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ICICI Lombard General Insurance Company Ltd.

BSE: 540716 Sector: Others
NSE: ICICIGI ISIN Code: INE765G01017
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NSE 14:09 | 19 Sep 1162.70 7.85
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OPEN 1158.75
PREVIOUS CLOSE 1153.80
VOLUME 7751
52-Week high 1285.35
52-Week low 703.40
P/E 49.39
Mkt Cap.(Rs cr) 52,832
Buy Price 1162.55
Buy Qty 1.00
Sell Price 1163.25
Sell Qty 9.00
OPEN 1158.75
CLOSE 1153.80
VOLUME 7751
52-Week high 1285.35
52-Week low 703.40
P/E 49.39
Mkt Cap.(Rs cr) 52,832
Buy Price 1162.55
Buy Qty 1.00
Sell Price 1163.25
Sell Qty 9.00

ICICI Lombard General Insurance Company Ltd. (ICICIGI) - Auditors Report

Company auditors report

To the Members of

ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED

Report on the Audit of the Financial Statements

We have audited the accompanying financial statements of ICICI LOMBARD GENERALINSURANCE COMPANY LIMITED ("the Company") which comprise the Balance Sheetas at March 31 2019 the Revenue accounts of fire marine and miscellaneous insurance(collectively known as the ‘Revenue account') the Profit and Loss account and theReceipts and Payments account for the year then ended the schedules annexed there to asummary of the significant accounting policies and other explanatory notes thereon.

In our opinion and to the best of our information and according to the explanationsgiven to us we report that the aforesaid financial statements prepared in accordance withthe requirements of Accounting Standards as specified under Section 133 of the CompaniesAct 2013 (the ‘Act') the Act Insurance Act 1938 read with Insurance Laws(Amendment) Act 2015 (to the extent notified) (the Insurance Act") the InsuranceRegulatory and Development Act 1999 (the "IRDAI Act") the Insurance Regulatoryand Development Authority (Preparation of Financial Statements and Auditors' Report ofInsurance Companies) Regulations 2002 (the "IRDAI Financial StatementRegulations") give a true and fair view in conformity with the accounting principlesgenerally accepted in India as applicable to insurance companies: a. in the case ofBalance Sheet of the state affairs of the Company as at March 31 2019;

b. in the case of Revenue Accounts of the operating profit in Fire and Miscellaneousbusiness and operating loss in Marine business for the year ended on that date; c. in thecase of Profit and Loss Account of the profit for the year ended on that date; and

d. in case of Receipts and Payments Account of the receipts and payments for the yearended on that date.

Basis for Opinion

WeconductedourauditinaccordancewiththeStandards on Auditing (SAs) specified undersection 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the financial statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that is relevant to our audit of the financial statements under theprovisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key audit matters

Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the financial statements of the current period and includethe most significant assessed risks of material misstatement (whether or not due to fraud)that we identified. These matters included those which had the greatest effect on: theoverall audit strategy the allocation of resources in the audit; and directing theefforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements asa whole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

Key Audit matter How our audit addressed the key audit matter
1. Revenue recognition on crop insurance: We reviewed the process adopted for policy booking for consistency
Crop insurance premium is accounted based on management estimates that are progressively actualised on receipt of information. in approach between accounting periods. Our tests included:
Obtaining confirmation from concerned controlling function of the company on information received if any pending accounting
Further the coverage data is based on information received / updated in the Software system maintained under the schemes which may have backlogs / reconciliation issues / duplicate information. Further the corrections to area coveredunderinsuranceandconsequentpremium adjustments are carried out progressively based on receipt of information which may be after the policy period ends. Carrying out substantive tests on income recognition from past data where available.
Verification of various reconciliations carried out with the government portal system and validating reconciling items
Discussing with senior management and obtaining their confirmations on booking of policies where information has been received
There is a risk of under/over estimation of revenue due to error or management bias. Studying the impact of information under processing and ensuring financial statements are adjusted for material impacts.
Refer crop segment under Schedule 1 – Premium earned (net) and Note 4.1 and 4.3 under Schedule Conclusion:
16 – Significant accounting policies and notes. Results of our tests did not indicate any material deviations.
2. Long term Motor Insurance Policies accounting: We obtained thorough understating of the regulatory prescriptions and reviewed the process adopted and carried out the following tests:
During the year the Company has introduced Long Term Motor Insurance Policies providing multi-year coverage which constitutes significant portion of the business segment. The Company has designed the scheme of accounting entries for recognition of revenue advance premium commissions and related indirect taxes based on relevant regulations. Validating the accounting policies adopted with the relevant regulatory prescriptions.
Verifying the premium allocation for sample transactions over the policy periods
Verifying the actual scheme of entries for sample period with the designed scheme.
This implementation was major one-time activity during the year which was prone to interpretation errors/ omissions. Verifying the overall reconciliation of balance sheet amounts with related feed systems.
Refer motor segment under Schedule 1- Premium earned (net) Premium received in advance under Schedule 13 – Current Liabilities and Note 4.1 4.2 4.3 4.6 under Schedule 1 – Significant accounting policies and notes Conclusion: Our procedures did not identify any material exceptions.

Information Other than the Financial Statements and Auditor's Report Thereon

The Directors are responsible for the other information. The other informationcomprises of Directors Report Business Responsibility Report Management Discussion &Analysis Management Report and Corporate Governance Report but does not include thefinancial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements we arerequired to determine whether there is a material misstatement of the other information.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact.

We confirm that we have nothing material to report add or draw attention to in thisregard.

Responsibilities of the Management and those charged with governance for the financialstatements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position underwriting results financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the applicable Accounting Standards specified underSection 133 of the Act the Insurance Act the IRDAI Act the IRDAI Financial StatementRegulations and orders / directions prescribed by the Insurance Regulatory and

Development Authority of India (‘IRDAI') in this behalf and current practicesprevailing within the insurance industry in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel assurance but it not a guarantee that an audit conducted in accordance withStandards of Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate that could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in orderto design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theability of the Company to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of this report. However future events or conditions may cause the Company to ceaseto continue as a going concern.

Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matters

The actuarial valuation of liabilities in respect of Incurred But Not Reported (the"IBNR") Incurred But Not Enough Reported (the "IBNER") and PremiumDeficiency Reserve (the "PDR") is the responsibility of the Company's AppointedActuary (the "Appointed Actuary"). The actuarial valuation of these liabilitiesthat are estimated using statistical methods as at March 31 2019 has been duly certifiedby the Appointed Actuary and in his opinion the assumptions considered by him for suchvaluation are in accordance with the guidelines and norms issued by the IRDAI and theInstitute of Actuaries of India in concurrence with the IRDAI. We have relied upon theAppointed Actuary's certificate in this regard for forming our opinion on the valuation ofliabilities for outstanding claims reserves and the PDR contained in the financialstatements of the Company.

Report on Other Legal and Regulatory Requirements

1. As required by the IRDAI Financial Statements Regulations we have issued a separatecertificate dated April 18 2019 certifying the matters specified in paragraphs 3 and 4 ofSchedule C to the IRDAI Financial Statement Regulations.

2. As required by the paragraph 2 of Schedule C to the IRDAI Financial StatementRegulations and Section 143(3) of the Act in our opinion and according to the informationand explanations give to us we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) As the Company's accounts are centralized and maintained at the corporate office noreturns for the purposes of our audit are prepared at the branches and other offices ofthe Company.

c) Proper books of account as required by law have been kept by the Company so far asit appears from our examination of those books.

d) The Balance sheet the Revenue accounts the Profit and Loss account and theReceipts and Payments account dealt with by this report are in agreement with the books ofaccount.

e) The aforesaid financial statements comply with the applicable Accounting Standardsspecified under Section 133 of the Act and with the accounting principles prescribed bythe Regulations and orders/directions prescribed by IRDAI in this regard.

f) Investments have been valued in accordance with the provisions of theInsurance Act the Regulations and orders/directions issued by IRDAI in this regard.

g) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 from being appointed as a director in terms of Section 164 (2) of theAct.

h) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure A".

i) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: i. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements – Refer Note no. 5.2.20 to the financial statements; ii. TheCompany has made provision as required under the applicable law or accounting standardsfor material foreseeable losses if any on long-term contracts. The Company did not haveany outstanding long term derivative contracts

– Refer Note no. 5.2.21 to the financial statements;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company - Refer Note no. 5.2.22 to thefinancial statements.

3. With respect to the other matters to be included in the Auditor's report in termsof the requirements of Section 197(16) of the Act we report that managerial remunerationpayable to the Company's Directors is governed by the provisions of Section 34A of theInsurance Act 1938 and requires approval of IRDAI. Accordingly the managerialremuneration limits specified under Section 197 of the Act do not apply.

For Chaturvedi & Co. For PKF Sridhar & Santhanam
Chartered Accountants LLP
Firm Registration Chartered Accountants
No. 302137E Firm Registration.
No 003990S/S200018
S N Chaturvedi R. Suriyanarayanan
Partner Partner
Membership No. 040479 Membership No. 201402
Place : Mumbai
Date : April 18 2019

Annexure A

Referred to in paragraph ‘h' of Section ‘Report on Other Legal and RegulatoryRequirements' of our report of even date to the members of ICICI Lombard General InsuranceCompany Limited ("the Company") on the financial statements as of and for theyear ended 31 March 2019.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of ICICILombard General Insurance Company Limited ("the Company") as of March 312019 in conjunction with our audit of the financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the "internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing prescribed under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2019 based on"the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".

Other Matter

The actuarial valuation of liabilities in respect of Incurred But Not Reported (the"IBNR") Incurred But Not Enough Reported (the "IBNER") and PremiumDeficiency Reserve (the "PDR") is the responsibility of the Company's AppointedActuary (the "Appointed Actuary"). The actuarial valuation of these liabilitiesthat are estimated using statistical methods as at March 31 2019 has been duly certifiedby the Appointed Actuary and in his opinion the assumptions considered by him for suchvaluation are in accordance with the guidelines and norms issued by the IRDAI and theInstitute of Actuaries of India in concurrence with the IRDAI. The said actuarialvaluations of liabilities for outstanding claims reserves and the PDR have been reliedupon by us as mentioned in Other Matters paragraph in our Audit Report on the financialstatements for the year ended 31st March 2019. Accordingly our opinion on the internalfinancial controls over financial reporting does not include reporting on the adequacy andoperating effectiveness of the internal controls over the valuation and accuracy of theaforesaid actuarial liabilities.

For Chaturvedi & Co. For PKF Sridhar & Santhanam
Chartered Accountants LLP
Firm Registration Chartered Accountants
No. 302137E Firm Registration.
No 003990S/S200018
S N Chaturvedi R. Suriyanarayanan
Partner Partner
Membership No. 040479 Membership No. 201402
Place : Mumbai
Date : April 18 2019