Rationale

 The rating factors in ICICI Lombard General Insurance Company Limited’s (ICICI Lombard) strong market position. The company is the largest private general insurer with a market share of 8.9%1 in terms of gross direct premium income (GDPI) in FY2024. It has an established presence across the retail as well as corporate segments. This is supported by its diversified distribution mix, which has aided growth. ICICI Lombard’s capitalisation remains strong with a reported solvency of 2.62 times as on March 31, 2024 (compared to the required regulatory level of 1.50 times), supported by healthy internal accruals. Its profitability remains healthy with an average return on equity (RoE)2 of 17.2% in the last five years. Given the strong solvency and the expectation that internal accruals will remain healthy, ICRA does not expect the company to require any capital infusion in the medium term. ICRA notes the high share of motor-third party (motor-TP; 19.8% of GDPI in FY2024), which exposes ICICI Lombard to reserving risks as this segment is long tail in nature. However, the company’s loss-reserving triangle, which involves actuarial estimates, indicates that it has maintained adequate reserves in the past as evidenced by the favourable claims experience in the last few years in the Motor-TP segment as well as other lines of business. The rating also factors in the strong promoter profile with ICICI Bank Limited {ICICI Bank; rated [ICRA]AAA (Stable)}3 holding an equity stake of 51.27% as on March 31, 2024. ICICI Bank received regulatory approval in August 2023 to increase its shareholding in ICICI Lombard by up to 4.0% in multiple tranches. In line with this, the bank increased its stake to 51.27% as on March 31, 2024, from 48.02% as on March 31, 2023, and the company became subsidiary of the bank. The rating considers the shared brand name, ICICI Lombard’s strategic importance to ICICI Bank and the bank’s representation on its board of directors, which strengthen ICRA’s expectation of adequate and timely capital support if required. The Stable outlook reflects ICICI Lombard’s robust distribution network, which will help it maintain its market position, and the expectation that it will continue to receive support from ICICI Bank, if required, and will maintain the solvency level above ICRA’s negative triggers. ICRA has withdrawn the rating assigned to the Rs. 35-crore subordinated debt programme at the company’s request and in accordance with ICRA’s policy on the withdrawal of credit ratings. No amount is outstanding against the rated instrument.