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DIRECTOR'S REPORT

ICICI Lombard General Insurance Company Ltd.

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Market Cap. (₹) 52479.68 Cr. P/BV 9.72 Book Value (₹) 118.84
52 Week High/Low (₹) 1285/639 FV/ML 10/1 P/E(X) 50.02
Bookclosure 27/06/2019 EPS (₹) 23.09 Div Yield (%) 0.52
Year End :2019-03 

Directors' Report

To the Members,

Your Directors have pleasure in presenting the Nineteenth Annual Report of ICICI Lombard General Insurance Company Limited ("the Company”) 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/Stable”, issued by ICRA Limited and "Crisil AAA/Stable” 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 "iAAA” 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 person” 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

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