Rationale

 The rating takes into account the shareholding pattern of ICICI Lombard General Insurance Company Limited (ICICIL), given the presence of a strong parent (51.88% stake held by ICICI Bank Limited (ICICI Bank; rated [ICRA]AAA (Stable)). The presence of a shared brand name strengthens ICRA's expectation that ICICIL will receive capital support from its parent as and when required. While the subordinated debt instrument cannot be serviced if the regulatory solvency requirements are breached, ICRA takes note of the company's current solvency indicators and its policy as well as its track record of maintaining adequate cushion in the solvency levels to take care of any exigencies. ICRA further expects that the standing of ICICI Bank, in the Indian capital markets, places a strong onus on the parent to ensure that it meets all the required regulatory requirements (on a continual basis) for the timely and adequate servicing of the debt obligations with respect to the rated instrument. The rating takes into account ICICIL's standing as India's leading private sector general insurer, its strong financial performance, prudent risk management practices and adequate reserve against claims. While a few segments of the industry have seen pricing pressure, ICRA notes the cautious call taken by the company to reduce its exposure to the crop segment. In the wake of the second wave of Covid-19 pandemic, ICRA expects the industry's (including ICICIL) claims ratio to remain at elevated level in FY2022, particularly for the health & travel insurance segments. The impact of the same on the company's premium growth and underwriting performance amid the changing industry dynamics would remain a key monitorable. ICRA also notes the operational challenges associated with the proposed merger with Bharti AXA General Insurance Limited, the ability of the firm to retain the employees and customers would remain a key point to monitor.