IndiaFirst Life Insurance to raise Rs 100 cr debt, ICRA assigns stable rating
Focussing higher margin and capital efficient individual retail business as reflected in the increasing share of individual retail business
ICRA has assigned a long-term rating of [ICRA]AA (Stable) (pronounced ICRA double A) to the Rs. 100-crore subordinated debt programme of IndiaFirst Life Insurance Company Limited (IndiaFirst). The outlook of the life insurer on the long-term rating is Stable.
IndiaFirst has consistently displayed strong operational efficiency supported by strong and effective use of technology and efficient utilisation of the banking sponsors’ vast branch network and its own sales force to distribute its products, said ICRA .
The company reported an operating expense to gross written premium ratio of 11.1 per cent for FY2017 as compared to an industry ratio of 13.8 per cent, indicating a significantly better performance than most of its peers.
Focus on product profitability and persistency, the company has been gradually shifting its focus from the low margin and capital intensive group funds business to the relatively higher margin and capital efficient individual retail business as reflected in the increasing share of individual retail business in the new business premiums from 11 per cent during FY2014 to 25 per cent during FY2017.
The company has made multiple process improvements to improve its policy renewal rates, resulting in an improvement in the 13th and 61st month persistency to 74% and 34% respectively during FY2017 from 64% and 22% respectively during FY2016.
ICRA believes that IndiaFirst Life Insurance Company Limited will continue to benefit from the capital support, technical expertise and the vast branch network of its sponsors.
IndiaFirst is owned by BOB ([ICRA]AAA (hyb) (stable)), Andhra Bank and Legal and General Group (Moody’s A3/stable) in a 44:30:26 joint venture partnership.