penetration and accessibility.
• The company is showing progress toward its stated long term goals, shown by consistently outperforming the Industry, with growth in multiple business segments, which aligns with their diversification goals.

Competitive Advantages and Market Positioning #

• ICICI Lombard is the largest private sector non-life insurer in India and the second-largest overall, indicating a strong competitive position.
• ICICI Lombard maintained market leadership in Motor, Marine Cargo, and Liability lines and gained the top spot in the Motor Insurance market.
• Diversified product portfolio and multi-channel distribution provide a competitive edge, evidenced by the broad presence across customer segments and geographies.
• High Solvency ratio (2.62x against IRDAI Min. requirement of 1.50 x) as on March 31, 2024, exceeding regulatory requirements.

Innovation Initiatives and R&D Effectiveness #

• The “Anywhere Cashless” feature and IL TakeCare app represent product and service innovations with high downloads (~9.3+ million) demonstrate user adoption.
• Adoption of technologies like AI/ML, IoT, and cloud computing, along with a focus on digitalisation, illustrates ongoing innovation and technological advancement.
• Project Orion indicates commitment to modernize core technology platforms, demonstrating a focus on future-proofing the business.
• The Company launched 8 new product in FY2025.

Management’s Track Record in Execution #

• Consistent GDPI growth of 17.8% exceeding the industry average (12.8%), coupled with an improved combined ratio (103.3% from 104.5%) demonstrates a strong track record.
• Achieved the No. 1 position in Motor Insurance, showcasing effective execution of segment-specific strategies.
• Digital initiatives, such as the IL TakeCare App, demonstrate management’s ability to execute on technology-driven service enhancements.

Capital Allocation Strategy #

• The company maintains a high solvency ratio (2.62x) well above the regulatory requirement (1.50x) and Zero instance of default on its debt portfolio since inception, illustrating a focus on capital conservation.
• The declaration of both interim and final dividends indicates a commitment to return value to shareholders, suggesting a balanced approach between growth investments and shareholder returns.
• 93.9% of Debt portfolio in sovereign or AAA-rated securities (by Domestic agencies) with all Debt securities rated AA and above.

Organizational Changes and Their Impact #

• Change in Management- Mr. Sanjeev Mantri appointed as the new MD & CEO.
• The adoption of the ‘One IL One Team’ philosophy indicates a strategic shift towards greater internal collaboration and efficiency.
• The implementation of ‘Amplify’ and ‘One IL One Agency’ platforms demonstrates a focus on streamlining operations and enhancing distributor engagement.
• The constitution of an Information Technology Strategy Committee indicates an increased emphasis on technological governance and risk management.

ESG Analysis #

Environmental Metrics and Targets #

• Branch area covered in LED lighting reached 98.4% in FY2024.
• 41.9 metric tonnes of paper were recycled in key offices.
• 10.31 million liters of rainwater were harvested at the Corporate Office in Prabhadevi.
• Emission intensity reduced to 0.87 MTCO2e (Scope 1+2+3) per headcount in FY2024, down from 1.17 MTCO2e in FY2020.
• The Company is increasing its focus on renewable energy, targeting to fulfil 27.0% energy requirements through same.

Social Responsibility Programs #

• CSR spends totaled ’ 370.4 million in FY2024.
• ‘Ride to Safety’ initiative: Over 175,000 parents and children were made aware of road safety, with 150,000 helmets distributed. Since inception 447,000 helmets distributed.
• ‘Caring Hands’ initiative: More than 45,000 students were screened, and over 4,700 spectacles were distributed to children with poor vision. Since 2011, the initiative has benefited over 400,000 children and distributed more than 47,000 spectacles.
• ‘Niranjali’ intiative: 1010 water purifiers were installed in schools, cumulatively impacting 400,000 lives.
• ‘Healthy Villages’ initiative: 11 Primary Healthcare Centers (PHCs) received 29 equipment of different types, impacting 50,000 beneficiaries.
• Insurance awareness initiatives in Bihar and Tripura.

Governance Structure and Effectiveness #

• The Board has a multi-tier structure with the Board and various committees (Board Nomination and Remuneration, Audit, Investment, Risk Management, Policyholder Protection, CSR & Sustainability, Stakeholders Relationship, and Strategy Committee).
• The Information Technology Strategy Committee was formed in 2024.
• Board composition complies with Companies Act, 2013, Listing Regulations, and IRDAI guidelines.
• The Board has a balance of Executive and Non-executive Directors; 64% are Non-executive, Independent Directors.
• The Chairperson is a Non-executive, Independent, Woman Director.
• Independent Directors meet separately as prescribed.
• There exist regular communication among employees via. mailers, workshops and townhalls.
• The Company has a Whistle Blower Policy.
• The Company has an Anti-Bribery and Anti-Corruption Policy.
• Performance evaluation of the Board, Committees, Chairperson, and individual Directors was completed.

Sustainability Investments and ROI #

• 221 solar panels were installed during the FY2024 across schools, cumulatively 326 panels have been installed since the launch of the initaitve, promoting green energy.
• Social Return on Investment (SROI) for specific programs (FY2023 Data):
  • Ride to Safety: 6.91
  • Niranjali: 4.77
  • Solar Panel Installations: 1.48
  • Caring Hands: 5.21
  • Healthy Villages: 1.32

Regulatory Compliance and Future Preparations #

• The Company complies with all applicable regulations, including the Companies Act, 2013, Listing Regulations, IRDAI guidelines, and the Insurance Act, 1938.
• The Company has maintaned adequate and effective system of internal controls with the requirements of the Insider Trading Regulations.
• The Company has formed an ESG committee and adopted ESG policies.
• The Company has appointed a Nodal Officer and Deputy Nodal Officer for IEPF compliance.
• The Company is preparing for Ind AS convergence.
• The Company is compliant with the ‘Fit and Proper’ criteria for Directors as laid down by IRDAI.
• The Company has complied with minimum rural, social sector and motor third party obligations as laid down by the IRDAI.
• The company is taking steps to implement regulatory reforms w.r.t ‘Cashless Everywhere’, ‘Bima Vahak’ & ‘Bima Vistar’.

Segment-Wise Financial Analysis #

Management Guidance and Assumptions #

• Management’s strategy prioritizes profitable growth, leveraging distribution, value-added services, risk-based underwriting, and reinsurer capacities.
• Assumptions include continued economic growth, increasing insurance awareness, and favorable regulatory changes.
• Management assumes that the digital first and cloud initiatives are expected to drive efficiencies and streamline the customer journey.
• Management’s compensation policies are structured to drive meritocracy and fairness, aligning employee interests with shareholders and focusing on long-term sustainable value.
• Assumes the ongoing digital transformation, along with the ‘Orion’ project, will enhance customer service, reduce costs, and expand distribution.

Market Growth Forecasts #

• The Indian General Insurance (GI) industry is projected to reach a Gross Written Premium (GWP) of ’ 4.75 trillion by 2028.
• Health Insurance (including personal accident) is identified as the fastest-growing segment (20% growth for FY24) and largest contributor to GI.
• Motor insurance, constituting about 31.7% of the GI, is projected to grow based on increased private car sales and rural demand for two-wheelers.
• Property insurance that forms part of the commercial line of business is driven by government and private investments in infrastructure projects.
• The overall insurance penetration in India is low (3.8% overall, 1% for non-life) compared to global averages, presenting substantial growth potential.
• India is also expected to be the 6th largest insurance market globally by 2026 with a market size of USD 222 Billion.

Planned Strategic Initiatives #

• One IL One Team: Focus on unifying efforts across functions, with initiatives like ‘Amplify’ for consolidated city views, ‘One IL One Agency’ for streamlined agent interactions, and ‘One IL One Digital’ for an omnichannel customer experience.
• Digital Transformation: Continued investment in technology modernization (Project Orion), cloud migration, and AI/ML applications to enhance customer service, streamline processes, and improve operational efficiency.
• Product Innovation: Focus on developing new and customized products, particularly in Health, Motor, Travel, and Corporate insurance segments, including riders, add-ons, and upgrades.
• Expansion in Tier 3 & 4 Cities: Increased virtual office presence and expansion of agent network to reach underserved markets.
• Strengthened Bancassurance and KRG Channels: Leverage existing and build new partnerships, especially in the health segment.
• CSR Initiatives: Continued focus on road safety, sanitation, health, and environmental conservation, with specific programs like ‘Ride to Safety’ and ‘Caring Hands’.
• ESG Integration: Incorporating ESG factors into risk management, underwriting, and investment decisions.
• Deepening of existing customer relationships by offering products and services that are aligned to customer’s needs.
• Enhancing product offering: Launching innovative products, customizing offerings, and revamping existing product lines to cater to market needs.

Capital Expenditure Plans #

• Significant ongoing investment in technology infrastructure (’ 9.45 billion capex in FY2024).
• Investment in new offices and branches (’ 6.16 billion capex in FY2024).

Efficiency Improvement Targets #

• Streamlining processes through digitalization and automation (e.g., InstaSpect, Cloud Calling, AI/ML for claims).
• Improving First Contact Resolution (FCR) rate (6% improvement in FY2024).
• Reducing turnaround time for issue resolution.
• Enhancing self-service capabilities for customers (DIY services on WhatsApp, interactive videos).
• Improving claims settlement efficiency through technology integration.
• Implementation of Project Orion will make organization more agile, efficient, reliable and secure.

Potential Challenges and Opportunities #

• Challenges:
  • Maintaining profitability in a competitive market.
  • Managing risks associated with rapid technological changes and cyber security.
  • Adapting to evolving regulatory landscape.
  • Addressing low insurance penetration and awareness in certain segments.
  • Potential impact of climate change and natural catastrophes.
• Opportunities:
  • Capitalizing on the growth potential of the Indian insurance market.
  • Leveraging digital transformation to enhance customer experience and operational efficiency.
  • Expanding product offerings and distribution network.
  • Tapping into underserved markets and customer segments.
  • Strengthening partnerships and collaborations.
  • Further improving brand equity and customer loyalty.

Scenario Analysis and Sensitivity to Key Assumptions #

• Economic Slowdown: A significant slowdown in economic growth could impact premium growth, particularly in segments linked to infrastructure and consumer spending.
• Regulatory Changes: Unfavorable changes in regulations (e.g., pricing, commission, expenses of management) could impact profitability.
• Technological Disruptions: Failure to adapt to rapidly evolving technologies could lead to loss of competitive advantage.
• Increased frequency and severity of Global risks: Climate change, cybercrime, and geopolitical instability could result in higher claim and expenses.
• Market competition: To achieve continued profitable growth the Company will continue to focus on risk selection, data analytics, healthy reserves and judicious investment management.
• Investment Risks: The Company is exposed to market risks and credit risks in relation to the investments of its portfolio.
• Cybersecurity: The Company is vulnerable to targeted cyber-attacks, given its use of technology, the large number of customers and its possession of a large amount of sensitive information.

Audit and Compliance Analysis #

Auditor’s Opinion and Qualifications #

• The Joint Statutory Auditors expressed an unmodified opinion on the financial statements.
• The Auditors’ Reports and certificates do not contain any qualifications, reservations, adverse remarks, or disclaimers.

Key Accounting Policies and Changes #

• Financial statements are prepared under the historical cost convention, on an accrual basis, and comply with applicable accounting standards, the Insurance Act, 1938, the IRDAI Act, 1999, and the IRDAI Financial Statements Regulations, 2002.
• There have been changes in the regulatory environment. The expense recognition is aligned with regulations, including Expense of management norms.
• Revenue recognition for premium income other than long-term policies is on receipt of complete information and at the commencement of risk. For long-term policies it is recognised over the policy period.
• Risk management includes ongoing risk assessment of all units.
• IBNR AND IBNER provisioning uses actuarial valuation.

Internal Control Effectiveness #

• The Company maintains internal financial controls considered adequate and operating effectively for financial reporting.
• Internal Audit function exists and reports to the Audit Committee, with a risk-based audit plan.
• Automated IT controls in place, with testing for design and operating effectiveness.
• The Company has implemented a framework to identify relevant applications for maintaining its books of accounts as per Companies Act 2013.
• One policy and claim administration application used for maintaining records of business demerged from Bharti AXA, discontinued on October 31, 2023.
• The audit trail feature was not enabled up to March 15, 2024, at the database level, for software maintaining commission and reinsurance records.

Regulatory Compliance Status #

• The Company has complied with the terms and conditions of registration stipulated by the IRDAI.
• The Company has complied with the SEBI (Prohibition of Insider Trading) Regulations, 2015.
• The Company’s shareholding pattern and transfer of shares through electronic mode are compliant with statutory and regulatory requirements.
• The Company is compliant with the applicable Secretarial Standards.
• The Company has complied with rural and social sector obligations.
• The constitution of the Board and its committees is in compliance with regulations.

Legal Proceedings and Their Potential Impact #

• The Company has disclosed the impact of pending litigations on its financial position.
• The Company does not expect the outcome of these proceedings to have a material impact.
• Contingent liabilities include disputed statutory demands/liabilities not provided for, totaling ’ 5,543.532 million.

Related Party Transactions #

• All related party transactions during FY2024 were conducted at arm’s length and in the ordinary course of business.
• Transactions with ICICI Bank Limited, ICICI Prudential Life Insurance Company Limited and other related entities are disclosed.
• Material related party transactions for FY2025 have been disclosed.

Subsequent Events #

• There were no material changes or commitments affecting the financial position of the Company between the end of the financial year and the date of the report.
• The Company exercised Call Option to redeem ‘0.35 billion Debentures on April 30, 2024.

Analysis of Accounting Quality and Regulatory Risk Assessment #

• Accounting Quality: The accounting policies are consistent, and the financial statements provide a true and fair view. The use of actuarial valuations for IBNR and IBNER reserves, and the adoption of the intrinsic value method for ESOS, are noted.
• Regulatory Risk Assessment: Key areas of risk are adequately addressed, including underwriting, credit, and market risks. Compliance with regulations such as those set out by IRDAI, Companies Act 2013, and Listing Regulations are met.
• The absence of a fully operational audit trail feature until March 15, 2024, in commission and reinsurance records.
• The discontinuation of a key policy and claim administration application without full audit trail preservation poses a risk.