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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 540133ISIN: INE726G01019INDUSTRY: Finance - Life Insurance

BSE   ` 608.95   Open: 593.65   Today's Range 593.65
614.10
+9.95 (+ 1.63 %) Prev Close: 599.00 52 Week Range 418.00
615.55
Year End :2023-03 

3.1. Contingent liabilities

(' 000)

Particulars

At March 31, 2023

At March 31, 2022

Partly-paid up investments*

4,777,632

6,996,702

Claims, other than those under policies, not acknowledged as debts comprising of:

-Claims made by vendors for disputed payments

539

539

-Claims for damages made by landlords (of premises taken on lease)

5,921

7,504

-Claims made by employees and advisors for disputed dues and compensation

4,766

9,335

Underwriting commitments outstanding (in respect of shares and securities)

-

-

Guarantees given by or on behalf of the Company

-

-

Statutory demands/liabilities in dispute, not provided for#

6,668

1,536,996

Reinsurance obligations to the extent not provided for

-

-

Policy related claims under litigation in different consumer forums:

-Claims for service deficiency

88,091

80,789

-Claims against repudiation

2,093,317

1,201,859

Total

6,976,934

9,833,724

*in respect of partly paid secured debentures and equity shares

#amount pertains to objections raised by office of the Commissioner of Service tax, Goods and Service tax Mumbai on certain tax positions taken by the Company.

3.2. Pending litigations

The Company's pending litigation comprises of claims against the Company primarily by the customers and proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial statements at March 31, 2023. Refer note 3.1 for details on contingent liabilities.

In respect of litigations, where the management assessment of a financial outflow is probable, the Company has made a provision of ' 1,077,754 thousand at March 31, 2023 (March 31, 2022: ' 884,859 thousand).

3.3. Actuarial method and assumptions

The actuarial liability in respect of both participating and non-participating policies is calculated using the gross premium method, using assumptions for interest, mortality, morbidity, expense and inflation and, in the case of participating policies, future bonuses together with allowance for taxation and allocation of profits to shareholders. These assumptions are determined as prudent estimates at the date of valuation including allowances for possible adverse deviations.

The liability for the unexpired portion of the risk for the non-unit liabilities of linked business and attached riders is the higher of the liability calculated using discounted cash flows and the unearned premium reserve.

An unexpired risk reserve and a reserve in respect of claims incurred but not reported is held for contracts wherein there is a possibility of lag in intimation of claims.

The unit liability in respect of linked business is the value of the units standing to the credit of policyholders, using the Net Asset Value (“NAV”) prevailing at the valuation date.

A brief of the assumptions used in actuarial valuation is as below:

a) The interest rates used for valuing the liabilities are in the range of 4.99% to 6.58% per annum. The interest rates used at March 31, 2022 were in the range of 3.67% to 6.30% per annum.

b) Mortality rates used are based on the published “Indian Assured Lives Mortality (2012 - 2014) Ult.” mortality table for assurances and “Indian Individual Annuitant's Mortality Table (2012-15)” table for annuities adjusted to reflect expected experience. Morbidity rates used are based on CIBT 93 table, adjusted for expected experience, or on risk rates provided by reinsurers.

c) Expenses are provided for at least at the current levels in respect of renewal expenses, with no allowance for any future improvement.

d) Per policy renewal expenses are assumed to inflate at 4.90% per annum. The expense inflation assumption used at March 31, 2022 was 4.59%.

e) The bonus rates for participating business to be declared in the future is consistent with the valuation assumptions.

f) The tax rate applicable for valuation at March 31, 2023 is 14.56% per annum. The tax rate applicable for valuation at March 31, 2022 was 14.56% per annum.

Certain explicit additional provisions are made, which include the following:

a) Reserves for additional expenses that the Company may have to incur if it were to close to new business twelve months after the valuation date.

b) Reserves for guarantees available to individual and group insurance policies.

c) Reserves for cost of non-negative claw back additions.

d) Reserves for free look option given to policyholders calculated using a free look cancellation rate of 2.30% as on March 31, 2023. The free look cancellation assumption used at March 31, 2022 was 2.20%.

e) Reserves for lapsed policies eligible for revivals.

f) An additional reserve is held for incurred but not reported claims.

3.4. Funds for Future Appropriations (‘FFA’)

The balance of participating FFA of ' 16,692,745 thousand (March 31, 2022: ' 13,833,234 thousand) is not available for distribution to the shareholders. Such amount is classified under Funds for Future appropriations in the Balance Sheet.

3.5. Claims settled and remaining unpaid

Claims settled and remaining unpaid for a period of more than six months at March 31, 2023 is ' 73,399 thousand (March 31, 2022: ' 34,292 thousand). These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants or litigation pending.

3.6. Reconciliation of unclaimed amounts of policyholders

Pursuant to IRDAI circular No. IRDA/F&A/CIR/ CLD/114/05/2015 dated May 28, 2015 and IRDA/F&A/ CIR/CPM/134/07/2015 dated July 24, 2015 on “Handling of unclaimed amounts pertaining to policyholders”, the Company has created a single segregated fund to manage all the unclaimed monies. The amount in such unclaimed fund has been invested in money market instruments and /or fixed deposit of scheduled banks.

The amount in the unclaimed fund has been disclosed in schedule 12 as “Assets held for unclaimed amount of policyholders”. Investment income accruing to the unclaimed fund has been credited to the fund and disclosed as ‘Other Income under Linked Life segment in the Revenue Account. Such investment income net of fund management charges (‘FMC') is paid/ accrued as “interest on unclaimed amounts” in schedule 4 of the financial statements as “Benefits paid”.

3.9. Taxation

The current tax provision is determined in accordance with the provisions of Income Tax Act, 1961. The provision for current tax for the year ended March 31, 2023 is ' 2,704,537 thousand (March 31, 2022: ' 2,025,723 thousand).

The provision for current tax includes an amount of ' 1,842,258 thousand for the year ended March 31, 2023 (March 31, 2022: ' 1,661,477 thousand) which has been charged on the total surplus of the participating line of business in Revenue Account, in line with the Company's accounting policy.

Further, tax expense amounting to ' 862,279 thousand for the year ended March 31, 2023 (March 31, 2022: ' 364,246 thousand) pertaining to other than participating line of business has been charged to Profit and Loss Account.

The deferred tax asset and liabilities are recognised using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised and carried forward only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. However, deferred tax asset in respect of unabsorbed depreciation or carried forward loss are recognised only if there is a virtual certainty of realisation of such assets.

Deferred tax charge for the year ended March 31, 2023 is ' Nil (March 31, 2022: ' Nil).

During the year, the Directorate General of GST Intelligence (DGGI) initiated an inquiry into goods and service tax (GST) credit availed on certain expenses incurred by the Company. During the course of the inquiry, the Company has deposited an amount, without acceptance of liability on account of denial of credit, with GST authorities. Subsequently, the Company has received an intimation of tax from DGGI. However, the Company is yet to receive a show cause notice from DGGI providing specific details / reasons for the intimation. Hence the Company is currently unable to assess the likelihood of the outcome in the matter as well as its financial effect.

3.10. Operating lease commitments

The Company takes premises, motor vehicles, office equipments and servers on operating lease. Certain lease arrangements provide for cancellation by either party and also contain a clause for renewal of the lease agreement. Lease payments on cancellable and non-cancellable operating lease arrangements are charged to the Revenue account and the Profit and Loss Account over the lease term on a straight line basis. The total operating lease rentals charged for the year ended March 31, 2023 is ' 689,074 thousand (March 31, 2022: ' 627,976 thousand).

3.11. Assets given on operating lease

The Company has entered into an agreement in the nature of leave and license for leasing out the investment property. This is in the nature of operating lease and lease arrangement contains provisions for renewal. There are no restrictions imposed by lease arrangement and the rent is not determined based on any contingency. The total lease payments received in respect of such lease recognised in the Revenue account and the Profit and Loss account for the year ended March 31, 2023 is ' 370,091 thousand (March 31, 2022: ' 250,040 thousand).

(b) Defined benefit plans (i) Gratuity

General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the ICICI Prudential Life Insurance Company Limited Employees' Group Gratuity Cum Life Assurance Scheme. The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972 or the Company's gratuity scheme, whichever is higher, to the vested employees. The benefit vests after a minimum prescribed period of continuous service at retirement or on death while in employment or on termination of employment. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), “Employee benefits”. Actuarial gains or losses are recognised in the Revenue Account.

(ii) Provident fund

Provident fund benefits are aimed at providing security to staff members and their dependents on retirement, disability or death. Both employee and the company contribute an equal percentage of the basic salary, a part of which is towards Government administered pension fund and balance portion is contributed to the fund administered by trustees. The provident fund is managed by ICICI Prudential Life Insurance Company Employees' Provident Fund Trust.

The minimum rate at which the annual interest is payable by the trust to members is prescribed by the Government. The Company has an obligation to make good the shortfall, if any, between the Government prescribed rate and actual return earned by the provident fund.

While computing liability, 2% leave availment has been assumed for each subsequent year following the valuation date and any voluntary leave encashment at a future date is assumed to be Nil.

3.19. Employee Stock Option Scheme (“ESOS”)

The Company granted options to its employees under its Employees Stock Option Scheme, prior to listing, since approval of its Employees Stock Option Scheme - 2005. This pre-IPO Scheme shall be referred to as ‘ESOS 2005' or ‘Scheme'. The Scheme had six tranches namely Founder, 2004-05, 2005-06, 2006-07, Founder II and 2007-08, pursuant to which shares had been allotted and listed in accordance with the in-principle approval extended by the stock exchanges. All six tranches under the pre-IPO Scheme stand lapsed as on March 31, 2023. The Scheme had been instituted vide approval of its Members at the Extra-Ordinary General Meeting (EGM) dated March 28, 2005 and had been subsequently amended by the Members of the Company vide its EGM dated February 24, 2015.

The Scheme was ratified and amended by the members of the Company at its Annual General Meeting held on July 17, 2017 which is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (referred to as the ‘Revised Scheme').

The meeting of Board Nomination and Remuneration Committee (BNRC) and the Board held on April 24, 2019 had approved the amendment to the definition of “Exercise Period”. The revision to the definition was approved by the members of the Company at its Annual General Meeting held on July 17, 2019.

Further, the meeting of Board Nomination and Remuneration Committee (BNRC) and the Board held on April 17, 2021 and April 19, 2021 respectively had approved the increase in the limit of the number of shares issued or issuable since March 31, 2016 pursuant to the exercise of any Options granted to the Eligible Employees issued pursuant to the Revised Scheme or any other stock option scheme of the Company, by 0.90% of the number of shares issued as on March 31, 2016, i.e. from a limit of 2.64% of the number of shares issued as on March 31, 2016 to 3.54%. The revision to the limit was approved by the members of the Company at its Annual General Meeting held on June 25, 2021.

As per the Revised Scheme, the aggregate number of shares issued or issuable since March 31, 2016 pursuant to the exercise of any Options granted to the Eligible Employees issued pursuant to the Scheme or any other stock option scheme of the Company, shall not exceed 3.54% of the number of shares issued at March 31, 2016. Further, pursuant to the Revised Scheme the maximum number of Options that can be granted to any Eligible Employee in a financial year shall not exceed 0.1% of the issued Shares of the Company at the time of grant of Options. The Revised Scheme provides for a minimum period of one year between the grant of Options and vesting of Options. The exercise price shall be determined by the board Nomination & Remuneration Committee in concurrence with the Board of Directors of the Company on the date the options are granted and shall be reflected in the award confirmation. Shares are allotted/ issued to all those who have exercised their Options, as granted by the Board of the Company and/or the BNRC in accordance with the criteria ascertained pursuant to the Company's Compensation policy.

The Company granted options in fourteen more tranches under ESOS 2005 (Revised), namely 2017-18, 2018-19, 2018-19 special options, 2018-19 joining options, 2019-20, 2019-20 joining options, 2020-21, two tranches of 202021 joining options, 2021-22 and three tranches of 2021-22 joining options and 2022-23.

The Company follows intrinsic value method and hence there was no charge in the Revenue Account and the Profit and Loss account on account of new grants during the year.

Note: The exercise price for all the options granted by the Board Nomination and Remuneration Committee (BNRC), after listing (as tabulated above), is the closing price on the recognised stock exchange having higher trading volume, on the date immediately prior to the date of meeting of the BNRC scheduled to consider granting options under the Company's Employee Stock Option Scheme.

Exercise price of all the options outstanding for all years/quarter for tranches 2017-18, 2018-19, 2018-19 Special Options and 2018-19 Joining Options, 2019-20, 2019-20 Joining Options, 2020-21, 2020-21 Joining Options (1), 202021 Joining Options (2), 2021-22, 2021-22 Joining Options (1), 2021-22 Joining Options (2), 2021-22 Joining Options (3), 2022-23 schemes is ' 468.60, ' 388.40, ' 388.40, ' 351.65, ' 369.50, ' 383.10, ' 400.10, ' 396.95, ' 501.90, ' 451.05, ' 626.25, ' 656.80, ' 615.65 and ' 541.00 respectively.

Out of the total outstanding stock options of the previous year 6,858,285 options are vested during the year ended March 31, 2023 and ' 489,089 thousand was realised by exercise of options during the year ended March 31, 2023. During the year ended March 31, 2023 the Company has recognised a compensation cost of ' Nil (March 31, 2022: ' Nil) as the intrinsic value of the options.

Had the company followed fair value method based on binomial tree model valuing its options compensation cost for the year ended would have been higher by ' 703,355 thousand (March 31, 2022: ' 587,352 thousand) and the proforma profit after tax would have been ' 7,403,300 thousand (March 31, 2022: ' 6,953,958 thousand). On a proforma basis, the company's basic and diluted earnings per share would have been ' 5.15 for the year ended March 31, 2023 (March 31, 2022: ' 4.84) and ' 5.14 for the year ended March 31, 2023 (March 31, 2022: ' 4.82) respectively.

For the year ended March 31 2022, ICICI Bank Limited (“the Holding Company”) has not granted options to the employees of ICICI Prudential Life Insurance Co. Ltd. (Previous year grant: Nil) and accordingly no cost was recognised.

3.20. Foreign exchange gain/loss

Transactions in foreign currencies are recorded at exchange rate prevailing on the date of transaction. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement is recognised as income or expense, as the case may be. The net foreign exchange fluctuation loss debited to the Revenue account and the Profit and Loss account for the year ended March 31, 2023 is ' 8,721 thousand (March 31, 2022: ' 3,887 thousand).

3.21. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for effects of all dilutive equity shares.

3.22. Managerial Remuneration

The appointment of managerial personnel is in accordance with the requirements of Section 34A of the Insurance Act, 1938. IRDAI has issued guidelines on August 05, 2016 on remuneration of Non-Executive Directors and Managing Director (‘MD') /Chief Executive Officer (‘CEO') /Whole Time Directors (‘WTD'), which have prescribed certain qualitative and quantitative disclosures. The disclosures for year ended March 31, 2023, are given below:

Remuneration to MD/CEO/WTD:

Qualitative disclosures:

A) Information relating to the bodies that oversee remuneration.

Name, composition and mandate of the main body overseeing remuneration:

The Board Nomination and Remuneration Committee (BNRC/Committee) is the body which oversees aspects pertaining to remuneration. The functions of the Committee include identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment & removal and formulating a criteria and specifying the manner for effective evaluation of every individual director's performance, evaluation of the performance of the Board and its Committees, and reviewing its implementation and compliance; considering to extend or continue the term of appointment of the Independent Directors, on the basis of the report of performance evaluation of Independent Directors; recommending to the Board a policy relating to the remuneration for the Directors, key management persons and other employees; recommending to the Board all remuneration, in whatever form, payable to senior management; ensuring that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; ensuring that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; approving the compensation program and ensuring that remuneration to Directors, key management persons and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals; formulating the criteria for determining qualifications, positive attributes and independence of a Director; devising a policy on diversity of the Board; considering and approving employee stock option schemes and administering & supervising the same; ensuring that the proposed appointments/re-appointments of key management persons or Directors are in conformity with the Board approved policy on retirement/superannuation; scrutinising the declarations of intending applicants before the appointment/re-appointment/election of Directors by the shareholders

at the annual general meeting; and scrutinising the applications and details submitted by the aspirants for appointment as the key management person.

External consultants whose advice has been sought, the body by which they were commissioned and in what areas of the remuneration process:

The Company employed the services of reputed consulting firms for market benchmarking in the area of compensation.

Scope of the Company’s remuneration policy (e.g. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches:

The Company's Policy on Compensation & Benefits (“Compensation Policy”) for Managing Director & CEO, Other wholetime Directors, non-executive Directors, Key Management Person (KMP), Senior Management Personnel (SMP) and other employees was last amended and approved by the BNRC and the Board at its Meeting held on April 16, 2022.

Type of employees covered and number of such employees:

All employees of the Company are governed by the Compensation Policy. The total number of permanent employees governed by the Compensation Policy of the Company at March 31, 2023 was 17,825.

B) Information relating to the design and structure of remuneration process.

Key features and objectives of remuneration policy:

The Company has historically followed prudent compensation practices under the guidance of the Board and the BNRC. The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy, the key elements of which are given below:

Effective governance of compensation:

The Company follows prudent compensation practices under the guidance of the BNRC andtheBoard. Thedecision relating to the remuneration of the Managing Director and CEO (MD & CEO) and other wholetime Directors is reviewed and approved by the BNRC and the Board. The BNRC and the Board approves the Key Performance Indicators (KPIs) and the performance threshold for payment of performance bonus, if applicable. The BNRC assesses business performance against the KPIs and on various risk parameters as prescribed by IRDAI. Based on its assessment, it makes recommendations to the Board regarding compensation for MD & CEO and other wholetime Directors, performance bonus and longterm pay for all eligible employees, including senior management and key management persons.

Alignment of compensation philosophy with prudent risk taking:

The Company seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels. For the MD & CEO and other wholetime Directors, compensation is sought to be aligned to both pre-defined performance objectives of the Company as well as prudent risk parameters. In addition, the Company has an Employees Stock Option Scheme aimed at enabling employees to participate in the long-term growth and financial success of the Company through stock option grants that vest over a period of time.

Whether the Remuneration Committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that were made:

The BNRC reviewed the Company's Compensation policy at its meeting held on April 16, 2022. The key changes in the policy are:

• The clause on variable pay for the Managing Director & CEO and Other wholetime Directors (in Part B of the Compensation Policy) has been modified to defer a minimum 50% of the bonus amount for Managing Director & CEO and other wholetime Directors. If the bonus is under ' 25 lakhs, the deferment shall not be applicable. The deferral period would be spread over a minimum period of three years (deferment period). The frequency of vesting will be on annual basis and the first vesting shall not be before one year from the commencement of deferral period. The vesting shall be no faster than a prorata basis. Additionally, vesting will not be more frequent than on a yearly basis.

Description of the ways in which current and future risks are taken into account in the remuneration processes.

• The Company follows prudent compensation practices under the guidance of the Board and the Board Nominations & Remuneration Committee (BNRC). The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. The performance rating assigned to employees is based on an assessment of performance delivered against a set of defined performance objectives. These objectives are balanced in nature and comprise a holistic mix of financial, customer, people, process, quality, compliance objectives and/ or any other parameters as may be deemed fit.

• For the MD & CEO and other wholetime Directors, compensation is sought to be aligned to both predefined performance objectives of the Company as well as prudent risk parameters.

• For the MD & CEO and other wholetime Directors, the quantum of bonus does not exceed a certain percentage (as stipulated in the Compensation Policy) of total fixed pay in a year; a minimum of 50% (as stipulated in the Compensation Policy) will be under deferment. If the bonus amount is under ' 25 lakhs, the deferment shall not be applicable. The deferral period would be spread over a minimum period of three years (deferment period). The frequency of vesting will be on annual basis and the first vesting shall not be before one year from the commencement of deferral period. The vesting shall be no faster than a prorata basis. Additionally, vesting will not be more frequent than on a yearly basis.

• The deferred part of the variable pay (performance bonus) for wholetime Directors is subject to malus, under which, the Company will prevent vesting of all or part of the variable pay in the event of an enquiry determining gross negligence or integrity breach.

• In clawback arrangements with wholetime Directors, the employee agrees to return, in case asked for, the previously paid variable pay to the Company in the event of an enquiry determining gross negligence or integrity breach, taking into account relevant regulatory stipulations.

• For malus and clawback, acts of gross negligence and integrity breach are covered under the purview of the compensation policy. Errors of judgment shall not be construed to be breaches.

Description of the ways in which the Company seeks to link performance during a performance measurement period with levels of remuneration.

The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. The extent of variable pay for individual employees is linked to individual performance for sales frontline employees and to individual & organisation performance for non-sales frontline employees & employees in the management cadre. For the latter, the performance rating assigned is based on assessment of performance delivered against a set of defined performance objectives. These objectives are balanced in nature, and comprise a holistic mix of financial, customer, people, process, quality and compliance objectives and/or any other parameters as may be deemed fit. For the MD & CEO and other wholetime Directors, to ensure effective alignment of compensation with prudent risk parameters, the Company takes into account various risk parameters along with other predefined performance objectives of the Company.

1 Cash amounts mentioned in above tables are outstanding deferred bonus of previous year/s and are paid post March 31,

2023 & March 31, 2022 respectively. Cash amount for March 31, 2023 does not include the deferred part (if any) of bonus payable for FY2023.

2 Employee Stock Options mentioned in above tables are outstanding options to be vested as on March 31, 2023 & March 31, 2022 respectively; for FY2022, includes options granted by ICICI Bank Ltd. (last granted in May 2019) and ICICI Prudential Life Insurance Co Ltd. during employment with ICICI Prudential Life Insurance Co Ltd.

* Against the provision of ' 5,000 thousand made in the FY2022, ' 5,000 thousand was paid in FY2023. Provision made for FY2023 amounts to ' 5,000 thousand.

Further, in accordance with the IRDAI circular IRDA/F&A/GDL/LSTD/155/08/2016 dated August 5 2016 read with IRDA/F&A/CIR/MISC/184/10/2019 dated October 4, 2019, annual managerial remuneration in excess of ' 15,000 thousand per director is required to be borne by the Shareholders' and separately disclosed in the Profit and Loss account. Accordingly, managerial remuneration in excess of such specified limit amounting to ' 54,605 thousand has been charged to and separately disclosed in the Profit and Loss account for the year ended March 31, 2023 (March 31, 2022: ' 58,930 thousand).

3.23. Commitments

Commitments made and outstanding (net of advances) for Company's investment in Real estate (Investment property) at March 31, 2023 is ' Nil (March 31, 2022 ' Nil ).

Estimated amount of contracts remaining to be executed on fixed assets to the extent not provided for (net of advance) is ' 1,137,575 thousand (March 31, 2022: ' 1,029,770 thousand)

There are no loan commitments made by the Company at March 31, 2023 (March 31, 2022 ' Nil).

Proceeds of the issuance have been utilized for the purpose as specified in the offer document.

Debenture redemption reserve is not required to be created as per Companies (Share Capital & Debenture) Amendment Rules, 2019 dated August 16, 2019

3.25. Investments

a. The investments are made from the respective funds of the Policyholders' or Shareholders' and investment income thereon has been accounted accordingly.

b. All investments are performing investments.

3.26. Interest rate derivatives

In line with the requirement of IRDAI Investment Master circular, the Company has put in place a derivative policy approved by the Board. The policy covers various aspects substantiating the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments due to variations in market interest rates.

A) The Company has during the year, as part of its hedging strategy, entered into Forward Rate Agreement (FRA) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI Investment Master Circular. The FRA derivative contracts are over-the-counter (OTC) transactions, agreeing to buy notional value of a debt security at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

B) The portion of the fair value gain/loss on the interest rate derivative that is determined to be an effective hedge is recognised directly in ‘Credit/ (Debit) Fair Value Change Account' in the Balance Sheet under policyholders' funds and the portion that gets determined as ineffective hedge or ineffective portion of effective hedge, based on the hedge effectiveness assessment is recognized in the Revenue Account under head “Transfer/Gain on revaluation/ Change in fair value”. The mark to market (MTM) losses in respect of FRA outstanding is ' 1,058,771 thousand at March 31, 2023 (March 31, 2022: ' 1,393,097 thousand)

D) A net amount of ' 1,029,473 thousand for the year ended March 31, 2023 (March 31, 2022: ' 968,092 thousand) was recognised in Revenue Account being the portion of loss determined to be ineffective portion of the effective hedge. The amount that was removed from the cash flow hedge reserve account during the year ended March 31, 2023 in respect of forecast transaction for which hedge accounting had previously been used but is no longer expected to occur is Nil (March 31, 2022: Nil). The hedged forecast transactions are expected to occur over the outstanding tenor of underlying policy liabilities and corresponding hedging gain/loss will accordingly flow to the Revenue Account

E) Disclosures on risk exposure in Interest rate derivatives:

i. Interest rate derivative hedging instruments: Derivatives are financial instruments whose characteristics are derived from the underlying assets, or from interest and exchange rates or indices. Interest rate derivatives include forward rate agreements, interest rate swaps and interest rate futures. The Company during the financial year has entered into forward rate agreement (FRA) derivative instrument to hedge exposure due to interest rate sensitivity for highly probable forecasted transactions. These hedges were entered only for hedging purpose to hedge the interest rate risk. This hedge is carried in accordance with its established policies, strategy, objective and applicable regulations.

ii. Derivative policy, process and hedge effectiveness assessment: The Company has a well-defined Board approved derivative policy and standard operating procedures setting out the strategic objectives, regulatory and operational framework and risks associated with interest rate derivatives. The policy includes the risk measurement and monitoring, processes to be followed and controls thereon. The accounting treatment has been documented and ensures a process of periodic effectiveness assessment and accounting in accordance with applicable accounting standard issued by the Institute of Chartered Accountants of India (ICAI).

The Company has clearly defined roles and responsibilities to ensure independence and accountability through the investment decision, trade execution, to settlement, accounting and periodic reporting and audit of the Interest rate derivative exposures. The overall policy, risk management framework for the Interest rate derivatives are monitored by the Board Risk Management Committee.

iii. Scope and nature of risk identification, risk measurement, and risk monitoring: The derivative policy as approved by the Board identify risk associated with interest rate derivatives transactions and sets appropriate market risk limits such as stress testing and value-at-risk limits. Financial risks of the derivative portfolio are measured and monitored on periodic basis.

The exposure limit has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-Balance Sheet transaction calculated using the CEM is the sum of

a) The current credit exposure (gross positive mark to market value of the contract)

b) Potential future credit exposure which is a product of the notional principal amount across the outstanding contract and a factor that is based on the mandated credit conversion factors as prescribed under the IRDAI circular on Interest Rate Derivatives, which is applied on the residual maturity of the contract.

3.28. Valuation of Investment property

In accordance with the IRDAI Regulations, 2002 (Preparation of Financial Statements and Auditors' Report of Insurance Companies), the Company's investment property has been revalued. The Company has revalued all its investment properties held for more than one year and market value for such properties is based on valuation performed by an independent valuer at March 31, 2023. The opinion on market value by the independent valuer, is prepared in accordance with the “The RICS Valuation Standards” published by the Royal Institution of Chartered Surveyors (“RICS”), subject to variation to meet local established law, custom, practice and market conditions. The methods used in valuation of property includes “Direct comparable approach”. The real estate investment property is accordingly valued at ' 4,893,040 thousand at March 31, 2023 (March 31, 2022: ' 4,830,436 thousand). The historical cost of the property at March 31, 2023 is ' 4,191,408 thousand (March 31, 2022: ' 3,836,532 thousand).

3.29. Impairment of investment assets

In accordance with the Financial Statements Regulations, Schedule A Part I on “Accounting Principle for Preparation of Financial Statements” on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2023 and accordingly impairment provisions have been provided as below.

3.30. Encumbrances of assets

The assets of the Company are free from all encumbrances except to the extent assets or monies are required to be deposited as margin contributions for investment trade obligations of the Company or as mandated by the court, as detailed below:

a. Assets deposited with National Securities Clearing Corporation Limited (NSCCL)

Mutual fund units (March 31, 2022: ' 1,030,145 thousand) previously deposited with NSCCL towards margin requirement for equity trade settlement have been withdrawn post change in equity trade settlement cycle from T 2 to T 1.

3.31. Assets to be deposited under local laws

There are no assets required to be deposited by the Company under any local laws or otherwise encumbered in or outside India at March 31, 2023 (March 31, 2022: ' Nil) except the assets disclosed in the note 3.30.

3.32. Securities Lending and Borrowing Scheme (SLB)

Equity shares transferred under SLB continue to be recognised on the Balance Sheet as the Company retains all the associated risks and rewards of these securities.

The value of equity shares lent by the Company under SLB and outstanding at March 31, 2023 is ' Nil (March 31, 2022: ' 2,836,127 thousand).

3.33. Reverse Repo transactions in Government securities/Corporate Debt Securities

Disclosures pursuant to IRDAI notification ref IRDA/F&I/CIR/INV/250/12/2012 dated December 4, 2012:

There is no investment in reverse repo for the year ended March 31, 2023 (March 31, 2022 ' Nil).

3.43. Extra allocation

As per the product filing for Group Unit Linked Superannuation and Group Unit Linked Employee Benefit Plan, extra allocation of units made and total extra allocation recovered is disclosed as below.

Total extra allocation made with respect to group products (Group Unit Linked Superannuation and Group Unit Linked Employee Benefit Plan) for the year ended March 31, 2023 is ' 1,200 thousand (for year ended March 31, 2022: ' Nil).

The amount of recovery towards extra allocation for the year ended March 31, 2023 is ' 479 thousand (March 31, 2022: ' 499 thousand).

3.44. Dividend

Interim dividend appropriation for the year ended March 31, 2023 is ' Nil (March 31, 2022: ' Nil)

Final dividend proposed for year ended March 31, 2023 is ' 0.60 per equity share (year ended March 31, 2022: ' 0.55 per equity share) of ' 10 each in its board meeting held on April 20, 2023, subject to shareholder approval in annual general meeting.

Dividend distribution tax is not applicable on the final dividend declared by the Company as per Income Tax Act, 1961.

Unclaimed dividend of ' 7,621 thousand at March 31, 2023 (March 31, 2022: ' 7,532 thousand) represents dividend paid but not claimed by shareholders, and are represented by a bank balance of an equivalent amount.

3.48. Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

For insurance contracts, actuarial valuation of liabilities for policies is done by the Appointed Actuary of the Company. The methods and assumptions used in valuation of liabilities are in accordance with the regulations issued by the Insurance Regulatory and Development Authority of India ("IRDAI") and actuarial practice standards and guidance notes issued by the Institute of Actuaries of India.

3.49. Corporate Social Responsibility

As per section 135 of the Companies Act, 2013 and amendment rules, the amount required to be spent by the Company on Corporate Social Responsibility (CSR) related activities during the year ended March 31, 2023 was ' 38,807 thousand (March 31, 2022: ' 68,544 thousand).

3.50. Loans and advances to subsidiaries, associates and related entities

Pursuant to Securities and Exchange Board of India (Listing obligations and disclosure requirements) Regulations, 2015, disclosures pertaining to loans and advances given to subsidiaries, associates and related entities are given below:

There are no loans and advances given to subsidiaries, associates and firms/companies in which directors are interested except for advances which are in the normal course of business but not in the nature of loans (March 31, 2022: ' Nil)

There are no investments by the loanee in the shares of the Company.

3.51. Contribution to Policyholders’ account

The following table sets forth, for the periods indicated, the amount contributed from Shareholders' Account in the Revenue Account.

Expense of Management

In accordance with the IRDAI (Expenses of Management of insurers transacting life insurance business) regulation 2016 read with circular IRDA/F&A/CIR/MISC/184/10/2019 dated October 4, 2019, expense of management in excess of allowable limit in any business segment is required to be borne by the Shareholders' and separately disclosed in the Profit and Loss account & the Revenue Account.

The Company is in compliance with the expense of management regulation at an overall level. Further for the Nonpar line of business, during the year ended March 31, 2023, expense of management in excess of allowable limits amounting to ' 2,655,997 thousand has been charged to and separately disclosed in the Profit and Loss account. (March 31, 2022: ' 2,145,034 thousand).

No irreversible contribution has been made from the Shareholders' account to the Policyholders' account during the financial year ended March 31, 2023 (March 31, 2022 : Nil).

3.52. Ind AS Implementation

Pursuant to IRDAI letter 100/2/Ind AS- Mission Mode/2022-23/1 dated July 14, 2022, a disclosure on the strategy for Ind AS implementation and progress in this regard is given below:

In January 2020, IRDAI issued a circular stating that the effective implementation date of Ind AS in the Indian insurance sector would be decided after the finalisation of IFRS 17 by International Accounting Standards Board (IASB). In June 2020, IASB notified the amended IFRS 17 with an effective date on or after January 1, 2023. ICAI issued an exposure draft of amendments in Ind AS 117 Insurance contracts in February 2022 which corresponds to amendments in IFRS 17. The amended Ind AS 117 is currently under the process of notification.

During FY2023, IRDAI issued various directives on IFRS/Ind AS implementation and constituted an expert committee with members from ICAI, Institute of Actuaries of India (IAI), and the insurance industry to address implementation issues. The final date of Ind AS implementation for the insurance sector is yet to be announced by IRDAI.

The Company has implemented IFRS 17 as part of consolidation for its foreign promotor and has prepared the opening Balance Sheet at January 1, 2022 as well as the financial statements for half year ended June 30, 2022. The Company expects to leverage this experience to comply with any additional requirements that may be stipulated in the final notification of Ind AS 117 and Ind AS 109.

3.53. Loans, Advances & Investment by or on behalf of Ultimate Beneficiaries

a) The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or other kind of funds) to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

b) The Company has not received any funds (which are material either individually or in the aggregate) from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

3.54. Previous year comparatives

Previous year's figures have been regrouped and reclassified wherever necessary to conform to current year's presentation.