ICICI Lombard General Insurance Company Limited · RED HERRING PROSPECTUS Dated September 6, 2017 Please read Section 32 of the Companies Act, 2013 Book Built Offer ICICI Lombard

RED HERRING PROSPECTUS

Dated September 6, 2017

Please read Section 32 of the Companies Act, 2013

Book Built Offer

ICICI Lombard General Insurance Company Limited

Our Company was incorporated at Mumbai on October 30, 2000 as ICICI Lombard General Insurance Company Limited, a public limited company under the Companies Act, 1956, as amended. Our Company obtained the certificate of commencement of

business on January 11, 2001 issued by the Registrar of Companies, Mumbai (the “RoC”). For details relating to change in the registered office of our Company, see “History and Certain Corporate Matters” on page 191.

Registered Office: ICICI Lombard House, 414, Veer Savarkar Marg, Near Siddhivinayak Temple, Prabhadevi, Mumbai 400 025; Tel: (91 22) 6196 1100; Fax: (91 22) 6196 1323;

Corporate Office: 15th Floor, Tower B, Peninsula Business Park, Lower Parel, Mumbai 400013; Tel: (91 22) 6196 1100; Fax: (91 22) 6196 1323;

Contact Person: Vikas Mehra, Company Secretary and Compliance Officer

E-mail: [email protected]; Website: https://www.icicilombard.com

Corporate Identity Number: U67200MH2000PLC129408

IRDAI Registration Number: 115 Date of Registration: August 3, 2001

OUR PROMOTER: ICICI BANK LIMITED

PUBLIC OFFER OF UP TO 86,247,187 EQUITY SHARES OF FACE VALUE OF ₹ 10 EACH (“EQUITY SHARES”) OF ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED (OUR “COMPANY”) FOR CASH AT A PRICE OF ₹

[●] PER EQUITY SHARE, THROUGH AN OFFER FOR SALE OF UP TO 31,761,478 EQUITY SHARES BY ICICI BANK LIMITED (“ICICI BANK” OR THE “PROMOTER SELLING SHAREHOLDER”) AND UP TO 54,485,709 EQUITY

SHARES BY FAL CORPORATION (“FAL” OR THE “INVESTOR SELLING SHAREHOLDER” AND TOGETHER WITH THE PROMOTER SELLING SHAREHOLDER, THE “SELLING SHAREHOLDERS”), AGGREGATING UP TO ₹

[●] MILLION (“OFFER”), INCLUDING A RESERVATION OF UP TO 4,312,359 EQUITY SHARES FOR PURCHASE BY ICICI BANK SHAREHOLDERS (AS DEFINED IN “DEFINITIONS AND ABBREVIATIONS”) FOR CASH AT A

PRICE OF ₹ [] PER EQUITY SHARE AGGREGATING UP TO ₹ [●] MILLION (“ICICI BANK SHAREHOLDERS RESERVATION PORTION”). THE OFFER WOULD CONSTITUTE 19.00% OF OUR POST-OFFER PAID-UP EQUITY

SHARE CAPITAL AND THE NET OFFER SHALL CONSTITUTE 18.05% OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL.

THE FACE VALUE OF THE EQUITY SHARES IS ₹10 EACH. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS IN CONSULTATION WITH THE

GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS (“GCBRLMS”) AND THE BOOK RUNNING LEAD MANAGERS (“BRLMS”) AND WILL BE ADVERTISED IN ALL EDITIONS OF FINANCIAL EXPRESS, ALL

EDITIONS OF JANSATTA AND MUMBAI EDITION OF NAVSHAKTI (WHICH ARE ENGLISH, HINDI AND MARATHI NEWSPAPERS, MARATHI BEING THE REGIONAL LANGUAGE OF MAHARASHTRA, WHERE THE

REGISTERED OFFICE OF OUR COMPANY IS LOCATED), EACH WITH WIDE CIRCULATION AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE

LIMITED (“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”) FOR THE PURPOSE OF UPLOADING ON THEIR WEBSITES.

In case of any revision to the Price Band, the Bid/Offer Period will be extended by at least three additional Working Days after such revision of the Price Band, subject to the Bid/Offer Period not exceeding 10 Working Days. Any revision in the Price Band and

the revised Bid/Offer Period, if applicable, will be widely disseminated by notification to BSE and NSE, by issuing a press release, and also by indicating the change on the websites of the GCBRLMs and the BRLMs and at the terminals of the Syndicate

Members and by intimation to Self-Certified Syndicate Banks (“SCSBs”), Registered Brokers, Collecting Depository Participants and Registrar and Share Transfer Agents.

This Offer is being made through the Book Building Process, in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”). The Offer is being made in accordance with Regulation 26(1) of the Securities and Exchange

Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (“SEBI Regulations”), wherein not more than 50% of the Net Offer shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”), provided

that our Company and the Selling Shareholders may, in consultation with the GCBRLMs and the BRLMs, allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis, out of which one-third shall be reserved for domestic Mutual Funds

only, subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price, in accordance with the SEBI Regulations. 5% of the QIB Portion (excluding the Anchor Investor Portion) shall be available for allocation

on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price. Further, not less than 15% of the Net Offer shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Net Offer shall be available for allocation to Retail Individual Bidders in

accordance with the SEBI Regulations, subject to valid Bids being received at or above the Offer Price. All potential investors, other than Anchor Investors, are required to mandatorily utilise the Application Supported by Blocked Amount (“ASBA”) process

providing details of their respective bank account which will be blocked by the SCSBs, to participate in this Offer. For details, see “Offer Procedure” on page 440.

RISKS IN RELATION TO THE FIRST OFFER

This being the first public issue of our Company, there has been no formal market for the Equity Shares. The face value of the Equity Shares is ₹ 10 each and the Floor Price is [●] times the face value of the Equity Shares and the Cap Price is [●] times the face value of the Equity Shares. The Offer Price (determined by our Company and the Selling Shareholders, in consultation with the GCBRLMs and the BRLMs, as stated under “Basis for Offer Price” on page 117) should not be taken to be indicative of the market

price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS

Investment in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking

an investment decision in the Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer, including the risks involved. The Equity Shares in the Offer have not been recommended or approved by

Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents of this Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page 22.

DISCLAIMER CLAUSE OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (“IRDAI”)

The IRDAI does not undertake any responsibility for the financial soundness of our Company or for the correctness of any of the statements made or opinions expressed in this connection. Any approval

by the IRDAI under the IRDAI Issuance of Capital Regulations (as defined in “Definitions and Abbreviations”) shall not in any manner be deemed to be or serve as a validation of the representations by

our Company in the offer document. The Offer has not been recommended or approved by IRDAI, nor does IRDAI guarantee the accuracy or adequacy of the contents / information in this Red Herring

Prospectus. It is to be distinctly understood that this Red Herring Prospectus should not in any way be deemed or construed to have been approved or vetted by IRDAI.

COMPANY’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY

Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of the Offer, that the information

contained in this Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes

this Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Further, each of the Selling Shareholders severally and not jointly, accepts responsibility for the

statements specifically made by such Selling Shareholder in this Red Herring Prospectus to the extent that the statements pertains to such Selling Shareholder and the respective portion of the Equity Shares offered by it in the Offer.

LISTING

The Equity Shares offered through this Red Herring Prospectus are proposed to be listed on BSE and NSE. Our Company has received an ‘in-principle’ approval from BSE and NSE for listing of the Equity Shares pursuant to letter bearing number

DCS/IPO/CS/IP/323/2017-18 dated July 27, 2017 and letter bearing number NSE/LIST/14252 dated July 28, 2017, respectively. For the purposes of the Offer, the Designated Stock Exchange shall be BSE Limited. A copy of this Red Herring Prospectus and the

Prospectus shall be delivered for registration to the RoC in accordance with Section 26(4) of the Companies Act, 2013. For details of the material contracts and documents available for inspection from the date of this Red Herring Prospectus up to the Bid/Offer

Closing Date, see “Material Contracts and Documents for Inspection” on page 490.

GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS

DSP Merrill Lynch Limited

Ground Floor, A Wing, One BKC

G Block, Bandra Kurla Complex Bandra (East)

Mumbai 400 051

Tel: (91 22) 6632 8000

Fax: (91 22) 6776 2343

E-mail: [email protected]

Investor grievance e-mail: [email protected]

Website: http://www.ml-india.com/

Contact person: Soham H. Bhattbhatt

SEBI registration number: INM000011625

ICICI Securities Limited*

ICICI Centre, H.T. Parekh Marg

Churchgate Mumbai 400 020

Tel: (91 22) 2288 2460

Fax: (91 22) 2282 6580



Website: www.icicisecurities.com

Contact person: Prem D’cunha / Govind Khetan


IIFL Holdings Limited*

10th Floor, IIFL Centre

Kamala City, Senapati Bapat Marg Lower Parel (West)

Mumbai 400 013

Tel: (91 22) 4646 4600

Fax: (91 22) 2493 1073



Website: www.iiflcap.com

Contact person: Ankur Agarwal / Manali Jain


BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE OFFER

CLSA India Private Limited

8/F Dalamal House

Nariman Point

Mumbai 400 021

Tel: (91 22) 6650 5050

Fax: (91 22) 2284 0271


Investor grievance e-mail: [email protected] Website: www.india.clsa.com

Contact person: Sarfaraz Agboatwala


Edelweiss Financial Services Limited

14th Floor, Edelweiss House

Off. C.S.T. Road, Kalina

Mumbai 400 098

Tel: (91 22) 4009 4400

Fax: (91 22) 4086 3610


Investor grievance e-mail: [email protected] Website: www.edelweissfin.com

Contact person: Nishita John/Pradeep Tewani


JM Financial Institutional Securities Limited

7th Floor, Cnergy

Appasaheb Marathe Marg

Prabhadevi

Mumbai 400 025

Tel: (91 22) 6630 3030

Fax: (91 22) 6630 3330

E-mail: [email protected] Investor grievance e-mail: [email protected]

Website: www.jmfl.com

Contact person: Prachee Dhuri


Karvy Computershare Private Limited

Karvy Selenium Tower B, Plot 31-32 Gachibowli, Financial

District Nanakramguda

Hyderabad 500 032

Tel: (91 40) 6716 2222

Fax: (91 40) 2343 1551


Investor grievance e-mail: [email protected] Website: www.karisma.karvy.com

Contact person: Mr. M. Murali Krishna

SEBI registration number: INR000000221

BID/OFFER PROGRAMME

BID/OFFER OPENS ON** September 15, 2017**

BID/OFFER CLOSES ON September 19, 2017

* In compliance with the proviso to Regulation 21A(1) of the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, as amended, read with proviso to Regulation 5(3) of the SEBI Regulations, ICICI Securities Limited and IIFL

Holdings Limited will be involved only in marketing of the Offer.

**Our Company and the Selling Shareholders may, in consultation with the GCBRLMs and the BRLMs, consider participation by Anchor Investors in accordance with the SEBI Regulations. The Anchor Investor Bid/Offer Period shall be one Working Day prior

to the Bid/Offer Opening Date.

TABLE OF CONTENTS

SECTION I: GENERAL ........................................................................................................................................................... 3

DEFINITIONS AND ABBREVIATIONS .............................................................................................................................. 3 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ....................... 18 FORWARD-LOOKING STATEMENTS ............................................................................................................................. 21

SECTION II: RISK FACTORS ............................................................................................................................................. 22

SECTION III: INTRODUCTION .......................................................................................................................................... 66

SUMMARY OF INDUSTRY ................................................................................................................................................ 66 SUMMARY OF OUR BUSINESS........................................................................................................................................ 72 SUMMARY OF FINANCIAL INFORMATION.................................................................................................................. 78 THE OFFER .......................................................................................................................................................................... 88 GENERAL INFORMATION ................................................................................................................................................ 90 CAPITAL STRUCTURE ...................................................................................................................................................... 99 OBJECTS OF THE OFFER .............................................................................................................................................. 115 BASIS FOR OFFER PRICE ................................................................................................................................................ 117 STATEMENT OF TAX BENEFITS ................................................................................................................................... 119

SECTION IV: ABOUT OUR COMPANY .......................................................................................................................... 127

INDUSTRY OVERVIEW ................................................................................................................................................... 127 OUR BUSINESS ................................................................................................................................................................. 151 REGULATIONS AND POLICIES ..................................................................................................................................... 180 HISTORY AND CERTAIN CORPORATE MATTERS .................................................................................................... 190 OUR MANAGEMENT ....................................................................................................................................................... 197 OUR PROMOTER AND PROMOTER GROUP ................................................................................................................ 215 OUR GROUP COMPANIES .............................................................................................................................................. 221 RELATED PARTY TRANSACTIONS .............................................................................................................................. 230 DIVIDEND POLICY........................................................................................................................................................... 231

SECTION V: FINANCIAL INFORMATION .................................................................................................................... 233

FINANCIAL STATEMENTS ............................................................................................................................................. 233 ADDITIONAL DISCLOSURES OF FINANCIAL STATEMENTS UNDER IRDAI ISSUANCE OF CAPITAL

REGULATIONS ................................................................................................................................................................. 317 CAPITALISATION STATEMENT .................................................................................................................................... 323 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS..................................................................................................................................................................... 324 FINANCIAL INDEBTEDNESS ......................................................................................................................................... 354

SECTION VI: LEGAL AND OTHER INFORMATION .................................................................................................. 356

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS.......................................................................... 356 GOVERNMENT AND OTHER APPROVALS ................................................................................................................. 407 OTHER REGULATORY AND STATUTORY DISCLOSURES ...................................................................................... 411

SECTION VII: OFFER INFORMATION .......................................................................................................................... 432

TERMS OF THE OFFER .................................................................................................................................................... 432 OFFER STRUCTURE ......................................................................................................................................................... 435 OFFER PROCEDURE ........................................................................................................................................................ 440 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES.................................................................... 479

SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ................................................................. 480

SECTION IX: OTHER INFORMATION ........................................................................................................................... 490

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................................ 490 DECLARATION ................................................................................................................................................................. 492

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SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

This Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or implies,

shall have the meanings provided below. References to any legislation, act, regulation, rules, guidelines, policies, circulars,

notifications or clarifications shall be to such legislation, act, regulation, rules, guidelines, policies, circulars, notifications or

clarifications as amended.

The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms under the SEBI

Regulations, the Companies Act, the SCRA, the Depositories Act, the Insurance Act and the rules and regulations made

thereunder, unless the context otherwise indicates or implies.

General Terms

Term Description

our Company / the Company / we / us

/ our

ICICI Lombard General Insurance Company Limited, a company incorporated under the

Companies Act, 1956 and having its registered office at ICICI Lombard House, 414, Veer

Savarkar Marg, Near Siddhivinayak Temple, Prabhadevi, Mumbai 400 025

Company Related Terms

Term Description

Amended and Restated Joint Venture

Agreement

The amended and restated joint venture agreement dated March 8, 2016 entered into

among ICICI Bank, Fairfax, Northbridge Financial Corporation (successor, by merger, to

Lombard Canada Ltd.), Northbridge General Insurance Corporation (formerly Lombard

General Insurance Company of Canada), Northbridge Personal Insurance Corporation

(formerly Lombard Insurance Company) and Zenith Insurance Company read with (i) the

amendment agreement dated April 11, 2016 entered into among ICICI Bank, Fairfax,

Northbridge Financial Corporation (successor, by merger, to Lombard Canada Ltd.),

Northbridge General Insurance Corporation (formerly Lombard General Insurance

Company of Canada), Northbridge Personal Insurance Corporation (formerly Lombard

Insurance Company) and Zenith Insurance Company, and (ii) the termination agreement

dated July 3, 2017 entered into among ICICI Bank, Fairfax, Northbridge Financial

Corporation (successor, by merger, to Lombard Canada Ltd.), Northbridge General

Insurance Corporation (formerly Lombard General Insurance Company of Canada),

Northbridge Personal Insurance Corporation (formerly Lombard Insurance Company) and

Zenith Insurance Company

AoA / Articles of Association The articles of association of our Company, as amended

Appointed Actuary The appointed actuary of our Company

Board / Board of Directors The board of directors of our Company or a duly constituted committee thereof

Class of Business General insurance business

Corporate Office The corporate office of our Company located at 15th Floor, Tower B, Peninsula Business

Park, Lower Parel, Mumbai 400 013

CRISIL Report Report titled “Analysis of general insurance industry in India” issued by CRISIL Research

in August, 2017

Debenture Redemption Reserve /

DRR

Reserve required to be created by companies issuing debentures to protect investors

against the possibility of default by such company

Debentures The unsecured, subordinated, fully paid-up, listed, redeemable, non-convertible debentures

of our Company having face value of ₹ 10,00,000 each

Deed of Assignment The deed of assignment executed on July 13, 2017 between Northbridge Financial

Corporation and our Company

Director(s) The director(s) of our Company

Equity Shares The equity shares of our Company of face value of ₹10 each

ESOS Scheme ICICI Lombard Employees Stock Option Scheme, 2005 of our Company (as amended

from time to time)

Fairfax Fairfax Financial Holdings Limited, a Canadian based holding company which, through its

4

Term Description

subsidiaries, is engaged in property and casualty insurance and reinsurance and investment

management

Group Companies The companies which are covered under the applicable accounting standards and also other

companies as considered material by our Board, as identified in “Our Group Companies”

on page 221

ICICI Bank ICICI Bank Limited, a company incorporated under the provisions of the Companies Act,

1956

ICICI Corporate Insurance Agency

Agreement

The corporate insurance agency agreement dated April 1, 2016 entered into among our

Company and ICICI Bank. Although our engagement with ICICI Bank does not provide

for exclusive distribution of our products, currently, it exclusively distributes our non-life

insurance products in India. The agreement entered into with ICICI Bank is valid until

March 31, 2019

ICICI Group ICICI Bank, its subsidiaries and associates

ICICI Trademark Licensing

Agreement

The trademark licensing agreement dated July 6, 2017 entered into between ICICI Bank

and our Company

Joint Auditors / Joint Statutory

Auditors

Chaturvedi & Co, Chartered Accountants and PKF Sridhar & Santhanam LLP, Chartered

Accountants

Key Management Personnel The key management personnel of our Company in terms of the SEBI Regulations, the

Companies Act, 2013 and the IRDAI Corporate Governance Guidelines and as identified

in “Our Management” on page 206

MoA / Memorandum of Association The memorandum of association of our Company, as amended

Original Joint Venture Agreement The joint venture agreement dated October 4, 2000 entered into among ICICI Bank (then

known as ICICI Limited), Fairfax, Lombard Canada Ltd., Lombard General Insurance

Company of Canada, Lombard Insurance Company and Zenith Insurance Company read

with the amendment agreement dated October 30, 2015 entered into among ICICI Bank,

Fairfax, Northbridge Financial Corporation (successor, by merger, to Lombard Canada

Ltd.), Northbridge General Insurance Corporation (formerly Lombard General Insurance

Company of Canada), Northbridge Personal Insurance Corporation (formerly Lombard

Insurance Company) and Zenith Insurance Company

Promoter The promoter of our Company is ICICI Bank. For details, see “Our Promoter and Promoter

Group” on page 215

Promoter Group The entities constituting the promoter group of our Company in terms of Regulation

2(1)(zb) of the SEBI Regulations. For details, see “Our Promoter and Promoter Group” on

page 219

Registered Office The registered office of our Company located at ICICI Lombard House, 414, Veer

Savarkar Marg, Near Siddhivinayak Temple, Prabhadevi, Mumbai 400 025

Restated Financial Statements The financial information prepared by the management of our Company from its audited

financial statements for Fiscals 2013, 2014, 2015, 2016, 2017, for the three months ended

June 30, 2017 and for the three months ended June 30, 2016 (prepared in accordance with

Indian GAAP and the IRDAI Preparation of Financial Statements Regulations) and

examined by the Joint Auditors in accordance with the requirements of (a) Section 26(1)(b)

of Chapter III of the Companies Act, 2013 read with Rule 4 to 6 of the Companies

(Prospectus and Allotment of Securities) Rules, 2014; (b) relevant provisions of the SEBI

Regulations; and (c) relevant provisions of the IRDAI Issuance of Capital Regulations

RoC / Registrar of Companies The Registrar of Companies, Maharashtra at Mumbai

Shareholders The shareholders of our Company

Offer Related Terms

Term Description

Acknowledgement Slip The slip or document issued by the Designated Intermediary to a Bidder as proof of

registration of the Bid cum Application Form

Allot / Allotment / Allotted Unless the context otherwise requires, the transfer of the respective portion of Equity

Shares offered by each Selling Shareholder pursuant to the Offer to the successful Bidders

5

Term Description

Allotment Advice A note or advice or intimation of Allotment sent to the Bidders who have been or are to be

Allotted the Equity Shares after the Basis of Allotment has been approved by the

Designated Stock Exchange

Allottee A successful Bidder to whom the Equity Shares are Allotted

Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion in

accordance with the requirements specified in the SEBI Regulations and this Red Herring

Prospectus

Anchor Investor Allocation Price The price at which Equity Shares will be allocated to Anchor Investors in terms of this

Red Herring Prospectus and the Prospectus, which will be decided by our Company and

the Selling Shareholders, in consultation with the GCBRLMs and the BRLMs

Anchor Investor Application Form The form used by an Anchor Investor to make a Bid in the Anchor Investor Portion and

which will be considered as an application for Allotment in terms of this Red Herring

Prospectus and the Prospectus

Anchor Investor Bid / Offer Period One Working Day prior to the Bid / Offer Opening Date, on which Bids by Anchor

Investors shall be submitted and allocation to Anchor Investors shall be completed

Anchor Investor Offer Price The final price at which the Equity Shares will be Allotted to Anchor Investors in terms of

this Red Herring Prospectus and the Prospectus, which price will be equal to or higher

than the Offer Price but not higher than the Cap Price.

The Anchor Investor Offer Price will be decided by our Company and the Selling

Shareholders, in consultation with the GCBRLMs and the BRLMs

Anchor Investor Portion Up to 60% of the QIB Portion which may be allocated by our Company and the Selling

Shareholders, in consultation with the GCBRLMs and the BRLMs, to Anchor Investors

on a discretionary basis in accordance with the SEBI Regulations.

One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds,

subject to valid Bids being received from domestic Mutual Funds at or above the Anchor

Investor Allocation Price

ASBA / Application Supported by

Blocked Amount

An application, whether physical or electronic, used by ASBA Bidders to make a Bid and

authorising an SCSB to block the Bid Amount in the ASBA Account

ASBA Account A bank account maintained with an SCSB and specified in the ASBA Form submitted by

ASBA Bidders for blocking the Bid Amount mentioned in the ASBA Form

ASBA Bid A Bid made by an ASBA Bidder

ASBA Bidders All Bidders except Anchor Investors

ASBA Form An application form, whether physical or electronic, used by ASBA Bidders to make

Bids, which will be considered as the application for Allotment in terms of this Red

Herring Prospectus and the Prospectus

Bankers to the Offer Escrow Collection Bank, Refund Bank and Public Offer Account Bank

Basic Earnings Per Share / Basic EPS Basic earnings per share is calculated by dividing the net profit or loss for the period

attributable to equity shareholders by the weighted average number of equity shares

outstanding during the period

Basis of Allotment The basis on which Equity Shares will be Allotted to successful Bidders under the Offer

and which is described in “Offer Procedure” on page 469

Bid An indication to make an offer during the Bid / Offer Period by a Bidder pursuant to

submission of the ASBA Form, or during the Anchor Investor Bid / Offer Period by an

Anchor Investor, pursuant to submission of the Anchor Investor Application Form, to

purchase the Equity Shares at a price within the Price Band, including all revisions and

modifications thereto as permitted under the SEBI Regulations. The term “Bidding” shall

be construed accordingly

Bid / Offer Closing Date Except in relation to any Bids received from the Anchor Investors, the date after which

the Designated Intermediaries will not accept any Bids, which shall be notified in all

editions of the English national newspaper Financial Express, all editions of the Hindi

national newspaper Jansatta, and Mumbai edition of the Marathi newspaper Navshakti

(Marathi being the regional language of Maharashtra, where the Registered Office is

located), each with wide circulation

6

Term Description

Bid / Offer Opening Date Except in relation to any Bids received from the Anchor Investors, the date on which the

Designated Intermediaries shall start accepting Bids, which shall be notified in all editions

of the English national newspaper Financial Express, all editions of the Hindi national

newspaper Jansatta, and Mumbai edition of the Marathi newspaper Navshakti (Marathi

being the regional language of Maharashtra, where the Registered Office is located), each

with wide circulation

Bid / Offer Period Except in relation to any Bids received from Anchor Investors, the period between the Bid

/ Offer Opening Date and the Bid / Offer Closing Date, inclusive of both days, during

which prospective Bidders can submit their Bids, including any revisions thereof

Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form and

payable by the Bidder or blocked in the ASBA Account of the ASBA Bidders, as the case

maybe, upon submission of the Bid

Bid cum Application Form The Anchor Investor Application Form or the ASBA Form, as the context requires

Bid Lot [●]

Bidder Any prospective investor who makes a Bid pursuant to the terms of this Red Herring

Prospectus and the Bid cum Application Form and unless otherwise stated or implied,

includes an Anchor Investor

Bidding Centres The centres at which the Designated Intermediaries shall accept the Bid cum Application

Forms, i.e. Designated Branches for SCSBs, Specified Locations for the Syndicate,

Broker Centres for Registered Brokers, Designated RTA Locations for RTAs and

Designated CDP Locations for CDPs

Book Building Process The book building process, as provided in Schedule XI of the SEBI Regulations, in terms

of which the Offer is being made

BRLMs / Book Running Lead

Managers

The book running lead managers to the Offer, being CLSA, Edelweiss and JM Financial

Broker Centres The broker centres notified by the Stock Exchanges where Bidders can submit the ASBA

Forms to a Registered Broker.

The details of such Broker Centres, along with the names and the contact details of the

Registered Brokers are available on the websites of the respective Stock Exchanges

(www.bseindia.com and www.nseindia.com)

CAN / Confirmation of Allocation

Note

A notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who

have been allocated Equity Shares, after the Anchor Investor Bid/ Offer Period

Cap Price The higher end of the Price Band, being ₹ [●] per Equity Share, above which the Offer

Price and Anchor Investor Offer Price will not be finalised and above which no Bids will

be accepted

CDP / Collecting Depository

Participant

A depository participant as defined under the Depositories Act, 1996, registered with

SEBI and who is eligible to procure Bids at the Designated CDP Locations in terms of

circular number CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by

SEBI

Client ID The client identification number maintained with one of the Depositories in relation to the

demat account

CLSA CLSA India Private Limited

Cut-off Price The Offer Price finalised by our Company and the Selling Shareholders, in consultation

with the GCBRLMs and the BRLMs

Only Retail Individual Bidders and ICICI Bank Shareholders Bidding under the ICICI

Bank Shareholders Reservation Portion (subject to the Bid Amount being up to

200,000) are entitled to Bid at the Cut-off Price. QIBs and Non-Institutional Investors and

ICICI Bank Shareholders applying for the Bid Amount above 200,000 under the ICICI

Bank Shareholders Reservation Portion are not entitled to Bid at the Cut-off Price

Demographic Details Details of the Bidders including the Bidders’ address, name of the Bidders’ father /

husband, investor status, occupation and bank account details

Designated Branches Such branches of the SCSBs which shall collect the ASBA Forms, a list of which is

available on the website of SEBI at

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes or at such other

http://www.bseindia.com/

7

Term Description

website as may be prescribed by SEBI from time to time

Designated CDP Locations Such locations of the CDPs where Bidders can submit the ASBA Forms.

The details of such Designated CDP Locations, along with names and contact details of

the CDPs eligible to accept ASBA Forms are available on the websites of the respective

Stock Exchanges (www.bseindia.com and www.nseindia.com)

Designated Date The date on which funds are transferred by the Escrow Collection Bank from the Escrow

Account or the amounts blocked by the SCSBs are transferred from the ASBA Accounts,

as the case may be, to the Public Offer Account or the Refund Account, as appropriate,

after the Prospectus is filed with the RoC

Designated Intermediaries The members of the Syndicate, Sub-Syndicate/Agents, SCSBs, Registered Brokers, CDPs

and RTAs, who are authorised to collect Bid cum Application Forms from the Bidders, in

relation to the Offer

Designated RTA Locations Such locations of the RTAs where Bidders can submit the ASBA Forms to RTAs.

The details of such Designated RTA Locations, along with names and contact details of

the RTAs eligible to accept ASBA Forms are available on the websites of the respective

Stock Exchanges (www.bseindia.com and www.nseindia.com)

Designated Stock Exchange BSE Limited

DRHP / Draft Red Herring Prospectus The draft red herring prospectus dated July 14, 2017 issued in accordance with the SEBI

Regulations, which did not contain complete particulars of the price at which the Equity

Shares will be Allotted and the size of the Offer together with the notice to investors dated

August 22, 2017

DSPML DSP Merrill Lynch Limited

Edelweiss Edelweiss Financial Services Limited

Eligible NRI(s) NRI(s) from jurisdictions outside India where it is not unlawful to make an offer or

invitation under the Offer and in relation to whom the Bid cum Application Form and this

Red Herring Prospectus will constitute an invitation to purchase the Equity Shares

Escrow Account The account opened with the Escrow Collection Bank and in whose favour the Anchor

Investors will transfer money through NEFT / RTGS / direct credit in respect of the Bid

Amount when submitting a Bid

Escrow Agreement The escrow agreement dated September 5, 2017 entered into among our Company, the

Selling Shareholders, the GCBRLMs, the BRLMs, the Registrar to the Offer and the

Bankers to the Offer for inter alia, collection of the Bid Amounts from the Anchor

Investors and where applicable, refunds of the amounts collected from the Anchor

Investors, on the terms and conditions thereof

Escrow Collection Bank A bank, which is a clearing member and registered with SEBI as a banker to an offer and

with whom the Escrow Account has been opened, in this case being ICICI Bank

First Bidder The Bidder whose name shall be mentioned in the Bid cum Application Form or the

Revision Form and in case of joint Bids, whose name shall also appear as the first holder

of the beneficiary account held in joint names

Floor Price The lower end of the Price Band, being ` [●] per Equity Share, subject to any revision

thereto, at or above which the Offer Price and the Anchor Investor Offer Price will be

finalised and below which no Bids will be accepted

GCBRLMs / Global Co-ordinators

and Book Running Lead Managers

The global co-ordinators and book running lead managers to the Offer, being DSPML, I-

Sec and IIFL

GID / General Information Document The General Information Document prepared and issued in accordance with the circular

(CIR/CFD/DIL/12/2013) dated October 23, 2013 notified by SEBI suitably modified and

included in “Offer Procedure” on page 450

ICICI Bank Shareholders Individuals and HUFs who are the public equity shareholders of ICICI Bank, our

Promoter and one of our Group Companies, (excluding such other persons not eligible

under applicable laws, rules, regulations and guidelines and American Depository Receipt

holders of ICICI Bank) as on the date of this Red Herring Prospectus

ICICI Bank Shareholders Reservation

Portion

Reservation of up to 4,312,359 Equity Shares of the face value of ₹10 each aggregating to

₹ [●] million in favour of the ICICI Bank Shareholders

http://www.bseindia.com/http://www.nseindia.com/http://www.bseindia.com/http://www.nseindia.com/

8

Term Description

IIFL IIFL Holdings Limited

Investor Selling Shareholder FAL Corporation

I-Sec ICICI Securities Limited

JM Financial JM Financial Institutional Securities Limited

Maximum RIB Allottees The maximum number of RIBs who can be allotted the minimum Bid Lot. This is

computed by dividing the total number of Equity Shares available for Allotment to RIBs

by the minimum Bid Lot

Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion), or 819,349 Equity Shares

which shall be available for allocation to Mutual Funds only

Net Offer The Offer less the ICICI Bank Shareholders Reservation Portion

NIIs / Non-Institutional Investors All Bidders that are not QIBs or RIBs and who have Bid for Equity Shares for an amount

of more than ₹ 200,000 (but not including NRIs other than Eligible NRIs)

Non-Institutional Portion Portion of the Net Offer being not less than 15% of the Net Offer or 12,290,225 Equity

Shares which shall be available for allocation on a proportionate basis to Non-Institutional

Investors, subject to valid Bids being received at or above the Offer Price

Non-Resident A person resident outside India as defined under FEMA and includes NRIs, FVCIs and

FPIs

Non-Resident Indians A non-resident Indian as defined under the FEMA Regulations

Offer The offer for sale of up to 86,247,187 Equity Shares by the Selling Shareholders at the

Offer Price aggregating up to ₹ [●] million in terms of this Red Herring Prospectus. The

Offer comprises the Net Offer and the ICICI Bank Shareholders Reservation Portion

Offer Agreement The offer agreement dated July 14, 2017 entered into among our Company, the Selling

Shareholders, the GCBRLMs and the BRLMs pursuant to which certain arrangements are

agreed to in relation to the Offer

Offer Price The final price at which the Equity Shares will be Allotted to ASBA Bidders in terms of

this Red Herring Prospectus.

The Offer Price will be decided by our Company and the Selling Shareholders, in

consultation with the GCBRLMs and the BRLMs, on the Pricing Date

Price Band The price band of a minimum price of ₹ [●] per Equity Share (Floor Price) and the

maximum price of ₹ [●] per Equity Share (Cap Price), including any revisions thereof.

The Price Band and the minimum Bid Lot size for the Offer will be decided by our

Company and the Selling Shareholders, in consultation with the GCBRLMs and the

BRLMs, and will be advertised, at least five Working Days prior to the Bid / Offer

Opening Date, in all editions of the English national newspaper Financial Express, all

editions of the Hindi national newspaper Jansatta, and Mumbai edition of the Marathi

newspaper Navshakti (Marathi being the regional language of Maharashtra, where the

Registered Office is located), each with wide circulation

Pricing Date The date on which our Company and the Selling Shareholders, in consultation with the

GCBRLMs and the BRLMs, will finalise the Offer Price

Promoter Selling Shareholder ICICI Bank

Prospectus The prospectus to be filed with the RoC after the Pricing Date in accordance with Section

26 of the Companies Act, 2013 and the SEBI Regulations, containing, inter alia, the Offer

Price that is determined at the end of the Book Building Process, the size of the Offer and

certain other information including any addenda or corrigenda thereto

Public Offer Account The account opened, in accordance with Section 40 of the Companies Act, 2013, with the

Public Offer Bank to receive monies from the Escrow Account(s) and the ASBA

Accounts on the Designated Date

Public Offer Bank The bank with whom the Public Offer Account for collection of Bid Amounts from

Escrow Accounts and ASBA Accounts has been opened, in this case being ICICI Bank

QIB Portion / QIB Category The portion of the Net Offer (including the Anchor Investor Portion) being not more than

50% of the Net Offer or 40,967,413 Equity Shares which shall be allocated to QIBs

(including Anchor Investors)

9

Term Description

QIBs / QIB Bidders / Qualified

Institutional Buyers

The qualified institutional buyers as defined under Regulation 2(1)(zd) of the SEBI

Regulations

Refund Account The account opened with the Refund Bank, from which refunds, if any, of the whole or

part of the Bid Amount to the Anchor Investors shall be made

Refund Bank ICICI Bank

Registered Brokers The stock brokers registered with the stock exchanges having nationwide terminals, other

than the Members of the Syndicate and eligible to procure Bids in terms of circular

number CIR/CFD/14/2012 dated October 4, 2012 issued by SEBI

Registrar to the Offer or Registrar Karvy Computershare Private Limited

Retail Portion The portion of the Net Offer being not less than 35% of the Net Offer or 28,677,190

Equity Shares which shall be available for allocation to RIBs in accordance with the SEBI

Regulations, subject to valid Bids being received at or above the Offer Price

Revision Form The form used by Bidders to modify the quantity of the Equity Shares or the Bid Amount

in any of their Bid cum Application Forms or any previous Revision Form(s).

QIB Bidders and Non-Institutional Investors are not allowed to withdraw or lower their

Bids (in terms of quantity of Equity Shares or the Bid Amount) at any stage. RIBs can

revise their Bids during the Bid/Offer Period and withdraw their Bids until Bid/Offer

Closing Date

RHP / Red Herring Prospectus This red herring prospectus dated September 6, 2017 issued by our Company in

accordance with Section 32 of the Companies Act, 2013 and the provisions of the SEBI

Regulations, which does not have complete particulars of the price at which the Equity

Shares will be offered and the size of the Offer including any addenda or corrigenda

thereto.

This red herring prospectus has been registered with the RoC at least three Working Days

before the Bid / Offer Opening Date and will become the Prospectus upon filing with the

RoC after the Pricing Date

RIBs / Retail Individual Bidders The individual Bidders, who have Bid for the Equity Shares for an amount not more than

₹ 200,000 in any of the bidding options in the Offer (including HUFs applying through

their Karta and Eligible NRIs) and does not include NRIs (other than Eligible NRIs)

RTAs / Registrar and Share Transfer

Agents

The registrar and share transfer agents registered with SEBI and eligible to procure Bids

at the Designated RTA Locations in terms of circular number

CIR/CFD/POLICYCELL/11/2015 dated November 10, 2015 issued by SEBI

SCSB(s) / Self Certified Syndicate

Bank(s)

The banks registered with SEBI, offering services in relation to ASBA, a list of which is

available on the website of SEBI at

http://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognised=yes and updated

from time to time

Selling Shareholders ICICI Bank and FAL

Share Escrow Agent The share escrow agent appointed pursuant to the Share Escrow Agreement namely Karvy

Computershare Private Limited

Share Escrow Agreement The share escrow agreement dated September 5, 2017 entered into among our Company,

the Selling Shareholders and the Share Escrow Agent in connection with the transfer of

Equity Shares under the Offer by the Selling Shareholders and credit of such Equity

Shares to the demat accounts of the Allottees

Specified Locations The Bidding centres where the Syndicate shall accept Bid cum Application Forms

Syndicate / Members of the Syndicate The GCBRLMs, the BRLMs and the Syndicate Members

Syndicate Agreement The syndicate agreement dated September 5, 2017 entered into among our Company, the

Selling Shareholders, the GCBRLMs, the BRLMs and the Syndicate Members in relation

to collection of Bid cum Application Forms by the Syndicate

Syndicate Members The intermediaries registered with SEBI who are permitted to carry out activities as an

underwriter, namely India Infoline Limited, Edelweiss Securities Limited and JM

Financial Services Limited

Underwriters [●]

10

Term Description

Underwriting Agreement The underwriting agreement to be entered into among our Company, the Selling

Shareholders and the Underwriters on or after the Pricing Date, but prior to filing the

Prospectus with the RoC

Wilful Defaulter Company or person categorised as a wilful defaulter by any bank or financial institution

or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the

Reserve Bank of India and includes any company whose director or promoter is

categorised as such

Working Day All days other than second and fourth Saturday of the month, Sunday or a public holiday,

on which commercial banks in Mumbai are open for business; provided however, with

reference to (a) announcement of Price Band; (b) Bid/Offer Period, “Working Day” shall

mean all days, excluding Saturdays, Sundays and public holidays, on which commercial

banks in Mumbai are open for business; and (c) the time period between the Bid/ Offer

Closing Date and the listing of the Equity Shares on the Stock Exchanges, “Working Day”

shall mean all trading days of Stock Exchanges, excluding Sundays and bank holidays, as

per the SEBI Circular SEBI/HO/CFD/DIL/CIR/P/2016/26 dated January 21, 2016

Technical / Insurance Industry related Terms / Abbreviations

Term Description

Accident Year / AY AY is the fiscal year in which a claim event occurred (regardless of when the claim was

reported or the loss was recorded)

Accretion of discount / amortisation

of premium

Premium/ discount refers to the price paid for a bond as against the par value of the bond.

This discount or premium is spread over the remaining life of the bond and is called

accretion or amortisation, respectively

Acquisition Cost Costs that vary with, and are primarily related to, the acquisition of new, and renewal of

insurance contracts. These include, amongst others, commissions and policy issue

expenses

Adjuster/Surveyor An independent professional appointed by an insurer which seeks to determine the extent

of its liability with respect to a claim that is submitted

Agent tied to an insurance company An agent of an insurance company who receives or agrees to receive payment by way of

commission or other remuneration in consideration of his soliciting or procuring insurance

business related to the issuance, continuance, renewal or revival of insurance policies

All risk insurance policy A type of insurance policy that covers a broad range of risks, including risks that are not

explicitly excluded in the policy contract

Allocated Loss Adjustment Expenses /

ALAE

Claim-related expenses that are directly attributable to a specific claim

Available Solvency Margin / ASM Available solvency margin means the excess of value of assets of an insurance company

over the value of its liabilities, with certain further prescribed adjustments by the IRDAI

Broker A licensed person/firm who arranges insurance contracts with insurance companies and/

or reinsurance companies on behalf of his clients for remuneration

Cashless facility A facility extended by an insurance company to the insured where the payments of the

costs of treatment/repair availed by the insured in accordance with the policy terms and

conditions are directly made to the network provider by the insurance company

Certificate of registration Certificate granted by the IRDAI under the IRDA (Registration of Indian Insurance

Companies) Regulations, 2000, registering an insurance company to transact the

classes of business specified therein

Claim Incurred (net) Claim incurred (net) are gross incurred claims less all claims recovered from reinsurers

related to those gross incurred claims. The gross claims incurred comprise of claims paid,

settlement costs, wherever applicable and change in the outstanding provision for claims

at the period end

Claim Reserves The reserves in respect of the claims which have already occurred. It is determined as the

aggregate of outstanding claim reserves and incurred but not reported claim reserves

Combined ratio The combined ratio is a measure of profitability of a non-life insurance company’s

underwriting business. The combined ratio is the sum of the loss ratio and the net expense

ratio

Corporate agent Any entity, as prescribed by the IRDAI, that holds a valid certificate of registration for

solicitation and servicing any of life, general and health insurance business

Cover An insurance contract whether in the form of a policy or a cover note or a certificate of

insurance or any other form as approved by IRDAI to evidence the existence of an

insurance contract

11

Term Description

Crop cutting experiment / CCE A crop cutting experiment is a physical harvest of sampled plots to estimate the crop

yields of a location. The sampled plots are identified by the agricultural statistics

department of a state using a stratified random survey method

Directors and Officers Liability Directors and Officers liability coverage protects directors or officers of a corporation

from liability arising out of the performance of their professional duties on behalf of the

corporation

Dividend Cover A measure of the ability of an insurance company to pay its dividend. It is calculated as

operating profit after tax divided by the total dividend paid for a particular financial year

Excess of loss reinsurance (also

known as non-proportional

reinsurance)

A type of reinsurance transaction pursuant to which the reinsurer, subject to a specified

limit, indemnifies the ceding insurer against the amount of loss in excess of a specified

retention amount

Expenses of Management All expenses in the nature of operating expenses including commission, brokerage and

remuneration to the insurance agents, intermediaries and insurance intermediaries which

are charged to the revenue account, but does not include the charges against profits such

as income tax and wealth tax and other taxes like service tax borne by the insurer and

other charges which are levied against the profit, as defined in the Insurance Regulatory

and Development Authority of India (Expenses of Management of Insurers transacting

life insurance business) Regulations, 2016

Expenses ratio Expenses ratio means operating expenses related to insurance business divided by net

written premium

Facultative Reinsurance Reinsurance transacted and negotiated on an individual risk basis. The ceding insurer has

the option to offer the individual risk to the reinsurer and the reinsurer retains the right to

accept or reject the risk

Fair value change account Unrealised gains/ losses arising due to changes in the fair value of listed equity shares and

mutual funds

First notice of loss / FNOL The initial report made to an insurer following a loss, theft, or damage of an insured asset.

The FNOL is normally the first step in the processing of a claim

Gross Direct Premium Income (GDPI) Gross Direct Premium Income is the total premium received before taking into account

reinsurance assumed and ceded

Gross Written Premium / GWP Gross Written Premium is the sum of GDPI and reinsurance inward premium accepted

Incurred but not enough reported/

IBNER

IBNER is a reserve reflecting expected changes (increases and decreases) in the estimates

of reported claims as on the accounting date

Incurred But Not Reported Claim

Reserves / IBNR

Includes IBNER, estimate for reopened claims, provision for incurred but not reported

claims, provision for claims in transit as on the accounting date and ALAE

Indian Motor Third Party Insurance

Pool / IMTPIP

The IMTPIP was a multilateral arrangement for insurance set up by the IRDAI in respect

of third-party claims against commercial vehicles, the losses or gains from which were

shared by all Indian non-life insurance companies in proportion to their overall market

share. The IMTPIP was effective from April 1, 2007 to March 31, 2012

Indian Motor Third-party Declined

Risk Pool / IMTPDRP

The IMTPDRP was an arrangement for insurance, set up by the IRDAI, in respect of

standalone third-party claims against commercial vehicles that insurers “declined” to keep

on their books. The losses or gains from such pool were shared by Indian non-life

insurance companies that failed to meet a certain quota of third-party insurance policies

underwritten. The IMTPDRP was effective from April 1, 2012 to March 31, 2016

Inland Marine Coverage for property that may be in transit, held by a bailee, at a fixed location, or a

movable good that is often at different locations

Insurance underwriting The process by which an insurance company examines risk and determines whether the

insurer will accept the risk or not, classifies those accepted and determines the appropriate

rate for coverage provided

Intermediary Entities like insurance brokers, re-insurance brokers, insurance consultants,

individual/corporate agents, third-party administrators, surveyors, loss assessors and any

other entities as may be specified by the IRDAI for undertaking insurance related

activities

Investment Income Investment income will include, income taken to revenue account and profit and loss

account (interest, profit/loss on sale, accretion of discount, amortization of premium,

dividend earned during the period) and taken to financial statements pertaining to all the

securities held under that category during that period

Investment leverage Investment leverage is the ratio of total investment assets (net of borrowings) to net worth.

I-Partner An information technology platform extended to intermediaries, more specifically agents

for booking insurance policies

Kharif Kharif refers to the season which lasts from April to October and the crops that are

cultivated and harvested in such season

12

Term Description

Loss ratio Loss ratio is the ratio of claims incurred (net) to NEP

Loss Reserves Loss reserves are the reserves (or provision) for outstanding claims, IBNR and IBNER

Modified National Agricultural

Insurance Scheme / MNAIS

The Modified National Agriculture Insurance Scheme was functioning as a component of

National Crop Insurance Programme (NCIP). This scheme provides insurance coverage

and financial support to the farmers in the event of failure of crops and subsequent low

crop yield

Monoline insurer A monoline insurer is a non-life insurer having a license to carry out a specific line of

business. Eg: health insurance including travel and personal accident insurance or

agriculture/crop insurance

Net earned premiums / NEP Net written premium adjusted by the change in unexpired risk reserve for the period

Net expense ratio Net expense ratio is the ratio of the sum of operating expenses related to insurance

business and commission paid (net) to the NWP

Net Promoter Score / NPS The Net Promoter Score is an index ranging from -100 to 100 that measures the

willingness of customers to recommend a company's products or services to others. It is

used as a proxy for gauging the customer's overall satisfaction with a company's product

or service and customers’ loyalty to the brand.

Surveyed customers are asked to rate the company on a scale of 0-10 in terms of how

likely they are to recommend the company to others. Respondents are grouped as follows:

Promoters – Those who give a rating of 9-10

Passives – Those who give a rating of 7-8

Detractors - Those who give a rating of 0-6

NPS = % Promoters - % Detractors

Net worth Net worth represents the shareholders’ funds and is computed as sum of share capital,

reserves and surplus, net of miscellaneous expenditure and debit balance in the profit and

loss account

Net written premium / NWP GWP less premium on reinsurance ceded

Non-Life insurance density The ratio of overall GDPI in the non-life insurance industry to the population of a country

Non-life insurance penetration Overall GDPI in the non-life insurance industry as a percentage of gross domestic product

of a country

Non-Life Insurance Penetration Non-life Insurance penetration refers to GDPI as a percentage of Gross Domestic Product

of India

Obligatory cession The portion of risk that Indian non-life insurance companies are required by law to cede to

General Insurance Corporation of India (GIC Re).

Outstanding Claim Reserves / OS

Reserves

The provision made in respect of all outstanding reported claims as on the accounting

date. OS Reserves include ALAE

Over-the-counter (OTC) products Pre-defined products with standardized price, terms and conditions offered to customers

Place of Business A regional office, a zonal office, a divisional office, branch office or any subordinate

office or any other office by whatever name called set up within India or a ‘representative

or a liaison office of Indian insurers’ or a ‘foreign branch office of Indian insurer’ set up

outside India by the insurers registered in India

Policyholders’ Funds The policyholders funds shall be the sum of (a) estimated liability for outstanding claims

including incurred but not reported and incurred but not enough reported (b) unexpired

risk reserve (“URR”) (c) catastrophe reserve (d) premium deficiency (e) other liabilities

net off other assets.

“Other liabilities” comprise of (i) premium received in advance (ii) unallocated premium

(iii) balance due to other insurance companies (iv) due to others members of third party

pool (“IMTPIP”), if applicable and (v) Sundry creditors (due to policyholders). Other

assets comprise of (i) outstanding premium (ii) due from other entities carrying on

insurance business including re-insurers (iii) balance with terrorism pool (if applicable)

and (iv) balance with motor third party pool, if any (if applicable)

Portability The right accorded to an individual health insurance policyholder (including family

cover), to transfer the credit gained for pre-existing conditions and time bound exclusions,

from one insurer to another or from one plan to another plan of the same insurer

Pradhan Mantri Fasal Bima Yojana /

PMFBY

A Government of India programme under which the central and state governments

subsidise the purchase of yield-based crop insurance for farmers. The PMFBY was

13

Term Description

launched in April 2016 and covers food crops, oilseeds and commercial and horticultural

crops

Premium Deficiency Reserve The reserve held in excess of the unearned premium reserve, which allows for any

expectation that the unearned premium reserve will be insufficient to cover the cost of

claims and related expenses incurred during the period of unexpired risk

Premium ceded Premium on reinsurance ceded is the premium in relation to the risk that we cede to our

reinsurers

Probable Maximum Loss (PML) The maximum loss that an insurer would be expected to incur on a policy. The probable

maximum loss represents an internal determination of the worst-case scenario for an

insurer

Proportional reinsurance A type of reinsurance transaction pursuant to which the reinsurer and the ceding insurer

share a defined percentage of the premiums and liabilities of certain underlying insurance.

The reinsurer also typically pays the ceding reinsurer a commission

Rabi Rabi refers to the season which typically lasts from mid-November to April/May and the

crops that are cultivated and harvested in such season

Rashtriya Swasthya Bima Yojana /

RSBY

A Government of India programme under which the central and state governments

provide health insurance to low income households and certain defined categories of

unorganised workers

Reinsurance Reinsurance is a transaction whereby one company, the reinsurer, agrees to indemnify

another insurance company, the reinsured against all or part of the loss that the latter

sustains under a policy or policies that it has issued, in return for a premium

Reinsurance ceded/accepted Reinsurance means an insurance contract between one insurance company (cedant) and

another insurance company (reinsurer) to indemnify against losses on one or more

contracts issued by the cedant in exchange for consideration. The consideration paid/

received is termed as reinsurance ceded/accepted. The intent of reinsurance is for an

insurance company to reduce the risks associated with underwritten policies by spreading

risks across alternative institutions

Reserving Triangle A table showing development of estimated ultimate loss amount and the corresponding

outstanding reserves for each accident year over the subsequent periodic valuations

Retained risk The amount of liability for which an insurance company will remain responsible after

accounting for its reinsurance arrangements

Retention limit The maximum amount of risk retained by an insurer, beyond which the insurer cedes the

risk to reinsurers

Retrocession Retrocession is the ceding of reinsurance accepted to another reinsurer

Rider The add-on benefits which are in addition to the benefits under a basic policy

RSM / Required Solvency Margin Shall be the higher of the amounts of RSM 1 and RSM 2 for each line of business

(“LOB”) separately.

RSM 1 means required solvency margin based on net premiums, and shall be determined

as 20% of the amount which is the higher of (a) the gross premiums multiplied by a factor

specified for each LOB and (b) the net premiums.

RSM 2 means required solvency margin based on net incurred claims and shall be

determined as 30% of the amount which is the higher of (a) the gross incurred claims

multiplied by a factor specified for each LOB and (b) the net incurred claims

S&P or equivalent international rating A rating from S&P or the S&P rating that corresponds to the rating from A.M. Best, Fitch

or Moody’s in the following table:

S&P Fitch Moody's A.M. Best

AAA AAA Aaa A++

AA+ AA+ Aa1

AA AA Aa2 A+

AA- AA- Aa3

A+ A+ A1

A A A2 A

A- A- A3 A-

BBB+ BBB+ Baa1 B++

BBB BBB Baa2

BBB- BBB- Baa3

BB+ BB+ Ba1

14

Term Description

BB BB Ba2 B+

BB- BB- Ba3

B+ B+ B1 B

B B B2 B-

B- B- B3

CCC+ CCC Caa C++

CCC DD Ca C+

CCC- SR C

CC C

C-

D

E

F

S

Salvage Value recoverable from sale of scrap/recovered material arising from claim

Shareholders’ Funds Shareholders’ funds comprise of share capital plus all reserves and surplus (except

revaluation reserve and fair value change account) as at the balance sheet date,

represented by investments of funds held in business beyond solvency margin

Solvency Ratio (Solvency) The ratio of available solvency margin to the required solvency margin

Technical reserves Technical reserves means reserve for unexpired risks plus premium deficiency reserve

plus reserve for outstanding claims (including IBNR and IBNER)

Third Party Administrators / TPA A company registered with IRDAI, and engaged by an insurer, for a fee or remuneration,

by whatever name called and as may be mentioned in the agreement, for providing health

services as mentioned under the Insurance Regulatory and Development Authority of

India (Third Party Administrators - Health Services) Regulations, 2016

Third-party loss / TP loss A loss suffered by a person(s) other than the insured or insurer who has incurred losses or

is entitled to receive payment due to acts or omissions of the insured

Treaty A reinsurance contract in which a reinsurance company agrees to accept all of a particular

type of risk from the ceding insurance company. Reinsurers in a treaty contract are

obliged to accept all risks outlined in the contract

Underwriting Balance Ratio Computed as underwriting profit or loss divided by net premium for the respective class

of business

Underwriting Results Underwriting profit or loss which is computed as net premium earned less net claims

incurred less net commission less operating expenses related to insurance business

Unearned Premium Reserve / UPR An amount representing that part of the premium written which is attributable and to be

allocated to the succeeding accounting periods

Unexpired Risk Reserve / URR Reserves in respect of the liabilities for unexpired risks and determined as the aggregate

of unearned premium reserve and premium deficiency reserve

Weather Based Crop Insurance

Scheme (WBCIS)

Weather Based Crop Insurance Scheme is an index based insurance cover which aims to

mitigate the hardship of the insured farmers against the likelihood of financial loss by

providing protection against variation in specified weather indices such as rainfall,

humidity, temperature etc. or a combination of these factors

Conventional and General Terms / Abbreviations

Term Description

₹ / Rs./ Rupees/ INR Indian Rupees

AGM Annual general meeting

AIF An alternative investment fund as defined in and registered with SEBI under the

Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012

AS / Accounting Standards The Accounting Standards issued by the Institute of Chartered Accountants of India

Bn / bn Billion

BSE BSE Limited

CAGR Compounded annual growth rate

Category I Foreign Portfolio Investors The FPIs who are registered as “Category I foreign portfolio investors” under the SEBI

FPI Regulations

Category II Foreign Portfolio The FPIs who are registered as “Category II foreign portfolio investors” under the SEBI

15

Term Description

Investors FPI Regulations

Category III Foreign Portfolio

Investors

The FPIs who are registered as “Category III foreign portfolio investors” under the SEBI

FPI Regulations

CCI Competition Commission of India

CDSL Central Depository Services (India) Limited

CIN Corporate Identification Number

Companies Act The Companies Act, 2013 and Companies Act, 1956, as applicable

Companies Act, 1956 The Companies Act, 1956 (without reference to the provisions thereof that have ceased to

have effect upon notification of the sections of the Companies Act, 2013) along with the

relevant rules made thereunder

Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of sections of

the Companies Act, 2013, along with the relevant rules made thereunder

Competition Act The Competition Act, 2002

CrPC The Code of Criminal Procedure, 1973

Debenture Trustees Regulations Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993

Depositories NSDL and CDSL

Depositories Act Depositories Act, 1996

DIN Director identification number

DIPP The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry,

Government of India

DP / Depository Participant A depository participant as defined under the Depositories Act

DP ID Depository participant identification

EGM Extraordinary general meeting

EPS Earnings per share

Erstwhile OCB / Overseas Corporate

Body

A company, partnership firm, society and other corporate body owned directly or

indirectly to the extent of at least sixty percent by NRIs and includes overseas trust in

which not less than 60% beneficial interest is held by NRIs directly or indirectly but

irrevocably and which was in existence on the date of commencement of the Foreign

Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies

(OCBs)) Regulations, 2003 and immediately prior to such commencement was eligible to

undertake transactions pursuant to the general permission granted under the relevant

regulations issued under FEMA

ESOP Employee stock options

FDI Foreign direct investment

FDI Policy The Consolidated Foreign Direct Investment Policy notified by the DIPP under D/o IPP F.

No. 5(1)/2017-FC-1 dated August 28, 2017

FEMA The Foreign Exchange Management Act, 1999, read with rules and regulations thereunder

FEMA Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

Outside India) Regulations, 2000

Financial Year / Fiscal / FY Unless stated otherwise, the period of 12 months ending March 31 of that particular year

FIR First information report

Foreign Investment Rules The Indian Insurance Companies (Foreign Investment) Rules, 2015

FPI(s) The foreign portfolio investors as defined under the SEBI FPI Regulations

FVCI Foreign venture capital investors as defined and registered under the SEBI FVCI

Regulations

GAAR General anti-avoidance rules

GDP Gross domestic product

GIC Re General Insurance Corporation of India is the national reinsurer wholly owned by the

16

Term Description

Government of India.

GoI or Government Government of India

GST Goods and services tax

HUF Hindu undivided family

ICAI The Institute of Chartered Accountants of India

ICDS Income Computation and Disclosure Standards

ICSI The Institute of Company Secretaries of India

IFRS International Financial Reporting Standards

Income Tax Act The Income-tax Act, 1961

Ind AS Indian Accounting Standards

India Republic of India

Indian GAAP Generally accepted accounting principles in India

Insurance Act The Insurance Act, 1938

IPC The Indian Penal Code, 1860

IPO Initial public offering

IRDA Act The Insurance Regulatory and Development Authority Act, 1999

IRDAI Insurance Regulatory and Development Authority of India

IRDAI Control Guidelines The guidelines on “Indian owned and controlled” issued by the IRDAI on October 19,

2015

IRDAI Corporate Governance

Guidelines

The Corporate Governance Guidelines for Insurers in India, 2016 issued by IRDAI

IRDAI Expenses of Management

Regulations

The Insurance Regulatory and Development Authority of India (Expenses of Management

of Insurers transacting General or Health Insurance Business) Regulations, 2016

IRDAI Investment Regulations The Insurance Regulatory and Development Authority of India (Investment) Regulations,

2016

IRDAI Issuance of Capital

Regulations

The Insurance Regulatory and Development Authority of India (Issuance of Capital by

Indian Insurance Companies transacting other than Life Insurance Business) Regulations,

2015

IRDAI Preparation of Financial

Statements Regulations

The Insurance Regulatory and Development Authority (Preparation of Financial

Statements and Auditor’s Report of Insurance Companies) Regulations, 2002

IRDAI Registration of Corporate

Agents Regulations

The Insurance Regulatory and Development Authority of India (Registration of Corporate

Agents) Regulations, 2015

IRDAI Transfer of Equity Shares

Regulations

The Insurance Regulatory and Development Authority of India (Transfer of Equity Shares

of Insurance Companies) Regulations, 2015

IST Indian Standard Time

IT Information technology

Listed Indian Insurance Companies

Guidelines

The Insurance Regulatory and Development Authority of India (Listed Indian Insurance

Companies) Guidelines, 2016

Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015

MAT Minimum alternate tax

Mn / mn Million

Mutual Fund(s) The mutual funds registered with SEBI under the Securities and Exchange Board of India

(Mutual Funds) Regulations, 1996

N.A. / NA Not applicable

NAV Net asset value

NEFT National Electronic Fund Transfer

17

Term Description

Negotiable Instruments Act The Negotiable Instruments Act, 1881

NR Non-resident

NRE Account Non-Resident External Account

NRO Account Non-Resident Ordinary Account

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

p.a. Per annum

P/E Ratio Price / earnings ratio

PAN Permanent account number

PAT Profit after tax

RBI Reserve Bank of India

RoNW Profit after tax for the period divided by the net worth as at the period end

RTGS Real time gross settlement

SCRA The Securities Contracts (Regulation) Act, 1956

SCRR The Securities Contracts (Regulation) Rules, 1957

SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992

SEBI Act The Securities and Exchange Board of India Act, 1992

SEBI AIF Regulations The Securities and Exchange Board of India (Alternative Investment Funds) Regulations,

2012

SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations,

2014

SEBI FVCI Regulations The Securities and Exchange Board of India (Foreign Venture Capital Investors)

Regulations, 2000

SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009

SEBI Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011

SEBI VCF Regulations Erstwhile Securities and Exchange Board of India (Venture Capital Funds) Regulations,

1996

SICA Erstwhile Sick Industrial Companies (Special Provisions) Act, 1985

State Government The government of a state in India

Stock Exchanges BSE and NSE

STT Securities transaction tax

U.S. / US / USA / United States United States of America

U.S. Securities Act U.S. Securities Act, 1933

UK United Kingdom

US GAAP Generally accepted accounting principles in the United States of America

USD / US$ United States Dollars

VAT Value-added tax

VCFs The venture capital funds as defined in and registered with SEBI under the SEBI VCF

Regulations

18

CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

Certain Conventions

All references to “India” in this Red Herring Prospectus are to the Republic of India and all references to the “U.S.”, “US”,

“USA” or “United States” are to the United States of America and all references to the “U.K.” or “UK” are to the United

Kingdom.

Unless stated otherwise, all references to page numbers in this Red Herring Prospectus are to the page numbers of this Red

Herring Prospectus.

Financial Data

Unless stated otherwise, the financial information in this Red Herring Prospectus is derived from our Restated Financial

Statements as of, for the three months ended June 30, 2017 and for the three months ended June 30, 2016 and Fiscals ended March

31, 2017, 2016, 2015, 2014 and 2013. These financial statements have been prepared in accordance with Indian GAAP, the

Companies Act, the Insurance Act, the IRDA Act, regulations framed and circulars issued thereunder and restated under the SEBI

Regulations.

In this Red Herring Prospectus, any discrepancies in any table between the total and the sum of the amounts listed are due to

rounding off. All figures in decimals have been rounded off to the second decimal for all amounts in ₹ billion and one or two

decimal in case of ₹ million (as appropriate). All percentage figures have been rounded off to one or two decimal (as appropriate)

place except certain elements like investment yield and financial ratios which are rounded off to second decimal place and

accordingly there may be consequential changes in this Red Herring Prospectus. Further, percentage figures are computed on basis

of figures denominated in ₹ million.

Our Company’s financial year commences on April 1 and ends on March 31 of the next year; accordingly, all references to a

particular financial year, unless stated otherwise, are to the 12-month period ended on March 31 of that year. References in this

Red Herring Prospectus to the terms Fiscal or Fiscal Year or Financial Year is to the 12 months ended on March 31 of such year,

unless otherwise specified. Indian GAAP differs from accounting principles and auditing standards with which prospective

investors may be familiar in other countries, including IFRS and US GAAP and the reconciliation of the financial information to

other accounting principles and auditing standards has not been provided. Our Company has not attempted to explain those

differences or quantify their impact on the financial data included in this Red Herring Prospectus and investors should consult

their own advisors regarding such differences and their impact on our Company’s financial data. See “Risk Factors” on page 59

for risks involving differences between Indian GAAP and other accounting principles and auditing standards and risks in relation

to Ind AS. The degree to which the financial information included in this Red Herring Prospectus will provide meaningful

information is entirely dependent on the reader’s level of familiarity with Indian accounting policies and practices, Indian GAAP,

the Insurance Act, the IRDA Act, regulations framed and circulars issued thereunder, the Companies Act and the SEBI

Regulations. Any reliance by persons not familiar with Indian accounting policies, Indian GAAP, the Companies Act, the

Insurance Act, the IRDA Act, regulations framed and circulars issued thereunder, the SEBI Regulations and practices on the

financial disclosures presented in this Red Herring Prospectus should accordingly be limited. See “Risk Factors - Risks Relating

to the Indian Insurance Industry - Our financial statements and the presentation of our performance metrics differ significantly

from those of non-insurance companies and may be difficult to understand or interpret” on page 57.

In accordance with the IRDAI Issuance of Capital Regulations, our Company has obtained a certificate dated September 1, 2017

from the Joint Auditors in relation to (i) the liabilities being determined in the manner prescribed under the Insurance Regulatory

and Development Authority (Assets, Liabilities and Solvency Margins of Insurers) Regulations, 2000 and the Insurance

Regulatory and Development Authority of India (Assets, Liabilities, and Solvency Margin of General Insurance business)

Regulations, 2016, as applicable and such liabilities being fair and reasonable, and (ii) the liabilities include the incurred but not

reported (IBNR) and the incurred but not enough reported (IBNER) reserves as determined by the appointed actuary of our

Company in accordance with the applicable IRDAI regulatio