Rationale

 The rating factors in IndiaFirst Life Insurance Company Limited's (IFLI) strong promoter profile with Bank of Baroda (BoB; [ICRA]AAA(hyb) (Stable)1 ) holding a 44% stake, followed by Union Bank of India (UBI2 ; [ICRA]AA+(hyb) (Negative)3 ) holding a 30% stake and Carmel Point Investments India Private Limited (an affiliate of Warburg Pincus LLC) holding a 26% stake as on March 31, 2021. The rating considers the track record of capital support from the promoters and the operational support in terms of access to the extensive branch network (~17,500) of the promoter banks and the wide geographical coverage across India. This enables IFLI to leverage the bancassurance channel to source business at a relatively low cost. The promoters have a presence on IFLI's board. The rating takes into account the adequate liquidity and solvency profile with a solvency ratio of 1.76 times as on June 30, 2021. The rating remains constrained by the uncertainty of a stake sale by UBI. Moreover, with the onset of the Covid-19 pandemic, the claims related to Covid have increased sharply for the industry as well as IFLI. Claims by death(net of reinsurance ) had increased by 462% to Rs. 203 crore in Q1 FY2022 (Rs. 36 crore in Q1FY2021). This led to the company posting a net loss of Rs. 144 crore in Q1 FY2022 and a reduction in its solvency ratio to 1.76 times as on June 30, 2021. The rating will remain sensitive to the impact of further waves of the pandemic on the company's profitability and solvency. ICRA has assigned a rating of [ICRA]AA (Stable) to the Rs. 125-crore subordinated debt programme of IFLI at the request of the company as it intends to raise subordinated debt in the near term.